Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505a.jpg" width="353">
Nonfarm payrolls rose just 138,000 last month and the March increase was revised down to 200,000. The April gain fell short of Consensus expectations for a 200,000 rise. 
Private sector jobs were up 131,000, thus undershooting the new ADP indicator for this subset which was issued Wednesday and had projected a 178,000 gain. The difference of 47,000 is somewhat less than that implied in the Consensus figure, while government employment, with a 7,000 rise, grew less than its recent average. 
The 0.5% gain in average hourly earnings exceeded the Consensus expectation for a 0.3% rise and followed an upwardly revised 0.3% March increase. Factory sector earnings accelerated to 0.3% (1.9% y/y) following four consecutive months of 0.1% gain while private service-producing wages rose 0.6% (4.3% y/y). Professional &amp; business services wages jumped 0.9% (5.8% y/y) and finance, insurance &amp; real estate earnings increased 0.7% (4.3% y/y).
From the household survey the unemployment rate matched Consensus expectations and held steady at 4.7%. Employment rose just 47,000 (1.8% y/y) after a 384,000 surge during March while the labor force rose 159,000 (1.3% y/y).
The decline in teen labor force participation from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2006_part1_aaronson_et_al.pdf">here</a>. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505b.jpg" width="353">
Payroll employment in private service-producing industries rose just 94,000 (1.7% y/y) last month following a downwardly revised 164,000 March rise. Jobs in retail trade reversed all of the prior month&#39;s increase with a 36,100 (+0.3% y/y) decline and job cutbacks were widespread. Financial sector jobs rose 26,000 (2.6% y/y) while professional &amp; business services employment was similarly firm with a 28,000 (2.7% y/y) gain. Jobs in education &amp; health rose 35,000 (2.4% y/y) while leisure &amp; hospitality employment increased 20,000 (1.8% y/y).
Factory sector payrolls posted the best month of job gain in two years with a 19,000 April worker increase. Employment in the motor vehicles &amp; parts industries rebounded 12,200 (-1.0% y/y) from earlier declines while computer &amp; electronics payrolls rose 6,500 (0.9% y/y). However, the breadth of gain in factory payrolls over the last three months fell to 45.2% indicating broad based job loss.
Construction employment rose 10,000 (3.7% y/y) but government employment rose just 7,000 (0.6% y/y) following somewhat stronger gains during the prior two months.
&quot;I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place.&quot; -- Winston Churchill

<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">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>138,000</td>
<td>200,000</td>
<td>1.5%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>19,000</td>
<td>1,000</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.8</td>
<td>33.8 (April &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>5.1% (April &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
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Nonfarm payrolls rose just 138,000 last month and the March increase was revised down to 200,000. The April gain fell short of Consensus expectations for a 200,000 rise. Private sector jobs were up 131,000, thus undershooting the new [...]

U.S. Job Growth Slowed, Wage Inflation Accelerated

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505a.jpg" width="353">
Nonfarm payrolls rose just 138,000 last month and the March increase was revised down to 200,000. The April gain fell short of Consensus expectations for a 200,000 rise. 
Private sector jobs were up 131,000, thus undershooting the new ADP indicator for this subset which was issued Wednesday and had projected a 178,000 gain. The difference of 47,000 is somewhat less than that implied in the Consensus figure, while government employment, with a 7,000 rise, grew less than its recent average. 
The 0.5% gain in average hourly earnings exceeded the Consensus expectation for a 0.3% rise and followed an upwardly revised 0.3% March increase. Factory sector earnings accelerated to 0.3% (1.9% y/y) following four consecutive months of 0.1% gain while private service-producing wages rose 0.6% (4.3% y/y). Professional &amp; business services wages jumped 0.9% (5.8% y/y) and finance, insurance &amp; real estate earnings increased 0.7% (4.3% y/y).
From the household survey the unemployment rate matched Consensus expectations and held steady at 4.7%. Employment rose just 47,000 (1.8% y/y) after a 384,000 surge during March while the labor force rose 159,000 (1.3% y/y).
The decline in teen labor force participation from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_1qtr2006_part1_aaronson_et_al.pdf">here</a>. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505b.jpg" width="353">
Payroll employment in private service-producing industries rose just 94,000 (1.7% y/y) last month following a downwardly revised 164,000 March rise. Jobs in retail trade reversed all of the prior month&#39;s increase with a 36,100 (+0.3% y/y) decline and job cutbacks were widespread. Financial sector jobs rose 26,000 (2.6% y/y) while professional &amp; business services employment was similarly firm with a 28,000 (2.7% y/y) gain. Jobs in education &amp; health rose 35,000 (2.4% y/y) while leisure &amp; hospitality employment increased 20,000 (1.8% y/y).
Factory sector payrolls posted the best month of job gain in two years with a 19,000 April worker increase. Employment in the motor vehicles &amp; parts industries rebounded 12,200 (-1.0% y/y) from earlier declines while computer &amp; electronics payrolls rose 6,500 (0.9% y/y). However, the breadth of gain in factory payrolls over the last three months fell to 45.2% indicating broad based job loss.
Construction employment rose 10,000 (3.7% y/y) but government employment rose just 7,000 (0.6% y/y) following somewhat stronger gains during the prior two months. 
&quot;I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place.&quot; -- Winston Churchill

