Tom Moeller

1241025V5.jpg

1241025W5.jpg

New orders for durable goods declined 0.8% (-2.1% y/y) during September after falling by the same amount in August, revised from no change. Orders rose a little-revised 9.8% in July, according to the U.S. Census Bureau. The Action Economics Forecast Survey expected a 0.7% decline last month. The decline in orders reflected a 3.1% drop (-7.9% y/y) in orders for transportation equipment after they were off 3.4% in August. Orders outside the transportation sector rose 0.4% (1.1% y/y) in September after increasing 0.6% in August.

Last month’s weakness in transportation orders reflected fewer aircraft & parts bookings. They fell 22.9% due to a 22.7% decline in nondefense aircraft orders. Defense sector aircraft orders fell 3.2%. Motor vehicle & parts orders rose 1.1% (0.1% y/y) after edging 0.1% lower in August. Elsewhere, primary metals orders rose 0.5% (0.9% y/y) while fabricated metals orders jumped 2.1% (3.2% y/y). Machinery orders slipped 0.2% (-0.7% y/y), the third month of slight decline, while computer & electronics fell 0.3% (+1.4% y/y) following a 0.7% rise. Electrical equipment orders were little changed (1.4% y/y) following a 2.4% rise. Orders for other durable goods rose 0.2% (0.7% y/y) following a 0.3% August increase.

Capital goods orders declined 2.8% in September (-6.3% y/y) after falling 2.6% in August. Nondefense capital goods orders declined 4.5% (-13.1% y/y) after a 4.4% decline while nondefense capital goods orders excluding aircraft rose 0.5% (0.1% y/y) after easing 0.3% in August. Defense capital goods orders jumped 6.4% and by one-half y/y, following an 8.4% increase.

Shipments from all manufacturing industries eased 0.4% (+0.2% y/y) during September after falling 0.7% in August. Durable goods shipments fell 0.6% (+1.6% y/y) last month, the same as in August. Transportation product shipments fell 2.4% (+4.3% y/y) after a 2.3% decline. Shipments excluding the transportation sector rose 0.3% both m/m and y/y after rising 0.2% in August. Machinery shipments held steady (-0.4% y/y) after rising 0.4% while computer & equipment shipments improved 0.4% (-0.1% y/y) after holding steady in August. Electrical equipment & appliance shipments rose 0.9% (1.3% y/y) following a 0.5% increase. Nondurable goods shipments fell 0.2% (-1.1% y/y) after falling 0.7% in August.

Unfilled orders for durable goods rose 0.2% (3.1% y/y) in September for the third straight month. Unfilled orders in transportation sector rose 0.1% (5.0% y/y) after rising 0.2% in August. Excluding transportation, unfilled orders rose 0.2% (-0.2% y/y), the same as they did in August. Unfilled orders for durable goods less transportation rose 0.2% (-0.2% y/y) and have been trending sideways since 2022.

Inventories of all manufactured products eased 0.2% in September (+0.2% y/y) after a 0.1% August rise. Durable goods inventories slipped 0.2% (+0.9% y/y) after holding roughly three straight months. Nondurable goods inventories slipped 0.1% (-0.9% y/y) after rising 0.2% in August, though petroleum inventories fell 1.4% (-6.2% y/y in September after rising 0.4% in August.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

1241025X5.jpg

1241025Y5.jpg

- Transportation orders decline with falloff in aircraft orders; excluding  transportation, orders rise modestly.
- Shipments ease for second month. Outside of transportation, shipments rise slightly.
- Unfilled orders rise negligibly for third straight month while inventories slip.

U.S. Durable Goods Orders Fall in September

1241025F12.jpg

1241025G12.jpg

During FY 2024, the U.S. Treasury Department reported a U.S. government budget deficit of $1.833 trillion compared to a $1.695 trillion deficit in FY 2023. It was the third largest deficit on record. For September alone, the government actually ran a budget surplus of $64.3 billion, which compared to a deficit of $170.7 billion twelve months earlier. The Action Economics Forecast Survey expected a $16 billion surplus in September.

Overall revenues last fiscal year increased 10.8% y/y as individual income tax receipts rose 11.5% y/y. The level of corporate tax receipts increased 26.3% y/y for the full fiscal year. Social insurance revenues increased a lessened 5.9% y/y and excise taxes increased 33.8% y/y in FY’24. Customs duties fell 4.1% y/y, continuing the decline since late-2022.

