Tom Moeller

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The busiest driving season has given rise to further strength in gasoline
prices. Regular gasoline prices increased to $2.34 per gallon during
Memorial Day week (-15.9% y/y) following the prior week's jump to $2.30,
according to the U.S. Department of Energy. Prices have risen by one-third since
mid-February and were at the highest level since the last week of September.
Prices remained down versus a 2014 high of $3.71 per gallon. Haver Analytics
constructs factors adjusting for the seasonal variation in pump prices, and the
adjusted price increased to $2.17 per gallon. Spot market gasoline prices
increased to $1.64 and remained up from a low of $0.89 in early February.
WTI crude oil costs strengthened to $48.91 per barrel last week
(-15.9% y/y) after rising to $48.01 in the prior week. Yesterday, prices firmed
to $49.10 per barrel, up 87% from the February's daily low of $26.21 per barrel.
Brent crude oil prices increased w/w to $48.73 per barrel, then rose to $49.26
yesterday.
Prices for natural gas declined to $1.83 per mmbtu last week (-33.6%
y/y), then recovered to $1.95 yesterday.
Last week, gasoline demand increased 3.9% y/y, while demand for all
petroleum products gained 3.0% y/y. Gasoline inventories rose 8.8% y/y
and inventories of all petroleum products increased 6.5% y/y. Crude oil
production (input to refineries) was little changed y/y in the last four weeks.
The energy price data are reported by the U.S. Department of Energy. The
petroleum demand and inventory figures are from the Oil &amp; Gas Journal
Weekly. These data can be found in Haver's WEEKLY database. The daily
figures are in DAILY and greater detail on prices, demand and production,
along with regional breakdowns, are in OILWKLY.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >06/06/16</th>
 <th scope="col" >05/30/16</th>
 <th scope="col" >05/23/16</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td></td>
 <td>2.34</td>
 <td>2.30</td>
 <td>-15.9</td>
 <td>2.03</td>
 <td>2.30</td>
 <td>3.33</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.,
 WSJ)</td>
 <td></td>
 <td>48.91</td>
 <td>48.01</td>
 <td>-15.9</td>
 <td>48.90</td>
 <td>93.64</td>
 <td>97.96</td>
 </tr>
 <tr>
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td></td>
 <td>1.83</td>
 <td>1.88</td>
 <td>-33.6</td>
 <td>2.62</td>
 <td>4.37</td>
 <td>3.73</td>
 </tr>
 </tbody>
</table>

</html>

The busiest driving season has given rise to further strength in gasoline prices. Regular gasoline prices increased to $2.34 per gallon during Memorial Day week (-15.9% y/y) following the prior week's jump to $2.30, according to the [...]

U.S. Gasoline Prices Rise With the Beginning of Summer

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Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y)
following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been
expected in the Action Economics Forecast Survey. It was the fourth productivity
decline in the last six quarters. It occurred as a diminished 0.4% rise in
output (+2.2% y/y) was outpaced by a 1.5% (1.6% y/y) rise in hours-worked.
Productivity's decline was accompanied by a strengthened 3.0% rise (2.8% y/y) in
compensation, the quickest rise since Q2. That combination of faster
compensation growth and declining productivity raised unit labor costs 4.1%
(2.3% y/y), the strongest gain since Q4'14. A 3.5% rise had been expected.
In the manufacturing sector, productivity rebounded 1.9% (1.5% y/y) following
a 1.0% decline, revised from -0.7%. Output improved 0.7% both q/q and y/y, while
hours-worked declined 1.1% (-0.8% y/y). Compensation growth weakened to 0.6%,
but the y/y advance of 3.1% was the strongest since Q4'14. The combination of
stronger productivity and weaker compensation growth caused unit labor costs to
decline 1.2%, offsetting a little-revised 3.6% gain. That pushed y/y growth to
1.6%, below last year's 1.9% rise and 2.8% in 2014.
The productivity &amp; cost figures are available in Haver's USECON
database. The expectations figures are from the Action Economics Forecast Survey
and are found in the AS1REPNA database.

