Tom Moeller

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506a.jpg" align="left" border="0" height="265" width="353"></p>
<p>Growth in worker productivity in the nonfarm business sector
slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of
output growth did not prompt as much of a cutback in aggregate
hours-worked (employment times hours worked). Nevertheless, the 6.3%
surge in U.S. worker productivity growth during the last four quarters
was the strongest since early-1962 (no typo). New technologies,
improved work techniques and an improved labor skill-sets have paid
off. Productivity last quarter exceeded Consensus expectations for a
2.5% rise.</p>
<p>The slowdown in 1Q productivity occurred as real output growth
slowed to 4.4% (3.1% y/y) from 7.0% during 4Q. That was met by a slight
acceleration in hours worked to 0.8% (-3.0% y/y) from 0.7%.Growth in
compensation costs also accelerated to 1.9% (2.3% y/y). Four-quarter
growth in compensation was nearly the slowest since 1995.</p>
<p>The rate of decline in unit labor costs eased during 4Q '09 as
compensation picked up slightly. Regardless, the four-quarter decline
in costs of 3.7% was the largest on record. That enabled corporate
profits to jump by nearly one-third last year.</p>
<p>In the factory sector alone, worker productivity growth also
slowed sharply to 2.5% (7.5% y/y) from 6.5% during 4Q '09. The slowdown
occurred as output rose an accelerated 7.5% (3.3% y/y) compared to the
pickup in hours-worked to 4.9% (-3.9% y/y) following a slight 4Q
decline. Compensation fell 1.2% but the y/y change of 0.9% was the
weakest since 2006. The combination of lower compensation and the rise
in productivity dropped unit labor costs by 3.7%.</p>
<p>The productivity &amp; cost figures are available in
Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506c.jpg" style="width: 312px; height: 265px;">
<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/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a>(SAAR,%)</th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09</th>
<th scope="col">3Q '09</th>
<th scope="col">1Q Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour
(Productivity)</td>
<td>3.6</td>
<td>6.3</td>
<td>7.8</td>
<td>6.3</td>
<td>3.7</td>
<td>2.1</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>1.9</td>
<td>0.4</td>
<td>-0.4</td>
<td>2.3</td>
<td>1.9</td>
<td>3.1</td>
<td>4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-1.6</td>
<td>-5.6</td>
<td>-7.6</td>
<td>-3.7</td>
<td>-1.7</td>
<td>1.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol" colspan="8"><b>Manufacturing
Sector</b></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>2.5</td>
<td>6.5</td>
<td>14.8</td>
<td>7.5</td>
<td>1.8</td>
<td>1.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>-1.2</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.9</td>
<td>4.4</td>
<td>3.2</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-3.7</td>
<td>-6.4</td>
<td>-13.7</td>
<td>-6.1</td>
<td>2.5</td>
<td>2.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body></html>

Growth in worker productivity in the nonfarm business sector slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of output growth did not prompt as much of a cutback in aggregate hours-worked (employment times hours [...]