Federal government outlays increased 10.1% y/y in FY’24 after a 2.2% decline in FY’23. Defense spending rose 6.5% y/y, about as it did in FY’23. Social Security outlays rose 7.9% y/y after rising 11.1% y/y in FY’23. Interest payments soared 33.7% y/y in FY’24 after a 38.7% rise a year earlier. Health program spending rose 2.5% y/y after declining 2.8% y/y in FY’23 while Medicare payments rose 3.1% y/y. Income security outlays fell 13.3% y/y compared to a 10.6% y/y decline in FY’23.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.

1241025H12.jpg

1241025I12.jpg

- Personal income tax receipts remain strong.
- Corporate tax payments surge.
- Social Security spending fuels outlay growth.

U.S. Government Budget Deficit Deepens in FY 2024

Andrew Cates

**The IMF’s Economic Outlook**
The IMF expects global growth to remain broadly flat – decelerating marginally from 3.3% y/y in 2023 to 3.2% in both 2024 and 2025. This outlook is largely unchanged from the forecasts that were published in April 2024 and October 2023. But there were some nuances beneath the surface, with upward revisions to the outlook for the US offset by downward revisions to the euro area, and to Germany in particular, in 2025.

241024Z1.jpg

**Policy Uncertainty**
The IMF’s relative optimism about the outlook for the US and the pessimism about Germany can be traced to a number of factors, though the latter’s high energy costs along with the plight of its manufacturing sector - and its auto sector in particular - have been key. These have combined to generate very high levels of policy uncertainty in Germany relative to its European peers and particularly compared to the US (see chart 2).

241024Z2.jpg

**Global trade**
Weak global demand, particularly from key markets like China, has also hit Germany’s economy. And this week’s latest data from South Korea have additionally underscored the fragility of that demand. For instance export growth in the first 20 days of October slowed to a 14 month low of -4.2% y/y on a working-day adjusted basis after +3.1% in September. PPI inflation also weakened, to 0.9%y/y in September from 1.6% in the previous month.

241024Z3.jpg

**The Energy Transition (and the UK)**
There are a number of downside risks to the outlook that the IMF – and other economic forecasters – have been citing in recent months. One of the most critical is climate change and the energy transition and how this is amplifying instability in energy and food markets. Ahead of next week’s Budget announcement from the new Labour government, there has been an active debate about the provision of electricity, amidst a dearth of public investment in nuclear energy sources. This is notwithstanding a relatively impressive shift away from fossil fuels toward more sustainable renewable energy sources over the past few years (see chart 4).

241024Z4.jpg

**The Policy Mix**
How policymakers now calibrate both monetary and fiscal policy will also clearly be key for the evolution of the broader world economy and financial markets in the period ahead. As the IMF additionally noted in its latest report, monetary policy has tightened considerably over the past two years and with respect to current levels of real policy rates, remains restrictive at present (with the notable exception of Japan). When measured with reference to shifts in cyclically-adjusted primary balances, fiscal policy is also now a little tighter in most major economies compared with two years ago.

241024Z5.jpg

**Structural Reforms**
Supply side rigidities stemming from reform fatigue, lacklustre investment and broader global challenges (including climate change) are additional threats to global economic stability. On the reform front it is certainly of note that Infrastructure Ratings from the Economist Intelligence Unit for several major advanced economies have, on the whole, declined over the past 10 years, albeit from a relatively high base. And even in fast growing developing economies, those ratings have also often either declined a little (e.g. for China) or edged only marginally higher (e.g. for India) even though the underlying base of these ratings is usually much weaker.

241024Z6.jpg

In the absence of incoming data that might have influenced the economic outlook, the financial press has been dominated by other factors, including Q3 corporate earnings reports and US political shenanigans. This week’s IMF meetings in Washington have additionally grabbed headlines and particularly the accompanying reports on the global economic outlook and financial market stability. While the IMF’s projections for global growth for 2024 and 2025 were little-changed compared with the previous full report in April (see chart 1), there were some notable revisions beneath the surface. Upgrades to the US growth outlook, for example, were offset by downgrades to Europe. And downside risks were additionally emphasised amidst elevated policy uncertainty in a number of countries (chart 2). These risks stem from a range of issues, including geopolitical stress in the Middle East, China’s imbalances and their reverberations (chart 3), high levels of debt together with other supply-side challenges such as climate change, the energy transition (chart 4) and ageing populations. Against that backdrop, policy decisions concerning the calibration of monetary and fiscal policy will be crucial (chart 5), as will the ability to implement supply-side reforms (chart 6).

