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Chart and compare multiple data series with accompanying data table of values

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Excel and PowerPoint direct export and complete integration (dynamic spreadsheets and presentations update on a click)

DLXVG3

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DLX Add-ins for all versions of Excel provide instant data updates of entire workbooks

Use DLXVG3 to locate data series codes from within any file, easily creating new spreadsheets for analysis

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Excel Spreadsheet Add-ins

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Haver offers timely, accurate, and professionally supported data via an update service, meeting the strictest demands of the institutional research community

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Data Link Express

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HaverView

[Matlab](http://matlab.com) by The MathWorks lets you access, visualize, and analyze historic time-series data to identify patterns or uncover complex relationships. From within a single environment you can:

- Access data from multiple sources including files, spreadsheets, databases, data providers, and the Web
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MATLAB

[Stata Data Analysis and Statistical Software](https://www.stata.com) by StataCorp LP is an integrated statistical package designed for researchers of all disciplines. It provides the ability to do data analysis, data management and graphics and has features such as multiple imputation, factor variables, GMM, competing-risks regression, state-space modeling, predictive margins, and more.

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Stata

[SAS](https://www.sas.com) provides an integrated environment for predictive and descriptive modeling, data mining, text analytics, forecasting, optimization, simulation, experimental design and more. From predictive analytics to model deployment and process optimization, SAS provides a range of techniques and processes for the collection, classification, analysis and interpretation of data to reveal patterns, anomalies, key variables and relationships, leading ultimately to new insights and better answers faster.

[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

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A popular open source option for statistical computing and graphics that is available on many UNIX platforms, Windows and MacOS

Estimating, evaluating, and forecasting ARIMA models

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Understanding the concept of cointegration and testing using the Enger-Granger test

Estimating and forecasting with vector error correction models

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

Econometrics Training: Applied Time Series in R

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Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

Proficiency working in Jupyter notebooks and the Python environment

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Remote Training: Applied Time Series in Python

US is big leader in global surge in private AI investment

Tian Yong Woon

In this week’s Letter, we review the key outcomes from last week’s US–China summit, which, while largely symbolic as a reset in bilateral relations, also yielded several notable trade-related agreements (chart 1). We also examine China’s latest monthly data releases, which extended last month’s moderation in growth and further highlighted the increasingly two-speed nature of its economy (chart 2). Turning to Japan, we look ahead to this week’s key data releases. Q1 GDP growth appears likely to be supported by resilient exports, while the domestic picture—reflected in indicators such as household spending—continues to lag (chart 3). On the inflation front, upcoming CPI readings will be closely watched; if price pressures accelerate further alongside continued yen weakness, this could revive a policy dilemma for the Bank of Japan (chart 4). Zooming out, inflation appears to have reasserted itself as the dominant market driver, with nominal yields rising across markets (chart 5). At the same time, AI-related optimism has taken a back seat for now, as equity markets pull back from recent rallies (chart 6).

**The US-China summit**
The highly anticipated US–China summit concluded last week, with few details released immediately afterward. More information emerged early this week, as the White House outlined several key developments. Perhaps most importantly, though largely symbolic at this stage, the two sides agreed to build a “constructive relationship of strategic stability.” While the phrase does not imply any concrete policy actions, it may signal a shift away from the repeated tensions and frictions that have characterized recent interactions. The US and China also agreed that the Strait of Hormuz should be reopened, although no specific measures were announced to achieve this. On more tangible outcomes, the White House said China approved an initial purchase of 200 Boeing aircraft for Chinese airlines and committed to buying at least $17 billion of US agricultural products annually from 2026 to 2028. China also restored market access for US beef by renewing expired registrations for more than 400 US beef facilities and adding new listings, while resuming imports of US poultry.

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**China’s latest data releases**
Overall, the US–China summit signalled a more conciliatory tone between the world’s two largest economies, with the initially announced agreements broadly reinforcing that shift, including plans to establish two new boards focused on trade and investment. Meanwhile, China’s latest data releases offered further insight into the economy’s performance amid the ongoing oil supply squeeze linked to disruptions in the Strait of Hormuz. Extending the slowdown already evident in March, April data showed weaker growth in retail sales, industrial production, and fixed asset investment, as illustrated in chart 2. In the case of fixed asset investment, year-to-date growth slipped into contraction territory. The increasingly two-speed nature of China’s economy is becoming more apparent. On one hand, robust exports and still-solid manufacturing activity continue to support overall growth. On the other, softer retail sales and broader domestic demand remain a persistent drag on the economy.

