Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060410a.jpg" width="353">
The Leading Index of the Major 7 OECD economies rose 0.4% during February following upwardly revised increases in January and December. The gains lifted the leaders&#39; six month growth rate to 3.8%, its best in nearly two years.
During the last ten years there has been a 64% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven OECD countries.
During February, the U.S. leaders increased 0.5% after a 0.5% January increase which was revised up from the slight decline reported initially. The leaders&#39; six month growth rose to 4.7%. Higher share prices, consumer sentiment and durable goods orders have contributed to the rise. The correlation between the leaders&#39; growth rate and real GDP growth has been a high 73% during the last ten years.
Leaders in the European Union (15 countries) rose 0.4% after an unrevised 0.4% January gain. As a result, six month growth in the index improved to 4.1%, the best since May 2004. During the last ten years there has been a 59% correlation between the change in the leading index and the quarterly change in the European Union GDP volume index.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060410b.jpg" width="353">
TheGerman leading index rose another strong 0.8% after a 0.7% jump during January and lifted the six month growth rate to 7.9%. The business climate indicator is improved and orders are up. During the last ten years there has been a 32% correlation between the change in the German leading index and the quarterly change in GDP volume.
A leaders in France increased 0.2%. The modest increase did, however, lift the series six month growth rate to 4.1% as the industrial sector&#39;s prospects improved as did the future tendency of production. New car registrations and job prospects remained depressed but the terms of trade were up.
The Italian leading index showed further improvement though the small 0.2% gain followed a downwardly revised 0.1% January decline. The series&#39; six month growth rate turned positive at 0.5% for the first time since early 2004 as the future tendency of production and consumer confidence rose.
The UK leaders rose just 0.1% for the second month and the six month growth rate was positive (0.2%) for the second month in the last year. Consumer confidence, export prospects and new car registrations have been depressed though the FT Share Price index was at the highest level since 2001.
In Japan, the February leading index rose 0.1% but the 0.5% gain initially reported for January was revised to 0.1%. That pulled the index&#39;s six month growth rate to a still improved 2.0% due to higher share prices and more construction starts. The leaders&#39; correlation with Japan&#39;s real economic growth has been a meaningful 40% during the last ten years.
The Canadian leaders surged 0.6% though the January increase was revised down sharply to 0.2%. The six month growth rate jumped to 3.0%, its most promising since Summer 2004. The correlation of the leaders&#39; growth with Canadian real GDP has been 49% during the last ten years.
The latest OECD Leading Indicator report is available <a href="http://www.oecd.org/dataoecd/20/19/36441492.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>105.00</td>
<td>104.60</td>
<td>2.5%</td>
<td>102.75</td>
<td>102.40</td>
<td>97.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>3.8%</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
 Industrial Production in Europe:  East and West 
by <a href="/comment/Curley.html">Louise Curley</a> April 10, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060410c.jpg" width="353">
February industrial production data for Sweden, France, the Czech Republic and Slovenia were released today. In each case there was a decline from January in the seasonally adjusted data. Except for France, however, the February figures for each country were above February, 2005, indicating that the positive trends in industrial production in these countries were still in place.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060410d.jpg" width="353">
The first chart shows the indexes of industrial production for Sweden and France and the second, for the Czech Republic and Slovenia.(Industrial Production for Slovenia is published on the basis of 2005=100. To facilitate the comparison with the Czech Republic, we have made use of the index function in the list of advanced functions to rebase the Slovene data to 2000=100)
As shown in the first chart industrial production in Sweden has been stronger than in France. In fact, industrial production in France has shown little change over the past five years. In the east, there have also been variations in growth of industrial production as indicated in the second chart which shows industrial production in the Czech Republic rising considerably faster than in Slovenia. Industrial production in the eastern European countries has, however, generally increased faster than production in the western European countries over the past five years. In February, industrial production in the Czech Republic was 54% above the average of 2000, in Slovenia it was 17% above its 2000 average, in Sweden, 10% and in France, a mere 1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production (2000=100)</th>
<th scope="col">Feb 06</th>
<th scope="col">Jan 06</th>
<th scope="col">Feb 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005&nbsp; </th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France</td>
<td>101.2</td>
<td>102.1</td>
<td>101.8</td>
<td>-0.88</td>
<td>-0.59</td>
<td>101.3</td>
<td>101.3</td>
<td>99.5</td>
</tr>
<tr>
<td class="firstcol">Sweden&nbsp;</td>
<td>109.6</td>
<td>111.1</td>
<td>107.9</td>
<td>-1.35</td>
<td>1.58</td>
<td>107.9</td>
<td>106.2</td>
<td>102.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>154.3</td>
<td>157.8</td>
<td>138.0</td>
<td>-2.22</td>
<td>11.81</td>
<td>144.1</td>
<td>135.6</td>
<td>123.4</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>116.9</td>
<td>122.9</td>
<td>108.4</td>
<td>-4.82</td>
<td>7.82</td>
<td>116.3</td>
<td>112.7</td>
<td>106.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Addendum:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"> &nbsp;Slovenia (2005=100)</td>
<td>100.6</td>
<td>105.7</td>
<td>93.3</td>
<td>-4.82</td>
<td>7.82</td>
<td>100.0</td>
<td>97.0</td>
<td>91.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The Leading Index of the Major 7 OECD economies rose 0.4% during February following upwardly revised increases in January and December. The gains lifted the leaders' six month growth rate to 3.8%, its best in nearly two years. During [...]