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/0MYxAxXEI8UTDU2rqXghKr?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Revisions, Risks, Reforms, Repeat

1241024A4.jpg

1241024B4.jpg

The Census Bureau reported that new single-family home sales rose 4.1% (6.3% y/y) during September to 738,000 (SAAR) after falling 2.3% in August to 709,000, revised from 716,000. Sales rose 8.0% in July to 726,000, revised from 751,000. The Action Economics Forecast Survey expected new home sales of 718,000 for September. Sales were 42.2% higher than the 519,000 low in July 2022, but remained 28.4% below their peak of 1.031 million in October 2020. The rise in September sales accompanied a decline in the average 30-year fixed-rate mortgage to 6.18% last month from 6.50% in August. It has since risen to 6.44% last week according to Freddie Mac.

The median sales price of a new home rose 3.7%, unchanged y/y, in September to $426,300 (NSA) after falling 3.8% to $410,900 in August. The median sales price was 7.4% below its October 2022 peak of $460,300. The average sales price of a new home increased 3.0% (-2.7% y/y) to $501,000 in September after falling 4.6% to $486,500 in August. The average price was 7.4% below its peak of $541,200 in July 2022. These sales price data are not seasonally adjusted.

New home sales were mixed m/m throughout the country in September. New home sales in the Northeast rose 21.7% (-22.2% y/y) to 28,000 after falling 30.3% in August. In the South, sales increased 5.8% (14.7% y/y) last month to 477,000 after rising 7.1% in August. Holding steady (-10.9% y/y) at 156,000 were new home sales in the West after they declined 17.9% in August. Working lower, new home sales in the Midwest weakened 2.5% (+14.9% y/y) to 77,000 after falling 3.7% in August.

The number of unsold new homes on the market in September rose 0.4% (8.0% y/y) to 470,000 following a 1.5% August increase. The seasonally adjusted months' supply of new homes for sale fell to 7.6 months in September from 7.9 months in August. It remained up from a low of 6.9 months in May 2023.

The median number of months a new home stayed on the market edged up to 2.5 months in September from 2.2 months in both August and July. The reading remained up from the record low of 1.5 months in both September and October of 2022 but down from a high of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

1241024C4.jpg

1241024D4.jpg

- Sales rise to highest level since May 2023.
- Median sales price increase reverses earlier decline.
- Sales performance is mixed regionally.

U.S. New Home Sales & Prices Post Firm Gains in September

Winnie Tapasanun

1241024J6.jpg

1241024K6.jpg

The Kansas City Fed manufacturing composite index was at -4 in October, up from -8 in September and slightly down from -3 in August, the October Manufacturing Survey by the Federal Reserve Bank of Kansas City showed, indicating Tenth District manufacturing activity declined modestly this month. The October index, negative for the 14th straight month, was up from -6 in October 2023 but well below a peak of 31 in March 2022. “The decline was present in both durable and nondurable goods, particularly chemical, steel, and beverage manufacturing,” the Kansas City Fed reported.

The ISM-adjusted index calculated by Haver Analytics rebounded to 47.3 (NSA) in October after a 3.4-point decline to 44.0 in September, indicating a contraction in factory activity for the fifth consecutive month but at a less severe pace. The latest ISM-adjusted figure was above 45.3 in October 2023 but well below a record-high 68.9 in March 2022.

In the latest survey, the new orders index was less negative in October, rising to -5 after a two-point decline to -14 in September; the October index registered the 27th straight negative reading and the highest since February. Twenty-nine percent of respondents (NSA) reported orders gains in October while 38% reported declines. The production index jumped to zero this month after a 24-point plunge to -18 in September; these readings were well below a high of 36 in March 2022. The shipments index rebounded to 7 in October, the first positive reading and the highest since May, after an 11-point drop to -12 in September; however, having remained down from a peak of 40 in March 2022.

The raw materials inventory index dropped to -10 in October, the eighth negative reading in 10 months, following a four-point increase to 4 in September; these figures were well below a high of 28 in March 2022. The order backlog index rose to -14 this month, the 27th consecutive negative reading, after dropping to -33 in September; these numbers were significantly below a record-high 43 in July 2021. The supplier delivery time index increased to -1 in October, the fourth successive negative reading, from -2 in September; these readings were well below a high of 51 in March 2022.

On the labor front, the employment index increased to -2 in October following a four-point decline to -11 in September, posting the fifth straight negative reading and the highest level since a positive 9 in May. The index was down from a high of 30 in May 2022. Fifteen percent of respondents (NSA) reported increases in the number of employees in October while 19% reported decreases.

