Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502a.jpg" width="353">
Chain store sales jumped another 0.7% last week and more than recouped the prior period&#39;s 0.2% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey.
The late-month recovery lifted April chain store sales 1.6% above the March average which rose 0.7% from February. The April gain was the largest in over two years and during the first four months of 2006, chain store sales rose at a 14% annual rate.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The chain store sales leading indicator fell 0.6% during the latest week (-1.4% y/y) marking the third decline in the last four periods. In April, the leading indicator is down 0.7% from the March average which rose 0.3% from February.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
Cross-Country Personal Saving Rates from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20060501/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</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">Total Weekly Chain Store Sales</td>
<td>477.7</td>
<td>474.6</td>
<td>4.3%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Gasoline Prices Stable Last Week, But ... 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502c.jpg" width="353">
Retail gasoline prices rose less than one penny last week to $2.92 per gallon (30.6% y/y). The near-stability followed four consecutive weeks of increase which ranged between nine and thirteen cents per week.
Earlier signs of relief from the recent upward pressure on prices reversed a bit yesterday as the spot market price for regular unleaded rose a nickel. Nevertheless, the latest spot price at $2.17 per gallon was down from the high of $2.35 during mid-April.
The price of West Texas Intermediate crude oil also move up yesterday to $73.71 per barrel, twelve cents short of the record high.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502b.jpg" width="353">
The jump in gasoline prices has been accompanied by a sharp slowdown in gasoline demand. Through the latest four weeks, demand versus the year ago level went negative by 0.5%, the first negative y/y comparison since last Autumn when gas prices were similarly elevated.
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">05/01/06</th>
<th scope="col">04/24/06</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">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.92</td>
<td>$2.91</td>
<td>30.6%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
Challenger Layoffs Lower Still 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502d.jpg" width="353">
Announced job cuts fell another 8.1% last month on top of the 25.7% m/m decline during March, according to the Challenger, Grey &amp; Christmas survey. The decline was to the lowest level since last April.
During the last ten years there has been an 83% (inverse) correlation between the three month moving average level of announced job cuts and the three month change payroll employment.
Layoffs in the apparel industry dropped sharply (-52.2% y/y) as did job cuts in financial (-37.8 y/y, industrial goods (-5.5% y/y), pharmaceutical (-67.3% y/y) and retail (-82.6% y/y). Announced job cuts in electronics (-74.0% y/y) and automotive industries (139.2% y/y) rose m/m.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported a sharp m/m increase in announced hiring plans (81.7% y/y).

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</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">Announced Job Cuts</td>
<td>59,688</td>
<td>64,975</td>
<td>3.2%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
 UK Mortgage Lending Up but Consumer Credit Down  
by <a href="/comment/Curley.html">Louise Curley</a> May 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502e.jpg" width="353">
The British Bankers&#39; Association released figures on mortgage and consumer credit lending today. Outstanding mortgages were up 0.12% from February and 3.54% above March 2005. Consumer credit outstanding, on the contrary, declined 1.82% from February and was 7.18% below March, 2005.
The year-to-year changes in outstanding mortgage and consumer credit have been declining since mid-2004. The deceleration in mortgages has been modest compared to that in consumer credit as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502f.jpg" width="353">
The decline in credit card debt is reflected in the decline over the past year or so in retail sales of household goods. The second chart shows the year-to-year change in retail sales of household goods and the net increase in consumer credit outstandings. Both series are seasonally unadjusted.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060502g.jpg" width="353">
Banks have been playing a smaller proportional role in mortgage lending as Other Specialist Lenders (Non-bank UK credit grantors and specialist mortgage lenders) have taken a larger share of the market. Banks&#39; share in the market has gone from 72.0% in 2000 to 59.4% in 2005, while that of Other Specialist Lenders has risen from 7.7% to 22.3%. The share of Building Societies has declined moderately from 20.0% to 17.9%. The share of other lenders has been insignificant. The year-to-year changes in outstanding mortgages at Banks and at Other Specialist lenders are shown in the third chart. While the yearly increases in Other Specialist Lenders have been declining they are still increasing at rates of almost 30% compared to about 5% for Banks.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/@U1/@U1.HTM">United Kingdom</a></th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">BBA Consumer Credit Outstanding (Bil. GBP)</td>
<td>31.2</td>
<td>31.8</td>
<td>33.6</td>
<td>-1.82</td>
<td>-7.18</td>
<td>33.4</td>
<td>34.0</td>
<td>28.7</td>
</tr>
<tr>
<td class="firstcol">BBA Mortgages Outstanding (Bil.GBP)</td>
<td>513.6</td>
<td>513.0</td>
<td>496.1</td>
<td>0.12</td>
<td>3.54</td>
<td>521.1</td>
<td>496.4</td>
<td>468.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mortgage Lending by: %</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
<td> 2000 </td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Banks</td>
<td>59.4</td>
<td>61.8</td>
<td>65.9</td>
<td>69.1</td>
<td>41.0</td>
<td>72.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Building Societies</td>
<td>&nbsp;17.9</td>
<td>18.2&nbsp;</td>
<td>18.4</td>
<td>18.3&nbsp;</td>
<td>&nbsp;19.2</td>
<td>&nbsp;20.0</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Specialist Lenders</td>
<td>22.3</td>
<td>19.6</td>
<td>15.4</td>
<td>12.1</td>
<td>9.7</td>
<td>7.7</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Other Lenders</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>