<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">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>138,000</td>
<td>200,000</td>
<td>1.5%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>19,000</td>
<td>1,000</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.8</td>
<td>33.8 (April &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>5.1% (April &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
Euro-Zone Banks Ease Credit Standards for Business, See Stronger Loan Demand 
by <a href="/comment/Stone.html">Carol Stone</a> May 5, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505c.jpg" width="353">
Since 2003, the European Central Bank (ECB) has conducted a bank officers&#39; lending survey similar to the Federal Reserve&#39;s &quot;Senior Loan Officer Survey&quot;, asking questions about lending policies and credit demand experienced by banks. Results of the ECB survey taken in early April were reported today; we call your attention to them because, while we have felt some concern about European economic conditions (see our note yesterday about sluggish retail trade), it appears that credit conditions have been easing and that credit demand is picking up.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505d.jpg" width="353">
Taken in April, the survey reports that the number of banks easing credit standards for business loans had exceeded those tightening standards by 9 percentage points during the previous three months. The easing trend actually began in mid-2004 and has continued since, except for one quarter. This comes off a period of significant tightening during 2003, with a net of 65 percent of banks making credit criteria more stringent in the first survey in January 2003. Credit demand in that early period was weak, falling at a net of 31 percent of participating banks in the first half of 2003. Now, however, demand for business loans is picking up noticeably, with the latest three quarters averaging +19 percent.
In the table below, we include data for lending to large businesses and in the first graph we compare that to the Fed&#39;s series for US bank lending policies covering a comparable set of businesses. The trends are similar, as might well be for large firms, which can choose among financing institutions.
Similar credit policy patterns appear in the data on consumer and housing credit, although the cycle is much less pronounced. Consumer credit lending policies are marginally easier, loosening in the three months before the survey at a net of 5 percent of reporting institutions. This extends a slight easing trend that began in Q4 2004. Interestingly, demand for consumer credit appears strong, rising on balance at 21 and 18 percent of banks in the last two quarters, respectively. In light of recently lackluster retail sales, this bears comparison with actual consumer lending data, but that&#39;s a commentary for another day!<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060505e.jpg" width="353">
Meantime, demand for housing loans may have peaked. After three sharply positive quarters, reaching 45% in the January survey, the balance of banks with increased home purchase lending fell to 17% in this survey. Regarding credit standards, the behavior here is similar to consumer credit, with nearly neutral readings.
Obviously, all of these data want for lack of history, particularly through an entire business cycle. They should become more useful as that history builds. However, at this time, it seems that we can conclude that banks are increasingly willing to lend to businesses, and they are seeing some positive response in lending activity.