U.S. Worker 1Q Productivity Growth Moderates, But Still Looks Strong Y/Y

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506a.jpg" align="left" border="0" height="265" width="353"></p>
<p>Growth in worker productivity in the nonfarm business sector
slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of
output growth did not prompt as much of a cutback in aggregate
hours-worked (employment times hours worked). Nevertheless, the 6.3%
surge in U.S. worker productivity growth during the last four quarters
was the strongest since early-1962 (no typo). New technologies,
improved work techniques and an improved labor skill-sets have paid
off. Productivity last quarter exceeded Consensus expectations for a
2.5% rise.</p>
<p>The slowdown in 1Q productivity occurred as real output growth
slowed to 4.4% (3.1% y/y) from 7.0% during 4Q. That was met by a slight
acceleration in hours worked to 0.8% (-3.0% y/y) from 0.7%.Growth in
compensation costs also accelerated to 1.9% (2.3% y/y). Four-quarter
growth in compensation was nearly the slowest since 1995.</p>
<p>The rate of decline in unit labor costs eased during 4Q '09 as
compensation picked up slightly. Regardless, the four-quarter decline
in costs of 3.7% was the largest on record. That enabled corporate
profits to jump by nearly one-third last year.</p>
<p>In the factory sector alone, worker productivity growth also
slowed sharply to 2.5% (7.5% y/y) from 6.5% during 4Q '09. The slowdown
occurred as output rose an accelerated 7.5% (3.3% y/y) compared to the
pickup in hours-worked to 4.9% (-3.9% y/y) following a slight 4Q
decline. Compensation fell 1.2% but the y/y change of 0.9% was the
weakest since 2006. The combination of lower compensation and the rise
in productivity dropped unit labor costs by 3.7%.</p>
<p>The productivity &amp; cost figures are available in
Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506c.jpg" style="width: 312px; height: 265px;">
<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/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a>(SAAR,%)</th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09</th>
<th scope="col">3Q '09</th>
<th scope="col">1Q Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour
(Productivity)</td>
<td>3.6</td>
<td>6.3</td>
<td>7.8</td>
<td>6.3</td>
<td>3.7</td>
<td>2.1</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>1.9</td>
<td>0.4</td>
<td>-0.4</td>
<td>2.3</td>
<td>1.9</td>
<td>3.1</td>
<td>4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-1.6</td>
<td>-5.6</td>
<td>-7.6</td>
<td>-3.7</td>
<td>-1.7</td>
<td>1.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol" colspan="8"><b>Manufacturing
Sector</b></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>2.5</td>
<td>6.5</td>
<td>14.8</td>
<td>7.5</td>
<td>1.8</td>
<td>1.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>-1.2</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.9</td>
<td>4.4</td>
<td>3.2</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-3.7</td>
<td>-6.4</td>
<td>-13.7</td>
<td>-6.1</td>
<td>2.5</td>
<td>2.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
<span id="articletitle">German Orders Take A Strong Hold
On Growth</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 06, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>In March German orders spurted beyond expectations rising by
5% after being flat in February. Foreign orders built on a 1.7% gain in
February rising by 4.7% in March. Domestic orders spurted by 5.4%
coming off a 1.7% decline in February. Over three months domestic and
foreign orders are growing at almost identical 48% compounded growth
rates; over six month their growth is clearly identical as well. Yr/Yr
foreign orders are stronger, rising by 29% compared to nearly 23% for
domestic orders. German orders are strong no matter how you slice them.
But not all sectors are strong.</p>
<p>Consumer orders remain mixed in Germany. Consumer durables
goods orders did better in March by reducing the pace at which they
declined to -0.7% from -2.4% in February. Consumer durable goods orders
are rising over three months, however, at a compounded annual rate pace
of just 3.7%, up from 1.8% over six months. Consumer nondurables orders
spiked by 5.4% in March, after dropping by 2.2% in February. They are
still declining at an 8.2% annual rate over three months, however.</p>
<p>Capital goods are the backbone of the German recovery. Those
orders rose by 2.4% in March after rising by 0.5% in February. Over
three months capital goods orders are rising at a 24.7% pace up from an
11.7% pace over six months and from 6.7% Yr/Yr.</p>
<p>Intermediate goods orders also rose in March making gains of
2.8% after edging lower by 0.3% in February. Intermediate goods orders
spurted at a 21% annual rate over three months compared to rising at a
10% over three months.</p>
<p>Manufacturing sales also were strong in March and their
sequential growth rates show persisting strength.</p>
<p>On balance German orders were an upside surprise. The strength
remains in the industrial sector with consumer goods starting to break
out of their declining ways but still not clearly shaking off the
lethargy. Orders grew at a 28% annualized rate in the quarter while
sales grew at a 5% pace.</p>
<p>The weakening euro is going to help cement these trends as
long as the financial problems in Greece do not spread too much and
damp growth in the e-Zone and the surrounding environs. Right now
tensions are running high as Moody&#8217;s warned on potential banking sector
problems as banks hold a lot of government bonds and it is some of the
debt-ridden European government&#8216;s that issued those bonds that are
under ratings pressure. If debt reschedulings were to occur there could
be losses pushed onto bond holders and slapped onto bank balance
sheets. In its meeting today the ECB held rates steady but that was all
it held steady. So far it is not willing to do nay more, much to the
markets consternation. Nervousness in the European markets is clear.
The potential for knock-on effects even to an economy like Germany that