OECD Leaders Improved

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407d.jpg" width="353">
The unemployment rate in Canada eased 0.1% in March to 6.3%, the lowest level since December 1974. Statistics Canada further reported that 50,500 more people had jobs in March, following on rises of 24,700 in February and 26,300 in January. Over the last year, employment has expanded 2.1%, the strongest 12-month increase since May 2004, and as we pointed out yesterday, this compares very favorably with employment gains in most other large industrial countries.
The fall in unemployment was all the more notable as it accompanied a rise in the labor force participation rate, the proportion of the population who have jobs or want them. It picked up from 67.0% in February to 67.2% in March. This ratio had been drifting downward, as people were pulling back from the labor force. But it has been basically flat for about a year now, so that recent declines in unemployment reflect genuine economic improvement, not discouraged workers.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407e.jpg" width="353">
The employment growth is occurring in the service industries, as seen in the table below. Business services, transport &amp; warehousing, heath care and information, culture &amp; recreation are the sectors with the largest gains in March. At the same time, the goods-producing industries have widely divergent patterns. As in many Western countries, manufacturing jobs are declining fairly consistently, and in Canada, so are those at utilities. But construction and mining (including gas and oil production) are both on quite distinct uptrends. While the mining gains are easily explained by high oil prices, we are struck by the long run-up in construction employment. It began growing in 1998 and appears to parallel expansion in residential and civil-engineering projects.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407f.jpg" width="353">
Despite this &quot;good news&quot; on employment and unemployment, Canadian financial markets reacted negatively. They see these favorable economic factors as contributing to interest rate increases, so by Friday noon, the TSE had lost 121 points, right at 1% of its value and 10-year Canadian bond yields added 5 basis points. US markets were responding to the US data in similar fashion. Both currencies, though, were rising, and versus the euro, the Canadian dollar was increasing more than the US dollar. Check DAILY and INTDAILY at the end of the business day today to see how these financial responses evolved over the day as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CANSIM/@C6/@C6.HTM">Canada&nbsp;</a> (Seasonally Adjusted)</th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>6.3</td>
<td>6.4</td>
<td>6.6</td>
<td>6.9</td>
<td>6.8</td>
<td>7.2</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">Participation Rate (%)</td>
<td>67.2</td>
<td>67.0</td>
<td>67.2</td>
<td>67.2</td>
<td>67.2</td>
<td>67.5</td>
<td>67.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (Change, 000s/%)</td>
<td>+50.5</td>
<td>+24.7</td>
<td>+26.3</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.8%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Goods-Producing </td>
<td>-9.5</td>
<td>30.5</td>
<td>-34.4</td>
<td>-0.0%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Service-Producing</td>
<td>+60.0</td>
<td>-5.8</td>
<td>60.7</td>
<td>2.7%</td>
<td>1.8%</td>
<td>1.8%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

The unemployment rate in Canada eased 0.1% in March to 6.3%, the lowest level since December 1974. Statistics Canada further reported that 50,500 more people had jobs in March, following on rises of 24,700 in February and 26,300 in [...]

