Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050711a.jpg" width="353">
The Leading Index of the Major 7 OECD economies fell for the fourth straight month in May. The 0.2% decline pulled the index down 1.3% since December and lowered six month growth in the index to a negative 1.8%, the weakest since March 2003.
During the last ten years there has been a 69% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.
A 0.2% decline in May coupled with downward revisions to earlier months&#39; data caused the leaders for the European Union (15 countries) to extend their decline to six consecutive months. Six month growth dropped to a negative 0.9%.
German leaders fell for the seventh month in the last eight. The 0.2% decline was caused by weaker new orders, a more sharply negative yield curve and a depressed business climate. Ssix month growth in the leading index fell to -2.1%, the worst in three and a half years. The French leaders also fell by 0.2% with six month growth a negative 1.3%. The yield curve was about dead flat and prospects for the industrial sector dimmed. The Italian leading index fell a hard 0.5% in May. This seventh consecutive decline lowered the six month growth rate to -2.8% and was caused by continued souring of consumer confidence as well as a weaker future tendency of orders books.
The UK economic leaders continued down and fell 0.4% for the second month. Six month growth fell to -1.9% due to even weaker consumer confidence and weaker prospects for production.The 1.0% decline in the leaders for Japan was double the drop in April, was the fifth decline this year and caused six month growth to fall to a negative 3.5%, the worst since late 2001.
The leading index for the US economy rose a modest 0.2%. The first increase since January improved six month growth slightly to -1.0% but the May increase was entirely due to higher durable goods (aircraft) orders. The Canadian leaders also moved higher by 0.4% and six month growth improved to a -0.3%. Share prices rose in May but other leading indicator components fell.
The latest OECD Leading Indicator report is available <a href="http://www.oecd.org/dataoecd/7/30/35110086.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>100.97</td>
<td>101.17</td>
<td>-1.0%</td>
<td>101.98</td>
<td>97.52</td>
<td>96.33</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>-1.8%</td>
<td>-1.6%</td>
<td>&nbsp;</td>
<td>3.5%</td>
<td>2.5%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
Chinese Imports of Crude Petroleum and Petroleum Products:  A Comparison between Two Data Sources 
by <a href="/comment/Curley.html">Louise Curley</a> July 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050711b.jpg" width="353">
Data on the volume and value of Chinese imports of crude petroleum and petroleum products were released today by CEIC, a private organization based in Hong Kong that publishes a vast amount of data on China. In its new data base--CHINA--Haver lists some 125,000 data series that CEIC publishes.
According to these data, the volume of Chinese imports of crude petroleum shows some signs of peaking, but with rising prices, the value is still on a sharp upward trend. The volume and value trends of petroleum products are more muted than those of crude petroleum . The first chart shows the value of imports of crude petroleum and petroleum products while the second chart shows the volume of imports of each.
The CEIC data are available a week to ten days before the official data shown in EMERGEPR and while the CEIC data do not equal the official data exactly, they are a good approximation as can be seen in the third chart, which compares the value of imports of crude petroleum and petroleum products in the EMERGEPR data base with the sum of these two items in the CHINA data base.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050711c.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050711d.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CHINA/CHINA.HTM">CEIC DATA</a></th>
<th scope="col">Jun 05</th>
<th scope="col">May 05</th>
<th scope="col">Jun 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Value of Chinese Imports (Millions of US$)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Crude Petroleum</td>
<td>3884.6</td>
<td>3883.1</td>
<td>3062.7</td>
<td>0.04</td>
<td>26.84</td>
<td>33913</td>
<td>19824</td>
<td>12761</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Petroleum Products</td>
<td>935.5</td>
<td>659.8</td>
<td>902.5</td>
<td>41.79</td>
<td>3.67</td>
<td>9241</td>
<td>5875</td>
<td>3802</td>
</tr>
<tr>
<td class="firstcol">Volume of Chinese Imports (Thousands of Tonnes)&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Crude Petroleum</td>
<td>11120</td>
<td>10410</td>
<td>11270</td>
<td>6.82</td>
<td>-1.33</td>
<td>122830</td>
<td>91130</td>
<td>69240</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum Products</td>
<td>2920</td>
<td>1970</td>
<td>3820</td>
<td>48.22</td>
<td>-2356</td>
<td>37860</td>
<td>28230</td>
<td>20350</td>
</tr>
</tbody>
</table>
</body>
</html>

The Leading Index of the Major 7 OECD economies fell for the fourth straight month in May. The 0.2% decline pulled the index down 1.3% since December and lowered six month growth in the index to a negative 1.8%, the weakest since [...]

