Tom Moeller

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 1.4% (1.1% y/y) during the four weeks ended April 5, 2024, adding to increases since a price low in the third week of December. The index remained 20.0% below the cycle peak in the second week of March 2022. During most of that period of time, U.S. factory output has been little-changed.

Prices in the crude oil & benzene group rose 2.7% (4.4% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil rose 7.5% in four weeks to $84.87 per barrel, up 6.6% y/y. Prices hit a low of $70.42 in the third week of December. The cost of the petro-chemical benzene, used for making plastics & synthetic fibers, held steady (+10.6% y/y) in four weeks. Excluding crude oil, the industrial commodity price index rose 1.0% (0.8% y/y) in the latest four-week period.

Metals group prices increased 2.6% (-4.5% y/y) over the most recent four weeks. Copper scrap prices increased 5.5% (0.3% y/y) in the last four weeks while aluminum prices improved 5.8%, but slipped 0.6% y/y. Tin prices rose 4.4% in four weeks and strengthened 9.6% y/y. The cost of steel scrap rose 2.0% (-12.9% y/y) while zinc prices improved 0.7% (-15.2% y/y). Working lower, lead prices were off 2.2% (-5.7% y/y) in four weeks.

Prices in the miscellaneous group increased 1.8% during the last four weeks and strengthened 4.4% y/y. Rubber prices improved 7.1% and by 46.2% y/y. The cost of framing lumber rose 1.8% in four weeks (3.4% y/y).

Working lower, textile group prices declined 1.0% (+1.4% y/y) in the latest four weeks but had been rising since their low in the second week of November. Cotton prices decreased 7.7% (+4.6% y/y) in the last four weeks while the cost of burlap rose 2.2% (6.6% y/y) in four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Crude oil prices surge.
- Gain in metals price paced by aluminum & copper.
- Rubber & lumber costs rise.
- Cotton prices move lower.

FIBER: Industrial Commodity Prices Continue to Trend Upward

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Nonfarm payrolls increased 303,000 (1.9% y/y) in March after rising 270,000 in February, revised from 275,000, and 256,000 in January, revised from 229,000. Expectations had been for a 203,000 rise in the Action Economics Forecast Survey. The three-month average change of 276,000 is the highest since March of last year.

Average hourly earnings increased an expected 0.3% last month after rising 0.2% in February, revised from 0.1%. The 4.1% y/y earnings increase remains below the 5.9% peak in March 2022.

The unemployment rate, measured in the household survey, eased to 3.8% in March, matching expectations, after rising to 3.9% in February. Household employment rose 498,000 after falling 184,000 in February. The labor force rose 469,000 after a 150,000 February gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons held at 7.3%. It remained the highest rate since December 2021.

In the **establishment survey**, private-sector employment increased 232,000 (1.7% y/y) after rising 207,000 in February. Construction sector employment increased 39,000 (3.6% y/y) following a 26,000 February gain. Mining & logging sector jobs rose 3,000 (1.8% y/y) after rising 1,000 in February. Factory sector employment held steady last month (0.2% y/y) after a 10,000 decline.

Private service-producing sector employment improved 190,000 in March (1.8% y/y), the same as in February. Increases varied greatly amongst service sector categories. Education & health service jobs rose 88,000 (4.3% y/y) after rising 82,000 in February while leisure & hospitality employment rose 49,000 (2.8% y/y) after a 43,000 gain. Trade, transportation & utilities employment gained 27,000 (0.5% y/y) after rising 46,000 while professional & business service jobs increased 7,000 (0.7% y/y) after a 17,000 February rise.

Government sector payrolls surged 71,000 last month (3.0% y/y) after increasing 63,000 in February. It was the largest increase in three months. Local government jobs increased 49,000 (2.6% y/y) after rising 42,000 in February and state government employment rose 13,000 (3.9% y/y) after an 11,000 gain. The number of federal government jobs increased 9,000 (3.3% y/y) following a 10,000 rise.

The 0.3% rise in private-sector average hourly earnings reflected a 0.6% rise (5.4% y/y) in the goods-producing sector which followed a 0.2% improvement in February. Earnings in construction strengthened 0.5% (5.0% y/y) while factory sector earnings strengthened 0.6% (5.4% y/y). In the private services-sector, earnings rose 0.3% last month (3.9% y/y) after a 0.2% rise. Information sector earnings rose 0.5% (2.6% y/y) following a 0.2% gain. Financial sector earnings increased 0.5% (5.8% y/y) for the second straight month. Education & health services earnings ease slightly (+2.9% y/y) after increasing 0.2% in February.