Housing's Role in the Slow&nbsp; Economic Recovery from the Federal
Reserve Bank of Philadelphia is available&nbsp; 

<a href="https://www.philadelphiafed.org/-/media/research-and-data/publications/economic-insights/2016/q2/eiq216_housings_role.pdf?la=en">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>


 <thead>
 <tr>
 <th class="firstcol" scope="col" >Productivity &amp; Costs
 (SAAR, %)</th>
 <th>Q1'16</th>
 <th>Q4'15</th>
 <th>Q3'15</th>
 <th>Q1'16 Y/Y</th>
 <th>2015</th>
 <th>2014</th>
 <th>2013</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Nonfarm Business Sector</td>
 </tr>
 <tr>
 <td class="firstcol" >Output per Hour (Productivity)</td>
 <td>-1.0</td>
 <td>-1.7</td>
 <td>2.0</td>
 <td>0.6</td>
 <td>0.7</td>
 <td>0.8</td>
 <td>0.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Compensation per Hour</td>
 <td>3.0</td>
 <td>0.9</td>
 <td>2.3</td>
 <td>2.8</td>
 <td>2.8</td>
 <td>2.8</td>
 <td>1.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Unit Labor Costs</td>
 <td>4.1</td>
 <td>2.7</td>
 <td>0.4</td>
 <td>2.3</td>
 <td>2.1</td>
 <td>2.0</td>
 <td>1.1</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Manufacturing Sector</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Output per Hour (Productivity)</td>
 <td>1.9</td>
 <td>-1.0</td>
 <td>3.7</td>
 <td>1.5</td>
 <td>0.2</td>
 <td>-0.1</td>
 <td>0.7</td>
 </tr>
 <tr>
 <td class="firstcol" >Compensation per Hour</td>
 <td>0.6</td>
 <td>2.5</td>
 <td>4.0</td>
 <td>3.1</td>
 <td>2.2</td>
 <td>2.7</td>
 <td>0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unit Labor Costs</td>
 <td>-1.2</td>
 <td>3.6</td>
 <td>0.3</td>
 <td>1.6</td>
 <td>1.9</td>
 <td>2.8</td>
 <td>-0.5</td>
 </tr>
 </tbody>
</table>


</html>

Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y) following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been expected in the Action Economics Forecast Survey. It was the fourth [...]

U.S. Productivity Declines for a Second Quarter and Cost Pressures Build

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Consumer credit outstanding increased $13.4 billion during April following a
$28.4 billion March surge, revised from $29.7 billion. A $19.0 billion increase
had been expected in the Action Economics Forecast Survey. During the last ten
years, there has been a 46% correlation between the y/y growth in consumer
credit and y/y growth in personal consumption expenditures.
Nonrevolving credit borrowing grew $11.8 billion (6.5% y/y) after a $17.9
billion jump, revised from $18.6 billion. Federal government loans (36% of the
total) increased 11.2% y/y. Finance company balances (24% of the total) eased
1.2% y/y. Borrowing at depository institutions (25% of the total) improved 5.3%
y/y, and borrowing at credit unions (11% of the total) jumped 15.0% y/y.
Nonprofit &amp; educational institution loans (2% of the total) declined 9.0%
y/y, and nonfinancial business loans (1% of the total) remained unchanged y/y.
Revolving consumer credit increased $1.6 billion following a $10.4 billion
rise, last month reported as $11.1 billion. Balances at depository institutions
(84% of the total) grew 7.9% y/y. Finance company holdings (6% of the total)
fell 6.4% y/y, while borrowing from credit unions (5% of the total) advanced 7.1%
y/y. Nonfinancial business credit (2% of the total) fell 5.4% y/y, and
securitized credit card balances (3% of the total) declined 16.5% y/y.
These Federal Reserve Board figures are break-adjusted and calculated by
Haver Analytics. There is a break in the credit outstanding data from November
2010 to December 2010 due to the Fed's benchmarking process. Benchmark estimates
are based on the Census of Finance Companies (CFC) and the Survey of Finance
Companies (SFC) conducted in 2010 and 2011, respectively.
The consumer credit data are available in Haver's USECON database. The
Action Economics figures are contained in the AS1REPNA database.