On the pricing front, the prices received index for finished products jumped to 11 in October, the highest level since May 2023, after an 11-point decrease to -5 in September. These readings remained well below a high of 50 in June 2022 and a record-high 62 in August 2021. An increased 18% of respondents (NSA) reported higher prices received in October while a lessened 11% reported price declines. The prices paid index for raw materials rose to 19 this month, the highest reading since May, after a five-point drop to 13 in September; nevertheless, having remained significantly down from a high of 73 in April 2022 and a record-high 87 in October 2021.

Expectations for future activity continued to stay positive, with activity in most categories expected to gain and raw materials prices expected to rise at a faster pace than finished product prices. The expectations index for six months ahead was at 7 in October, slightly down from 9 in September and 8 in August. The expectations indexes for production (27), shipments (21), and new orders (14) rose in October, while those for raw materials inventories (-14) and supplier delivery time (-7) dropped for the month. The expectations index for employment fell to 15 in October from 18 in September and the index for capital expenditures fell to 1 from 11; however, remaining in positive territory and indicating expansion. The expectations index for raw materials prices rebounded to 38 in October following a seven-point drop to 33 in September, while the index for finished goods prices rose to 35, the highest level since March 2023, after September’s 12-point jump to 33.

The latest survey was conducted for a six-day period from October 16-21, 2024 and included 103 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

1241024L6.jpg

1241024M6.jpg

- October Composite Index at -4 reflects negative readings in materials inventories (-10), new orders (-5) and employment (-2), while production (0) rebounds from September’s negative level (-18).
- Price indexes rise, w/ prices paid (19) up to a 5-month high and prices received (11) up to a 17-month high.
- Expectations for future activity remain positive.

Kansas City Fed Manufacturing Index Less Negative in October

1241024F12.jpg

1241024G12.jpg

The Chicago Federal Reserve Bank reported that its National Activity Index (CFNAI) fell to -0.28 during September and reversed the August improvement to -0.01, revised from +0.12. The recent high of +0.39 was reached in February. The three-month moving average of the index eased to -0.19 during September from -0.14 in August. The index has been consistently negative since late in 2022, suggesting below-trend economic growth. During the last 20 years, there has been a 91% correlation between the three-month index level and the q/q change in real GDP.

The report indicated that each broad category of indicators used to construct the index declined in September. The Production & Income category contributed -0.21 to the total in September after adding 0.04 in August. It remained up from a January low of -0.48, continuing to suggest a lessening of negative pressure. The Employment, Unemployment & Hours series contributed -0.03 in September versus zero contribution in August. It has been mostly negative since early last year. The Personal Consumption & Housing figure contributed -0.01 last month after -0.03 in August. It remained higher, however, than the January low of -0.09. The Sales, Orders & Inventories figure contributed a steady -0.03 last month versus +0.07 in August. These negative readings reversed a July improvement.

The diffusion index of the CFNAI, which measures the breadth of component change, rose to -0.16 in September from -0.21 in August. It compared to the low of -0.27 in October of last year and was below the recent high of +0.24 in September 2022.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's **SURVEYS** database.

- Production & income lead softening.
- Other series are negative as well.
- Trend weakens.

Chicago Fed National Activity Index Weakens in September

Sandy Batten

1241024A5.jpg

1241024B5.jpg

Initial claims for unemployment insurance fell 15,000 to 227,000 seasonally adjusted in the week ended October 19, from 242,000 in the previous week, revised up 1,000 from the initially reported 241,000 level. The Action Economics Forecast Survey had expected 244,000 in the October 19 week. Press reports indicate that the 35,000 jump to 260,000 in the October 5 week was related to the impact of Hurricane Helene. Over the following two weeks, weekly claims have fallen by 33,000 to a level just above the one that existed prior to the hurricane. Still, the effects of both Hurricane Helene and Milton will likely keep weekly claims data volatile in the coming weeks. The four-week moving average of initial claims was 238,500 in the week ended October 19, up from 236,500 the week before.

In the week ended October 12, the total number unemployment benefit recipients—also known as insured unemployment—was 1.897 million, up 28,000 from 1.869 million in the week of October 5, which was revised up slightly from 1.867 million. The four-week moving average of insured unemployment was 1.861 million, up from 1.843 million in the prior week.

Also, in the week ended October 12, the insured unemployment rate edged up from 1.2% to 1.3%, its first weekly change since it rose to 1.2% in the week ended March 11, 2023. This is the number of beneficiaries as a percent of covered employment.