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**Japan**
Beyond China, Japan will also be in focus this week, with several key indicators on growth and inflation due for release. Most notably, Japan’s preliminary Q1 GDP reading, due Tuesday, will provide the first comprehensive snapshot of the economy after incorporating the initial effects of the Middle East conflict. As with China, Japan’s economy exhibits a two-speed dynamic. Strong export growth is likely to have supported Q1 activity, reflecting resilient external demand. However, domestic indicators such as household spending continue to point to a fragile underlying picture (chart 3). This leaves Japan exposed to a similar risk as China: If external demand weakens under the weight of rising oil prices and broader uncertainty stemming from disruptions in the Strait of Hormuz, growth could come under significant pressure in the absence of secondary growth drivers.

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Inflation will also be a key focus in Japan this week, given its implications for household purchasing power, real economic growth, and monetary policy. While inflation is not yet showing a full resurgence, nationwide consumer price inflation picked up in March (chart 4), and Tokyo CPI data pointed to a modest firming in price pressures in April. These developments have coincided with a prolonged weakening of the yen, which, while supportive of exports, also raises inflationary pressures by increasing the cost of imported goods. If inflation were to return to the peaks seen in previous years, the Bank of Japan could once again face a policy dilemma, particularly if economic growth slows at the same time. In that scenario, the BoJ would need to balance the risks of persistent inflation against the need to support a weakening economy.

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**Market shifts**
Zooming out to broader market developments, and taking into account the recent US–China summit, the ongoing closure of the Strait of Hormuz, and earlier AI-driven optimism, it appears that AI enthusiasm has, for now, ceded its role as the dominant market driver. In its place, renewed inflation concerns have taken centre stage, weighing on bond prices and pushing yields higher, as shown in chart 5. This dynamic is particularly evident in some economies, such as Japan. While nominal government bond yields have risen sharply, real yields have edged lower, implying that inflation expectations have increased. These rising inflation expectations likely reflect the continued apparent impasse in US–Iran negotiations, along with the absence of concrete actions to reopen the Strait of Hormuz and ease pressure on global energy markets.

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At the same time, AI optimism—which had previously underpinned equity market performance—has appeared to lose some momentum as a dominant price driver, with inflation concerns moving to the forefront. As shown in chart 6, after months of seemingly uninterrupted gains, equity indices in advanced Asian economies—typically heavy in technology and semiconductor exposure—pulled back last Friday, with further declines observed in Monday’s trading session. This shift has coincided with firmer crude oil prices, reinforcing the narrative that inflation risks and supply-side pressures linked to the Strait of Hormuz disruption are now firmly back in focus.

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Asia

Economic Letter from Asia: After the Summit

Robert Brusca

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Confidence for Turkey in April improved rising by 1.5% month-to-month to an index value of 96.42.  Services and retail confidence both rose on the month as confidence in Construction fell by a sharp 3.6%, partly reversing an even sharper gain form a month ago. 

The sequential performance of confidence in Turkey finds overall, services and retail sector confidence accelerating. Construction confidence is stronger over 3-months than over 12-months but its six-month gain shows slowing. Performance is still getting settled and the service and retail sector readings are still lower on balance over 12-months, even as they show acceleration and growth in train. Turky is a work in progress. 

The individual sector standings of the confidence metrics by sector are surprisingly similar and cluster around the 20-percentile mark. Overall confidence at 22.7% has the strongest reading while the weakest sector reading is 17.4-percent and it finds construction and services in a tie for the lowest index rank standing. 

The table also ranks confidence by growth rates, comparing growth over the past year across the sector readings. The growth sectors have relatively strong reading that the sector index standings. That is an admission that conditions currently have, when compared back to 2012, ranked weaker than the level of economic conditions (as proxied by confidence, of course) evaluated over the same period. It is evidence that some improvement in conditions (perceived improvement) is underway. The growth rate rankings stretch from the 32nd percentile to the 53rd percentile- all the growth standings exceed the index standings. 

The growth in construction at a 53.5-perntiel standing is above its median growth rate since January 2012. Overall confidence still has a growth rate below its median at a 41.9 percentile standing; the shortfall is significant but not severe. Services and retail are more significant laggard with growth rate standings in their respective 32nd- and 33rd-percentiles – historically, reading that are higher about two-thirds of the time on the timeline back to early 2012.

Turkey continues to experience high inflation at 33% over the last year, a small deceleration from the month before. With global energy price pressures rising, Turkey’s central bank has recently lifted its outlook for inflation hear as well. The economy grew about 3.6% this year; it is on track for about 3% growth. Confidence readings suggest some ambivalence to these conditions. By this time, the population has gotten used to the high inflation. But growth has not stepped up significantly. That could be the key driver for improved expectations and confidence. But it is not yet a reality. Turkey is still, affected, of course, by the war-time conditions in Iran that is right on its border. 