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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Consumer Credit
 Outstanding (M/M Chg, SA)</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >$13.4 bil.</td>
 <td >$28.4 bil.</td>
 <td >$12.9 bil.</td>
 <td >6.2%</td>
 <td >6.5%</td>
 <td >7.2%</td>
 <td >6.0%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; &nbsp;Revolving</td>
 <td >1.6</td>
 <td >10.4</td>
 <td >2.3</td>
 <td >5.5</td>
 <td >5.2</td>
 <td >3.9</td>
 <td >1.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Nonrevolving</td>
 <td >11.8</td>
 <td >17.9</td>
 <td >10.6</td>
 <td >6.5</td>
 <td >7.0</td>
 <td >8.4</td>
 <td >7.9</td>
 </tr>
 </tbody>
</table>


</body>

</html>

Consumer credit outstanding increased $13.4 billion during April following a $28.4 billion March surge, revised from $29.7 billion. A $19.0 billion increase had been expected in the Action Economics Forecast Survey. During the last [...]

U.S. Consumer Credit Gain Moderates

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Regular gasoline prices increased to $2.38 per gallon last week (-14.4%
y/y) following the prior week's rise to $2.34, according to the U.S. Department
of Energy. Prices have risen by one-third since mid-February and were at the
highest level since early September. Prices remained down, however, versus a
2014 high of $3.71 per gallon. Haver Analytics constructs factors adjusting for
the seasonal variation in pump prices, and the adjusted price increased to $2.20
per gallon. Spot market gasoline prices eased to $1.59 and remained up from a
low of $0.89 in early February.
WTI crude oil costs were little-changed at $48.98 per barrel last week
(-17.9% y/y) after rising to $48.91 in the prior week. Yesterday, prices firmed
to $49.69 per barrel, up from the February's daily low of $26.21 per barrel.
Brent crude oil prices increased w/w to $48.91 per barrel, then were $48.94
yesterday.
Prices for natural gas spiked to $2.24 per mmbtu last week (-13.9%
y/y), then rose further to $2.32 yesterday.
Last week, gasoline demand increased 3.9% y/y, while demand for all
petroleum products gained 3.2% y/y. Gasoline inventories rose 8.3% y/y
and inventories of all petroleum products increased a diminished 6.0% y/y. Crude
oil production (input to refineries) was unchanged y/y in the last four weeks.
The energy price data are reported by the U.S. Department of Energy. The
petroleum demand and inventory figures are from the Oil &amp; Gas Journal
Weekly. These data can be found in Haver's WEEKLY database. The daily
figures are in DAILY and greater detail on prices, demand and production,
along with regional breakdowns, are in OILWKLY.



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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>


 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >06/06/16</th>
 <th scope="col" >05/30/16</th>
 <th scope="col" >05/23/16</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td >2.38</td>
 <td >2.34</td>
 <td >2.30</td>
 <td >-14.4</td>
 <td >2.03</td>
 <td >2.30</td>
 <td >3.33</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.,
 WSJ)</td>
 <td >48.98</td>
 <td >48.91</td>
 <td >48.01</td>
 <td >-17.9</td>
 <td >48.90</td>
 <td >93.64</td>
 <td >97.96</td>
 </tr>
 <tr>
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td >2.24</td>
 <td >1.83</td>
 <td >1.88</td>
 <td >-13.9</td>
 <td >2.62</td>
 <td >4.37</td>
 <td >3.73</td>
 </tr>
 </tbody>
</table>


</html>

Regular gasoline prices increased to $2.38 per gallon last week (-14.4% y/y) following the prior week's rise to $2.34, according to the U.S. Department of Energy. Prices have risen by one-third since mid-February and were at the [...]

U.S. Energy Prices Strengthen

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 Nonfarm output per hour during Q1'16 fell 0.6% at an annual rate (+0.7% y/y),
revised from -1.0%, following an unrevised 1.7% Q4'15 shortfall. The decline
matched expectations in the Action Economics Forecast Survey. The latest decline
occurred as output rose 0.9% (2.3% y/y) and hours worked gained 1.5% (1.6% y/y).
Compensation per hour increased 3.9% (3.7% y/y), revised from 3.0%. In Q4,
compensation also was revised up to 3.6% from 0.9%. The combination of faster
compensation growth and declining productivity raised unit labor costs 4.5% (3.0%
y/y), revised from 4.1%. Growth during Q4 was revised up to 5.4% from 2.7%. A
revised 4.0% increase in unit labor costs during Q1 had been expected.
In the manufacturing sector, cost pressures strengthened to a greater extent.
Productivity rebounded 1.3% (1.5% y/y), revised from 1.9%, following a 1.2%
decline. Output improved 0.6% both q/q and y/y, while hours worked declined 0.7%
q/q and y/y. Compensation growth was strengthened to 2.5% (5.0% y/y) from 0.6%.
The larger revision, however, was to Q4 where growth was raised to 7.9% from
2.5%. Revisions caused unit labor costs to increase 1.1% last quarter, rather
than decline 1.2%. The increase in Q4 was pushed up to 9.2% from 3.6%.
The productivity &amp; cost figures are available in Haver's USECON
database. The expectations figures are from the Action Economics Forecast Survey
and are found in the AS1REPNA database.