<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/EUROSTAT/@U4/@U417/@U417.HTM">Net Percentages: last 3 months</a></th>
<th scope="col">Q2 2006</th>
<th scope="col">Q1 2006</th>
<th scope="col">Q2 2005</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Overall Business: Tighter Credit Standards </td>
<td>-9</td>
<td>-4</td>
<td>-10</td>
<td>-7</td>
<td>7</td>
<td>40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Credit Demand</td>
<td>18</td>
<td>23</td>
<td>-1</td>
<td>1</td>
<td>-8</td>
<td>-26</td>
</tr>
<tr class="odd">
<td class="firstcol">Large Businesses: Tighter Credit Standards</td>
<td>-3</td>
<td>-3</td>
<td>-5</td>
<td>-5</td>
<td>4</td>
<td>40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Credit Demand</td>
<td>17</td>
<td>10</td>
<td>-6</td>
<td>-4</td>
<td>-7</td>
<td>-21</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Credit: Tighter Standards</td>
<td>-5</td>
<td>1</td>
<td>-7</td>
<td>-3</td>
<td>1</td>
<td>15</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Credit Demand</td>
<td>18</td>
<td>21</td>
<td>0</td>
<td>6</td>
<td>4</td>
<td>-3</td>
</tr>
<tr class="odd">
<td class="firstcol">Housing Loans: Tighter Standards</td>
<td>-9</td>
<td>2</td>
<td>-7</td>
<td>-3</td>
<td>4</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Credit Demand</td>
<td>17</td>
<td>45</td>
<td>-1</td>
<td>18</td>
<td>13</td>
<td>27</td>
</tr>
</tbody>
</table>
</body>
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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/060504e.jpg" width="353">
Retailers in several diverse regions are seeing mixed demand, according to data available today for February and March. In the EuroZone12 (the grouping that includes Greece throughout), sales were down 0.8% in March after a 0.1% decrease in February. The March drop carried the total down 0.2% below the year-ago amount. As seen in the table below, retailing in the major European nations has hardly been robust over recent years, and these latest data indicate that the trend is not improving. Food stores are the leader in the downward movement, but sales volume at nonfood stores is also weakening.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504f.jpg" width="353">
Just on the south side of the Euro-Zone, Slovenia&#39;s retail sector looks fairly mixed. Total sales fell in both January and February, but some of February&#39;s weakness is due to quirks in the arithmetic of combining the food and nonfood segments into a common index. Each of these categories actually increased, food stores by 2.0% and nonfood outlets by 1.3%. Food recovered somewhat from a steep 13.5% fall in January. In general, though, consumers in Slovenia have been increasing their spending in stores, with 2005 showing total growth of 7.6%.
Significantly further south, retail trade in South Africa seems to be going strong. After a hesitation in January, sales in February expanded 3.8%, putting the year-on-year gain at 10.4%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504g.jpg" width="353">
All of these retail sales figures are seasonally adjusted and adjusted for inflation. They also exclude motor vehicles. To give these data some context, we consulted some US information, the retail sales dataset prepared by the BEA, which includes comparable adjustments. These sales were flat in March and eased by 0.2% in February. So they&#39;ve slowed too, then, in the last couple of months, although they remain a hefty 7.6% ahead of a year ago. Thus, while European consumers appear to be dragging, in other select regions, they have been spending at a good clip. Now that gasoline prices have taken off again, it will be interesting to see what the reaction of these other spending patterns will be.
The EuroZone data are contained in Haver&#39;s EUROSTAT database as is that for Slovenia. Other Slovenia data are in EMERGECW, and South Africa in EMERGEMA. The US series is from those compiled by the BEA from the original Census data; these appear in USECON in the menu just beneath the main Census entry and also in USNA in the Underlying Detail tables.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Mo/Mo &amp; Yr/Yr % Changes, SA*</th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EuroZone12</td>
<td>-0.8</td>
<td>-0.1</td>
<td>0.5</td>
<td>-0.2</td>
<td>1.3</td>
<td>1.5</td>
<td>0.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food</td>
<td>-1.0</td>
<td>-0.1</td>
<td>0.8</td>
<td>-0.9</td>
<td>0.7</td>
<td>1.2</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonfood</td>
<td>-0.5</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.5</td>
<td>1.8</td>
<td>1.7</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>--</td>
<td>-1.1</td>
<td>-5.3</td>
<td>4.8</td>
<td>7.6</td>
<td>2.6</td>
<td>3.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food</td>
<td>--</td>
<td>2.0</td>
<td>-13.5</td>
<td>-1.7</td>
<td>7.4</td>
<td>3.3</td>
<td>-1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonfood</td>
<td>--</td>
<td>1.3</td>
<td>0.4</td>
<td>12.7</td>
<td>7.1</td>
<td>2.6</td>
<td>8.0</td>
</tr>
<tr class="odd">
<td class="firstcol">South Africa</td>
<td>--</td>
<td>3.8</td>
<td>-1.0</td>
<td>10.4</td>
<td>6.7</td>
<td>9.7</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">United States**</td>
<td>0.0</td>
<td>-0.2</td>
<td>2.2</td>
<td>7.6</td>
<td>6.1</td>
<td>6.3</td>
<td>4.5</td>
</tr>
</tbody>
</table>
</body>
</html>

Retailers in several diverse regions are seeing mixed demand, according to data available today for February and March. In the EuroZone12 (the grouping that includes Greece throughout), sales were down 0.8% in March after a 0.1% [...]

Retail Trade Stagnates in Europe, But Shows Some Vigor in Slovenia and South Africa

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504c.jpg" width="353">
Initial claims for jobless insurance rose 5,000 last week to 322,000 from an upwardly revised level the prior period. Consensus expectations had been for 310,000 claims.
The increase pulled the level of claims filed last month up to 314,000. The 1.6% increase versus March was the third m/m rise since the January low when just 286,000 claims were filed.
The four week moving average of initial claims rose to 314,250 (-4.4% y/y).
Continuing claims for unemployment insurance rose for the third consecutive week. The 21,000 increase followed a downwardly revised 14,000 increase the prior week.
The insured unemployment rate remained at 1.9%, where it&#39;s been since early February.
Assessing the impact of job loss on workers and firms from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflapril2006_225a.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/29/06</th>
<th scope="col">04/22/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>322</td>
<td>317</td>
<td>-5.6%</td>
<td>332</td>
<td>343</td>
<td>403</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,462</td>
<td>-5.5%</td>
<td>2,663</td>
<td>2,923</td>
<td>3,530</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance rose 5,000 last week to 322,000 from an upwardly revised level the prior period. Consensus expectations had been for 310,000 claims. The increase pulled the level of claims filed last month up to [...]