OECD Leaders Lower Still, North American Increase Limited

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708b.jpg" width="353">
Six months ago, we wrote about labor market conditions in Canada, describing them as a bit shaky after three years of growth. Such hesitancy is still evident in an uneven pattern of employment gains, slow in the first quarter and picking up slightly in the second. Data for June were reported this morning by Statistics Canada. These latest employment increases are sufficient however, to cut the unemployment rate. It reached 6.7% in June, the lowest since June 2000, which in turn was the lowest since March 1976.
Among sectors of the economy, factory employment is continuing an uneven trend. June&#39;s modest increase follows a sizable monthly decline in May and the year-on-year performance, at -3.4%, is among the weakest since the recession in the early 1990s. Services are also remarkably sluggish, dragged down &#150; interestingly &#150; by health care and also accommodation and food services. The finance sector and business services, by contrast, are quite strong. Also strong is construction, with a remarkable 12-month increase of 7.6% through June. Persistently low interest rates in Canada, as in the United States, are facilitating considerable building. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708a.jpg" width="353">
The low unemployment rate would be cause for greater enthusiasm, but for slow growth in the labor force. As evident in the table below and in the second graph, the total number of people working or available for work has shown progressive deceleration. Two of the last three months have seen 12-month percentage changes below 1%, the first time since 1996 that even a single month has been that low.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://http://www.haverselect.com/dlx/CANADA.HTM">Canada</a> Thousands</th>
<th scope="col">June 2005 </th>
<th scope="col">May 2005 </th>
<th scope="col">June 2004 </th>
<th scope="col">2004 </th>
<th scope="col">2003 </th>
<th scope="col">2002 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment </td>
<td>+14</td>
<td>+35</td>
<td>+1.3%</td>
<td>+1.8%</td>
<td>+2.3%</td>
<td>+2.4%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing </td>
<td>+6</td>
<td>-19</td>
<td>-3.4%</td>
<td>+0.6%</td>
<td>-0.3%</td>
<td>+2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction </td>
<td>+21</td>
<td>-15</td>
<td>+7.6%</td>
<td>+5.1%</td>
<td>+5.0%</td>
<td>+4.7%</td>
</tr>
<tr>
<td class="firstcol">Services Producing </td>
<td>-19</td>
<td>+46</td>
<td>+1.5%</td>
<td>+1.9%</td>
<td>+2.7%</td>
<td>+2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force </td>
<td>-2</td>
<td>+41</td>
<td>+0.8%</td>
<td>+1.4%</td>
<td>+2.3%</td>
<td>+2.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate </td>
<td>6.7%</td>
<td>6.8%</td>
<td>7.2%</td>
<td>7.2%</td>
<td>7.6%</td>
<td>7.7%</td>
</tr>
</tbody>
</table>
</body>
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Six months ago, we wrote about labor market conditions in Canada, describing them as a bit shaky after three years of growth. Such hesitancy is still evident in an uneven pattern of employment gains, slow in the first quarter and [...]

Canadian Unemployment Rate Ties 29-Year Low in June, but Employment Growth Is Sluggish

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708c.jpg" width="353">
Non-farm payrolls rose 146,000 last month following an upwardly revised 104,000 rise in May. While the latest increase disappointed Consensus expectations for a rise of 183,000, it continued the pace of job growth of roughly 1.5% in place for the last year.
The unemployment rate from the household survey fell to its lowest level since September 2001. At 5.0%, the rate reflected a 165,000 (1.8% y/y) rise in employment and a 1,000 (1.2% y/y) rise in the labor force. The labor force participation rate dipped slightly to 66.0% reflecting an increase in the number of dropouts from the force after two months of decline. Growth in dropouts rose, as a result, to 1.3% y/y though that remained down from the high of 3.7% late in 2003.
Factory sector payrolls fell 24,000 and suffered the worst month of job loss since January, led lower by an 18,000 (-2.6% y/y) worker decline in the motor vehicle industry. A 12,000 (-1.6% y/y) decline in nondurable goods reflected widespread industry declines but were notable at textile mills (-6.1% y/y) and in apparel (-10.5% y/y).
Private service producing industries payrolls rose a firm 148,000 (1.9% y/y) last month led by professional &amp; business services, up 56,000 (3.0% y/y), and education &amp; health services, up 38,000 (2.3% y/y).
Construction jobs rose 18,000 (4.1% y/y) and total government employment rose a modest 2,000 (0.8% y/y). Federal government jobs fell 7,000 (-0.7% y/y) but local gov&#39;t employment rose 7,000 (1.0% y/y).
The index of aggregate hours worked (employment times hours worked) rose 0.2% (2.6% y/y) and recovered a revised 0.2% decline in May. The level of hours worked in 2Q rose 2.8% (AR) from 1Q05.
Average hourly earnings rose the same 0.2% as during May and those gains were down from 0.3% during the prior two months.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>146,000</td>
<td>104,000</td>
<td>1.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-24,000</td>
<td>-6,000</td>
<td>-0.5%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.6</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.7%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.0%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Non-farm payrolls rose 146,000 last month following an upwardly revised 104,000 rise in May. While the latest increase disappointed Consensus expectations for a rise of 183,000, it continued the pace of job growth of roughly 1.5% in [...]