Economic conditions vary widely across states and territories. In the week ended October 5, the highest unemployment rates were in New Jersey (2.17%), California (1.92%), Washington (1.78%), Nevada (1.59%) and Rhode Island (1.58%). The lowest rates were in South Dakota (0.23%), North Dakota (0.34%), Florida (0.34%), Virginia (0.41%) and Alabama (0.43%). Rates in other notable states include New York (1.48%), Illinois (1.40%), Pennsylvania (1.33%) and Texas (1.00%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

1241024C5.jpg

1241024D5.jpg

- Claims totaled 227,000, down a more-than-expected 15,000 from the previous week.
- Decline reflected some normalization after the hurricane-induced surge in early October.
- Continuing claims (reported with a one-week lag) rose sharply.

U.S. Initial Unemployment Claims Fell Again in Week of October 19

241023J1.jpg

241023K1.jpg

Sales of existing homes fell 1.0% (-3.5% y/y) in September to 3.84 million units (SAAR) after declining 2.0% in August to 3.88 million, revised from 3.86 million. This was the lowest level of sales since October 2010 despite the decline in 30-year mortgage interest rates last month to an average 6.18% versus the peak 7.06% averaged in May. It has since risen to 6.44% last week. The Action Economics Forecast Survey expected September sales of 3.85 million units. The sales figures are based on closings of sales signed over the past couple of months.

The median price of all existing homes (NSA) fell 2.3% in September (3.0% y/y) to $404,500 after declining 1.7% in August to $414,200, revised from $416,700. It was the third consecutive monthly decline after having risen to a record $426,900 in June. Prices remained almost twice their level of $209,100 ten years earlier. The median price of an existing single-family home fell 2.6% (+2.9% y/y) to $409,000 in September after two months of decline. The median price for condos and co-ops were off 0.8% (+2.2% y/y) to $361,600, also after two months of decline.

By region, sales of existing homes in the Northeast declined 4.2% (-6.1% y/y) to 460,000 in September following a 2.0% August fall. Sales in the Midwest were off 2.2% last month (-5.3% y/y) to 900,000 after holding steady in August. Sales in the South declined 1.7% in September (-5.5% y/y) to 1.72 million following a 2.8% August drop. To the upside, existing home sales in the West rose 4.1% (5.6% y/y) to 760,000 after declining 2.7% in August.

The number of existing homes for sale (NSA) rose 1.5% (23.0% y/y) to 1.39 million last month after rising 2.2% in August. The supply of homes on the market at the current selling rate (NSA) inched up to 4.3 months in September from 4.2 months in August. This figure has generally risen since February. The record low in supply of 1.6 months was reached in January 2022. These figures date back to January 1999.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

241023L1.jpg

241023M1.jpg

- Sales weaken for sixth month in last seven.
- Declines posted in all regions except the West.
- Median price falls for third straight month.

U.S. Existing Home Sales Ease During September

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

**Global growth**
Latest flash PMI readings reveal a widening gap in manufacturing performance across major economies. Europe remains mired in contraction, with both the UK and euro area registering PMI figures below the 50 threshold. The UK’s manufacturing sector is particularly under pressure, with the PMI dropping to a new low not seen in over a year—reflecting weak output and mounting challenges from both domestic uncertainty and external shocks, including the disruptive impact of recent US trade actions. While the euro area shows tentative signs of stabilization, with PMI readings inching higher, the recovery remains fragile. In sharp contrast, India’s manufacturing sector continues to outperform, with PMI figures climbing further and signalling resilient industrial momentum amidst global headwinds.

250425Z1.jpg

**US capex intentions**
The latest reading from the US Philly Fed survey suggests a sharp drop in capex intentions among manufacturers in the Philadelphia region, likely reflecting growing uncertainty in the wake of the US administration’s surprise announcement of sweeping tariffs on April 2nd, 2025. This abrupt policy shift has rattled business confidence, echoing past episodes—such as during the 2008 financial crisis and early stages of the pandemic—when capex sentiment similarly plunged. The downturn underscores how policy-induced trade disruptions can swiftly chill investment appetite, particularly in manufacturing sectors exposed to global supply chains.

250425Z2.jpg

**South Korean trade**
The fallout from President Trump’s “reciprocal” tariffs and the rapid escalation of the trade dispute with China is also now becoming evident in Asia’s trade data. South Korea’s trade figures for the first 20 days of April—often seen as a bellwether for global trade—fell sharply compared to the same period last year. The drop was led by a steep decline in exports to the United States, where tariffs on Chinese goods have surged to as high as 145%, effectively choking bilateral trade flows outside a narrow band of exemptions for strategic goods like electronics and semiconductors. Even these sectors are feeling the strain: South Korea’s semiconductor exports continued to decelerate in April, highlighting the broader collateral damage of deepening trade tensions.