Housing's Role in the Slow&nbsp; Economic Recovery from the Federal
Reserve Bank of Philadelphia is available&nbsp; 

<a href="https://www.philadelphiafed.org/-/media/research-and-data/publications/economic-insights/2016/q2/eiq216_housings_role.pdf?la=en">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Productivity &amp; Costs
 (SAAR, %)</th>
 <th>Q1'16</th>
 <th>Q4'15</th>
 <th>Q3'15</th>
 <th>Q1'16 Y/Y</th>
 <th>2015</th>
 <th>2014</th>
 <th>2013</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Nonfarm Business Sector</td>
 </tr>
 <tr>
 <td class="firstcol">Output per Hour (Productivity)</td>
 <td >-0.6</td>
 <td >-1.7</td>
 <td >2.0</td>
 <td >0.7</td>
 <td >0.7</td>
 <td >0.8</td>
 <td >0.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Compensation per Hour</td>
 <td >3.9</td>
 <td >3.6</td>
 <td >2.3</td>
 <td >3.7</td>
 <td >2.8</td>
 <td >2.8</td>
 <td >1.1</td>
 </tr>
 <tr>
 <td class="firstcol">Unit Labor Costs</td>
 <td >4.5</td>
 <td >5.4</td>
 <td >0.4</td>
 <td >3.0</td>
 <td >2.1</td>
 <td >2.0</td>
 <td >1.1</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Manufacturing Sector</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Output per Hour (Productivity)</td>
 <td >1.3</td>
 <td >-1.2</td>
 <td >3.7</td>
 <td >1.3</td>
 <td >0.2</td>
 <td >-0.1</td>
 <td >0.7</td>
 </tr>
 <tr>
 <td class="firstcol">Compensation per Hour</td>
 <td >2.5</td>
 <td >7.9</td>
 <td >4.0</td>
 <td >5.0</td>
 <td >2.2</td>
 <td >2.7</td>
 <td >0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Unit Labor Costs</td>
 <td >1.1</td>
 <td >9.2</td>
 <td >0.3</td>
 <td >3.6</td>
 <td >1.9</td>
 <td >2.8</td>
 <td >-0.5</td>
 </tr>
 </tbody>
</table>

</html>

Nonfarm output per hour during Q1'16 fell 0.6% at an annual rate (+0.7% y/y), revised from -1.0%, following an unrevised 1.7% Q4'15 shortfall. The decline matched expectations in the Action Economics Forecast Survey. The latest [...]

U.S. Productivity Decline is Lessened and Cost Pressures Build

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Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y)
following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been
expected in the Action Economics Forecast Survey. It was the fourth productivity
decline in the last six quarters. It occurred as a diminished 0.4% rise in
output (+2.2% y/y) was outpaced by a 1.5% (1.6% y/y) rise in hours-worked.
Productivity's decline was accompanied by a strengthened 3.0% rise (2.8% y/y) in
compensation, the quickest rise since Q2. That combination of faster
compensation growth and declining productivity raised unit labor costs 4.1%
(2.3% y/y), the strongest gain since Q4'14. A 3.5% rise had been expected.
In the manufacturing sector, productivity rebounded 1.9% (1.5% y/y) following
a 1.0% decline, revised from -0.7%. Output improved 0.7% both q/q and y/y, while
hours-worked declined 1.1% (-0.8% y/y). Compensation growth weakened to 0.6%,
but the y/y advance of 3.1% was the strongest since Q4'14. The combination of
stronger productivity and weaker compensation growth caused unit labor costs to
decline 1.2%, offsetting a little-revised 3.6% gain. That pushed y/y growth to
1.6%, below last year's 1.9% rise and 2.8% in 2014.
The productivity &amp; cost figures are available in Haver's USECON
database. The expectations figures are from the Action Economics Forecast Survey
and are found in the AS1REPNA database.
Housing's Role in the Slow&nbsp; Economic Recovery from the Federal
Reserve Bank of Philadelphia is available&nbsp; <o:p>
</o:p>
<a href="file:///C:/Users/Tom_M/Documents/eiQ216_housings_role%20(2)%20(1).pdf">here</a><o:p>
</o:p>