seems to be doing so well is a real risk.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="9">German Orders and Sales
By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="grey2">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>5.0%</td>
<td>0.0%</td>
<td>5.2%</td>
<td>49.1%</td>
<td>22.1%</td>
<td>26.0%</td>
<td>-32.8%</td>
<td>28.5%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.7%</td>
<td>1.7%</td>
<td>3.8%</td>
<td>48.7%</td>
<td>21.9%</td>
<td>29.0%</td>
<td>-36.2%</td>
<td>28.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>5.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>48.9%</td>
<td>22.0%</td>
<td>22.8%</td>
<td>-28.6%</td>
<td>28.2%</td>
</tr>
<tr class="grey2">
<td colspan="9" class="firstcol">Real Sector
Sales</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG/Mining</td>
<td>2.9%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>16.3%</td>
<td>7.8%</td>
<td>8.5%</td>
<td>-21.8%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>4.6%</td>
<td>-2.1%</td>
<td>-4.0%</td>
<td>-6.8%</td>
<td>-3.5%</td>
<td>2.5%</td>
<td>-11.3%</td>
<td>-6.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Cons
Durables</td>
<td>-0.7%</td>
<td>-2.4%</td>
<td>4.1%</td>
<td>3.7%</td>
<td>1.8%</td>
<td>5.4%</td>
<td>-22.7%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Non-Durable</td>
<td>5.4%</td>
<td>-2.2%</td>
<td>-5.0%</td>
<td>-8.2%</td>
<td>-4.2%</td>
<td>2.1%</td>
<td>-9.4%</td>
<td>-8.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Captial Gds</td>
<td>2.4%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>24.7%</td>
<td>11.7%</td>
<td>6.7%</td>
<td>-24.5%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>2.8%</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>21.0%</td>
<td>10.0%</td>
<td>15.2%</td>
<td>-24.4%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">All MFG-Sales</td>
<td>2.7%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>15.7%</td>
<td>7.6%</td>
<td>8.3%</td>
<td>-21.7%</td>
<td>5.3%</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Initial Unemployment
Insurance Claims Decline </span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 6, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Bureau of Labor Statistics reported that initial claims
for jobless insurance fell 7,000 to 444,000 after the prior week's
lessened 8,000 drop. The latest level was near this cycle's lowest but
fell slightly short of Consensus expectations for a decline to 440,000
claims. Last week's figure was down from the recession peak of 651,000
reached in March of 2009. The four-week moving average of initial
claims increased to 458,500.</p>
<p>A 59,000 decline in continuing claims for unemployment
insurance during the latest week followed a little-revised 10,000 drop
during the prior week. They were down by one-third from the June '09
peak. The overall decline is a function of the improved job market but
also reflects the exhaustion of 26 weeks of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims at 4.649M
remained near the cycle low. This series dates back to 1966.</p>
<p>Extended benefits for unemployment insurance slipped w/w to
201,487. However, they were down by three-quarters from a peak of
597,688 reached in November.</p>
<p>The insured unemployment rate remained at 3.6% where it has
been since mid-February. The rate reached a high of 4.9% during May.
During the last ten years, there has been a 96% correlation between the
level of the insured unemployment rate and the overall rate of
unemployment published by the Bureau of Labor Statistics.</p>
<p>The highest insured unemployment rates in the week ending
April 17 were in Alaska (6.6 percent), Puerto Rico (6.0), Oregon (5.8),
Nevada (5.1), Wisconsin (5.1), California (5.0), Michigan (4.9),
Montana (4.9), Pennsylvania (4.9), Idaho (4.7), and North Carolina
(4.7). The lowest insured unemployment rates were in Virginia (1.9),
Texas (2.3), Georgia (2.8), Maryland (3.0), Florida (3.2), Wyoming
(3.4), Ohio (3.4), New York (3.5) and Maine (3.7). These data are not
seasonally adjusted but the overall insured unemployment rate is.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>05/01/10</b></th>
<th scope="col"><b>04/24/10</b></th>
<th scope="col"><b>04/17/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>444</td>
<td>451</td>
<td>459</td>
<td>-26.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,594</td>
<td>4,653</td>
<td>-26.2%</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.6</td>
<td>3.6</td>
<td>4.9(5/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505i.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The outplacement firm Challenger, Grey &amp; Christmas
reported that the level of layoffs fell last month to 38,326. It was
the lowest level since mid-2006 and remained well under the cycle-high
of 241,748 in January of last year. The decline was led by sharply
lower layoffs in the government, computer, energy, entertainment, and
retail industries. An increased level of layoffs occurred in the
construction, financial, health care and utility industries.</p>
<p>Challenger also samples firms' hiring plans. April plans
increased for the second month consecutive month to the highest level
since 2005. They rose in the transportation, consumer goods, health
care and financial industries though most elsewhere they fell.</p>
<p>During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment<em>.</em>
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.</p>
<p>The Challenger figures are available in Haver's <b>SURVEYS</b>
database.</p>
</span>
<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/SURVEYS/@S3/@S301/@S301.HTM" style="color: black;"><b>Challenger, Gray &amp;
Christmas</b></a></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><strong>March</strong></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><strong>Y/Y</strong></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Announced Job Cuts</td>
<td>38,326</td>
<td>67,611</td>
<td>42,090</td>
<td>-71.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>15,654</td>
<td>13,994</td>
<td>8,300</td>
<td>-42.2%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
</body></html>