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The length of the average workweek rose to 34.4 hours in March after rising to 34.3 hours in February. The workweek in the goods-producing sector rose to 39.9 hours, the highest level in five months. The construction sector average workweek rose to 39.3 hours, the highest level since November. The factory sector workweek held steady at 40.0 hours while the average workweek in the private service sector also was unchanged at 33.3 hours. The aggregate weekly hours index, a key indicator of production and income, rose 0.5% (1.7% y/y) and was up a steady 1.0% (AR) in the first quarter.

The **household survey** indicated a slip in the jobless rate to 3.8% as the size of the labor force rose moderately. The labor force participation rate rose to 62.7% after three months at 62.5%. The rate for teenagers moved up to 38.2%, while for individuals aged 20-24 it rose to 72.1%. For rate for workers aged 25-54, it eased to 83.4% and for workers 55 and over, it improved slightly to 38.6 hours.

The employment/population ratio for all workers rose to 60.3% in March, but was slightly below where it was twelve months earlier. It remained below its 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.

**Risks and Uncertainty in Monetary Policy: Current and Past Considerations** from Fed Governor Michelle W. Bowman is available [here](https://www.federalreserve.gov/newsevents/speech/bowman20240405a.htm).

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- Latest job increase accelerates to quickest since last May.
- Earnings increase moves up.
- Jobless rate slips as employment jumps.

U.S. Payroll Employment Surges in March; Wage Growth Improves & Jobless Rate Eases

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Consumer credit outstanding rose $14.1 billion (2.5% y/y) during February following a $17.7 billion January increase, revised from $19.5 billion. These figures compare to a $3.2 billion gain during December of last year. A $15.7 billion rise had been expected in the Action Economics Forecast Survey. The ratio of consumer credit outstanding to disposable personal income held steady at 24.4% in February, below the December 2022 high of 25.4%.

Revolving credit outstanding rose $11.3 billion (9.0% y/y) in February after an $8.6 billion increase in January. Borrowing at banks rose 9.9% y/y but finance company loans fell 2.0% y/y. Credit union loans increased 8.1% y/y.

Nonrevolving credit balances increased $2.9 billion (0.4% y/y) in February following a $9.1 billion January gain. Borrowing at banks fell 2.2% y/y, while finance company loans grew 7.4% y/y. Credit unions loans increased 1.6% y/y but federal government loans decreased 1.3% y/y. The total of nonrevolving credit includes secured and unsecured credit for big-ticket items, such as autos, mobile homes, trailers, durable goods and vacations.

The value of student loans outstanding fell 2.1% y/y in Q4’23, while motor vehicle loans increased 3.7% y/y in Q4’23.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Revolving credit usage strengthens.
- Nonrevolving credit growth slows.

Consumer Credit Growth Moderates in February

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The U.S. trade deficit in goods and services (BOP basis) increased to $68.9 billion in February after rising to $67.6 billion in January, revised from $67.4 billion. December’s deficit was un revised at $64.2 billion, according to the U.S. Census Bureau. The deficit was the largest since April 2023 which was $72.2 billion. A $67.0 billion deficit had been expected in the Action Economics Forecast Survey. Exports rose 2.3% (4.1% y/y) in February following a 0.1% rise in January. Imports rose 2.2% (2.8% y/y) in February, the third straight month of moderate gain.

The trade deficit in goods trade (BOP basis) narrowed to $91.4 billion in February from $91.7 billion in January. Goods exports rose 2.9% (2.8% y/y) after holding steady in January. Imports of goods rose 1.8% (2.2% y/y), up for the third straight month. The services trade surplus lessened to $22.5 billion in February from $24.1 billion in January and it was down from a peak $25.2 billion last August. Services exports rose 1.0% (6.8% y/y) in February, the fourth consecutive monthly gain. Services imports jumped 3.9% (5.4% y/y) following a 1.1% January rise.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars) widened to $87.0 billion in February, the largest deficit in seven months, from $86.0 billion in January. Real exports of goods rose 2.1% (5.4% y/y) in February after easing 0.4% in January. Real imports of goods grew 1.7% (2.9% y/y), the third straight monthly rise. A narrowing of the trade balance (net exports) added 0.25% percentage points to GDP growth in Q4 2023 after adding 0.03%-points in Q3 2023.