250425Z3.jpg

**Gold prices**
The latest escalation in US-China trade tensions is reverberating far beyond traditional trade channels. Market sentiment has deteriorated noticeably, weighed down by darkening global growth prospects and deepening uncertainty over the future of relations between the world’s two largest economies. The forced decoupling is also reshaping investor behaviour, particularly among Chinese investors, who are increasingly turning to stateless safe-haven assets like gold. This shift is evident in the surge in trading volumes on the Shanghai Gold Exchange and the steady climb in global gold prices—buoyed further by a weakening US dollar. The trend points to rising concern among Chinese investors about the geographic concentration of their wealth, as Washington’s increasingly hawkish posture prompts a reassessment of cross-border financial exposure.

250425Z4.jpg

**The US dollar and market volatility** 
Recent sweeping US-led trade actions and a broader turn toward protectionism have sharply eroded the goodwill and soft power long associated with the US and its financial assets. As Washington becomes an increasingly prominent source of global instability, investor confidence in the US dollar as a safe-haven currency has weakened. This loss of faith is reflected across asset markets, with the dollar’s persistent and more entrenched decline against major currencies standing out as a clear signal of a broader reassessment of the US’s global economic role. Elevated market uncertainty reinforces this shift, as underscored by still-high—albeit slightly moderated—readings on the VIX volatility index.

250425Z5.jpg

**Asia’s consumption**
Viewed in a broader context, the recent actions by the US may signal an effort to rebalance its economy—though whether this strategy is well-calibrated remains highly contested. As the issuer of the world’s dominant reserve currency, the US has long been ensnared in the so-called Triffin dilemma: global demand for dollar-denominated assets has sustained persistent trade deficits, gradually undermining the competitiveness of its domestic manufacturing and other tradable sectors. China, by contrast, grapples with the mirror image of this problem. Its growth model remains heavily anchored in manufacturing and external surpluses, and it is now under mounting pressure to pivot toward consumption-led growth—an imperative sharpened by the latest wave of US measures designed to curb Chinese export strength.

250425Z6.jpg

Financial market volatility has remained elevated over the past several days as investors attempted to weigh a modest improvement in sentiment—driven by a potential, if partial, retreat by the US administration from its aggressive tariff stance—against a still-cloudy global outlook. Signals from flash PMI surveys on global growth remain mixed: Europe continues to stagnate, with the UK particularly weak, while India stands out with resilient and rising manufacturing activity (chart 1). In the US, most of the incoming data suggest that business confidence has faltered, with capital expenditure intentions plunging particularly sharply in the wake of the April 2nd tariff announcement (chart 2). The drag from trade tensions is, moreover, becoming more evident: South Korea’s exports have slumped, especially to the US, and even sectors granted exemptions—like semiconductors—are showing signs of strain (chart 3). These pressures are reverberating through financial markets as well, where Chinese investors are shifting into gold as a hedge, fuelling record trading volumes on the Shanghai Gold Exchange and lifting global gold prices (chart 4). Meanwhile, a broadly-based decline in the US dollar and persistently high readings on the VIX index arguably reflect a deeper reassessment of US assets as reliable safe havens amid mounting policy unpredictability (chart 5). Beneath these short-term ripples lie more entrenched structural challenges: the US is seeking to rebalance away from external deficits linked to its reserve currency role, while China is under growing pressure to pivot toward consumption-led growth—an imperative sharpened by American efforts to choke off its export strength (chart 6). In short, the latest softening in US trade rhetoric may offer brief relief, but the underlying economic, geopolitical, and structural crosswinds remain very much in play.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/2IjMlHRbWf4hxzucxtpZJg?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Dollar Dips and Trade Trips

250425J5.jpg

250425K5.jpg

The Federal Reserve Bank of Kansas City reported that its index of manufacturing sector activity declined to -4 during April from -2 in March, indicating a continued decline in factory sector activity. The index has been at zero or below since October 2022. This survey was taken between April 16-21.

Haver Analytics calculates an index based on the Kansas City results which is comparable to the ISM series. This index eased to 50.0 (NSA) from 51.4 in March. It compared to a low of 43.7 last July.

The new orders index of -11 this month compared to -12 in March. Thirty percent (NSA) of respondents reported higher orders while 37% reported a decline. Shipments improved to -2 from -4 and remained above -12 in December. Thirty-three percent (NSA) of respondents reported higher shipments while 28% reported a decline. Employment fell to -11 this month from -4 In March. It has been negative for three straight months. Thirteen percent (NSA) of respondents reported more hiring while 25% reported less. The average workweek index fell to -6 from +6 in March. Supplier delivery times surged to 13 from -1 as a higher 18% (NSA) of respondents reported a quickening of delivery speeds and a lessened 2% indicated a slowdown. Finished goods inventories rose to +5 from -8 in March, indicating the greatest rate of inventory accumulation in four months. Materials inventories weakened to -5 in April from +4 in March.