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Chain store sales jumped another 0.7% last week and more than recouped the prior period's 0.2% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey. The late-month recovery lifted April chain store [...]

When Shoppers Shop ...

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501g.jpg" width="353">
China&#39;s balance of payment data for 2005 were released today and, to no one&#39;s surprise, the current account surplus was a record--$160.8 billion, $67.2 billion in the first half of the year and $93.5 in the second half. For the year as a whole, the surplus was $92.2 billion above last year&#39;s surplus of $68.7 billion. (Data for China&#39;s balance of payments are reported only on a semi annual basis.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501i.jpg" width="353">
With its large current account surplus and a net inflow of capital, China has been piling up international reserves as can be seen in the first chart that compares the current account surplus with the increase in reserves. China is now the world&#39;s largest holder of international reserves having surpassed Japan in November 2004 as seen in the second chart.As of December, 2005, China&#39;s holdings of foreign reserves less gold amounted to $822 billion and the latest data for February, 2006, show a further rise to $856 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501h.jpg" width="353">
Data for China&#39;s trade through March 2006 was also released today. The widening gap between exports to and imports from the United States shows no sign of diminishing as can be seen in the third chart.
Data on China&#39;s trade and balance of payments may be found in the Haver CHINA and EMERGEPR data bases. The data on the balance of payments are identical in both data bases, but the data on trade are more detailed in the CHINA data base. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">China</a>&nbsp; (Bil. US $)</th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade in Goods</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>77.9</td>
<td>70.1</td>
<td>61.0</td>
<td>11.1</td>
<td>29.7</td>
<td>762.0</td>
<td>593.3</td>
<td>438.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Imports</td>
<td>63.2</td>
<td>66.4</td>
<td>52.3</td>
<td>-4.8</td>
<td>20.8</td>
<td>660.0</td>
<td>561.2</td>
<td>412.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance</td>
<td>14.7</td>
<td>3.7</td>
<td>8.6</td>
<td>11.0 dif</td>
<td>6.1 dif</td>
<td>102.0</td>
<td>32.1</td>
<td>25.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance with U. S.</td>
<td>12.6</td>
<td>10.5</td>
<td>9.2</td>
<td>2.1 dif </td>
<td>3.4 dif</td>
<td>114.2</td>
<td>80.3</td>
<td>58.6</td>
</tr>
<tr>
<td class="firstcol">Balance of Payments&nbsp;</td>
<td>H2 06</td>
<td>H1 05</td>
<td>H2 05</td>
<td>H/H dif </td>
<td>Y/Y dif</td>
<td>2005</td>
<td>2004&nbsp;</td>
<td>2003&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>160.8</td>
<td>67.3</td>
<td>68.6</td>
<td>93.5</td>
<td>92.2</td>
<td>160.8</td>
<td>68.6</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol">Capital Account</td>
<td>&nbsp;4.1</td>
<td>2.2&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>&nbsp;1.9</td>
<td>4.2&nbsp;</td>
<td>4.1&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>-0.0&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Account</td>
<td>58.9</td>
<td>36.1</td>
<td>110.7</td>
<td>22.7</td>
<td>51.9</td>
<td>58.9</td>
<td>110.7</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">Change in Reserves*</td>
<td>-207.0</td>
<td>-100.5</td>
<td>-206.4</td>
<td>-106.6</td>
<td>-0.6</td>
<td>-207.0</td>
<td>-206.4</td>
<td>117.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>-16.77</td>
<td>-5.1</td>
<td>27.05</td>
<td>-11.9</td>
<td>-43.8</td>
<td>-16.77</td>
<td>27.05</td>
<td>18.42</td>
</tr>
</tbody>
</table>
</body>
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China's balance of payment data for 2005 were released today and, to no one's surprise, the current account surplus was a record--$160.8 billion, $67.2 billion in the first half of the year and $93.5 in the second half. For the year [...]