The customs value goods trade deficit narrowed to $90.3 billion in February from $90.6 billion in January. The latest figure was smaller than a $91.8 billion deficit in the advance report released on March 29. Custom value exports rose 2.9% (3.7% y/y) in February after a 0.1% January improvement. Automotive vehicles, parts & engines fell 8.5% (+1.7% y/y) while nonfood consumer goods excluding autos rose 0.7% (-2.7% y/y). Capital goods exports excluding autos rose 2.9% (8.0 y/y) while exports of industrial supplies & materials increased 4.8% (3.8% y/y). Foods, feeds & beverages exports rose 12.4% (2.7% y/y).

Customs value imports of goods rose 1.8% (2.3% y/y) in February, the third consecutive monthly increase.  Automotive vehicles, parts & engines imports rose 2.6% (15.8% y/y) while capital goods imports excluding autos rose 0.9% (3.9% y/y). Foods, feeds & beverage imports increased 7.6% both m/m and y/y. Goods imports of industrial supplies & materials edged 0.2% higher (-7.6% y/y) and nonfood consumer goods excluding autos rose 2.6% (1.3% y/y). Meanwhile, petroleum imports rose 2.3% (-6.8% y/y) in February following a 7.5% January decline. Nonpetroleum imports grew 1.7% (3.7% y/y), the third straight monthly gain.

The rise in services exports reflected a 1.5% increase (12.5% y/y) in personal, cultural & recreational services and a 2.7% (25.1% y/y) rise in travel services exports. Exports of construction services declined 3.7% (-7.1% y/y) while government goods & services exports declined 3.3% (-21 .5% y/y). The increase in services imports was due to construction services imports which rose 3.1% (39.4% y/y) while travel services imports gained 9.3% (18.5% y/y). Imports of transport services rose 8.8% (6.1% y/y) and charges for the use of intellectual property eased 0.3% (+3.2 y/y) in February.

The U.S. goods trade deficit with China eased to a seasonally adjusted $21.9 billion in February from $22.9 billion in January. Exports fell 1.0% (+2.9% y/y) while imports fell 3.1% (-6.2% y/y). The goods trade deficit with the European Union eased to $17.6 billion from $18.1 billion in January as exports fell 4.5% (+1.1% y/y) and imports were down 3.8% (-1.5% y/y). The trade shortfall with Japan fell to $6.2 billion in February from the record high of $7.3 billion in the previous month. Exports rose 2.4% (-6.9% y/y) while imports fell 7.1% (-0.4% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver's **USECON** database. Detailed figures on international trade are available in the **USINT** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Exports and imports both increase.
- Real goods trade deficit widens to seven-month high.
- Goods trade deficits w/ China & Japan narrow.

U.S. Trade Deficit Widens to Ten-Month High in February

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 184,000 during March following a 155,000 February gain, revised from 140,000. January’s 111,000 increase was unrevised. The 1.9% y/y gain is steady with last year but below the 3.1% growth in 2022. During the last three months, payroll increases averaged 150,000, the quickest increase since September of last year. A 155,000 rise in March ADP employment had been expected in the Action Economics Forecast Survey.

Small business hiring (less than 50 employees) increased 16,000 (1.5% y/y) last month after rising 12,000 in February. Employment at medium-sized firms (50-499,000 employees) rose 93,000 (2.5% y/y), the same as in February but remained below a 220,000 June high. Large business hiring (500+ employees) rose 87,000 (1.6% y/y) during March following a 67,000 February rise. It was the quickest increase since August 2023.

By industry group, goods-producing employment rose 42,000 last month (1.6% y/y) after a 37,000 February rise. The number of construction sector jobs rose 33,000 (4.2% y/y) following a 31,000 February increase. Hiring in the manufacturing sector edged 1,000 higher (-0.7% y/y) last month after a 6,000 February gain. Natural resource & mining sector employment rose 8,000 (6.8% y/y) after holding steady in February.

Service-producing jobs rose 142,000 in March (2.0% y/y) following a 118,000 February gain. The increase was double the January rise and the strongest since September. Leisure & hospitality employment improved 63,000 in March (4.8% y/y), roughly double the gains in each of the prior two months. Trade, transportation & utilities jobs rose 29,000 (0.8% y/y) after rising 21,000 in February. Education & health service employment grew 17,000 (3.1% y/y) after rising 13,000 in February. The number of financial sector jobs also rose 17,000 (1.4% y/y) after increasing 20,000 in February. Information sector employment rose 8,000 (-1.0% y/y) after rising 1,000 in February. Professional & business service employment edged lower by 8,000 (+0.5% y/y), the second decline in three months.