&nbsp;
<table width="1782" class="centered" border="0" cellSpacing="0">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="739">Productivity &amp; Costs
 (SAAR, %)</th>
 <th width="148">Q1'16</th>
 <th width="148">Q4'15</th>
 <th width="148">Q3'15</th>
 <th width="148">Q1'16 Y/Y</th>
 <th width="149">2015</th>
 <th width="149">2014</th>
 <th width="149">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" width="1778">Nonfarm Business Sector</td>
 </tr>
 <tr>
 <td class="firstcol" width="739">Output per Hour (Productivity)</td>
 <td align="center" width="148">-1.0</td>
 <td align="center" width="148">-1.7</td>
 <td align="center" width="148">2.0</td>
 <td align="center" width="148">0.6</td>
 <td align="center" width="149">0.7</td>
 <td align="center" width="149">0.8</td>
 <td align="center" width="149">0.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="739">Compensation per Hour</td>
 <td align="center" width="148">3.0</td>
 <td align="center" width="148">0.9</td>
 <td align="center" width="148">2.3</td>
 <td align="center" width="148">2.8</td>
 <td align="center" width="149">2.8</td>
 <td align="center" width="149">2.8</td>
 <td align="center" width="149">1.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="739">Unit Labor Costs</td>
 <td align="center" width="148">4.1</td>
 <td align="center" width="148">2.7</td>
 <td align="center" width="148">0.4</td>
 <td align="center" width="148">2.3</td>
 <td align="center" width="149">2.1</td>
 <td align="center" width="149">2.0</td>
 <td align="center" width="149">1.1</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" width="1778">Manufacturing Sector</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="739">Output per Hour (Productivity)</td>
 <td align="center" width="148">1.9</td>
 <td align="center" width="148">-1.0</td>
 <td align="center" width="148">3.7</td>
 <td align="center" width="148">1.5</td>
 <td align="center" width="149">0.2</td>
 <td align="center" width="149">-0.1</td>
 <td align="center" width="149">0.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="739">Compensation per Hour</td>
 <td align="center" width="148">0.6</td>
 <td align="center" width="148">2.5</td>
 <td align="center" width="148">4.0</td>
 <td align="center" width="148">3.1</td>
 <td align="center" width="149">2.2</td>
 <td align="center" width="149">2.7</td>
 <td align="center" width="149">0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="739">Unit Labor Costs</td>
 <td align="center" width="148">-1.2</td>
 <td align="center" width="148">3.6</td>
 <td align="center" width="148">0.3</td>
 <td align="center" width="148">1.6</td>
 <td align="center" width="149">1.9</td>
 <td align="center" width="149">2.8</td>
 <td align="center" width="149">-0.5</td>
 </tr>
 </tbody>
</table>
&nbsp;
U.S. Gasoline Prices Rise With the Beginning of
Summer 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;June
7, 2016
The busiest driving season has given rise to further strength in gasoline
prices. Regular gasoline prices increased to $2.34 per gallon during
Memorial Day week (-15.9% y/y) following the prior week's jump to $2.30,
according to the U.S. Department of Energy. Prices have risen by one-third since
mid-February and were at the highest level since the last week of September.
Prices remained down versus a 2014 high of $3.71 per gallon. Haver Analytics
constructs factors adjusting for the seasonal variation in pump prices, and the
adjusted price increased to $2.17 per gallon. Spot market gasoline prices
increased to $1.64 and remained up from a low of $0.89 in early February.
WTI crude oil costs strengthened to $48.91 per barrel last week
(-15.9% y/y) after rising to $48.01 in the prior week. Yesterday, prices firmed
to $49.10 per barrel, up 87% from the February's daily low of $26.21 per barrel.
Brent crude oil prices increased w/w to $48.73 per barrel, then rose to $49.26
yesterday.
Prices for natural gas declined to $1.83 per mmbtu last week (-33.6%
y/y), then recovered to $1.95 yesterday.
Last week, gasoline demand increased 3.9% y/y, while demand for all
petroleum products gained 3.0% y/y. Gasoline inventories rose 8.8% y/y
and inventories of all petroleum products increased 6.5% y/y. Crude oil
production (input to refineries) was little changed y/y in the last four weeks.
The energy price data are reported by the U.S. Department of Energy. The
petroleum demand and inventory figures are from the Oil &amp; Gas Journal
Weekly. These data can be found in Haver's WEEKLY database. The daily
figures are in DAILY and greater detail on prices, demand and production,
along with regional breakdowns, are in OILWKLY.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="818">Weekly Energy Prices</th>
 <th scope="col" align="center" width="137">06/06/16</th>
 <th scope="col" align="center" width="137">05/30/16</th>
 <th scope="col" align="center" width="137">05/23/16</th>
 <th scope="col" align="center" width="137">Y/Y %</th>
 <th scope="col" align="center" width="137">2015</th>
 <th scope="col" align="center" width="137">2014</th>