No Surprises in China's Balance of Payments and Trade Data

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501e.jpg" width="353">
The March value of construction put in place increased another 0.9% on top of the 1.0% rise during February and for the second month, the gain was double the Consensus expectation for a 0.4% increase.
Residential building jumped 1.6% after an unrevised 1.3% February surge. Strength was most pronounced in the value of improvements which jumped 4.5% (-7.0% y/y) while new single family building rose 0.5% (13.5% y/y).
Nonresidential building fell 0.1%, the first decline since last October, and it was led by a 1.7% (+11.2% y/y) drop in office construction. Commercial building rose 0.6% (8.7% y/y) after a huge 3.3% February drop.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501f.jpg" width="353">
Public construction spending rose 0.2% for the second month though construction activity on highways &amp; streets, nearly one third of the value of public construction spending, slipped 0.4% (4.9% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></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">Total</td>
<td>0.9%</td>
<td>1.0%</td>
<td>8.4%</td>
<td>9.2%</td>
<td>10.9%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.1%</td>
<td>1.2%</td>
<td>8.9%</td>
<td>9.7%</td>
<td>13.6%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>1.6%</td>
<td>1.3%</td>
<td>8.6%</td>
<td>11.5%</td>
<td>18.2%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>9.6%</td>
<td>5.4%</td>
<td>3.9%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.2%</td>
<td>0.2%</td>
<td>6.6%</td>
<td>7.6%</td>
<td>2.5%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
</body>
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The March value of construction put in place increased another 0.9% on top of the 1.0% rise during February and for the second month, the gain was double the Consensus expectation for a 0.4% increase. Residential building jumped 1.6% [...]

U.S. Construction Again Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501d.jpg" width="353">
The April Composite Index of activity in the factory sector reported by the Institute of Supply Management (ISM) surged to 57.3, well ahead of Consensus expectations for an unchanged reading at 55.0. The figure was the highest since last November and represented improvement from the 1Q average of 55.6.
During the last twenty years there has been a 68% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
A higher production index at 60.4 versus 57.2 averaged during 1Q led last month&#39;s rise. Moreover, the employment index rebounded to 55.8 versus 52.9 during 1Q. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment. The inventory index also rose to its highest level (51.3) in a year while the supplier deliveries index increased to its highest (57.7) since October.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501c.jpg" width="353">
To the downside was the new orders index which fell to the lowest level (57.6) since August. New export orders were notably weak as the index dropped to the lowest level (53.4) since last June.
The price index showed further strength with a five point increase to its highest level since November. During the last twenty years there has been a 91% correlation between the price index and the three month change in the PPI for intermediate goods less food &amp; energy.
Are We Engineering Ourselves Out of Manufacturing Jobs? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0101.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/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;05</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">Composite Index</td>
<td>57.3</td>
<td>55.2</td>
<td>53.8</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>57.6</td>
<td>58.4</td>
<td>54.7</td>
<td>57.4</td>
<td>63.5</td>
<td>57.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>71.5</td>
<td>66.5</td>
<td>71.0</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The April Composite Index of activity in the factory sector reported by the Institute of Supply Management (ISM) surged to 57.3, well ahead of Consensus expectations for an unchanged reading at 55.0. The figure was the highest since [...]