Inflation indicators strengthened in April. The prices paid index for finished products jumped to 29 from 15 in March. It was the highest reading in almost three years, up from a low of -3 in July 2023. Thirty-four percent (NSA) of respondents reported higher prices while none paid less. The raw materials index held at 42, up from a low of -1 in October 2023.

The composite index of expectations six months ahead fell to 6 in April from 10 in March. It was below a high of 17 in December. Expectations for future shipments fell to 9 this month, down from 31 in December. Orders expectations also weakened significantly, with the index falling to a minimal 3 from 20 in March. The employment reading of 1 compared to zero in March and 19 in December. Expectations continue to be for higher prices. The expectations index for finished goods prices jumped to 59, a roughly three-year high, from 39 in March. Raw material prices jumped to 71 in April, also a three-year high, from 57 in March.

The latest survey was conducted between April 16-21, 2024 and included 97 responses from factories in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

The Fed’s latest **Beige Book** covering regional economic conditions is available [here](https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20250423.pdf).

250425L5.jpg

250425M5.jpg

- Index has moved sideways for over two years.
- Most components remain negative.
- Prices paid reading surges.

Kansas City Fed Manufacturing Activity Index Declines in April; Expectations Diminish

250424J1.jpg

250424K1.jpg

Existing home sales declined 5.9% (-2.4% y/y) during March to 4.02 million units after rising 4.4% to 4.270 million units in February, revised from 4.26 million, according to the National Association of Realtors (NAR). The Action Economics Forecast Survey expected 4.15 million unit sales. The March sales decline accompanied an easing in the effective 30-year mortgage interest rate to an average 6.65% in March from 6.84% in February. The sales figures are based on closings of sales signed over the past couple of months.

Existing single-family home sales in March declined 6.4% (-2.2% y/y) to 3.64 million units after a 5.7% increase to 3.89 million in February. Sales of condos and co-ops held steady (-5.0% y/y) at 380,000, following a 7.3% February decline.

Sales declined in all regions in March. Sales in the West fell 9.4% (+1.3% y/y) to 770,000 after a 13.3% strengthening in February. Sales in the South declined 5.7% (-4.2% y/y) to 1.81 million after a 4.9% February increase. Sales in the Northeast were off 2.0%, unchanged y/y to 490,000, down for the third straight month. Sales in the Midwest declined 5.0% (-3.1% y/y) to 950,000 units after holding steady in February.

The median price averaged by all existing homes (NSA) rose 1.7% (2.7% y/y) to $403,700 in March after a 0.9% February increase. Prices remained below a high of $426,900 in June 2024. The median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 in March and the median price of condos and co-ops increased 2.3% (1.5% y/y) to $363,000 last month. Prices for all homes rose 2.3% (+3.5 y/y) in the Midwest to $302,100. In the South, prices rose 1.2% (0.6% y/y) to $360,400. Prices in the Northeast prices increased 0.8% (7.7% y/y) to $468,000 while in the West prices rose 1.1% (2.6% y/y) to $621,200.

The number of existing homes for sale (NSA) rose 8.1% (19.8% y/y) to 1.33 million units in March following a 4.2% February increase. The supply of homes on the market at the current selling rate (NSA) increased to 4.0 months. A high of 4.2 months occurred in September 2024. The record low in supply of 1.6 months occurred in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

250424L1.jpg

250424M1.jpg

- Sales are lowest since September.
- Decline extends throughout the country.
- Median sales price increases.

U.S. Existing Home Sales Fall Sharply in March

250424V4.jpg

250424W4.jpg

New orders for durable manufactured goods jumped 9.2% (11.9% y/y) during March after increasing 0.9% in February, revised from 1.0%. A 2.0% increase had been expected in the Action Economics Forecast Survey. A 27.0% rise (31.2% y/y) in transportation sector orders accounted for the rise, following a 1.2% gain. Excluding the transportation sector, new orders for durable goods held steady (+2.2% y/y), after a 0.7% rise during February.