Growth in median annual pay for "job stayers" held at 5.1% y/y in March, remaining well below a September 2022 high of 7.8% y/y. The earnings slowdown continued to be led by the leisure & hospitality sector, where a 5.8% y/y pay gain in March compared to a high of 16.9% y/y growth in March 2022. Construction sector pay grew a reduced 5.7% y/y and remained below a February 2023 high of 7.1% y/y. Education & health services pay rose a lessened 5.7% y/y, below a 7.3% y/y high in October 2022. Financial sector earnings rose 5.3% y/y, down from a 7.8% y/y high in November of 2022, while information sector pay rose a lessened 4.8% y/y and remained below the 8.0% y/y peak in June 2022. Factory sector earnings rose a reduced 4.6% y/y versus a high of 7.8% y/y in September 2022. Pay increases for “job changers” surged to 10.0% y/y last month, up from a 7.2% y/y low in January, but remained below the 16.4% y/y peak in June 2022.

By Census region, employment in the South rose 91,000 last month (2.2% y/y) after a 64,000 February increase. In the West, employment improved 53,000 (1.2% y/y) after rising 6,000 in February. The number of jobs in the Midwest increased 28,000 (1.8% y/y) after moving up 66,000. Employment in the Northeast improved 20,000 last month (2.1% y/y) after increasing 45,000 in February.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Job increase is strongest since July 2023.
- Service-sector gain strengthens; construction improves.
- Pay increase steadies.

ADP Employment Growth Picks Up in March; Pay Growth Remains Lower

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The Autodata Corporation reported that U.S. light vehicle sales fell 2.8% (+2.6% y/y) to 15.41 million units (SAAR) after rising to 15.86 million in February, revised from 16.01 million. During all of Q1’24, light vehicle sales averaged 15.39 million units versus 15.79 million in Q4’23.

Sales of light trucks eased 2.4% (+4.0% y/y) during March to 12.4 million units (SAAR) after rising 7.1% in February. Purchases of domestically-made light trucks fell 3.3% (+2.1% y/y) to 9.55 million units after rising 7.9% in February. Sales of imported light trucks rose 1.1% (10.9% y/y) to 2.85 million units after a 4.1% February increase.

Trucks' share of the light vehicle market edged up to a record 80.5% last month compared to 80.1% in February.

Auto sales fell 4.7% (-1.3% y/y) to 3.01 million units (SAAR) following a 4.6% February rise. Purchases of domestically-produced cars weakened 4.1% (-3.2% y/y) in March to 2.12 million units after rising 6.3% in February. Sales of imported autos weakened 5.3% (-2.2% y/y) to 0.89 million units after holding steady in February.

Imports' share of the U.S. light vehicle market edged higher to 24.3% in March from 23.8% in February, up versus a May 2023 low of 22.3%. Imports' share of the passenger car market eased to 29.6% in March from 29.8% in February. It reached a high of 37.9% in September 2021. Imports' share of the light truck market improved to 23.0% from 22.2% in February.

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

**How Do Periods of Inflation, Recession Affect Real Earnings?** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2024/04/how-do-periods-of-inflation-recession-affect-real-earnings/).

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- Light truck & passenger car sales decline following February strengthening.
- Imports' market share improves modestly.


U.S. Light Vehicle Sales Decline in March

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Job openings edged up 8,000 during February (-11.1% y/y) to 8.756 million after falling 141,000 in January, revised from a 26,000 decline, according to the Job Openings and Labor Turnover Survey. The number of job openings have been trending lower since early-2022. The latest reading is well below the recent peak of 12.182 million reached in March 2022. The job openings rate was 5.3% for the third straight month, off from a high of 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings.

Private sector openings declined 	0.6% (-11.1% y/y) to 7.855 million in February. The private job openings rate eased to 5.5% from 5.6% in January. It was 6.2% twelve months earlier. The level of leisure & hospitality openings rose 2.0% (-19.4% y/y) but information openings weakened 42.1% (-19.3% y/y). Trade, transportation & utilities openings fell 6.2% (-41.8% y/y) while openings in professional & business services eased 0.4% (-12.6% y/y). Private educational openings declined 1.9% (+8.6% y/y). Mining openings jumped 10.3% (-8.6% y/y) while construction openings rose 3.8% (7.8% y/y). Manufacturing openings fell 2.2% (-13.5% y/y). Government sector openings increased 6.5% (-11.5% y/y).