ISM Activity & Pricing Indexes Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501a.jpg" width="353">
Personal income increased 0.8% during March, double the Consensus expectation for a 0.4% rise and followed an unrevised 0.3% increase in February. The increase was the largest for any month since last September.
A 5.3% (16.4% y/y) spike in health insurance benefits due to prescription drug benefits under the Medicare health-care program boosted transfer payments by 3.3% (9.3% y/y).
Wage &amp; salary disbursements rose another 0.4% (5.0% y/y) lifted by a 0.5% (5.6% y/y) rise in private service sector wages. Factory wages rose 0.3% (2.4% y/y), the firmest gain since last October, while government sector wages grew 0.3% (3.3% y/y).
Disposable personal income jumped 0.8% (5.5% y/y) while personal taxes rose 0.8% (9.3% y/y). Adjusted for price inflation disposable income rose 0.5% (2.6% y/y) and real disposable income per capita jumped 0.4% (1.6% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501b.jpg" width="353">
Personal consumption also was firm and increased 0.6% versus a Consensus expectation for a 0.4% rise. Adjusted for price inflation, spending rose 0.2% (3.4% y/y). Real spending on furniture &amp; household equipment increased 0.9% (13.0% y/y) and &quot;other&quot; durable goods spending rose 1.8% (8.5% y/y). Spending on clothing &amp; shoes fell for the second consecutive month and drooped 0.9% (+7.8% y/y) following several strong monthly gains between October and January. Spending on gasoline &amp; oil fell 2.9% (-0.2% y/y and real services spending rose 0.4% (3.0% y/y).
The PCE chain price index rose 0.4% lifted by a 3.5% (16.5% y/y) jump in gasoline &amp; oil prices. Prices for clothing &amp; shoes surged 1.2% (-1.8% y/y), furniture &amp; household equipment prices fell another 0.3% (-4.5% y/y) but motor vehicle &amp; parts prices rose 0.2% (0.8% y/y).
Incentives and Prices for Motor Vehicles: What has been happening in recent years? is a Working Paper from the Federal Reserve Board and is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200609/200609pap.pdf">here</a>.
The personal savings rate was a negative 0.3%.
Last week&#39;s testimony, Outlook for the U.S. Economy, by Federal Reserve Bank Chairman Ben S. Bernanke can be found <a href="http://www.federalreserve.gov/BoardDocs/Testimony/2006/20060427/default.htm">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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></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">Personal Income</td>
<td>0.8%</td>
<td>0.3%</td>
<td>6.0%</td>
<td>5.5%</td>
<td>5.9%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.2%</td>
<td>6.4%</td>
<td>6.5%</td>
<td>6.5%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>0.4% (Mar &#39;05)</td>
<td>-0.4%</td>
<td>1.7%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.6%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>2.0%</td>
<td>2.0%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>


</html>

Personal income increased 0.8% during March, double the Consensus expectation for a 0.4% rise and followed an unrevised 0.3% increase in February. The increase was the largest for any month since last September. A 5.3% (16.4% y/y) [...]