Canadian Unemployment Hits 31-Year Low in March; Employers Add 50,000 New Workers

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407b.jpg" width="353">
Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February &amp; January advances were both revised down slightly. Since payrolls started rising in early 2003 employment growth has averaged 1.5% at an annual rate.
From the household survey the unemployment rate fell back to 4.7%. Employment surged 384,000 (2.2% y/y) and the labor force rose 203,000 (1.6% y/y). Consensus expectations had been for an unchanged unemployment rate at 4.8%.
Since early 2003, the household survey&#39;s measure of employment growth has averaged 1.7% (AR).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407a.jpg" width="353">
The gain in construction employment slowed to 7,000 (4.3% y/y) during March following increases the prior two months which were helped by warm winter temperatures and averaged 41,000.
Jobs in private service-producing industries rose 178,000 (1.8% y/y). Jobs in retail trade rose a firm 29,400 (0.9% y/y) though motor vehicle dealers&#39; employment fell and financial sector jobs rose 16,000 (2.3% y/y). Professional &amp; business services employment rose 52,000 (2.8% y/y) while jobs in education &amp; health rose 33,000 (2.4% y/y). Leisure &amp; hospitality employment increased 42,000 (2.2% y/y).
Factory sector payrolls fell another 5,000 after a deepened 10,000 worker decline during February. Employment in the motor vehicles &amp; parts industries fell 1,900 (-2.9% y/y) after a 14,900 February drop. The breadth of gain in factory payrolls over the last three months fell to a 45.2%, indicating broad based job loss.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407c.jpg" width="353">
Government employment rose 24,000 (0.7% y/y) though hiring by the federal government was unchanged (-0.8% y/y). During the last three years the number of federal government jobs has fallen 3.0% but during the same period state &amp; local hiring is up 2.0%
The 0.2% gain in average hourly earnings was half the February rate increase.
Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004 from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200613/200613pap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>211,000</td>
<td>225,000</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-5,000</td>
<td>-10,000</td>
<td>-0.4%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7 (Mar &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>5.1% (Mar &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February & January advances were both revised down slightly. Since payrolls started rising in early 2003 employment [...]