Initial Unemployment Insurance Claims Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504a.jpg" width="353">
Non-farm labor productivity growth last quarter improved to 3.2% from the 0.3% decline during the final quarter of 2005. The increase beat Consensus expectations for a 2.8% rise and also represented improvement from the average quarterly growth rates during 2004 (2.7%) and 2005 (2.5%).
Output growth surged to 5.8% (4.1% y/y) from just 1.5% during 4Q. That surge was on the back of only a 2.5% (1.7% y/y) rise in hours worked after a 1.8% increase the prior quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504b.jpg" width="353">
Unit labor cost growth of 2.5% was slower than the 4Q increase but nevertheless represented an acceleration in labor cost pressures from a quarterly average of 1.3% during 2005.
Factory sector productivity grew 4.2% (4.1% y/y), right on the firm 4.3% quarterly pace of last year. Compensation grew just 1.5% (3.0% y/y). Therefore unit labor costs in the factory sector declined for the third of the last four quarters, off 2.6% (-1.1% y/y) during 1Q06.
A Leaner, More Skilled U.S. Manufacturing Workforce from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci12-2.pdf"> here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504d.jpg" width="353">
The implicit price deflator for the nonfarm business sector rose 2.8% (3.1% y/y) after a 3.6% jump during 4Q05.The rise lifted the ratio of prices to unit labor costs to near the highest level since 1997. During the last ten years there has been an 81% correlation between this ratio and corporate profit margins.
In Why Did U.S. Market Hours Boom in the 1990s?, the Federal Reserve Bank of Minneapolis examines the impact of longer hours worked on productivity &amp; profits. The paper can be found <a href="http://www.minneapolisfed.org/research/SR/SR369.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;06</th>
<th scope="col">4Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>3.2%</td>
<td>-0.3%</td>
<td>2.4%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>5.7%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>5.4%</td>
<td>4.6%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.5%</td>
<td>3.0%</td>
<td>1.4%</td>
<td>2.5%</td>
<td>1.1%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Non-farm labor productivity growth last quarter improved to 3.2% from the 0.3% decline during the final quarter of 2005. The increase beat Consensus expectations for a 2.8% rise and also represented improvement from the average [...]