U.S. Income, Spending & Prices Firm in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501a.jpg" width="353">
Personal income increased 0.8% during March, double the Consensus expectation for a 0.4% rise and followed an unrevised 0.3% increase in February. The increase was the largest for any month since last September.
A 5.3% (16.4% y/y) spike in health insurance benefits due to prescription drug benefits under the Medicare health-care program boosted transfer payments by 3.3% (9.3% y/y).
Wage &amp; salary disbursements rose another 0.4% (5.0% y/y) lifted by a 0.5% (5.6% y/y) rise in private service sector wages. Factory wages rose 0.3% (2.4% y/y), the firmest gain since last October, while government sector wages grew 0.3% (3.3% y/y).
Disposable personal income jumped 0.8% (5.5% y/y) while personal taxes rose 0.8% (9.3% y/y). Adjusted for price inflation disposable income rose 0.5% (2.6% y/y) and real disposable income per capita jumped 0.4% (1.6% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501b.jpg" width="353">
Personal consumption also was firm and increased 0.6% versus a Consensus expectation for a 0.4% rise. Adjusted for price inflation, spending rose 0.2% (3.4% y/y). Real spending on furniture &amp; household equipment increased 0.9% (13.0% y/y) and &quot;other&quot; durable goods spending rose 1.8% (8.5% y/y). Spending on clothing &amp; shoes fell for the second consecutive month and drooped 0.9% (+7.8% y/y) following several strong monthly gains between October and January. Spending on gasoline &amp; oil fell 2.9% (-0.2% y/y and real services spending rose 0.4% (3.0% y/y).
The PCE chain price index rose 0.4% lifted by a 3.5% (16.5% y/y) jump in gasoline &amp; oil prices. Prices for clothing &amp; shoes surged 1.2% (-1.8% y/y), furniture &amp; household equipment prices fell another 0.3% (-4.5% y/y) but motor vehicle &amp; parts prices rose 0.2% (0.8% y/y).
Incentives and Prices for Motor Vehicles: What has been happening in recent years? is a Working Paper from the Federal Reserve Board and is available <a href="http://www.federalreserve.gov/pubs/feds/2006/200609/200609pap.pdf">here</a>.
The personal savings rate was a negative 0.3%.
Last week&#39;s testimony, Outlook for the U.S. Economy, by Federal Reserve Bank Chairman Ben S. Bernanke can be found <a href="http://www.federalreserve.gov/BoardDocs/Testimony/2006/20060427/default.htm">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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></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">Personal Income</td>
<td>0.8%</td>
<td>0.3%</td>
<td>6.0%</td>
<td>5.5%</td>
<td>5.9%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.2%</td>
<td>6.4%</td>
<td>6.5%</td>
<td>6.5%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>0.4% (Mar &#39;05)</td>
<td>-0.4%</td>
<td>1.7%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.6%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>2.0%</td>
<td>2.0%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
ISM Activity & Pricing Indexes Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501d.jpg" width="353">
The April Composite Index of activity in the factory sector reported by the Institute of Supply Management (ISM) surged to 57.3, well ahead of Consensus expectations for an unchanged reading at 55.0. The figure was the highest since last November and represented improvement from the 1Q average of 55.6.
During the last twenty years there has been a 68% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
A higher production index at 60.4 versus 57.2 averaged during 1Q led last month&#39;s rise. Moreover, the employment index rebounded to 55.8 versus 52.9 during 1Q. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment. The inventory index also rose to its highest level (51.3) in a year while the supplier deliveries index increased to its highest (57.7) since October.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501c.jpg" width="353">
To the downside was the new orders index which fell to the lowest level (57.6) since August. New export orders were notably weak as the index dropped to the lowest level (53.4) since last June.
The price index showed further strength with a five point increase to its highest level since November. During the last twenty years there has been a 91% correlation between the price index and the three month change in the PPI for intermediate goods less food &amp; energy.
Are We Engineering Ourselves Out of Manufacturing Jobs? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0101.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/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;05</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">Composite Index</td>
<td>57.3</td>
<td>55.2</td>
<td>53.8</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>57.6</td>
<td>58.4</td>
<td>54.7</td>
<td>57.4</td>
<td>63.5</td>
<td>57.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>71.5</td>
<td>66.5</td>
<td>71.0</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
U.S. Construction Again Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501e.jpg" width="353">
The March value of construction put in place increased another 0.9% on top of the 1.0% rise during February and for the second month, the gain was double the Consensus expectation for a 0.4% increase.
Residential building jumped 1.6% after an unrevised 1.3% February surge. Strength was most pronounced in the value of improvements which jumped 4.5% (-7.0% y/y) while new single family building rose 0.5% (13.5% y/y).
Nonresidential building fell 0.1%, the first decline since last October, and it was led by a 1.7% (+11.2% y/y) drop in office construction. Commercial building rose 0.6% (8.7% y/y) after a huge 3.3% February drop.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501f.jpg" width="353">
Public construction spending rose 0.2% for the second month though construction activity on highways &amp; streets, nearly one third of the value of public construction spending, slipped 0.4% (4.9% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<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/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></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">Total</td>
<td>0.9%</td>
<td>1.0%</td>
<td>8.4%</td>
<td>9.2%</td>
<td>10.9%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.1%</td>
<td>1.2%</td>
<td>8.9%</td>
<td>9.7%</td>
<td>13.6%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>1.6%</td>
<td>1.3%</td>
<td>8.6%</td>
<td>11.5%</td>
<td>18.2%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>9.6%</td>
<td>5.4%</td>
<td>3.9%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.2%</td>
<td>0.2%</td>
<td>6.6%</td>
<td>7.6%</td>
<td>2.5%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
 No Surprises in China's Balance of Payments and Trade Data  
by <a href="/comment/Curley.html">Louise Curley</a> May 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501g.jpg" width="353">
China&#39;s balance of payment data for 2005 were released today and, to no one&#39;s surprise, the current account surplus was a record--$160.8 billion, $67.2 billion in the first half of the year and $93.5 in the second half. For the year as a whole, the surplus was $92.2 billion above last year&#39;s surplus of $68.7 billion. (Data for China&#39;s balance of payments are reported only on a semi annual basis.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501i.jpg" width="353">
With its large current account surplus and a net inflow of capital, China has been piling up international reserves as can be seen in the first chart that compares the current account surplus with the increase in reserves. China is now the world&#39;s largest holder of international reserves having surpassed Japan in November 2004 as seen in the second chart.As of December, 2005, China&#39;s holdings of foreign reserves less gold amounted to $822 billion and the latest data for February, 2006, show a further rise to $856 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060501h.jpg" width="353">
Data for China&#39;s trade through March 2006 was also released today. The widening gap between exports to and imports from the United States shows no sign of diminishing as can be seen in the third chart.
Data on China&#39;s trade and balance of payments may be found in the Haver CHINA and EMERGEPR data bases. The data on the balance of payments are identical in both data bases, but the data on trade are more detailed in the CHINA data base. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">China</a>&nbsp; (Bil. US $)</th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade in Goods</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>77.9</td>
<td>70.1</td>
<td>61.0</td>
<td>11.1</td>
<td>29.7</td>
<td>762.0</td>
<td>593.3</td>
<td>438.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Imports</td>
<td>63.2</td>
<td>66.4</td>
<td>52.3</td>
<td>-4.8</td>
<td>20.8</td>
<td>660.0</td>
<td>561.2</td>
<td>412.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance</td>
<td>14.7</td>
<td>3.7</td>
<td>8.6</td>
<td>11.0 dif</td>
<td>6.1 dif</td>
<td>102.0</td>
<td>32.1</td>
<td>25.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance with U. S.</td>
<td>12.6</td>
<td>10.5</td>
<td>9.2</td>
<td>2.1 dif </td>
<td>3.4 dif</td>
<td>114.2</td>
<td>80.3</td>
<td>58.6</td>
</tr>
<tr>
<td class="firstcol">Balance of Payments&nbsp;</td>
<td>H2 06</td>
<td>H1 05</td>
<td>H2 05</td>
<td>H/H dif </td>
<td>Y/Y dif</td>
<td>2005</td>
<td>2004&nbsp;</td>
<td>2003&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>160.8</td>
<td>67.3</td>
<td>68.6</td>
<td>93.5</td>
<td>92.2</td>
<td>160.8</td>
<td>68.6</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol">Capital Account</td>
<td>&nbsp;4.1</td>
<td>2.2&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>&nbsp;1.9</td>
<td>4.2&nbsp;</td>
<td>4.1&nbsp;</td>
<td>-0.1&nbsp;</td>
<td>-0.0&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Account</td>
<td>58.9</td>
<td>36.1</td>
<td>110.7</td>
<td>22.7</td>
<td>51.9</td>
<td>58.9</td>
<td>110.7</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">Change in Reserves*</td>
<td>-207.0</td>
<td>-100.5</td>
<td>-206.4</td>
<td>-106.6</td>
<td>-0.6</td>
<td>-207.0</td>
<td>-206.4</td>
<td>117.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>-16.77</td>
<td>-5.1</td>
<td>27.05</td>
<td>-11.9</td>
<td>-43.8</td>
<td>-16.77</td>
<td>27.05</td>
<td>18.42</td>
</tr>
</tbody>
</table>