U.S. Payrolls Up, Unemployment Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407a.jpg" width="353">
Non-farm payrolls increased 211,000 during March. The gain beat Consensus expectations for a 190,000 rise but the February &amp; January advances were both revised down slightly. Since payrolls started rising in early 2003 employment growth has averaged 1.5% at an annual rate.
From the household survey the unemployment rate fell back to 4.7%. Employment surged 384,000 (2.2% y/y) and the labor force rose 203,000 (1.6% y/y). Consensus expectations had been for an unchanged unemployment rate at 4.8%.
Since early 2003, the household survey&#39;s measure of employment growth has averaged 1.7% (AR).
The gain in construction employment slowed to 7,000 (4.3% y/y) during March following increases the prior two months which were helped by warm winter temperatures and averaged 41,000.
Jobs in private service-producing industries rose 178,000 (1.8% y/y). Jobs in retail trade rose a firm 29,400 (0.9% y/y) though motor vehicle dealers&#39; employment fell and financial sector jobs rose 16,000 (2.3% y/y). Professional &amp; business services employment rose 52,000 (2.8% y/y) while jobs in education &amp; health rose 33,000 (2.4% y/y). Leisure &amp; hospitality employment increased 42,000 (2.2% y/y).
Factory sector payrolls fell another 5,000 after a deepened 10,000 worker decline during February. Employment in the motor vehicles &amp; parts industries fell 1,900 (-2.9% y/y) after a 14,900 February drop. The breadth of gain in factory payrolls over the last three months fell to a 45.2%, indicating broad based job loss.
Government employment rose 24,000 (0.7% y/y) though hiring by the federal government was unchanged (-0.8% y/y). During the last three years the number of federal government jobs has fallen 3.0% but during the same period state &amp; local hiring is up 2.0%
The 0.2% gain in average hourly earnings was half the February rate increase.
Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004 from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200613/200613pap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>211,000</td>
<td>225,000</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-5,000</td>
<td>-10,000</td>
<td>-0.4%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7 (Mar &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>5.1% (Mar &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
Canadian Unemployment Hits 31-Year Low in March; Employers Add 50,000 New Workers 
by <a href="/comment/Stone.html">Carol Stone</a> April 7, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407d.jpg" width="353">
The unemployment rate in Canada eased 0.1% in March to 6.3%, the lowest level since December 1974. Statistics Canada further reported that 50,500 more people had jobs in March, following on rises of 24,700 in February and 26,300 in January. Over the last year, employment has expanded 2.1%, the strongest 12-month increase since May 2004, and as we pointed out yesterday, this compares very favorably with employment gains in most other large industrial countries.
The fall in unemployment was all the more notable as it accompanied a rise in the labor force participation rate, the proportion of the population who have jobs or want them. It picked up from 67.0% in February to 67.2% in March. This ratio had been drifting downward, as people were pulling back from the labor force. But it has been basically flat for about a year now, so that recent declines in unemployment reflect genuine economic improvement, not discouraged workers.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407e.jpg" width="353">
The employment growth is occurring in the service industries, as seen in the table below. Business services, transport &amp; warehousing, heath care and information, culture &amp; recreation are the sectors with the largest gains in March. At the same time, the goods-producing industries have widely divergent patterns. As in many Western countries, manufacturing jobs are declining fairly consistently, and in Canada, so are those at utilities. But construction and mining (including gas and oil production) are both on quite distinct uptrends. While the mining gains are easily explained by high oil prices, we are struck by the long run-up in construction employment. It began growing in 1998 and appears to parallel expansion in residential and civil-engineering projects.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060407f.jpg" width="353">
Despite this &quot;good news&quot; on employment and unemployment, Canadian financial markets reacted negatively. They see these favorable economic factors as contributing to interest rate increases, so by Friday noon, the TSE had lost 121 points, right at 1% of its value and 10-year Canadian bond yields added 5 basis points. US markets were responding to the US data in similar fashion. Both currencies, though, were rising, and versus the euro, the Canadian dollar was increasing more than the US dollar. Check DAILY and INTDAILY at the end of the business day today to see how these financial responses evolved over the day as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CANSIM/@C6/@C6.HTM">Canada&nbsp;</a> (Seasonally Adjusted)</th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>6.3</td>
<td>6.4</td>
<td>6.6</td>
<td>6.9</td>
<td>6.8</td>
<td>7.2</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">Participation Rate (%)</td>
<td>67.2</td>
<td>67.0</td>
<td>67.2</td>
<td>67.2</td>
<td>67.2</td>
<td>67.5</td>
<td>67.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (Change, 000s/%)</td>
<td>+50.5</td>
<td>+24.7</td>
<td>+26.3</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.8%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Goods-Producing </td>
<td>-9.5</td>
<td>30.5</td>
<td>-34.4</td>
<td>-0.0%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Service-Producing</td>
<td>+60.0</td>
<td>-5.8</td>
<td>60.7</td>
<td>2.7%</td>
<td>1.8%</td>
<td>1.8%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406c.jpg" width="353">
The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel&#39;s Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or 2.9%. The CBS also publishes a subset of the jobs data that excludes foreign workers, mostly Palestinians. There were 82,000 of them in January, up from 70,000 a year ago. So the number of jobs covered by Israeli workers was 2.508 million, up just 1,000 from December and 2.7% from January 2005. Both the total number of jobs and those held by Israelis increased by 3.3% for 2005 as a whole.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406d.jpg" width="353">
The average job paid NIS7,232 for the month of January, about US$1,565. For jobs held by Israelis only, the comparable figure was NIS7,614, about US$1,648. In shekels, both total and Israeli wages were up 1.6% from a year ago. Taking account of inflation, &quot;real&quot; wages have fallen 1.3% for all workers and 1.0% for Israeli workers since January 2005.
While real purchasing power per job in Israel has stagnated over the last few years, the number of jobs themselves has advanced nicely. As we point out frequently here, employment in Europe is nearly at a standstill, and in the US, prior to the release tomorrow of March data, recent trends show roughly 1.5% gains in nonfarm payrolls, only about half the pace in Israel. So midst all the Middle East tension, the Israeli economy is presently able to increase jobs and overall growth as well. In industry data through Q4 2005, accommodation, trade and business services were seeing the greatest percentage job gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Number of Jobs (thous.)</td>
<td>2,590</td>
<td>2,585</td>
<td>2,511</td>
<td>2,548</td>
<td>2,466</td>
<td>2,425</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.9</td>
<td>3.0</td>
<td>--</td>
<td>3.3</td>
<td>2.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Jobs ex Foreign Workers (thous.)</td>
<td>2,508</td>
<td>2,507</td>
<td>2,441</td>
<td>2,472</td>
<td>2,393</td>
<td>2,342</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.7</td>
<td>2.9</td>
<td>--</td>
<td>3.3</td>
<td>2.8</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, All Jobs (NIS)</td>
<td>7,232</td>
<td>7,208</td>
<td>7,138</td>
<td>7,225</td>
<td>7,000</td>
<td>6,863</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.4</td>
<td>--</td>
<td>3.3</td>
<td>2.1</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, ex Foreign Workers (NIS)</td>
<td>7,614</td>
<td>7,636</td>
<td>7,481</td>
<td>7,334</td>
<td>7,081</td>
<td>6,981</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.2</td>
<td>--</td>
<td>3.1</td>
<td>2.2</td>
<td>-2.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel's Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or [...]