U.S. Payrolls Up, Unemployment Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708c.jpg" width="353">
Non-farm payrolls rose 146,000 last month following an upwardly revised 104,000 rise in May. While the latest increase disappointed Consensus expectations for a rise of 183,000, it continued the pace of job growth of roughly 1.5% in place for the last year.
The unemployment rate from the household survey fell to its lowest level since September 2001. At 5.0%, the rate reflected a 165,000 (1.8% y/y) rise in employment and a 1,000 (1.2% y/y) rise in the labor force. The labor force participation rate dipped slightly to 66.0% reflecting an increase in the number of dropouts from the force after two months of decline. Growth in dropouts rose, as a result, to 1.3% y/y though that remained down from the high of 3.7% late in 2003.
Factory sector payrolls fell 24,000 and suffered the worst month of job loss since January, led lower by an 18,000 (-2.6% y/y) worker decline in the motor vehicle industry. A 12,000 (-1.6% y/y) decline in nondurable goods reflected widespread industry declines but were notable at textile mills (-6.1% y/y) and in apparel (-10.5% y/y).
Private service producing industries payrolls rose a firm 148,000 (1.9% y/y) last month led by professional &amp; business services, up 56,000 (3.0% y/y), and education &amp; health services, up 38,000 (2.3% y/y).
Construction jobs rose 18,000 (4.1% y/y) and total government employment rose a modest 2,000 (0.8% y/y). Federal government jobs fell 7,000 (-0.7% y/y) but local gov&#39;t employment rose 7,000 (1.0% y/y).
The index of aggregate hours worked (employment times hours worked) rose 0.2% (2.6% y/y) and recovered a revised 0.2% decline in May. The level of hours worked in 2Q rose 2.8% (AR) from 1Q05.
Average hourly earnings rose the same 0.2% as during May and those gains were down from 0.3% during the prior two months.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>146,000</td>
<td>104,000</td>
<td>1.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-24,000</td>
<td>-6,000</td>
<td>-0.5%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.6</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.7%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.0%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
Canadian Unemployment Rate Ties 29-Year Low in June, but Employment Growth Is Sluggish 
by <a href="/comment/Stone.html">Carol Stone</a> July 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708b.jpg" width="353">
Six months ago, we wrote about labor market conditions in Canada, describing them as a bit shaky after three years of growth. Such hesitancy is still evident in an uneven pattern of employment gains, slow in the first quarter and picking up slightly in the second. Data for June were reported this morning by Statistics Canada. These latest employment increases are sufficient however, to cut the unemployment rate. It reached 6.7% in June, the lowest since June 2000, which in turn was the lowest since March 1976.
Among sectors of the economy, factory employment is continuing an uneven trend. June&#39;s modest increase follows a sizable monthly decline in May and the year-on-year performance, at -3.4%, is among the weakest since the recession in the early 1990s. Services are also remarkably sluggish, dragged down &#150; interestingly &#150; by health care and also accommodation and food services. The finance sector and business services, by contrast, are quite strong. Also strong is construction, with a remarkable 12-month increase of 7.6% through June. Persistently low interest rates in Canada, as in the United States, are facilitating considerable building. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050708a.jpg" width="353">
The low unemployment rate would be cause for greater enthusiasm, but for slow growth in the labor force. As evident in the table below and in the second graph, the total number of people working or available for work has shown progressive deceleration. Two of the last three months have seen 12-month percentage changes below 1%, the first time since 1996 that even a single month has been that low.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://http://www.haverselect.com/dlx/CANADA.HTM">Canada</a> Thousands</th>