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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/060428g.jpg" width="353">
Besides its monthly labor force survey to measure the number of people employed, Statistics Canada also conducts a survey of establishments, similar to that in the United States. These industry establishment data are part of the compilation of Canada&#39;s monthly GDP series. As with the labor force series, the industry data show good jobs growth in the first two months of 2006, including gains of 15,087 and 34,641 in January and February, respectively.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060428h.jpg" width="353">
At the same time, the establishment data indicate some firming in the manufacturing sector that is not evident in the labor force series. After a long decline, the former began to turn upward in November; the cumulative increase over the four months is only 12,600, but it includes a more marked upturn in the durable goods sector totaling 18,300 since last July. Employment at nondurable goods manufacturers continues in a downward drift. By contrast, the labor force measure shows that the number of people working in manufacturing is still falling, a decrease of 1.2% since October, compared to the 0.7% increase in manufacturing company jobs. These series are not well correlated month-to-month, and can be erratic, so these comparisons could easily be erased by one or two months of reversals in either dataset. Even so, the gain in manufacturing establishment jobs is intriguing, and the labor force series bears monitoring for a sign of new growth there.
Service sector jobs are picking up steam in the establishment data. These had slowed to just a 1.4% increase in 2004, but grew 1.9% last year and through February were already 2.4% ahead of a year ago. The gain in the service industries and the better performance of manufacturing are contributing to growth in Canada&#39;s monthly GDP of 3.3% year-on-year in February, somewhat firmer than last year&#39;s overall increase of 3.0%.