1Q U.S. Productivity Improved, Profits' Implication Good

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504a.jpg" width="353">
Non-farm labor productivity growth last quarter improved to 3.2% from the 0.3% decline during the final quarter of 2005. The increase beat Consensus expectations for a 2.8% rise and also represented improvement from the average quarterly growth rates during 2004 (2.7%) and 2005 (2.5%).
Output growth surged to 5.8% (4.1% y/y) from just 1.5% during 4Q. That surge was on the back of only a 2.5% (1.7% y/y) rise in hours worked after a 1.8% increase the prior quarter.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504b.jpg" width="353">
Unit labor cost growth of 2.5% was slower than the 4Q increase but nevertheless represented an acceleration in labor cost pressures from a quarterly average of 1.3% during 2005.
Factory sector productivity grew 4.2% (4.1% y/y), right on the firm 4.3% quarterly pace of last year. Compensation grew just 1.5% (3.0% y/y). Therefore unit labor costs in the factory sector declined for the third of the last four quarters, off 2.6% (-1.1% y/y) during 1Q06.
A Leaner, More Skilled U.S. Manufacturing Workforce from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci12-2.pdf"> here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504d.jpg" width="353">
The implicit price deflator for the nonfarm business sector rose 2.8% (3.1% y/y) after a 3.6% jump during 4Q05.The rise lifted the ratio of prices to unit labor costs to near the highest level since 1997. During the last ten years there has been an 81% correlation between this ratio and corporate profit margins.
In Why Did U.S. Market Hours Boom in the 1990s?, the Federal Reserve Bank of Minneapolis examines the impact of longer hours worked on productivity &amp; profits. The paper can be found <a href="http://www.minneapolisfed.org/research/SR/SR369.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;06</th>
<th scope="col">4Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>3.2%</td>
<td>-0.3%</td>
<td>2.4%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>5.7%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>5.4%</td>
<td>4.6%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.5%</td>
<td>3.0%</td>
<td>1.4%</td>
<td>2.5%</td>
<td>1.1%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
Initial Unemployment Insurance Claims Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 4, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504c.jpg" width="353">
Initial claims for jobless insurance rose 5,000 last week to 322,000 from an upwardly revised level the prior period. Consensus expectations had been for 310,000 claims.
The increase pulled the level of claims filed last month up to 314,000. The 1.6% increase versus March was the third m/m rise since the January low when just 286,000 claims were filed.
The four week moving average of initial claims rose to 314,250 (-4.4% y/y).
Continuing claims for unemployment insurance rose for the third consecutive week. The 21,000 increase followed a downwardly revised 14,000 increase the prior week.
The insured unemployment rate remained at 1.9%, where it&#39;s been since early February.
Assessing the impact of job loss on workers and firms from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflapril2006_225a.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/29/06</th>
<th scope="col">04/22/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>322</td>
<td>317</td>
<td>-5.6%</td>
<td>332</td>
<td>343</td>
<td>403</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,462</td>
<td>-5.5%</td>
<td>2,663</td>
<td>2,923</td>
<td>3,530</td>
</tr>
</tbody>
</table>
Retail Trade Stagnates in Europe, But Shows Some Vigor in Slovenia and South Africa 
by <a href="/comment/Stone.html">Carol Stone</a> May 4, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504e.jpg" width="353">
Retailers in several diverse regions are seeing mixed demand, according to data available today for February and March. In the EuroZone12 (the grouping that includes Greece throughout), sales were down 0.8% in March after a 0.1% decrease in February. The March drop carried the total down 0.2% below the year-ago amount. As seen in the table below, retailing in the major European nations has hardly been robust over recent years, and these latest data indicate that the trend is not improving. Food stores are the leader in the downward movement, but sales volume at nonfood stores is also weakening.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504f.jpg" width="353">
Just on the south side of the Euro-Zone, Slovenia&#39;s retail sector looks fairly mixed. Total sales fell in both January and February, but some of February&#39;s weakness is due to quirks in the arithmetic of combining the food and nonfood segments into a common index. Each of these categories actually increased, food stores by 2.0% and nonfood outlets by 1.3%. Food recovered somewhat from a steep 13.5% fall in January. In general, though, consumers in Slovenia have been increasing their spending in stores, with 2005 showing total growth of 7.6%.
Significantly further south, retail trade in South Africa seems to be going strong. After a hesitation in January, sales in February expanded 3.8%, putting the year-on-year gain at 10.4%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060504g.jpg" width="353">
All of these retail sales figures are seasonally adjusted and adjusted for inflation. They also exclude motor vehicles. To give these data some context, we consulted some US information, the retail sales dataset prepared by the BEA, which includes comparable adjustments. These sales were flat in March and eased by 0.2% in February. So they&#39;ve slowed too, then, in the last couple of months, although they remain a hefty 7.6% ahead of a year ago. Thus, while European consumers appear to be dragging, in other select regions, they have been spending at a good clip. Now that gasoline prices have taken off again, it will be interesting to see what the reaction of these other spending patterns will be.
The EuroZone data are contained in Haver&#39;s EUROSTAT database as is that for Slovenia. Other Slovenia data are in EMERGECW, and South Africa in EMERGEMA. The US series is from those compiled by the BEA from the original Census data; these appear in USECON in the menu just beneath the main Census entry and also in USNA in the Underlying Detail tables.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Mo/Mo &amp; Yr/Yr % Changes, SA*</th>
<th scope="col">Mar 2006</th>
<th scope="col">Feb 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EuroZone12</td>
<td>-0.8</td>
<td>-0.1</td>
<td>0.5</td>
<td>-0.2</td>
<td>1.3</td>
<td>1.5</td>
<td>0.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food</td>
<td>-1.0</td>
<td>-0.1</td>
<td>0.8</td>
<td>-0.9</td>
<td>0.7</td>
<td>1.2</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonfood</td>
<td>-0.5</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.5</td>
<td>1.8</td>
<td>1.7</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>--</td>
<td>-1.1</td>
<td>-5.3</td>
<td>4.8</td>
<td>7.6</td>
<td>2.6</td>
<td>3.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food</td>
<td>--</td>
<td>2.0</td>
<td>-13.5</td>
<td>-1.7</td>
<td>7.4</td>
<td>3.3</td>
<td>-1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonfood</td>
<td>--</td>
<td>1.3</td>
<td>0.4</td>
<td>12.7</td>
<td>7.1</td>
<td>2.6</td>
<td>8.0</td>
</tr>
<tr class="odd">
<td class="firstcol">South Africa</td>
<td>--</td>
<td>3.8</td>
<td>-1.0</td>
<td>10.4</td>
<td>6.7</td>
<td>9.7</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">United States**</td>
<td>0.0</td>
<td>-0.2</td>
<td>2.2</td>
<td>7.6</td>
<td>6.1</td>
<td>6.3</td>
<td>4.5</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503g.jpg" width="353">
Today, ADP, the well-known payroll processors for many employers, published an estimate of the upcoming nonfarm payroll data for April, pointing to an increase in private sector employment of 178,000 for the month (1.9% y/y). They have compiled this from their substantial database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator meant to project the BLS&#39;s official number. This 178,000 gain would follow March&#39;s 133,000 rise. 
These data are called the &quot;ADP National Employment Report&quot;. The series will be maintained in Haver&#39;s USECON database; historical data go back to December 2000. Importantly, the figures in this report cover only private sector jobs and exclude employment in the public sector, which grew an average of 13,000 per month over the last year. The monthly change also obviously varies, and indeed ranged from a decline of 34,000 to an increase of 35,000. This would be a significant difference between the ADP number and total nonfarm payrolls. Some analysts indicated that ADP&#39;s April estimate of 178,000 in private sector jobs would correspond to a gain in total payrolls of 200,000.
Unlike other indicators of the US labor market, such as unemployment insurance claims, the ADP measure is directly comparable to the kind of data in the official BLS report. Automatic Data Processing, Inc. is the nation&#39;s leading provider of payroll-related services. Their figure is based on information about 24,000,000 jobholders; this is distilled to cover the numbers actually on payrolls during the BLS survey week, about 14,000,000. The report will be issued at 8:15AM on the Wednesday prior to each employment release. 
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90. The estimator is shown by the firms&#39; analysis to outperform current &quot;consensus&quot; forecasts and models based on claims data. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/ADP_NER_Report_April.pdf">here</a>, and their methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (Chg.)</td>
<td>178,000</td>
<td>133,000</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>-0.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Today, ADP, the well-known payroll processors for many employers, published an estimate of the upcoming nonfarm payroll data for April, pointing to an increase in private sector employment of 178,000 for the month (1.9% y/y). They [...]