 <th scope="col" align="center" width="138">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="818">Retail Gasoline ($ per Gallon, Regular)</td>
 <td align="center" width="137"></td>
 <td align="center" width="137">2.34</td>
 <td align="center" width="137">2.30</td>
 <td align="center" width="137">-15.9</td>
 <td align="center" width="137">2.03</td>
 <td align="center" width="137">2.30</td>
 <td align="center" width="138">3.33</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="818">Light Sweet Crude Oil, WTI ($ per bbl.,
 WSJ)</td>
 <td align="center" width="137"></td>
 <td align="center" width="137">48.91</td>
 <td align="center" width="137">48.01</td>
 <td align="center" width="137">-15.9</td>
 <td align="center" width="137">48.90</td>
 <td align="center" width="137">93.64</td>
 <td align="center" width="138">97.96</td>
 </tr>
 <tr>
 <td class="firstcol" width="818">Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td align="center" width="137"></td>
 <td align="center" width="137">1.83</td>
 <td align="center" width="137">1.88</td>
 <td align="center" width="137">-33.6</td>
 <td align="center" width="137">2.62</td>
 <td align="center" width="137">4.37</td>
 <td align="center" width="138">3.73</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Consumer Credit Increase Is Strongest Since 2001 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;June
7, 2016
Consumer credit outstanding jumped $29.7 billion during March (6.6% y/y)
following a $14.1 billion February rise, revised from $17.2 billion. It was the
fastest gain since November 2001. A $15.7 billion increase had been expected in
the Action Economics Forecast Survey. During the last ten years, there has been
a 46% correlation between the y/y growth in consumer credit and y/y growth in
personal consumption expenditures.
Revolving consumer credit surged $11.1 billion (6.2% y/y) after an unrevised
$2.9 billion rise. It was the strongest gain since February 2001. Credit card
balances at depository institutions (84% of the total) surged 8.8% y/y. Finance
company holdings (6% of the total) fell 5.1% y/y, while borrowing from credit
unions (5% of the total) advanced 7.3% y/y. Nonfinancial business credit (2% of
the total) fell 5.4% y/y, and securitized credit card balances (3% of the total)
declined 15.9% y/y.
Nonrevolving credit borrowing grew $18.6 billion (6.8% y/y) following an
$11.2 billion rise, revised from $14.3 billion reported last month. It was the
quickest rise in six months. Federal government loans (36% of the total)
increased 11.1% y/y. Finance company balances (24% of the total) eased 0.8% y/y.
Borrowing at depository institutions (25% of the total) accelerated to 5.7% y/y,
and borrowing at credit unions (11% of the total) also accelerated to 15.1% y/y.
Nonprofit &amp; educational institution loans (2% of the total) declined 8.7%
y/y, and nonfinancial business loans (1% of the total) remained unchanged y/y.
Student loans outstanding increased a diminished 6.2% y/y during Q1'16 while
motor vehicle loans rose a steady 8.2% y/y.
These Federal Reserve Board figures are break-adjusted and calculated by
Haver Analytics. There is a break in the credit outstanding data from November
2010 to December 2010 due to the Fed's benchmarking process. Benchmark estimates
are based on the Census of Finance Companies (CFC) and the Survey of Finance
Companies (SFC) conducted in 2010 and 2011, respectively.
The consumer credit data are available in Haver's USECON database. The
Action Economics figures are contained in the AS1REPNA database.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="898">Consumer Credit
 Outstanding (M/M Chg, SA)</th>
 <th scope="col" width="127">Apr</th>
 <th scope="col" width="128">Mar</th>
 <th scope="col" width="128">Feb</th>
 <th scope="col" width="128">Y/Y</th>
 <th scope="col" width="128">2015</th>
 <th scope="col" width="128">2014</th>
 <th scope="col" width="128">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="898">Total</td>
 <td align="center" width="127"></td>
 <td align="center" width="128">$29.7 bil.</td>
 <td align="center" width="128">$14.1 bil.</td>
 <td align="center" width="128">6.6%</td>
 <td align="center" width="128">6.6%</td>
 <td align="center" width="128">7.2%</td>
 <td align="center" width="128">6.0%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="898">&nbsp; &nbsp;Revolving</td>
 <td align="center" width="127"></td>
 <td align="center" width="128">11.1</td>
 <td align="center" width="128">2.9</td>
 <td align="center" width="128">6.2</td>
 <td align="center" width="128">5.2</td>
 <td align="center" width="128">3.9</td>
 <td align="center" width="128">1.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="898">&nbsp; &nbsp;Nonrevolving</td>
 <td align="center" width="127"></td>
 <td align="center" width="128">18.6</td>
 <td align="center" width="128">11.2</td>
 <td align="center" width="128">6.8</td>
 <td align="center" width="128">7.1</td>
 <td align="center" width="128">8.4</td>
 <td align="center" width="128">7.9</td>
 </tr>
 </tbody>
</table>