<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/CANSIM/@C6/@C6.HTM">SA, Thousands</a></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">Total NAICS Industries</td>
<td>13,922</td>
<td>13,887</td>
<td>13,647</td>
<td>13,743</td>
<td>13,515</td>
<td>13,337</td>
</tr>
<tr>
<td class="firstcol">Mo/Mo (000) &amp; Yr/Yr % Changes</td>
<td>34.6</td>
<td>15.1</td>
<td>2.0%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing</td>
<td>1,950</td>
<td>1,944</td>
<td>1,967</td>
<td>1,952</td>
<td>1,991</td>
<td>2,045</td>
</tr>
<tr>
<td class="firstcol">Mo/Mo (000) &amp; Yr/Yr % Changes</td>
<td>6.1</td>
<td>-4.9</td>
<td>-0.8%</td>
<td>-2.0%</td>
<td>-2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Service Producing</td>
<td>10,709</td>
<td>10,682</td>
<td>10,463</td>
<td>10,550</td>
<td>10,351</td>
<td>10,213</td>
</tr>
<tr>
<td class="firstcol">Mo/Mo (000) &amp; Yr/Yr % Changes</td>
<td>26.9</td>
<td>18.9</td>
<td>2.4%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">GDP: Mo/Mo &amp; Yr/Yr % Changes</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
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Besides its monthly labor force survey to measure the number of people employed, Statistics Canada also conducts a survey of establishments, similar to that in the United States. These industry establishment data are part of the [...]