Private sector hiring increased 2.4% in February (-4.0% y/y) to 5.438 million after falling 1.4% in January. The private sector hiring rate edged up to 4.0% from 3.9% in January. Hiring was strongest in the service sector where the number of jobs in trade, transportation & utilities rose 12.0% (-10.4% y/y) and leisure & hospitality hiring increased 1.4% (-8.3% y/y). Educational & health services hiring rose 0.2% (2.5% y/y) but financial hiring fell 0.5% both m/m and y/y. Construction sector hiring increased 3.3% (7.5% y/y). Adding to this decline, factory sector hiring fell 13.8% (-24.1% y/y) while government hiring weakened 2.6% (-3.1% y/y) in February, reflecting a 2.6% decline (-1.8% y/y) in state and local government hiring.

Total separations rose 2.0% (-4.7% y/y) to 5.559 million in February after a 0.6% January increase. The separation rate held steady at 3.5%. Private separations increased 2.1% (-4.9% y/y) in February after a 1.3% January rise. Government sector separations increased 1.2% (-0.9% y/y) after falling 9.7% in January.

Private sector quits increased 1.2% (-12.8% y/y) following a 0.4% January rise. Government quits held steady (+1.0% y/y). The overall quits rate was steady at a reduced 2.2% for the fourth consecutive month. Private sector layoffs surged 7.4% (10.4% y/y) in February led by a two-thirds increase (52.2% y/y) in the leisure & hospitality sector. Government layoffs increased 21.7% but were unchanged y/y. The layoff rate rose to 1.1%.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

- Openings remain well below 2022 high.
- Hires improve, but are sharply lower y/y.
- Quits edge higher but layoffs jump.

U.S. JOLTS: Job Openings Rise Slightly in February

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Retail gasoline prices for all grades held at $3.64 per gallon (+0.8% y/y) in the week ended April 2 after rising from $3.57 in the third week of March. These compare to a low of $3.18 in the middle of January. The recent high stands at $4.00 per gallon in the third week of September, and the all-time high was $5.11 in the week ended June 13, 2022. Retail prices for on-highway diesel fuel eased to an average $4.00 per gallon (-2.7% y/y) last week from $4.04 in the prior week. A recent low of $3.77 per gallon occurred in the week ended July 3, 2023.

The average price of West Texas Intermediate crude oil was minimally changed at	 $82.34 per barrel (11.6% y/y) in the week ended March 29 versus an average $82.38 in the prior week. It remained near the highest price since late-October and stood above its low of $74.31 per barrel in the week of June 30, 2023. The price remained below a high of $91.45 in the week of September 29, 2023. The all-time high was seen in the week of July 4, 2008 at $142.46 per barrel. Yesterday, the price of West Texas Intermediate crude oil rose to $83.71 per barrel. The price of European Brent crude oil increased to $86.15 per barrel (10.4% y/y) in the week ended March 29 compared to $85.61. The price of Brent has recently ranged from a low of $74.31 in the week ended June 30, 2023 to a high of $121.57 in the week ended June 10, 2022. Yesterday, the price was $87.46 per barrel.

Natural gas prices eased to an average of $1.46/mmbtu (-27.4% y/y) in the week ended March 29 from $1.54/mmbtu in the prior week. These were the lowest prices since December 1998 and compare to a recent high of $3.20 averaged in the week of October 13, 2023. Yesterday, the natural gas price was $1.64/mmbtu.

Gasoline demand rose 0.9% y/y in the four weeks ended March 22 after falling 0.3% y/y in the four weeks ended March 15. Demand for all petroleum products rose 2.2% y/y, the same as during the prior four-week period. Crude oil input to refineries rose 1.8% y/y in the four weeks ended March 22 after rising 1.1% y/y in the previous four week period.

Gasoline inventories rose 2.4% y/y in the week of March 22 following a 0.5% y/y rise in the prior week. Inventories of residual fuel oil fell 1.1% y/y in the week of March 22 after declining 3.2% y/y in the previous week. Crude oil inventories, including the Strategic Petroleum Reserve, decreased 4.0% y/y in the week of March 22 after a 5.3% y/y fall in the prior week.