ADP National Employment Report & U.S. Payrolls

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503f.jpg" width="353">
Factory inventories rose 0.7% during March and more than made up for an unrevised 0.4% drop the prior month.
Much of the prior month&#39;s inventory decline had been due to lower computers &amp; electronic products which fully recovered with a 2.9% (4.1% y/y) rise. Machinery inventories also were down in February and then rose in March by 1.0% (6.0% y/y) while a 0.2% decline in electrical equipment inventories (6.1% y/y) also fully reversed.
Continuing with earlier accumulation, inventories of furniture &amp; related products jumped 1.9% (5.5% y/y) while primary metals inventories added 0.2% (0.5% y/y) to the very strong accumulation of January &amp; February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060503e.jpg" width="353">
Total factory orders jumped 4.2% due to a 6.5% surge in durable goods orders, revised up from the advance report of a 6.1% surge. That was goosed by orders for nondefense aircraft &amp; parts which rose 71.3% (329.9% y/y). Factory orders less the transportation sector altogether rose 2.2% (6.8% y/y) and reversed all of the prior month&#39;s decline.
Factory shipments rose 0.8% and reversed most of a February drop while less transportation shipments gained back half of the February drop with a 0.8% increase (6.0% y/y). Petroleum shipments rose 7.8% (7.3% y/y). Factory shipments less transportation &amp; petroleum ticked up 0.1% (5.9% y/y).
Unfilled orders ballooned 2.9% due to the strength of aircraft orders. Nevertheless, less the transportation sector altogether backlogs rose 1.5% (11.1% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>3.4%</td>
<td>4.4%</td>
<td>7.7%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>4.2%</td>
<td>0.4%</td>
<td>11.6%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.8%</td>
<td>-1.2%</td>
<td>6.1%</td>
<td>7.4%</td>
<td>9.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>2.9%</td>
<td>1.1%</td>
<td>21.1%</td>
<td>16.5%</td>
<td>8.4%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories rose 0.7% during March and more than made up for an unrevised 0.4% drop the prior month. Much of the prior month's inventory decline had been due to lower computers & electronic products which fully recovered with [...]

U.S. Factory Inventories Accumulate

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

Resilient US economy is pushing up longer-term inflation expectations and interest rates

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The Conference Board's Index of Consumer Confidence fell 8.4% (-11.8% y/y) to 86.0 after a 6.2% decline in March to 93.9, revised from down 7.2%. A reading of 87.2 had been expected in the Action Economics Forecast Survey. The April figure was 23.8% below its November 2024 high. Weakness in confidence is widespread amongst components in this latest report.

The Expectations Index plunged 18.7% (-20.9% y/y) to 54.4, after falling 10.6% in March, revised from a 12.8% decline. This latest figure was the weakest since October 2011. The Present Situation index fell 0.7% (-5.0% y/y) to 133.5, after declining 2.7% in March and 1.3% in February. The reading was the lowest in seven months.

The percentage of respondents assessing business conditions as “good” rose to 19.2% this month after declining to 18.3% in March. The index hit a high of 22.0% in October. The percentage assessing conditions as “bad” eased to 16.1% after rising to 16.5% in March. The appraisal of labor market conditions dipped m/m in April as 31.7% of respondents thought jobs were plentiful, down from 33.6% in March. Jobs were viewed as hard to get by 16.6% of respondents this month, up from 16.1% in March. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) fell to 15.1% compared to 17.5% in March and remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions deteriorated in April. A lessened 15.7% of respondents expect conditions to improve over the next six months, down from 20.8% in both February and January, while a higher 34.8% expect them to deteriorate, up from 25.5% in February. On employment, a lessened 13.7% expect the number of jobs to increase over the next six months. The percentage expecting the number of jobs to decline in the next six months rose to 32.1% after surging to 26.6% in February. A lessened 15.0% expect income to increase in six months. That remained down from a high of 20.7% in November and compares to a higher 18.2% who expect income to decrease, up from 11.8% in October.

The expected rate of price inflation over the next twelve months jumped to 7.0% in April after increasing to 6.0% in March. This compares to a low of 5.0% in November. Interest rates are expected to rise this year by a higher 56.1% of respondents, up from a 45.5% low in November 2024. The percentage of respondents expecting equity prices to increase over the next twelve months declined to 36.1% after dropping from 57.2% in November, while the percentage expecting a decline in stock prices jumped to 48.5% from a 21.7 low in November.