Jobs in Canada Show Pick-Up, Even in Manufacturing

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060428e.jpg" width="353">
The employment cost index for private industry workers rose a moderate 0.6% last quarter after a downwardly revised 0.7% increase to close out 2005. Downward revisions to earlier quarters (mostly in benefit costs) resulted in a picture of sharp deceleration in compensation costs during the last two years. Consensus expectations had been for a 0.9% 1Q increase.
The 2.6% increase in the ECI during the last twelve months was the slowest in ten years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060428f.jpg" width="353">
The 0.4% 1Q increase in benefit costs halved the prior quarter&#39;s growth rate and continued a downtrend that since early 2004 has pulled the y/y growth rate to 2.9% from 7.2%. (Annual growth during 2004 was revised to 6.6% from 10.1% reported earlier.)
Wage and salary growth was up slightly to 0.7% from 0.6% averaged during 2005. Service producing industries saw a 0.8% (2.4% y/y) gain while factory sector wages grew 0.5% (NSA, 2.5% y/y).
The latest release encompassed several revisions. To review the latest changes visit BLS <a href="http://www.bls.gov/news.release/eci.nr0.htm">site</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/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></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">Compensation</td>
<td>0.6%</td>
<td>0.7%</td>
<td>2.6%</td>
<td>3.0%</td>
<td>3.7%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.7%</td>
<td>0.6%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.4%</td>
<td>0.7%</td>
<td>2.9%</td>
<td>4.0%</td>
<td>6.6%</td>
<td>6.5%</td>
</tr>
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The employment cost index for private industry workers rose a moderate 0.6% last quarter after a downwardly revised 0.7% increase to close out 2005. Downward revisions to earlier quarters (mostly in benefit costs) resulted in a [...]

Employment Cost Index Eased

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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Kathleen Stephansen, CBE

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Mortgage applications declined 4.2% (+16.4% y/y) in the week ended April 25, after dropping 12.7% (+18.7% y/y) in the week ended April 18, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications to refinance an existing mortgage dropped 3.7% (+42.0% y/y) in the week ended April 25 after plunging 20.0% (+42.5% y/y) in the week ended April 18. Loan applications to purchase a home declined 4.4% (+3.5% y/y) in the latest week after falling 6.6% (+6.4% y/y) in the prior week.

The effective interest rate on a 30-year fixed rate loan edged down 1bp to 7.08% in the week ended April 25 from 7.09% in the week ended April 18. The effective rate on a 15-year fixed rate loan rose 2bps to 6.36% in the week ended April 25 from 6.34% in the week of April 18. The rate on a 30-year jumbo loan rose 3bps to 7.06% in the latest week from 7.03% in the prior week, while the rate on a 5-year ARM eased 7bps to 6.12% in the week ended April 25 from 6.19% in the week ended April 18.

The share of applications to refinance an existing mortgage remained at a 10-month low of 37.3% in the week ended April 25, unchanged from the prior week. The share of loans with an adjustable rate fell to 7.4% in the latest week from 7.5% in the week ended April 18.

The average size of a mortgage loan declined 0.7% (+1.6% y/y) to $384,100 in the week ended April 25, after dropping 6.8% (+1.3% y/y) to $386,800 in the week ended April 18. The average size of a loan to purchase a home rose to $440,100 (+0.9% y/y) in the latest week from $439,900 (+0.5% y/y) in the week prior. The average size of a loan to refinance an outstanding mortgage dropped to $289,800 (+18.5% y/y) in the week ended April 25 from $297,700 (+16.4% y/y) in the week ended April 18.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Refinancing and purchase loan applications decline.
- Effective interest rates are range-bound.
- Average loan size falls

Mortgage Applications Continue to Fall in Latest Week

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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%).


Economy in Brief

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U.S. Income, Spending & Prices Firm in March

Jobs in Canada Show Pick-Up, Even in Manufacturing

Employment Cost Index Eased