Employment Grows in Israel; Wages Rise, but Lose Ground to Inflation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406a.jpg" width="353">
Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was slightly less than initially estimated.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell to 308,500 (-9.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406b.jpg" width="353">
Continuing claims for unemployment insurance fell a sharp 22,000 during the latest week following a revised decline of 1,000 the prior period, initially reported as an increase.
The insured rate of unemployment was stable at 1.9% for the seventh week.
The highest insured unemployment rates during the week ending March 18 were in Alaska (5.1%), Michigan (4.5%), Wisconsin (3.5%), Puerto Rico (3.4%), Pennsylvania (3.3%), Rhode Island (3.3%), New Jersey (3.1%), Vermont (3.1%), Massachusetts (3.0%), Connecticut (2.8%), and Oregon (2.8%).
Look Who&#39;s Working Now from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060401/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/01/06</th>
<th scope="col">03/25/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>299</td>
<td>304</td>
<td>-13.6%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,440</td>
<td>-9.0%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was [...]

Initial Claims for Jobless Insurance Below Expectations

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406a.jpg" width="353">
Initial claims for unemployment insurance dropped for the third consecutive period last week. The 5,000 person decline to 299,000 compared to Consensus expectations for 305,000 claims. It followed a 8,000 fall the prior week which was slightly less than initially estimated.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell to 308,500 (-9.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406b.jpg" width="353">
Continuing claims for unemployment insurance fell a sharp 22,000 during the latest week following a revised decline of 1,000 the prior period, initially reported as an increase.
The insured rate of unemployment was stable at 1.9% for the seventh week.
The highest insured unemployment rates during the week ending March 18 were in Alaska (5.1%), Michigan (4.5%), Wisconsin (3.5%), Puerto Rico (3.4%), Pennsylvania (3.3%), Rhode Island (3.3%), New Jersey (3.1%), Vermont (3.1%), Massachusetts (3.0%), Connecticut (2.8%), and Oregon (2.8%).
Look Who&#39;s Working Now from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060401/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/01/06</th>
<th scope="col">03/25/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>299</td>
<td>304</td>
<td>-13.6%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,440</td>
<td>-9.0%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
Employment Grows in Israel; Wages Rise, but Lose Ground to Inflation 
by <a href="/comment/Stone.html">Carol Stone</a> April 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406c.jpg" width="353">
The number of jobs in Israel increased 5,000 in January from December, seasonally adjusted, to 2.59 million, according to data reported today by Israel&#39;s Central Bureau of Statistics (CBS). The gain from a year ago was 79,000 jobs, or 2.9%. The CBS also publishes a subset of the jobs data that excludes foreign workers, mostly Palestinians. There were 82,000 of them in January, up from 70,000 a year ago. So the number of jobs covered by Israeli workers was 2.508 million, up just 1,000 from December and 2.7% from January 2005. Both the total number of jobs and those held by Israelis increased by 3.3% for 2005 as a whole.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060406d.jpg" width="353">
The average job paid NIS7,232 for the month of January, about US$1,565. For jobs held by Israelis only, the comparable figure was NIS7,614, about US$1,648. In shekels, both total and Israeli wages were up 1.6% from a year ago. Taking account of inflation, &quot;real&quot; wages have fallen 1.3% for all workers and 1.0% for Israeli workers since January 2005.
While real purchasing power per job in Israel has stagnated over the last few years, the number of jobs themselves has advanced nicely. As we point out frequently here, employment in Europe is nearly at a standstill, and in the US, prior to the release tomorrow of March data, recent trends show roughly 1.5% gains in nonfarm payrolls, only about half the pace in Israel. So midst all the Middle East tension, the Israeli economy is presently able to increase jobs and overall growth as well. In industry data through Q4 2005, accommodation, trade and business services were seeing the greatest percentage job gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jan 2006</th>
<th scope="col">Dec 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Number of Jobs (thous.)</td>
<td>2,590</td>
<td>2,585</td>
<td>2,511</td>
<td>2,548</td>
<td>2,466</td>
<td>2,425</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.9</td>
<td>3.0</td>
<td>--</td>
<td>3.3</td>
<td>2.2</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Jobs ex Foreign Workers (thous.)</td>
<td>2,508</td>
<td>2,507</td>
<td>2,441</td>
<td>2,472</td>
<td>2,393</td>
<td>2,342</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>2.7</td>
<td>2.9</td>
<td>--</td>
<td>3.3</td>
<td>2.8</td>
<td>-0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, All Jobs (NIS)</td>
<td>7,232</td>
<td>7,208</td>
<td>7,138</td>
<td>7,225</td>
<td>7,000</td>