The percentage of respondents planning to buy a home fell in April to 4.5% from 5.6% in March. Plans to purchase an automobile eased to 10.5% this month, down from 10.7% in March and February.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Confidence weakens to lowest level since May 2020.
- Expectations reading plummets to 2011 low; present situation reading eases.
- Inflation and interest rate expectations rise further.

U.S. Consumer Confidence Slides Again in April; Inflation Expectations Strengthen

Sandy Batten

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Job openings fell 288,000 to 7.192 million in March from a downwardly revised 7.480 million in February (previously 7.568 million), according to the Job Openings and Labor Turnover Survey. This is the lowest level of openings since last September although openings have been relatively trendless for the past year. The number of openings continues to exceed the number unemployed, but by only 109,000, the smallest amount since the pandemic, and indicates a relatively balanced labor market. The job openings rate fell to 4.3% in March from 4.5% in February. The March figure was in line with those immediately prior to the pandemic and is well below a high of 7.4% reached in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings.

Private sector openings fell 229,000 to 6.359 million in March from 6.588 million in February. The March decline was widely spread with manufacturing (+4,000) and “other” (+20,000) the only major sectors experiencing an increase. Trade, transportation and utilities openings fell 62,000 on top of 198,000 plunge in February. Construction openings fell 38,000, their first monthly decline in three months. Private education and health services openings fell 61,000, their third monthly decline in the past four months. The private sector job openings rate edged down to 4.5% in March from 4.6% in February (revised down from 4.7%). It has fluctuated between 4.4% and 5.0% over the past 13 months without a noticeable trend.

Total hiring edged up 41,000 to 5.411 million in March. This was the second monthly gain in the past six months. Over the past year, hiring has fallen 61,000. Private hiring rose 30,000 to 5.050 million, its fourth consecutive monthly gain although it has fallen 41,000 over the past year. Hiring in leisure and hospitality increased 48,000, the first increase in three months. Private educational and health services hiring rose 36,000, also its first increase in three months. Finance hiring increased 28,000. In contrast, construction hiring fell 45,000, the first monthly decline in three months. And professional and business services hiring fell 43,000. Total government hiring rose 11,000 which included a 1,000 decline in federal government hiring. The total hiring rate was unchanged at 3.4%, where it has been for five of the past six months. The private hiring rate was also unchanged at 3.7% in March for the sixth consecutive month.

Total job separations fell 179,000 to 5.137 million in March. They have been little changed over the past year. Quits increased 82,000 to 3.332 million; layoffs fell 222,000, the largest monthly decline since February 2023; other separations fell 39,000 to 247,000. Quits are voluntary separations initiated by the employee and are often viewed as an indicator of workers’ willingness to leave jobs for other opportunities. Private quits (+91,000 in March to 3.145 million) have been on a modest uptrend since late last year, possibly pointing to a slight firming of the labor market. Private layoffs (separations initiated by the employer) appear to be reversing their uptrend from last year. They fell 229,000 to 1.451 million in March, also their largest monthly decline since Febuary2023, led by a 79,000 monthly decline in leisure and hospitality layoffs and a 56,000 drop in trade, transportation and utilities layoffs.

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

- Job openings fell to 7.192 million from downwardly revised 7.480 million in February.
- The job opening rate slid to 4.3% from 4.5%.
- Hiring was little changed in March.
- Layoffs fell to lowest level since last June.

JOLTS: Openings and Layoffs Fall in March; Hiring Little Changed

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The advance estimate of the U.S. international trade deficit in goods deepened to $162.0 billion in March after narrowing to $147.8 billion in February, as reported by the U.S. Census Bureau showed. A deficit of $143.0 billion for March had been expected by the Action Economics Forecast Survey. In Q1'25, the goods trade deficit widened to $463.2 billion after rising to $324.0 billion in Q4'24 from $305.1 billion in Q3'24. In real terms, the Q1’25 trade deficit is likely to have subtracted from real GDP growth, after having added 0.26 percentage point to growth in Q4'24.

Total goods imports jumped 5.0% (31.3% y/y) to $342.7 billion in March after a 0.3% February gain. Consumer goods imports surged 27.7% (54.1% y/y) following a 2.9% increase. Auto imports strengthened 6.6% (9.5% y/y) after a 1.2% rise while capital goods imports increased 4.0% in March (23.2% y/y) following a 1.7% February gain. Offsetting these increases, imports of industrial supplies & materials declined 13.3% (+39.9% y/y) after falling 3.7% in February. Foods, feeds & beverage imports eased 0.4% (+10.9% y/y) following a 2.1% decline and imports of “other” goods were off 5.6% (+13.7% y/y) after a 4.7% February increase.

Total goods exports rose 1.2% (6.9% y/y) to $180.8 billion in March, the fourth rise in five months, after increasing 3.7% in February. The rise reflected a 6.9% surge (-0.5% y/y) in foods, feeds & beverages after a decline of 2.5% In February. Industrial supplies & materials exports gained 3.2% (4.5% y/y) after increasing 4.6% in February. Exports of autos surged 7.9% (10.8% y/y) following a 2.7% increase. Exports of other goods edged 0.3% higher (2.4% y/y) after four straight months of decline. Offsetting these gains, consumer goods exports declined 1.6% (+1.9% y/y) following a 0.6% rise. Capital goods exports were off 2.6% (+13.3% y/y) after rising 4.8% in February.  