The outplacement firm Challenger, Grey & Christmas reported that the level of layoffs fell last month to 38,326. It was the lowest level since mid-2006 and remained well under the cycle-high of 241,748 in January of last year. The [...]

Challenger Layoffs Reach Cycle Low

Robert Brusca

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The services sector continues to improve in EMU with the EMU
and German indices rising in April to their strongest levels since late
in 2007 (France was last stronger in Nov of 2009; Italy&#8217;s index slipped
in April).</p>
<p>While Germany and the overall EMU measures continue to rise
strongly some countries in the Zone are slowing their progress, as the
French and Italian comparisons show. The services sector is still where
the jobs are and this sector is not as vibrant as the manufacturing
sector.</p>
<p>The Euro-Area retail sales for April were flat in volume terms
and barley higher Yr/Yr. The consumer sector has just not come alive in
Europe and that is a key part of the services sector.</p>
<p>Looking ahead there will be challenges to Europe&#8217;s service
sector. The ash cloud that shut down air transportation has just shut
down a few more airports in Scotland. Those interruptions will probably
affect services, especially tourism. Greece which is a hot tourism
destination will have been off limits to most tourists during the time
of its upheaval. And, since Greece is in the Zone there is no such
thing as a post crisis &#8216;drachma discount.&#8217; Indeed, with strikes still
in progress in Greece there is no telling how much the tourists season
will harmed as we head into summer.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="8">Markit Services Indices for EU/EMU</th>
</tr>
<tr>
<th class="firstcol">&nbsp;
</th>
<th>Apr-10</th>
<th>Mar-10</th>
<th>Feb-10</th>
<th>3Mo</th>
<th>6Mo</th>
<th>12Mo</th>
<th>Percentile</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>55.60</td>
<td>54.08</td>
<td>51.81</td>
<td>53.83</td>
<td>53.44</td>
<td>50.77</td>
<td>76.4%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>55.22</td>
<td>54.86</td>
<td>51.89</td>
<td>53.99</td>
<td>53.04</td>
<td>51.11</td>
<td>70.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>59.17</td>
<td>53.80</td>
<td>54.60</td>
<td>55.86</td>
<td>57.23</td>
<td>53.72</td>
<td>85.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>54.47</td>
<td>55.34</td>
<td>50.76</td>
<td>53.52</td>
<td>52.53</td>
<td>49.35</td>
<td>69.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>50.93</td>
<td>51.27</td>
<td>47.12</td>
<td>49.77</td>
<td>48.21</td>
<td>45.82</td>
<td>70.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>51.02</td>
<td>49.61</td>
<td>48.84</td>
<td>49.82</td>
<td>48.15</td>
<td>46.05</td>
<td>56.0%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU only</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (CIPs)</td>
<td>#N/A</td>
<td>56.46</td>
<td>58.41</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU Commission Indices
for EU and EMU</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EU Index</td>
<td style="font-weight: bold;">Apr-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">EU Services</td>
<td>4</td>
<td>1</td>
<td>0</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-19.42</td>
<td>54.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EMU </td>
<td style="font-weight: bold;">Apr-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>5</td>
<td>1</td>
<td>1</td>
<td>2.33</td>
<td>-0.17</td>
<td>-8.21</td>
<td>55.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-17</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-11.94</td>
<td>54.3%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Ccon</td>
<td>-7</td>
<td>-13</td>
<td>-17</td>
<td>-12.33</td>
<td>-15.00</td>
<td>-19.58</td>
<td>60.5%</td>
</tr>
<tr>
<td class="firstcol">France-Ccon</td>
<td>-20</td>
<td>-19</td>
<td>-17</td>
<td>-18.67</td>
<td>-18.00</td>
<td>-22.75</td>
<td>42.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Ccon</td>
<td>-21</td>
<td>-22</td>
<td>-22</td>
<td>-21.67</td>
<td>-19.17</td>
<td>-18.75</td>
<td>31.4%</td>
</tr>
<tr>
<td class="firstcol">UK-Ccon</td>
<td>-6</td>
<td>-5</td>
<td>-2</td>
<td>-4.33</td>
<td>-6.00</td>
<td>-10.42</td>
<td>76.3%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile is over
range since May 2000</td>
</tr>
</tbody>
</table>
</body></html>

The services sector continues to improve in EMU with the EMU and German indices rising in April to their strongest levels since late in 2007 (France was last stronger in Nov of 2009; Italy’s index slipped in April). While Germany and [...]

EMU Service Sector Continues To Improve

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Positive growth in the number of jobs has returned. The latest
report from the payroll processor ADP, in their National Employment
Report, indicated that private nonfarm payroll levels rose in April by
32,000, the third consecutive month of increase. The gain roughly
matched Consensus expectations. Earlier data were slightly revised.<span class="style1"></span></p>
<p>ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.</p>
</span><span class="style1">


</span>The U.S. Bureau of Labor Statistics will report April
payroll employment this Friday<span class="style1">. For
comparison, the March increase of 19,000 in ADP's measure of private
nonfarm payrolls was accompanied by a rise of 123,000 jobs in the BLS
measure of private sector payrolls.</span><span class="style1">
According to ADP and Macro-Advisers, the correlation between the
monthly percentage change in the ADP estimate and that in the BLS data
is 0.90.</span><span class="style1">