</body>

</html>

U.S. Productivity Declines for a Second Quarter

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 <a href="/comment/160606f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606f.png"></a>
 <a href="/comment/160606g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606g.png"></a>
 
The Labor Market Conditions Index from the Federal Reserve Board includes 19
indicators of labor market activity, covering the broad categories of
unemployment and underemployment. These include jobs, workweeks, wages,
vacancies, hiring, layoffs, quits and other surveys of consumers and businesses.
Because the trends in the index are slow-moving, Haver presents only the changes
in the index. All are measured monthly and have been seasonally adjusted.
During May, the index deteriorated at the quickest rate since 2009, pulled
down the weakness in payroll employment reported Friday. Other components in the
jobs report lessened the index gain including a weaker monthly rise in average
hourly earnings and a lower labor force participation rate.
The data are available in Haver's SURVEYS database.

 
 
<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Labor Market Conditions
 Index (SA)</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >May'15</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Monthly Index Change</td>
 <td >-4.8</td>
 <td >-3.4</td>
 <td >-3.0</td>
 <td >2.2</td>
 <td >1.8</td>
 <td >5.0</td>
 <td >3.7</td>
 </tr>
 </tbody>
</table>



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The Labor Market Conditions Index from the Federal Reserve Board includes 19 indicators of labor market activity, covering the broad categories of unemployment and underemployment. These include jobs, workweeks, wages, vacancies, [...]

U.S. Labor Market Conditions Index Deteriorates

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 <a href="/comment/160606a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606a.png"></a>
 <a href="/comment/160606b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606b.png"></a>
 