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Advance reading reflects higher consumer goods & auto imports.
- Other imports also are strong, while exports rise modestly.
- Exports growth held back by fall in nonauto consumer & capital goods.

U.S. Goods Trade Deficit Deepens to Another Record in March as Imports Surge

Winnie Tapasanun

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U.S. house prices edged up 0.1% m/m in February after rises of 0.3% in January (+0.2% initially) and 0.4% in December (+0.5% previously), according to the Federal Housing Finance Agency (FHFA) House Price Index. The February HPI at 437.32 was 13.3% above a low of 386.15 in August 2022. The February m/m reading was the 11th straight monthly gain but the smallest since May 2024. The year-on-year rate of increase decelerated to 3.9% in February, the lowest since June 2023, from 5.0% in January; thus, having remained lower than 7.3% in February 2024 and well below a high of 18.7% in February 2022.

House prices rose m/m in February (vs. January) in six of the nine census divisions. These included New England (1.3% vs. 0.1%), East North Central (0.8% vs. 0.5%), Middle Atlantic (0.6% vs. 1.0%), South Atlantic (0.3% vs. -0.6%), West North Central (0.2% vs. 0.8%), and East South Central (0.1% vs. -0.03%). To the downside, house prices fell m/m in three census divisions in February (vs. January): Pacific (-0.8% vs. 0.6%), Mountain (-0.7% vs. -0.02%), and West South Central (-0.1% vs. 0.9%).

Year-on-year house prices continued to gain in February. However, the pace of increase decelerated y/y in February (vs. January) in all of the nine census divisions. These were Pacific (0.9% vs. 3.6%), West South Central (2.1% vs. 2.8%), South Atlantic (3.2% vs. 4.1%), Mountain (3.5% vs. 4.3%), East South Central (3.7% vs. 4.4%), West North Central (4.2% vs. 5.0%), New England (6.1% vs. 7.5%), East North Central (6.5% vs. 7.0%), and Middle Atlantic (7.0% vs. 8.5%).

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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- Feb. FHFA HPI +0.1% m/m (+3.9% y/y, lowest since June ’23); +0.3% m/m (+5.0% y/y) in Jan.
- House prices up m/m in six of nine census divisions but down in Pacific, Mountain, and West South Central.
- House prices up y/y in all of the nine regions, w/ the highest rate in Middle Atlantic (7.0%) and the lowest rate in Pacific (0.9%).


U.S. FHFA House Price Growth Continues to Decelerate in February

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Retail gasoline prices for all grades slipped to an average $3.26 per gallon (-13.7% y/y) in the week ended April 28 after falling to $3.27 in the prior week. Prices were $3.37 per gallon to begin the month but remained above their low of $3.13 in the week of December 9. An earlier high was $3.79 in the week ending April 22, 2024. The all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.51 per gallon (-11.0% y/y) in the week of April 28 from $3.53 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil rose to $63.09 per barrel (-24.8% y/y) in the week ended April 25, after rising to $62.50 per barrel in the prior week. Prices remained below a high of $91.45 in the week of September 29, 2023. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $62.05 per barrel. The price of European Brent crude oil edged up to $67.92 per barrel (-23.3% y/y) in the week of April 25 from $67.76 in the previous week. Prices remained well below a recent high of $95.61 in the week of September 29, 2023 and compared to a peak of $127.40 in the week of June 10, 2022. Yesterday the price was $66.13 per barrel.

Natural gas prices declined last week to an average $2.97 per mmbtu (+92.9% y/y) in the week ended April 25, after falling to $3.26/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday’s price was $2.96/mmbtu.

Gasoline demand slipped 0.4% y/y in the four weeks ending April 18 following a 3.4% y/y decline in the prior four weeks. Demand for all petroleum products improved 0.4% y/y in the four weeks ending April 18 after a 1.7% y/y decline in the previous four-week period. Crude oil input to refineries fell 1.3% y/y in the four weeks ending April 18 after a 1.6% y/y decline in the prior four weeks.

Gasoline inventories rose 1.2% y/y in the week ending April 18 after a 2.9% y/y rise in the week ending April 11. Residual fuel oil inventories fell 19.0% y/y in the week of April 18, after a 14.0% y/y fall in the prior week. Crude oil inventories rose 2.6% y/y in the week of April 18 after a 1.8% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell w/w to 26.4 days in the week of April 18 from 27.5 days in the prior. The recent low was 22.9 days in the week of November 8. The supply of crude oil also was unchanged w/w at 28.3 days in the week of April 18 for the third straight week, up from 24.6 days in the week of January 10 but remained below a high of 31.9 days in the week of March 3, 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 ease.
- Crude oil prices rise.
- Natural gas costs decline further.

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