<th scope="col">June 2005 </th>
<th scope="col">May 2005 </th>
<th scope="col">June 2004 </th>
<th scope="col">2004 </th>
<th scope="col">2003 </th>
<th scope="col">2002 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment </td>
<td>+14</td>
<td>+35</td>
<td>+1.3%</td>
<td>+1.8%</td>
<td>+2.3%</td>
<td>+2.4%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing </td>
<td>+6</td>
<td>-19</td>
<td>-3.4%</td>
<td>+0.6%</td>
<td>-0.3%</td>
<td>+2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction </td>
<td>+21</td>
<td>-15</td>
<td>+7.6%</td>
<td>+5.1%</td>
<td>+5.0%</td>
<td>+4.7%</td>
</tr>
<tr>
<td class="firstcol">Services Producing </td>
<td>-19</td>
<td>+46</td>
<td>+1.5%</td>
<td>+1.9%</td>
<td>+2.7%</td>
<td>+2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force </td>
<td>-2</td>
<td>+41</td>
<td>+0.8%</td>
<td>+1.4%</td>
<td>+2.3%</td>
<td>+2.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate </td>
<td>6.7%</td>
<td>6.8%</td>
<td>7.2%</td>
<td>7.2%</td>
<td>7.6%</td>
<td>7.7%</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050707b.jpg" width="353">
Australian labor markets are showing marked strength, according to labor force data reported today by the Australian Bureau of Statistics. The unemployment rate fell to 5.0%, the lowest reading since monthly surveys began in February 1978. This result was unexpected, as forecasters had projected an uptick to 5.2%.
Accompanying employment data also reached a benchmark, with a 41,700 increase in the number employed to 10.023 million, the first tally surpassing 10 million. This is 3.8% larger than the year-ago figure. Further, the number of full-time employees rose more, by 60,200, while part-timers decreased 18,600. This development brought the proportion of full-time workers to 71.7% of total employment. For the first 25 years of this survey, that proportion trended consistently lower, but since the middle of 2003, the share has stabilized and tilted slightly upward, suggesting that employers have some confidence that their demand for workers will be sustained.
The month&#39;s results also extended a steep gain in labor force participation. The rate was 64.7% of the working-age population (15 years of age and older), a record high and up more than a full percentage point just since last August.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050707c.jpg" width="353">
Analysts pointed out in press reports today that Australia is benefiting from increased sales to China and from a surge in commodity prices. Indeed, today&#39;s Wall Street Journal has an entire feature on traffic jams in Queensland ports as ships wait to load coal for export. Just a week ago, the Bureau of Statistics reported a gain in local retail sales after two monthly declines, leading some to conclude that the employment growth is beginning to prompt higher spending.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ANZ/@A1/@A1.HTM">Australia</a> Seasonally Adjusted</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">June 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employed (thous)</td>
<td>10023</td>
<td>9981</td>
<td>9656</td>
<td>9682</td>
<td>9481</td>
<td>9270</td>
</tr>
<tr>
<td class="firstcol">Change (thous/%)</td>
<td>+42</td>
<td>+14</td>
<td>3.8</td>
<td>2.1</td>
<td>2.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed (thous)</td>
<td>528</td>
<td>540</td>
<td>576</td>
<td>566</td>
<td>611</td>
<td>636</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.0</td>
<td>5.1</td>
<td>5.6</td>
<td>5.5</td>
<td>6.0</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>64.7</td>
<td>64.5</td>
<td>63.6</td>
<td>63.6</td>
<td>63.6</td>
<td>63.4</td>
</tr>
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Australian labor markets are showing marked strength, according to labor force data reported today by the Australian Bureau of Statistics. The unemployment rate fell to 5.0%, the lowest reading since monthly surveys began in February [...]