The National Association for Business Economics projects 2.3% real
U.S. economic growth next year, little changed from its last estimate of 2.4%
growth. This year's estimate was reduced, however, to 1.8% from 2.2%, and from
2.6% projected in December. The gains follow a 2.4% rise in both 2015 and
2014. Quarterly GDP growth is expected to range between 2.2% and 2.5%. Growth in
personal consumption expenditures is expected to moderate to 2.5% next year
following a lessened 2.6% in 2016 and 3.1% in 2015. Nevertheless, these remain
the strongest yearly gains since 2006. Real net exports are expected to
deteriorate next year, producing another drag on U.S. GDP growth as import
growth of 5.0% outpaces the 3.5% gain in exports. The rate of inventory
investment is expected to ease to the slowest since 2011. Growth of 7.4% next
year in residential investment compares to 9.6% in 2016, continuing to be the
economy's strongest sector.
Housing starts are expected to average 1.36 million after a slightly lowered
2016 estimate of 1.21 million. Expected light vehicle sales of 17.3 million
units next year followed a lowered estimate of 17.3 million this year. Average
monthly gains in payroll employment are expected to ease to 192,000 from 201,000
in 2016, both of which were raised slightly. Expectations for the unemployment
rate of 4.7% next year compared to a raised estimate of 4.8% in 2016. Consumer
price inflation is expected to average 2.2% next year, the quickest rate of
increase since 2011. The core PCE price index should rise 1.9% next year,
unrevised from the previous expectation and the strongest gain since 2011.
The forecasted 2.73% interest rate on 10-year Treasury notes at the end of
next year was reduced from 3.07%, and follows a lessened 2.25% estimate at the
end of this year. The Fed is expected to continue raising the federal funds rate
to a lessened 1.63% by the end of next year. Corporate profits next year should
rise 3.9% following a reduced 2.0% decline forecasted this year. The Federal
government budget deficit is expected to be $542 billion in 2017, roughly
one-third its $1.4 trillion peak in 2009.
The figures from the latest NABE report can be found in Haver's SURVEYS
database. 

 Current Conditions and the Outlook for the U.S. Economy is the title of today's speech by Janet L. Yellen 
<a href="https://www.federalreserve.gov/newsevents/speech/yellen20160606a.htm">here</a>.

 <a href="/comment/160606c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606c.png"></a>
 <a href="/comment/160606d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160606d.png"></a>
 
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">National
 Association For Business Economics</a></th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Real GDP (% Chg. SAAR)</td>
 <td >2.3</td>
 <td >1.8</td>
 <td >2.4</td>
 <td >2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Personal Consumption
 Expenditures</td>
 <td >2.5</td>
 <td >2.6</td>
 <td >3.1</td>
 <td >2.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Structures</td>
 <td >--</td>
 <td >4.0</td>
 <td >-1.5</td>
 <td >8.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Equipment</td>
 <td >--</td>
 <td >4.9</td>
 <td >3.1</td>
 <td >5.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Residential Investment</td>
 <td >7.4</td>
 <td >9.6</td>
 <td >8.9</td>
 <td >1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Change in Real Business
 Inventories (Bil. $)</td>
 <td >55.6</td>
 <td >54.5</td>
 <td >97.5</td>
 <td >68.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Real Net Exports (Bil. $)</td>
 <td >-625.5</td>
 <td >-582.6</td>
 <td >-543.4</td>
 <td >-442.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Housing Starts (Mil. Units)</td>
 <td >1.36</td>
 <td >1.21</td>
 <td >1.11</td>
 <td >1.00</td>
 </tr>
 <tr>
 <td class="firstcol" >Light Vehicle Sales (Mil. Units)</td>
 <td >17.3</td>
 <td >17.3</td>
 <td >17.4</td>
 <td >16.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Payroll Employment Average Monthly
 Change (000s)</td>
 <td >192</td>
 <td >201</td>
 <td >229</td>
 <td >251</td>
 </tr>
 <tr>
 <td class="firstcol" >Unemployment Rate (%)</td>
 <td >4.7</td>
 <td >4.8</td>
 <td >5.3</td>
 <td >6.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Consumer Price Index (Y/Y %)</td>
 <td >2.2</td>
 <td >1.3</td>
 <td >0.1</td>
 <td >1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >Fed Funds Rate (%, Year-End)</td>
 <td >1.63</td>
 <td >0.87</td>
 <td >0.38</td>
 <td >0.13</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >10-Year Treasury Note (%, Year-End)</td>
 <td >2.73</td>
 <td >2.25</td>
 <td >2.27</td>
 <td >2.17</td>
 </tr>
 </tbody>
</table>


</body>

</html>

The National Association for Business Economics projects 2.3% real U.S. economic growth next year, little changed from its last estimate of 2.4% growth. This year's estimate was reduced, however, to 1.8% from 2.2%, and from 2.6% [...]

NABE Expects Moderate 2017 Economic Growth, but Lowers 2016 Estimate Again

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

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: June 2016

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