Measured in days’ supply, gasoline inventories were 26.1 days in the week of March 22, the same as in the prior week. The recent low was 23.4 days in the week of June 30, 2023. Crude oil inventories declined to 28.6 days of supply in the week of March 22, down from 29.0 days in the prior week. These compare to a recent high of 31.9 days in the week of March 3, 2023 and a low of 25.0 days in the week of September 1, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices hold steady.
- Crude oil costs are little-changed	.
- Natural gas prices slip.


U.S. Energy Prices Loose Steam in Latest Week

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The Purchasing Managers Index of activity in the manufacturing sector jumped to 50.3 in March after falling to 47.8 in February, according to the Institute for Supply Management. Moving above 50, the March index indicated a rise in U.S. manufacturing sector activity for the first time since September 2023, up from a low of 46.5 twelve months earlier. The index peaked at 64.0 in March 2021. A reading of 48.4 for last month had been expected in the Action Economics Forecast Survey.

Movement amongst the index components was mixed in March. Leading the upturn, the production index surged to 54.6 from 48.4 in February. Twenty-five percent (NSA) of survey participants reported increased orders while 13.0% reported declines. The inventories index jumped to 48.2 in March from 45.3 in February. It was increased from an October low of 43.6. Sixteen percent (NSA) of survey participants reported higher inventories while 17.8% reported decline. The employment index rose to 47.4 from 45.9, reversing its February decline. It has trended sideways for the last five months, remaining below last year’s high of 50.9 in September. Fourteen percent (NSA) of respondents reported higher employment while 18.1% indicated decline.

Also showing improvement, the new orders index of 51.4 last month compared to 49.2 in February. It remained below the January high of 52.5 but up from the January 2023 low of 42.8. Twenty-six percent (NSA) of survey respondents reported higher new orders while 16.2% reported decline. Easing slightly last month was the supplier delivery index to 49.9 from 50.1 in February. The index nevertheless remained above the May 2023 low of 43.5. Nine percent of survey respondents reported slower delivery speeds while 9.3% reported faster speeds.

The prices index strengthened to 55.8 (NSA) last month from 52.5 in February. It remained up from a low of 39.4 in December 2022. The index peaked at 92.1 in June 2021 and averaged 46.6 last year. Twenty-four percent of respondents reported higher prices last month while twelve percent reported price declines.

In other series, the export order index held steady in March at 51.6. It was the highest level since July 2022 and up from the January 2024 low of 45.2. Twelve percent (NSA) of respondents reported higher exports while 9.0% reported declines. The imports series held steady at 53.0, its highest level since July 2022. The order backlog index also was unchanged at 46.3 (NSA) last month, up from a low of 37.5 in May of last year.

The ISM figures are based on responses from over 400 purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states.

These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver's **AS1REPNA** database.

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- Index reaches highest point since September 2022.	
- Production, employment, orders & inventories all advance.
- Price index strength builds momentum.

U.S. ISM Manufacturing PMI & Prices Strengthen in March

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Personal consumption expenditures (PCE) rose 0.8% (4.9% y/y) during February after rising an unrevised 0.2% in January. A 0.5% increase had been expected in the Action Economics Forecast Survey. Adjusted for price changes, PCE rose 0.4% last month (2.4% y/y) after a 0.2% January decline, revised from -0.1%.

Real spending on durable goods rebounded 1.2% last month (1.6% y/y) after falling 2.7% in January. Real spending on motor vehicles surged 3.8% (-4.5% y/y) after a 5.0% decline. Real home furnishings & appliance outlays improved 0.4% (2.2% y/y) after falling 0.9% in January while real spending on recreational goods & vehicles declined 1.1% (+6.5% y/y) after weakening 2.6% in January. Real spending on nondurable goods fell 0.6% last month (+0.8% y/y) after falling 0.5% in January. Real clothing and footwear purchases were off 1.5% (+0.6% y/y) following a 0.6% rise. Real food & beverage buying eased 0.2% (-0.1% y/y), the third consecutive monthly decline. Real spending on services increased 0.6% (3.0% y/y) following two consecutive 0.3% gains. Real spending on transportation services surged 2.6% (5.3% y/y) in February after rising 0.3% in January. Real spending on food services & accommodations improved 0.4% (2.9% y/y) after declining 1.0% in January, but real spending on financial services & insurance rose 1.1% last month (4.6% y/y), about the same as in each of the prior three months. Real spending on housing & utilities held steady (+1.6% y/y) after rising 0.5% in the prior month while real healthcare spending rose 0.3% (4.2% y/y), as it did in January.