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Turkey

Confidence in Turkey Advances 

Sandy Batten

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Industrial production (IP) rose a much larger-than-expected 0.7% m/m in April, rebounding from an upwardly revised 0.3% m/m decline in March (previously -0.5% m/m), according to data released by the Federal Reserve Board. The Action Economics Survey looked for a 0.2% monthly gain. The y/y rate also rebounded in April, rising to 1.4% y/y after having fallen to 0.7% in March. IP has clearly trended up since late last year. Since November 2025, it has grown at a 3.6% annual rate. The current level of output is the highest since August 2019 but is still 1.5% below the November 2018 series peak.

Manufacturing output led the April rebound, rising 0.6% m/m (1.3% y/y) following an upwardly revised 0.1% monthly increase in March (previously -0.1% m/m). Mining output fell in April for the second consecutive month, edging down 0.1% m/m (+0.2% y/y) after a 1.6% monthly drop in March (revised down from -1.2% m/m). Utilities production rebounded in April, jumping 1.6% m/m (2.7% y/y) and more than offsetting a 1.4% monthly decline in March (revised up from -2.3% previously). The rebound in utilities output reflected a 1.1% rise in electricity production and a 7.3% monthly jump in natural gas distribution, the first monthly gain in four months.

Within manufacturing, durable goods production jumped 1.2% m/m (3.2% y/y) in April after having been unchanged in March. A 3.7% m/m rebound in motor vehicles and parts production, the largest monthly gain since May 2025, led the April increase. Motor vehicles and parts production had fallen 2.4% m/m in March. Production of computers and electronic products increased 1.5% m/m, the fourth consecutive monthly rise. Aerospace output rose 1.6% m/m in April, the third consecutive monthly gain and the largest since July 2025. By contrast, furniture production fell 1.8% m/m, the third consecutive monthly decline. 

Output of nondurable manufactured goods edged down 0.1% m/m (-0.6% y/y) in April, the first monthly decline in four months. Production of apparel and leather goods slumped 2.2% m/m on top of a 2.0% monthly fall in March. Chemical output fell 0.9% m/m in April, its first monthly decline in four months. Output of plastics and rubber products fell 0.9% m/m, the first monthly fall in four months. By contrast, production of petroleum and coal products rose 1.0% m/m in April, the same monthly increase as in March.

By market group, output of consumer goods rebounded in April, increasing 0.9% m/m (-0.2% y/y) following a 0.8% m/m decline in March. Production of business equipment surged 1.5% m/m (+6.0% y/y) in April, the largest monthly gain since March 2025. Output of construction supplies was unchanged in April from March (+1.2% y/y) following a 0.9% m/m gain in March. Materials production rebounded in April, rising 0.5% m/m (1.2% y/y) after a 0.4% m/m decline in March.

In special classifications, output of selected high-tech industries increased 1.0% m/m (+9.2% y/y) in April following a 0.5% monthly gain in March. The rebound in motor vehicles and parts production reflected a 5.3% monthly surge in vehicle output, the largest monthly gain since May 2025. Manufacturing output excluding selected high-tech industries rose 0.6% m/m in April, the largest increase since February 2025, following a 0.1% m/m increase in March. Manufacturing output excluding both selected high-tech industries and motor vehicles and parts advanced 0.3% m/m in April, the same monthly gain as in March.

Capacity utilization rose to 76.1% in April from 75.7% in March. The April reading was the highest since last August but was still 3.3%-points below its long-term (1972-2025) average. Manufacturing capacity utilization increased to 75.8% in April from 75.4% in March, 2.4%-points below its long-term average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Total industrial output increased a much larger-than-expected 0.7% m/m in April with a small upward revision to March.
- Manufacturing output increased 0.6% m/m, led by a 5.3% m/m rebound in vehicle production.
- Mining output edged down 0.1% m/m, while utilities production rose 1.9% m/m.
- The headline rate of capacity utilization rose to 76.1% in April, its highest reading since last August but still well below its long-term average.


U.S. Industrial Production Jumped in April

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Industrial orders in Canada are back on an expansion path with orders growing 4.7% in March on top of a 6.9% gain in February. These statistics chronicle Canadian orders digging out from a hole they fell into early in 2026. Now the data show emerging sequential growth in Canadian orders, which are advancing 3.6% over 12 months at a 14.9% annual rate over six-months, and a 26.7% annual rate over three-months. Still, on the chart that plots the year-over-year growth rates these recent accelerated rates of growth appear as mere recoveries from what had been earlier weakness. It remains to be seen how much acceleration the Canadian economy will actually undergo.