The March rise in transportation orders was driven by a more-than-doubling of aircraft & parts orders and a 2.3% increase (0.6% y/y) in motor vehicles & parts, coming on the heels of a 5.1% February gain. Primary metals orders rose 0.7% (4.6% y/y) after rising 1.3% while fabricated metals orders increased 0.2% (2.7% y/y) after a 1.2% rise. Machinery orders edged 0.1% higher (1.1% y/y) after increasing 0.8% in February. Elsewhere, orders declined. Computer & electronic product orders fell 1.2% (+2.7% y/y) following a 0.1% easing while electrical equipment, appliance & component orders declined 0.5% (5.2% y/y) after rising 0.6% in February.

Nondefense capital goods orders surged 29.4% (32.3% y/y), while nondefense capital goods orders excluding aircraft improved 0.1% (1.8% y/y) in March after falling 0.3% in February. Defense capital goods orders fell 9.4% (+3.5% y/y), the sixth straight month of sharp decline.

Factory shipments of durable goods edged 0.1% higher (3.7% y/y) in March following a 1.3% February rise. Transportation sector shipments fell 0.5% (+7.3% y/y) after a 2.4% gain. Shipments excluding the transportation sector improved 0.4% (2.1% y/y) following a 0.8% rise. Machinery shipments gained 0.5% (0.3% y/y) following a 0.9% rise while computer & electronic product shipments eased 0.2% (+4.0% y/y) after rising 1.6%. Shipments of electronics & appliances rose 0.5% (3.7% y/y) after a 0.3% decline. Shipments of all manufactured products eased 0.1% (+2.1% y/y) in March after improving 0.7% in February. Shipments of nondefense capital goods less aircraft rose 0.3% (0.8% y/y) after rising 0.7% in February.

Unfilled orders of durable goods rose 2.0% (2.3% y/y) during March after a 0.1% February gain. Excluding transportation, backlogs eased 0.1% (+0.7% y/y) after no change in February. Inventories of durable goods edged 0.1% higher (1.0% y/y) following no change during both of the prior two months. Less transportation, durable goods inventories rose 0.2% (0.3% y/y) after holding steady in February. Inventories of all manufactured products rose 0.1% (1.0% y/y) during March for the third month in a row.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

250424X4.jpg

250424Y4.jpg

- Increase exceeds expectations after moderate February rise.
- Transportation orders account for all of last month’s gain.
- Nondefense capital goods less aircraft orders are minimally higher.

U.S. Advance Durable Goods Orders Surge During March

250424A14.jpg

250424B14.jpg

The Chicago Fed National Activity Index (CFNAI) was at -0.03 in March, down from +0.24 in February (+0.18 initially) and up from -0.26 in January (-0.08 previously), today’s report from the Federal Reserve Bank of Chicago showed, indicating U.S. economic growth decreased for the month. The March CFNAI registered the second negative reading in three months and the eighth negative in 10 months; it was up from -0.20 in March 2024 but below a high of +0.38 in February 2024.

The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, dropped to -0.01 in March after rising to +0.12 in February (+0.15 initially), posting the first negative reading since December; nevertheless, it was an improvement from -0.21 in March 2024. The CFNAI-MA3 is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession. Thus, the March reading suggests that the U.S. economy is not currently in a recession.

The March negative reading reflected m/m drops in two of the four CFNAI key components and three negative contributions. The contribution of the Production & Income index decreased to -0.09 in March from +0.25 in February; however, it was up from -0.10 in March 2024 and a low of -0.59 in December 2022. The contribution of the Sales, Orders & Inventories index fell to -0.03 in March from +0.01 in February, but it was up from -0.05 in March 2024 and a low of -0.23 in January 2024. The Employment, Unemployment & Hours index contributed -0.01 in March, slightly up from -0.02 in February and improved from -0.04 in March 2024. Meanwhile, the contribution of the Personal Consumption & Housing index to the CFNAI rose to +0.11 in March, the highest reading since January 2023, after rebounding to a neutral value (0.00) in February; it was also up from -0.01 in March 2024.

The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, fell to -0.01 in March after posting +0.12 in February (+0.16 initially) and +0.07 in January (+0.08 previously) and a string of negative readings from March 2023 to December 2024. A reading of zero indicates that all of the indicators are growing at their long-term average. The March reading was up from -0.18 in March 2024 and a low of -0.35 in October 2023; however, having remained below a high of +0.25 in September 2022.

The CFNAI is a weighted average of 85 indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's **SURVEYS** database.

- CFNAI -0.03 in March vs. +0.24 in February.
- Two of four CFNAI components fall m/m and three make negative contributions.
- Personal Consumption & Housing index rises to the highest since Jan. ’23.
- CFNAI-MA3 declines to -0.01, the first negative reading since Dec.; still above -0.70 (recession signal).