Personal income rose 0.3% (4.6% y/y) in February following a 1.0% January surge. A 0.4% increase had been expected. A 0.8% rise (5.8% y/y) in wages & salaries came after a 0.3% January increase. Rental income jumped 1.6% (8.0% y/y) following a 1.4% increase and proprietors’ income rose 0.6% (3.5% y/y) after a 0.1% slip during January. Income from assets fell 2.1% (+2.9% y/y) after a 1.8% rise and current transfer receipts rose 0.6% (3.1% y/y) after surging 2.8% in January. Government social benefits strengthened 1.0% (3.0% y/y) after surging 2.5% in January.

Disposable personal income increased 0.2% (4.1% y/y) in February following a 0.4% January rise. After adjusting for price changes, disposable income eased 0.1% (+1.7% y/y) last month after holding steady in January. It was the weakest m/m reading in five months.

As spending growth outpaced the gain in disposable income, the personal saving rate fell to 3.6% from an upwardly revised 4.1% in January. The rate was down from a May 2023 high of 5.3%. Personal saving declined 11.8% (-19.5% y/y) after rising 5.4% in January.

The PCE chain price index rose 0.3% (2.5% y/y) in February after increasing 0.4% in January, revised from 0.3%. These increases were up from minimal change during the prior three months. The index excluding food and energy rose 0.3% (2.8% y/y) after a 0.5% January increase, revised from 0.4%. Goods prices rose 0.5% last month (-0.2% y/y) following four straight monthly declines. Services prices rose 0.3% (3.8% y/y) following a 0.6% increase. Services prices excluding energy & healthcare increased 0.3% (4.2% y/y) after rising 0.6% in January. Food prices edged 0.1% higher (1.3% y/y) last month after rising 0.5% in January, while energy prices increased 2.3% (-2.3% y/y) after falling in each of the prior four months.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

**There’s Still No Rush** from Fed governor Christopher J. Waller is available [here](https://www.federalreserve.gov/newsevents/speech/waller20240327a.htm).

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- Spending growth rebounds.
- Disposable income increase slows.
- PCE price index gain weakening is broad-based.

U.S. Personal Spending Strengthens; Core Price Gain Moderates

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Real GDP growth in Q4’23 was revised to 3.4% (SAAR) from 3.2% reported last month and 3.3% reported initially. it followed a 4.9% Q3 increase. A 3.1% rise had been expected in the Action Economics Forecast Survey. Real GDP grew an unrevised 3.1% on a Q4/Q4 basis, after a 0.7% rise in 2022 and 5.4% growth in 2021. Growth averaged 2.5% last year versus 1.9% in 2022.

Corporate profits after-tax w/o IVA & CCA rose 2.6% (8.6% y/y) last quarter following a 4.0% Q3 increase. Before-tax earnings with IVA & CCA increased 4.1% (5.1% y/y) after a 3.4% rise. Financial sector earnings grew 1.3% (-4.6% y/y) while nonfinancial sector profits rose 5.9% (7.7% y/y). Rest of world earnings declined 1.7% (+2.8% y/y).

Contributions to growth from international trade & the change in inventories were revised. Inventories subtracted 0.47 percentage points from growth last quarter, revised from a 0.27 percentage point subtraction. Net exports added 0.25 percentage points, revised from a 0.32 percentage point contribution reported last month. It followed two straight quarters of minimal add. Exports grew a downwardly revised 5.0% (1.8% y/y) which followed a 5.4% Q3 rise. Imports grew a lessened 2.2% (-0.1% y/y) after rising 4.2% in Q3.

Growth in real final sales to domestic purchasers was increased to 3.5% (3.2% y/y) from 3.1% after rising 3.5% in Q3. Personal consumption expenditures rose a modestly raised 3.3% (2.7% y/y) after a 3.1% increase, adding 2.2 percentage points to Q4 growth. Durable goods spending growth was unrevised at 3.2% (5.8% y/y), following a 6.7% gain. Motor vehicle expenditures fell a lessened 1.7% (+4.0% y/y), slightly more than it did Q3. Furniture & appliance buying rose 1.7% (2.2% y/y), revised from 2.5%, after a 5.5% gain in Q3 while recreational goods & vehicle purchases grew a marginally changed 7.5% (11.2% y/y) after strengthening 16.9% in Q3.