Unfilled orders expanded in March for the second month in a row, growing 2.4% after growing 1.4% in February once again following the recovery theme.

Manufacturing shipments grew by 3% in March after growing 3.4% in February and after dropping sharply in January - again echoing the recovery theme. Durable goods show two months of increases with the March increase weak after a very strong rise in February. Motor vehicle output recovered very strongly in February, after falling at a 37.1% annual rate in January; motor vehicle output is up by 15% in March, a hefty growth rate but short of what was posted in February. Once again, we see an echo of the theme of recovery. However, shipments of durable goods excluding motor vehicles are less robust, after dropping 1.8% in January output rose by 3.8% in February and has fallen back, dropping by 1.1% in March, a small fly in the ointment of this recovery theme for Canada. And nondurable goods shipments saw a small increase in January of 0.2%, a flat February, and now an extremely strong, 5.6% month-to-month gain in March.

Canada's sequential growth rates are on the verge of showing broad acceleration. Orders clearly do accelerate from 12-months to six-months to three-months. Unfilled orders, however, accelerate over six-months compared to 12-months and then take a small step back over three-months to an annualized growth rate of 13.4% - a very small step back that is still far above the 12-month growth pace. Manufacturing shipments, too, show a small flaw in acceleration as the 6-month pace dips ever so slightly before logging a very strong 3-month pace. Durable goods then are an exception to the acceleration theme; however, nondurable goods get back on board with the strong acceleration move.

**Rankings**
The rank standings for these categories are based on annual growth rates and comparison with data extend back approximately 25 years. Orders have a 58-percentile standing, unfilled orders have a 57-percentile standing, while manufacturing shipments have a 62-percentile standing. Shipments for durable goods durables excluding motor vehicles and from motor vehicles as a stand-alone have rankings in their 30th- to 40th-percentiles, below their historic medians. (medians occur at a ranking of 50). However, nondurables have an extremely strong 80.5 percentile standing. The data are consistent, the recovery and progress with the exception that durable goods shipments that are not fully on board and languish below their historic median results. Ranking the data over six-month growth rates improves the results somewhat and brings motor vehicles on board for a growth rate that is above its historic median.

**Signs of improvement**
Goods-based industry shows signs of picking up even in March as oil prices were rising and industry was facing greater challenges. The US industrial production report for April, similarly, shows acceleration across the board, even as the economy continued to deal with the difficulties of rising oil prices. Of course, the Canadian US economies are closely linked; we would expect the manufacturing sectors to be performing with some degree of synchronization. However, there's no reason to be complacent about the outlook. Oil prices have continued to rise, the challenge to consumers is strong and across all countries. In the US special tax cuts enacted last year, which went into effect earlier this year, have helped to deliver extra money to consumers that have helped them deal with the oil price shock. But these were funds that were supposed to help stimulate the economy to higher growth and were planned by the President to help him with midterm elections coming later in the year. The US economy still has to deal with those realities with sharply divided political reality as well.

**Outlook**
The US acrimony with Canada has taken a back burner for a while. And as that has happened the Canadian economy has come back to life. However, Canada still has some problems with inflation although it also has a broader inflation target to accommodate some flexibility. And the prospect for more inflation because of global oil prices continues to hang in the balance. The results for March are encouraging but certainly not definitive. Canada has mounted a nice recovery after a period of difficulty earlier in the year but it's still hard to say what comes next.



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Canada

Canadian Industry Perks Up

Andrew Cates

**A Tug of War Between AI Hope and Geopolitical Shock**
The latest Blue Chip Economic Indicators survey highlights a growing divergence between economies benefiting from AI-driven optimism and those more exposed to the inflationary consequences of renewed geopolitical instability. Taiwan stands out as the clearest AI beneficiary, with growth forecasts revised sharply higher while inflation expectations have risen only modestly, reflecting surging semiconductor demand and continued investment in global technology supply chains. China also remains relatively resilient, supported by ongoing AI-related capital spending and stronger technology sectors. By contrast, the euro area and UK have seen much larger upward revisions to inflation forecasts alongside weaker or declining growth expectations, underscoring their greater vulnerability to the recent Middle East shock and higher energy costs. Korea sits somewhere in between: benefiting from the AI hardware cycle but still exposed to trade and energy headwinds. Overall, the chart illustrates the increasingly important push-and-pull shaping the global outlook: AI optimism and productivity hopes on one side, and geopolitical fragmentation, energy insecurity and supply-side inflation pressures on the other.