<p>ADP reported that private service-producing industry
employment rose for the third consecutive month with a gain of 50,000
(-0.8% y/y). Small-sized payrolls grew 25,000 (-0.6% y/y) while
medium-sized payrolls grew 20,000 (-0.9% y/y). These increases were
accompanied by a modest 5,000 increase (-1.5% y/y) in large service
producing payrolls.</p></span><span class="style1"><p>Though declines in the goods producing sector have lessened,
employment nevertheless fell another 18,000 during April (-7.4% y/y).
The three-month annual rate of change eased to -2.0% versus -17.1% one
year ago. In the manufacturing sector alone, however, payrolls rose
29,000 (-4.9% y/y). The three-month change of 1.3% was the first
positive figure since early-2006. Large goods producing payrolls
increased 9,000 (-7.6% y/y), the first positive change in more than two
years. Small-sized payrolls fell 24,000 (-8.4% y/y) while medium-sized
payrolls fell 3,000 (-6.5% y/y). </p>
</span><span class="style1">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><strong><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP National Employment
Report</a></strong></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><b>March</b></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>32</td>
<td>19</td>
<td>3</td>
<td>2.0%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>1</td>
<td>4</td>
<td>-10</td>
<td>-1.7</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>17</td>
<td>12</td>
<td>17</td>
<td>-2.0</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>14</td>
<td>3</td>
<td>-4</td>
<td>-2.8</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Positive growth in the number of jobs has returned. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payroll levels rose in April by 32,000, the third consecutive [...]

