Economy in Brief

The median reading for the 18 early reporting manufacturing sectors in the table (17 countries plus the euro area) is lower in March at 48.7 from 49.5 in February. Also, in March the diffusion (breadth) of reporters showing month-to-month improvement fell to 33.3% from 66.7% in February and 61.1% in January. However, diffusion over broader periods (3-mo vs. 6-mo; 6-mo vs. 12-mo and 12-mo vs. 12-mo ago) shows diffusion has been steadily at and above the 60% mark (them as point-to-point diffusion changes). And on those timelines, the median reading for the 12-month average is at 49.8, the 6-month average is at 49.3, and the 3-month average is at 48.7. Despite improving diffusion, the median reading has been slipping, but the slippage has been extremely slow. For the United States, France, Germany and the euro area - as a block - these three, blocs of time show diffusion improving in 10 of the twelve segments, the two deteriorating segments are for comparison with a year ago in the U.S. and comparisons between the 6-month average and the 12-month average for France. All four reporters show improvement in three-months compared to six-months, based on average data. By comparison, the four BRIC countries show only two improvements among the 12 possibilities, and only India shows improvement in three-months compared to six-months.

According to breath, this is ongoing improvement. But median data are not confirming the trend. It’s just another example of how small the current changes are and how the data can show small changes over periods as long as a year, when in reality all we are experiencing are gyrations, and little change in an essentially static environment.

The queue standings (rankings) show only seven of 18 reporters at or above the 50% mark; this is the demarcation line for the median on these ranked data. So, over the last four years data, are arrayed with slightly less than half above and slightly more than half below their respective medians. However, the median reading of these rankings makes it clear that data tilt to the weak side at a 45-percentile standing. On data from January 2021 to date, all March 2025 readings are lower on balance (except India-and that exception is on a small margin, +0.3 points).

In that table, I look at various groups: BRICS, Asia, and a group of the more advanced countries (U.S., U.K., EMU, Canada & Japan); each of them shows very little movement.

However, we have a world with a great deal of change in train, especially changes thrust on Europe by changing U.S. policy to put more of Europe’s own security provision in Europe’s on hands. This is going to ramp up spending and should cause economies to heat up in the year ahead or more. Such a change could spur PMI values, economic growth, stimulate the inflation environment, and alter monetary policy itself. There is change in progress that we can see coming but has not been reflected in this month’s report.

The light vehicle market continued to improve last month, with sales rising to the highest level in four years. U.S. light vehicle sales rose 10.4% (11.8% y/y) to 17.76 million units (SAAR) in March after rising 3.8% to 16.09 million in February. The rise in March vehicle sales accompanied a 1.8% y/y rise in real disposable income through February, which compared to 2.0% growth in 2024.

Sales improvement was broad-based last month. Light truck sales rose 12.1% (13.2% y/y) during March to 14.46 million units (SAAR), after increasing 3.3% in February. Purchases of domestically-made light trucks surged 12.4% (13.1% y/y) to 11.05 million units, after rising 3.3% in February. Sales of imported light trucks jumped 10.7% (13.0% y/y) to 3.40 million units, following February’s 3.4% rise.

Trucks’ 81.4% share of the light vehicle market last month compared to 80.2% in February and set a new record. The share was 80.3% during all of 2024 and 53.3% ten years earlier.

Auto sales also rose last month, by 3.8% (8.2% y/y) to 3.31 million units (SAAR) following a 6.0% February increase. Sales of cars moved to the highest level since July 2021. Purchases of domestically-produced cars rose 3.4% (12.3% y/y) last month to 2.46 million units, after rising 9.2% in February. Sales of imported autos gained 4.9% (-7.6% y/y) to 0.85 million units, following a 2.4% February decrease.

Imports' share of the U.S. light vehicle market eased to 23.9% in March from 24.1% in February. It compared to a May 2023 low of 22.9% before it reached a high of 26.3% in November of 2023. Imports' share of the passenger car market rose to 25.7% last month from 25.4% in February. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.5% in March after holding at 23.8% in February.

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

The large industrial companies that form the most important vanguard readings for this report are the weakest in the first quarter with manufacturing backtracking to reading of +12 from +14 in the fourth quarter. That +12 reading is below its four-quarter average of +13.0. Large nonmanufacturing firms, however, stepped up with a reading of +35 in the first quarter up from +33 in the fourth quarter to the highest standing since the third quarter of 2006, which is the period over which we rank these data. The large manufacturing bellwether reading has a 66.7 percentile standing, while the total industry reading is static at +23 for the first quarter with the percentile standing and its 97th percentile.

The outlook for large manufacturing companies also stepped back to +12 in the second quarter from +13 in the first quarter. Its four-quarter average is +13.3 and that leaves it with the ranking at its 67th percentile quite similar to the current reading for the first quarter for manufacturing. Nonmanufacturing remained at a reading of +28 for the third quarter in a row; this is a second-quarter of 2025 reading; it's one-year average is +27.8 and at +28 this is also the highest outlook reading for nonmanufacturing on this timeline. The total industry reading has an outlook in the second quarter of +20.0, the same as the first quarter, down slightly from the fourth quarter; it compares to a four-quarter average of +20.3 and has a queue percentile standing in its 92nd percentile.

The outlook readings, for the most part, are firm-to-strong. Unfortunately, the manufacturing readings are the weakest; instead of being on their 90th percentile like the total industry and nonmanufacturing, manufacturing readings have 66th percentile standing which leaves them only at the lower border of the top third all readings since 2006.

Nonmanufacturing industries show the strongest readings with 90th percentile standings for transportation, restaurants & hotels, wholesaling, and services for businesses. Among the other reporting nonmanufacturing sectors, the standings are in their 80th percentiles or higher except for personal services that has a softer 70th percentile standing.

Compared to the period just before COVID, all sectors are higher except for services for businesses and personal services that are each one or two points lower than they were in the fourth quarter of 2019 before COVID struck. The strongest advances from the pre-COVID reading are from restaurants & hotels with the 35-point rise in their index, as well as retailing, and real estate each with 24-point increases in their respective indexes; wholesaling has a 22-point rise in its index. Large firm manufacturing overall has a 12-point rise in its index on that timeline while construction has an increase of only two points.

The responses for medium- and small-sized firms are not considered to be harbingers in this survey, but for manufacturing both medium- and small-sized firms have rankings in their low 80th percentile while the nonmanufacturing rankings have standing in their 97th and 98th percentile. However, the outlook for medium- and small-sized firms carry percentile standing in their 70th percentile for manufacturing. There still are readings with rankings in the high 90th percentiles for the nonmanufacturing sector that continues to be quite strong across Japan regardless of the size of the firm reporting