Australia Unemployment Falls; Employment Passes 10 Million

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050707a.jpg" width="353">
Initial claims for unemployment insurance ticked up 7,000 to 319,000 last week after a 4,000 drop the week earlier that was slightly shallower than the decline initially indicated. Consensus expectations had been for an increase to 318,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims fell to 320,500 (-5.7% y/y).
Continuing claims for unemployment insurance dropped 16,000 following a revised 1,000 up tick during the prior week.
The insured unemployment rate remained at 2.0%, the low for this cycle.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">07/02/05</th>
<th scope="col">06/25/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>319</td>
<td>312</td>
<td>-1.2%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,581</td>
<td>-10.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
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Initial claims for unemployment insurance ticked up 7,000 to 319,000 last week after a 4,000 drop the week earlier that was slightly shallower than the decline initially indicated. Consensus expectations had been for an increase to [...]

Initial Claims for Unemployment Insurance Ticked Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050706f.jpg" width="353">
Net rates of return for UK corporations have run strong in the last several quarters. The first quarter&#39;s outcome, 13.3%, was the third highest in the 16-year history of these quarterly data. These figures on corporate profitability were reported yesterday, July 5, by the UK Office of National Statistics and have just recently been added to Haver&#39;s UK database. The information, called &quot;Profitability of UK Companies&quot;, is listed in both the Financial Data and National Accounts menus.
The rates of return are defined as the ratio of the net operating surplus to net capital employed. [The values in &quot;gross&quot; terms, i.e., before the deduction of capital consumption, are also published, but the &quot;net&quot; data get far more attention.] The factors in the ratio, net operating surplus and net capital employed, are published annually; rates of return are available quarterly for all private non-financial corporations and three categories: &quot;Continental Shelf&quot; companies, manufacturing firms and service sector companies. &quot;Continental Shelf&quot; refers to the UK petroleum industry.
In the first quarter, the 13.3% overall return represented a pick-up from the fourth quarter&#39;s 13.1% and was equal to the 2004 average of 13.3%. As might be expected, the Continental Shelf firms saw a boost in their return, to 29.6%, up from the prior quarter; the last five years have averaged 30.8%, the highest ever, with a range among individual quarters of 25.6%, right after 9/11, to 38.1% at the end of 2000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050706g.jpg" width="353">
Non-financial service industries experienced their strongest returns in the late 1990s. We&#39;d speculate that computer software developers, internet companies and other tech firms led this high-profit time in the UK, when returns on capital peaked at 19.5% in the second quarter of 1998. The recent period, while lower, isn&#39;t &quot;bad&quot;, with profitability still running at about 16.5% on average and this latest quarter at 17.5%.
Manufacturing returns have lagged. This has been so for a long time, throughout the history of these data back to 1970. The worst performance was during the energy &quot;crisis&quot;/stagflation recessions of the late 1970s and early 1980s, when, for instance, the net return dipped to just 1.5% in 1981. More currently, manufacturing firms saw good results from 1994 to 1999, but since then have fallen back to single-digits. The 6.0% in Q1 is among the lowest since the 1991 recession. The ONS suggests that the lower returns in manufacturing reflect their higher capital intensity, compared with service firms. This is certainly true, but perhaps their greater cyclicality and variability also restrain their overall performance. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">UK</a>:&nbsp; % except as noted</th>
<th scope="col">Q1 2005</th>
<th scope="col">Q4 2004</th>
<th scope="col">Q3 2003</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Net Rate of Return: All PNFCs*</td>
<td>13.3</td>
<td>13.1</td>
<td>13.4</td>
<td>13.3</td>
<td>12.9</td>
<td>12.5</td>
</tr>
<tr>
<td class="firstcol">Net Operating Surplus (&pound; Billions)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>152.2</td>
<td>140.2</td>
<td>132.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Capital Employed (&pound; Billions)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>1146.4</td>
<td>1089.4</td>
<td>1056.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Continental Shelf Companies**</td>
<td>29.6</td>
<td>27.6</td>
<td>30.5</td>
<td>29.1</td>
<td>29.2</td>
<td>30.4</td>
</tr>
<tr>
<td class="firstcol">Manufacturing </td>
<td>6.0</td>
<td>7.7</td>
<td>5.8</td>
<td>6.9</td>
<td>6.9</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Service Sector</td>
<td>17.5</td>
<td>15.9</td>
<td>16.4</td>
<td>16.5</td>
<td>16.5</td>
<td>16.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Net rates of return for UK corporations have run strong in the last several quarters. The first quarter's outcome, 13.3%, was the third highest in the 16-year history of these quarterly data. These figures on corporate profitability [...]

UK Corporations Achieve High Profitability in Q1, Led by Oil Companies and Service Industries

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: July 2005

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OECD Leaders Lower Still, North American Increase Limited

Canadian Unemployment Rate Ties 29-Year Low in June, but Employment Growth Is Sluggish

U.S. Payrolls Up, Unemployment Down

U.S. Payrolls Up, Unemployment Down

Australia Unemployment Falls; Employment Passes 10 Million

Initial Claims for Unemployment Insurance Ticked Up

Initial Claims for Unemployment Insurance Ticked Up

UK Corporations Achieve High Profitability in Q1, Led by Oil Companies and Service Industries