ADP Report: Job Growth Resumes Led By The Service & Factory Sectors

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Positive growth in the number of jobs has returned. The latest
report from the payroll processor ADP, in their National Employment
Report, indicated that private nonfarm payroll levels rose in April by
32,000, the third consecutive month of increase. The gain roughly
matched Consensus expectations. Earlier data were slightly revised.<span class="style1"></span></p>
<p>ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.</p>
</span><span class="style1">
</span>The U.S. Bureau of Labor Statistics will report April
payroll employment this Friday<span class="style1">. For
comparison, the March increase of 19,000 in ADP's measure of private
nonfarm payrolls was accompanied by a rise of 123,000 jobs in the BLS
measure of private sector payrolls.</span><span class="style1">
According to ADP and Macro-Advisers, the correlation between the
monthly percentage change in the ADP estimate and that in the BLS data
is 0.90.</span><span class="style1">
<p>ADP reported that private service-producing industry
employment rose for the third consecutive month with a gain of 50,000
(-0.8% y/y). Small-sized payrolls grew 25,000 (-0.6% y/y) while
medium-sized payrolls grew 20,000 (-0.9% y/y). These increases were
accompanied by a modest 5,000 increase (-1.5% y/y) in large service
producing payrolls.</p>
</span><span class="style1">
<p>Though declines in the goods producing sector have lessened,
employment nevertheless fell another 18,000 during April (-7.4% y/y).
The three-month annual rate of change eased to -2.0% versus -17.1% one
year ago. In the manufacturing sector alone, however, payrolls rose
29,000 (-4.9% y/y). The three-month change of 1.3% was the first
positive figure since early-2006. Large goods producing payrolls
increased 9,000 (-7.6% y/y), the first positive change in more than two
years. Small-sized payrolls fell 24,000 (-8.4% y/y) while medium-sized
payrolls fell 3,000 (-6.5% y/y). </p>
</span><span class="style1">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><strong><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP
National Employment
Report</a></strong></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><b>March</b></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>32</td>
<td>19</td>
<td>3</td>
<td>2.0%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>1</td>
<td>4</td>
<td>-10</td>
<td>-1.7</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>17</td>
<td>12</td>
<td>17</td>
<td>-2.0</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>14</td>
<td>3</td>
<td>-4</td>
<td>-2.8</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">EMU Service Sector Continues To
Improve</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 05, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The services sector continues to improve in EMU with the EMU
and German indices rising in April to their strongest levels since late
in 2007 (France was last stronger in Nov of 2009; Italy&#8217;s index slipped
in April).</p>
<p>While Germany and the overall EMU measures continue to rise
strongly some countries in the Zone are slowing their progress, as the
French and Italian comparisons show. The services sector is still where
the jobs are and this sector is not as vibrant as the manufacturing
sector.</p>
<p>The Euro-Area retail sales for April were flat in volume terms
and barley higher Yr/Yr. The consumer sector has just not come alive in
Europe and that is a key part of the services sector.</p>
<p>Looking ahead there will be challenges to Europe&#8217;s service
sector. The ash cloud that shut down air transportation has just shut
down a few more airports in Scotland. Those interruptions will probably
affect services, especially tourism. Greece which is a hot tourism
destination will have been off limits to most tourists during the time
of its upheaval. And, since Greece is in the Zone there is no such
thing as a post crisis &#8216;drachma discount.&#8217; Indeed, with strikes still
in progress in Greece there is no telling how much the tourists season
will harmed as we head into summer.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="8">Markit Services Indices for EU/EMU</th>
</tr>
<tr>
<th class="firstcol">&nbsp;
</th>
<th>Apr-10</th>
<th>Mar-10</th>
<th>Feb-10</th>
<th>3Mo</th>
<th>6Mo</th>
<th>12Mo</th>
<th>Percentile</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>55.60</td>
<td>54.08</td>
<td>51.81</td>
<td>53.83</td>
<td>53.44</td>
<td>50.77</td>
<td>76.4%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>55.22</td>
<td>54.86</td>
<td>51.89</td>
<td>53.99</td>
<td>53.04</td>
<td>51.11</td>
<td>70.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>59.17</td>
<td>53.80</td>
<td>54.60</td>
<td>55.86</td>
<td>57.23</td>
<td>53.72</td>
<td>85.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>54.47</td>
<td>55.34</td>
<td>50.76</td>
<td>53.52</td>
<td>52.53</td>
<td>49.35</td>
<td>69.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>50.93</td>
<td>51.27</td>
<td>47.12</td>
<td>49.77</td>
<td>48.21</td>
<td>45.82</td>
<td>70.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>51.02</td>
<td>49.61</td>
<td>48.84</td>
<td>49.82</td>
<td>48.15</td>
<td>46.05</td>
<td>56.0%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU only</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (CIPs)</td>
<td>#N/A</td>
<td>56.46</td>
<td>58.41</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices
for EU and EMU</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EU
Index</td>
<td style="font-weight: bold;">Apr-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">EU Services</td>
<td>4</td>
<td>1</td>
<td>0</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-19.42</td>
<td>54.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EMU
</td>
<td style="font-weight: bold;">Apr-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>5</td>
<td>1</td>
<td>1</td>
<td>2.33</td>
<td>-0.17</td>
<td>-8.21</td>
<td>55.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-17</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-11.94</td>
<td>54.3%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Ccon</td>
<td>-7</td>
<td>-13</td>
<td>-17</td>
<td>-12.33</td>
<td>-15.00</td>
<td>-19.58</td>
<td>60.5%</td>
</tr>
<tr>
<td class="firstcol">France-Ccon</td>
<td>-20</td>
<td>-19</td>
<td>-17</td>
<td>-18.67</td>
<td>-18.00</td>
<td>-22.75</td>
<td>42.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Ccon</td>
<td>-21</td>
<td>-22</td>
<td>-22</td>
<td>-21.67</td>
<td>-19.17</td>
<td>-18.75</td>
<td>31.4%</td>
</tr>
<tr>
<td class="firstcol">UK-Ccon</td>
<td>-6</td>
<td>-5</td>
<td>-2</td>
<td>-4.33</td>
<td>-6.00</td>
<td>-10.42</td>
<td>76.3%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile
is over
range since May 2000</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. ISM Nonmanufacturing Index
Steady But Pricing Reaches New High</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 5,2010</span>
<span id="articletext">
<p></p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505f.jpg" style="width: 312px; height: 265px;">
<p>Recovery in the service sector continued last month. The
Institute for Supply Management's (ISM) Composite Index for the service
&amp; construction sectors held steady in April at 55.4, the
highest level since early-2006. Moreover, the series has risen
considerably from a low of 37.2 late in 2008. The latest figure fell
slightly short of Consensus expectations for a reading of 56.0. Since
the series' inception in 1997 there has been a 65% correlation between
the level of the composite index in the nonmanufacturing sector and the
q/q change in real GDP for the services and the construction sectors.</p>
<p>ISM surveys more than 370 purchasing managers in more than 62
industries including law firms, hospitals, government and retailers.
The nonmanufacturing survey dates back to July 1997. The figures are
available in Haver's <b>USECON </b>database.</p>
<p>The business activity index for the nonmanufacturing sector
nudged up to 60.3 which was the highest level since early-2006. The
supplier delivery index also rose indicating slower delivery speeds.
Working the other way, the new orders index retraced a piece of its
March surge but remained near the highest level since 2006. Thirty-six
percent of respondents reported higher orders while only 11% reported
them lower. Finally, the employment index also slipped from the highest
level since April 2008 and remained up sharply from the late-2008 low.
Since the series' inception in 1997 there has been an 80% correlation
between the level of the ISM nonmanufacturing employment index and the
m/m change in payroll employment in the service-producing plus the
construction industries.</p>
<p>Pricing power continued to firm. At its strongest since
September 2008, the index at 64.7 was up sharply from the 2008 low.
Forty-two percent of respondents reported higher prices while just 2%
reported them lower. At the worst, late in 2008, 41% reported lower
prices. Since its inception ten years ago, there has been a 73%
correlation between the price index and the q/q change in the GDP
services chain price index.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505g.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505h.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>April '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Composite Index</td>
<td>55.4</td>
<td>55.4</td>
<td>53.0</td>
<td>43.9</td>
<td>46.2</td>
<td>47.3</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>60.3</td>
<td>60.0</td>
<td>54.8</td>
<td>45.7</td>
<td>48.0</td>
<td>47.4</td>
<td>56.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>58.2</td>
<td>62.3</td>
<td>55.0</td>
<td>47.4</td>
<td>47.9</td>
<td>47.0</td>
<td>54.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>49.5</td>
<td>49.8</td>
<td>48.6</td>
<td>36.9</td>
<td>39.9</td>
<td>43.8</td>
<td>52.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries (NSA)</td>
<td>53.5</td>
<td>49.5</td>
<td>53.5</td>
<td>45.5</td>
<td>49.0</td>
<td>51.1</td>
<td>51.1</td>
</tr>
<tr class="even">
<td class="firstcol">Prices Index</td>
<td>64.7</td>
<td>62.9</td>
<td>60.4</td>
<td>40.6</td>
<td>49.4</td>
<td>66.0</td>
<td>63.8</td>
</tr>
</tbody>
</table>
<span id="articletitle">Challenger Layoffs Reach Cycle Low</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 5, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505i.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The outplacement firm Challenger, Grey &amp; Christmas
reported that the level of layoffs fell last month to 38,326. It was
the lowest level since mid-2006 and remained well under the cycle-high
of 241,748 in January of last year. The decline was led by sharply
lower layoffs in the government, computer, energy, entertainment, and
retail industries. An increased level of layoffs occurred in the
construction, financial, health care and utility industries.</p>
<p>Challenger also samples firms' hiring plans. April plans
increased for the second month consecutive month to the highest level
since 2005. They rose in the transportation, consumer goods, health
care and financial industries though most elsewhere they fell.</p>
<p>During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment<em>.</em>
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.</p>
<p>The Challenger figures are available in Haver's <b>SURVEYS</b>
database.</p>
</span>
<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/SURVEYS/@S3/@S301/@S301.HTM" style="color: black;"><b>Challenger, Gray &amp;
Christmas</b></a></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><strong>March</strong></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><strong>Y/Y</strong></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Announced Job Cuts</td>
<td>38,326</td>
<td>67,611</td>
<td>42,090</td>
<td>-71.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>15,654</td>
<td>13,994</td>
<td>8,300</td>
<td>-42.2%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
</body></html>