Nondurable goods outlays improved a downwardly revised 2.9% (2.0% y/y), following 3.9% growth in Q3. Apparel outlays rose a lessened 3.4% (0.8% y/y) after a 6.2% increase while food & beverage spending rose a lessened 0.8% (0.1% y/y) following a 1.9% gain. Outlays on gasoline & other energy products rose an unchanged 4.3% (3.8% y/y) after falling 1.0% in Q3.

Spending on services increased 3.4% (2.4% y/y), revised from 2.8%, last quarter following a 2.2% gain in Q3. Health care purchases rose 7.8% (5.7% y/y), revised from 1.5%, following a 2.7% increase. Transportation services outlays growth of 4.2% (1.8% y/y) was increased from 2.8% following a 0.9% rise. Restaurant & hotel accommodations rose a lessened 6.5% (3.8% y/y) after gaining 7.1% in Q3, while growth in recreation outlays improved 0.4% (2.9% y/y), revised from 4.1%, after a 2.3% rise in Q3. Housing & utilities outlays rose a lessened 0.1% (0.6% y/y), after a 3.0% Q3 improvement.

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Business fixed investment increased 3.8% (4.6% y/y), revised from 2.4% last quarter, following a 1.5% Q3 rise as spending on nonresidential structures increased 10.9% (16.9% y/y), revised from 7.6%, after rising 11.2% in Q3. Equipment investment fell 1.1% (-0.6% y/y), revised from -1.7%, after falling 4.4%. Information processing investment surged 11.4% (-0.9% y/y), revised from 9.4% following four consecutive quarterly declines, while industrial equipment outlays held steady (-1.7% y/y), about as estimated last month, after falling 5.4%. Transportation equipment spending weakened a marginally changed 21.6% (+2.8% y/y) after a 1.7% drop in Q3. Investment in intellectual property products rose 4.3% (3.1% y/y), revised from 3.3%) after a 1.8% rise.

Residential structures investment increased a minimally-changed 2.8% (0.4% y/y) after a 6.7% increase.

Government spending increased 4.6% both q/q and y/y, revised from 2.2%, accounting for 0.79 percentage points of GDP growth, after a 5.8% rise. Federal government spending growth of 2.4% (3.9% y/y) was minimally revised and followed a 7.1% jump. State & local government spending grew 6.0% (5.1% y/y), revised from 5.4%, following a 5.0% Q3 rise.

The GDP price index rose an unrevised and expected 1.6% (2.6% y/y) after a 3.3% Q3 gain. The PCE price index increased an unchanged 1.8% (2.8% y/y) after a 2.6% rise. The PCE price index excluding food and energy prices rose a minimally changed 2.0% (3.2% y/y), as it did in Q3. The PCE goods price index fell 1.4% (+0.1% y/y) after rising 0.9% as gasoline prices fell and services prices rose 3.4% (4.1% y/y), about the same as they did in Q3. The services price index less energy & housing rose a minimally changed 2.6% (3.6% y/y) after a 2.9% rise.

The business fixed investment price index rose 2.0% (2.3% y/y), revised from 1.8%, following a 0.9% rise. The residential investment price index increased an unchanged 4.0% (1.3% y/y) after a 4.8% gain. The government spending price index rose a minimally changed 1.9% both m/m and y/y after strengthening 5.1% in the third quarter.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Growth accelerates as domestic final demand growth is lifted.
- Inventory & foreign trade contributions are lessened.
- Halving of Q3 price gain remains in place.

U.S. GDP Growth Is Revised Upward in Q4; Corporate Profits Strengthen

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The Pending Home Sales Index from the National Association of Realtors increased in February by 1.6% (-7.0% y/y) to 75.6 after declining 4.7% in January to 74.4, revised from a 4.9% decline. The weakening followed a 5.7% December increase. Sales were 40.9% below the peak in August 2020. The index reflects sales contract signings.

The rise in February sales occurred as the average rate on a 30-year mortgage increased to an average 6.78% from 6.64% in January. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were regionally mixed last month. Sales in the Midwest rose 10.6% (-2.6% y/y) after falling 7.5% in January. Sales in the South increased 1.1% (-8.5% y/y) following a 7.3% January decline. Sales in the Northeast eased 0.3% (-9.0% y/y) following a 0.8% January rise. Sales in the West declined 6.5% (-7.9% y/y) in February after a 0.5% January improvement.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Modest increase follows sharp decline.
- Regional changes are mixed.

U.S. Pending Home Sales Improve Moderately in February

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