<td>6,863</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.4</td>
<td>--</td>
<td>3.3</td>
<td>2.1</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Wages, ex Foreign Workers (NIS)</td>
<td>7,614</td>
<td>7,636</td>
<td>7,481</td>
<td>7,334</td>
<td>7,081</td>
<td>6,981</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change</td>
<td>1.6</td>
<td>-1.2</td>
<td>--</td>
<td>3.1</td>
<td>2.2</td>
<td>-2.5</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405e.jpg" width="353">
Commercial real estate has increased significantly in importance as an investment medium in recent years. Securitization of commercial mortgage securities and direct interests in portfolios of properties join residential real estate as outlets for capital. But it is complicated to assess the returns on such investments. Each property is sizable and very different from every other property. So, unlike other objects to be priced, there are not simple rules-of-thumb or statistical properties that can be exploited to derive valuations.
Just in mid-February, the Massachusetts Institute of Technology&#39;s Center for Real Estate introduced a helpful tool in this process, the Transactions-Based Index. A client brought these new quarterly series to Haver&#39;s attention, and they were added to our basic USECON product about two weeks ago.
The Total Return Index shows that commercial real estate holdings earned 34.3% in 2005, following valuation gains of 16.0% in 2004 and 10.0% in 2003. Returns based on price change alone were 29.4% last year, 10.7% in 2004 and 4.2% in 2003.
These figures are weighted indexes for &quot;All Properties&quot;, including apartments, industrial buildings, offices and retail centers. Sub-indexes are available for each one of these segments. Retail properties were the strongest in 2005, with a 40.2% total return, while industrial buildings earned &quot;only&quot; 24.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060405f.jpg" width="353">
The secret to these indexes is a proprietary database maintained by the National Council of Real Estate Investment Fiduciaries (NCREIF). This group is a trade association of pension funds managers; they collectively own some $200 billion worth of commercial properties numbering about 5,000. Data on pricing and income is taken from actual transactions involving these properties.
Further, since the properties are all distinct, the &quot;average&quot; value of transactions cannot by obtained by simply toting up individual prices and dividing by some appropriate number. The indexes are compiled by appeal to the same kind of weighted &quot;hedonic&quot;, quality-adjusting econometric techniques used by BEA and BLS for constructing many of the price indexes used by economists every day. The NCREIF database has been maintained for many years, allowing the MIT econometricians to construct 22 years of history for the &quot;All Property&quot; index and 12 years for the individual property types. A press release and more detailed description of the data are found <a href="http://web.mit.edu/cre/news/060216-tbi.html">here</a> on the website of the MIT Center for Real Estate. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">MIT Commercial Real Estate &quot;TBI&quot; Indexes</th>
<th scope="col">Q4 2005</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
Year-End
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total Return Index</td>
<td>668.0</td>
<td>638.9</td>
<td>601.1</td>
<td>497.1</td>
<td>428.5</td>
<td>389.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Yr/Yr % Change</td>
<td>34.3</td>
<td>31.8</td>
<td>26.0</td>
<td>16.0</td>
<td>10.0</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">TBI Price Index</td>
<td>194.3</td>
<td>187.3</td>
<td>177.7</td>
<td>150.2</td>
<td>135.7</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Yr/Yr % Change</td>
<td>29.4</td>
<td>26.6</td>
<td>20.6</td>
<td>10.7</td>
<td>4.2</td>
<td>4.3</td>
</tr>
</tbody>
</table>
</body>
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Commercial real estate has increased significantly in importance as an investment medium in recent years. Securitization of commercial mortgage securities and direct interests in portfolios of properties join residential real estate [...]

MIT Center for Real Estate Compiles Price and Total Return Indexes for Commercial Real Estate Transactions: [...]

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Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

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The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

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Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

Robert Brusca

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

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**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

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**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

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**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

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**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

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**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

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Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: April 2006

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