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100504m.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Pressure on the Euro-Area PPI remained in force in March as
the price index continues to show Yr/Yr drops. Still the 6-month index
is up at a 0.4% rate and the 3-Mo index is up at a 4.1% pace. For
manufacturing the same trends are in play but with accelerated rates of
growth.</p>
<p>Excluding energy prices both France and Germany show
manufactured prices that are transitioning to positive growth rates for
prices over three months or longer. Both series show a gradual
acceleration in prices. Headline prices accelerate for all large EMU/EU
countries in the table. Only Germany is still showing price drops even
over three months for headline prices (excluding construction).</p>
<p>Sector prices also how an acceleration (or reduced
deceleration, if you prefer) is in motion. These trends are also
consistent with the notion that aggregate demand is picking up since at
some point very weak prices indicate not just pricing and cost trends
but demand deficiencies. That part of the weak price picture appears to
be going away. And that is consistent with the better growth metrics we
have been seeing in the Zone recently.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Euro-Area
and UK PPI Trends</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">TotalxConstruct</td>
<td>0.3%</td>
<td style="color: red;">-0.1%</td>
<td>4.1%</td>
<td>0.4%</td>
<td style="color: red;">-6.6%</td>
<td>6.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital Gds</td>
<td style="color: red;">0.0%</td>
<td>0.0%</td>
<td style="color: red;">-0.1%</td>
<td>-0.8%</td>
<td style="color: red;">-0.7%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">Consurmer Gds</td>
<td style="color: red;">-0.3%</td>
<td style="color: red;">-0.1%</td>
<td style="color: red;">-1.1%</td>
<td>-0.8%</td>
<td style="color: red;">-2.8%</td>
<td>2.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Intermediate&amp;Cap
Gds</td>
<td style="color: red;">-0.1%</td>
<td>0.5%</td>
<td>3.3%</td>
<td>0.5%</td>
<td style="color: red;">-6.5%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td style="color: red;">0.0%</td>
<td>5.2%</td>
<td>2.4%</td>
<td style="color: red;">-5.2%</td>
<td>3.6%</td>
</tr>
<tr class="grey1">
<td style="font-weight: bold;" class="firstcol">Germany</td>
<td>0.2%</td>
<td style="color: red;">-0.2%</td>
<td style="color: red;">-5.2%</td>
<td>-6.1%</td>
<td style="color: red;">-7.5%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gy
ExEnergy</td>
<td style="font-weight: bold;">0.2%</td>
<td style="font-weight: bold;">0.4%</td>
<td style="font-weight: bold;">3.1%</td>
<td>1.5%</td>
<td style="font-weight: bold;">0.3%</td>
<td style="color: red;">-1.4%</td>
</tr>
<tr class="grey1">
<td style="font-weight: bold;" class="firstcol">France:Tot</td>
<td>1.0%</td>
<td>-<span style="color: red;">0.2%</span></td>
<td>6.5%</td>
<td>2.7%</td>
<td style="color: red;">-6.6%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fr
ExF&amp;Energy</td>
<td style="font-weight: bold;">0.3%</td>
<td style="font-weight: bold;">0.0%</td>
<td style="font-weight: bold;">1.5%</td>
<td>-0.4%</td>
<td style="color: red;">-3.4%</td>
<td>3.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>0.3%</td>
<td>0.3%</td>
<td>5.9%</td>
<td>1.2%</td>
<td style="color: red;">-6.1%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>1.4%</td>
<td>0.4%</td>
<td>19.0%</td>
<td>8.6%</td>
<td style="color: red;">-2.7%</td>
<td>14.6%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Euro-Area
Harmonized
PPI ex construction</td>
</tr>
</tbody>
</table>
</body></html>

Pressure on the Euro-Area PPI remained in force in March as the price index continues to show Yr/Yr drops. Still the 6-month index is up at a 0.4% rate and the 3-Mo index is up at a 4.1% pace. For manufacturing the same trends are in [...]

EMU PPI Prices Show Downward Pressures Unwinding

Louise Curley

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100504j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Brazilian economy continued strong in the first quarter of
this year. Industrial production in March, published today, was up
2.75% from February and 18.56% from March 2009. Between February and
March production of intermediate goods was up 1.25%, consumer goods,
2.26 and capital goods 2.47%. The year to year increases were,
respectively, 17.64%, 13.32% and 35.80%. The levels of the production
of intermediate, consumer and capital goods, are shown in the first
chart.</p>
<p>In response to the strength of the economy and signs of rising
price pressures, COPOM, the Monetary Policy Committee of the Bank of
Brazil raised its target rate 75 basis points from 8.75% to 9.50% last
week. The second chart shows the target rate since 2000. While not
exactly low, by comparison with interest rates in the developed
nations, the current level of interest rates in Brazil is a tribute to
the long and relatively successful effort to control the country's
bouts with hyperinflation.</p>
<p>In addition to the current data on the economy of Brazil in
the data base EMERGELA, forecasts of selected features of the economy
are available in the Haver data bases, FX4CASTS and OEFMAJOR. The
former contains five year forecasts of exchange rates, interest rates,
real growth rates, inflation rates and the current account as a percent
of GDP. The latter contains ten year forecasts of many of the usual
items found in the EMERGELA data base under the headings: Financial,
National Income, Prices, Production, Unemployment, International Trade
and Balance of Payments and Population/Demographics. The third chart
shows the ten year annual forecast of industrial production from the
OEFMAJOR data base and the actual 2OO9 industrial production from
EMEREGLA.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100504k.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100504l.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Brazil</th>
<th scope="col"><b>Mar 10&nbsp;</b></th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Mar 09</b></th>
<th scope="col"><b>M/M Chg</b></th>
<th scope="col"><b>Y/Y Chg</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial
Production (2002=100)</td>
<td>130.65</td>
<td>127.15</td>
<td>110.27</td>
<td>2.75</td>
<td>18.36</td>
<td>116.21</td>
<td>125.31</td>
<td>121.78</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>181.32</td>
<td>176.09</td>
<td>133.52</td>
<td>2.97</td>
<td>35.80</td>
<td>150.50</td>
<td>182.32</td>
<td>159.49</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>130.39</td>
<td>127.51</td>
<td>115.06</td>
<td>2.26</td>
<td>13.32</td>
<td>118.68</td>
<td>121.89</td>
<td>119.73</td>
</tr>
<tr>
<td class="firstcol">Intermediate
Goods&nbsp;</td>
<td>122.10</td>
<td>120.68</td>
<td>103.84</td>
<td>1.25</td>
<td>17.64</td>
<td>109.65</td>
<td>119.87</td>
<td>118.34</td>
</tr>
</tbody>
</table>
</body></html>

The Brazilian economy continued strong in the first quarter of this year. Industrial production in March, published today, was up 2.75% from February and 18.56% from March 2009. Between February and March production of intermediate [...]

Brazil: Current Data And Forecasts

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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

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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: May 2010

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