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**Forecasters See Contained Pass-Through**
Against this backdrop, our latest Blue Chip special question sought to gauge whether economists believe the recent rise in energy prices will remain largely contained — or whether it risks spilling more meaningfully into underlying global inflation dynamics. The results suggest forecasters have become somewhat less concerned about a broad and persistent inflationary impulse since April. A larger share of respondents in the May survey now expect only a “limited and temporary” pass-through into core inflation, while the proportion anticipating “moderate and persistent” effects has declined noticeably. Very few panelists expect significant second-round effects, implying that most still believe inflation expectations and wage-setting behaviour remain relatively well anchored. In part, this reflects confidence in central bank credibility and the view that softer global demand conditions will constrain firms’ pricing power. Yet the persistence of a sizeable minority still expecting moderate pass-through underscores the uncomfortable tension facing policymakers. 

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**Energy Reawakens as a US Inflation Driver**
While survey respondents generally expect only limited pass-through from higher energy prices into broader inflation, the latest US CPI data provide a reminder that the process may already be underway at the margin. April’s CPI report showed core inflation coming in slightly firmer than expected, suggesting underlying price pressures remain more persistent than many policymakers had hoped. The decomposition of CPI inflation highlights that services continue to dominate overall inflation dynamics, reflecting still-elevated wage and labour-intensive price pressures across the economy. However, the more notable recent development has been the renewed contribution from energy prices, which had previously acted as a disinflationary force through much of 2025. Food inflation has also remained comparatively steady, while non-energy goods prices continue to exert only modest upward pressure despite ongoing tariff and supply-chain concerns. Taken together, the data reinforce the idea that the US economy is not facing a classic demand collapse, but rather a more uncomfortable supply-side environment in which geopolitical energy shocks risk colliding with still-resilient domestic demand, AI-related investment spending and sticky service-sector inflation.

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**AI: The Powerful Counterweight to Geopolitical Headwinds**
If rising energy prices and geopolitical instability represent one major force shaping the current macroeconomic outlook, the extraordinary surge in AI-related investment represents the other. The latest data from Our World in Data show global private investment in AI accelerating sharply again in 2025, reaching close to $300 billion — more than double the level seen just two years earlier. The United States continues to dominate the global AI landscape, accounting for the overwhelming majority of private investment spending, while China and Europe remain considerably smaller contributors despite continued growth. The scale and speed of the 2025 increase is particularly striking given the broader backdrop of elevated policy uncertainty, trade fragmentation and concerns about slowing global productivity growth. In effect, the global economy is now being pulled in two competing directions: on one side, geopolitical tensions, supply-chain fragilities and more recent energy shocks are weighing on confidence and raising supply-side costs; on the other, AI enthusiasm is driving an enormous wave of capital expenditure, infrastructure build-out and technology-related demand. This helps explain why growth expectations — particularly in the US and parts of Asia — have remained comparatively resilient despite an increasingly uncertain global environment.

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**Industrial Winners and Losers in a Fragmenting Global Economy**
The divergence in industrial performance across advanced economies has become increasingly striking. Taiwan has emerged as one of the clearest beneficiaries of the global AI boom, with industrial production surging as semiconductor demand, data-centre investment and advanced electronics exports continue to accelerate. Denmark has also significantly outperformed, though for very different reasons, with the extraordinary global success of its pharmaceutical sector — particularly weight-loss and diabetes drugs — driving a powerful expansion in manufacturing output. By contrast, the UK and Germany have experienced a far weaker industrial recovery. In both cases, elevated energy costs and greater dependence on imported energy have weighed heavily on industrial competitiveness since the post-pandemic energy shock. Germany’s large manufacturing sector has been particularly exposed to higher natural gas prices and weaker external demand, while the UK has continued to struggle with a combination of high energy costs, weak productivity growth and subdued business investment. The chart highlights an increasingly important feature of the global economy: countries exposed to powerful structural growth themes such as AI or pharmaceuticals are pulling away from those still burdened by energy dependence and deteriorating industrial competitiveness.

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**China’s Pulse Is Picking Up Again**
China’s economic backdrop has shown clearer signs of improvement in recent months, with both the Citigroup Economic Surprise Index and the Yicai High Frequency Economic Activity Index moving higher. The rebound suggests that incoming data have begun consistently outperforming expectations after a prolonged period of disappointment. Part of the recent improvement likely reflects the cumulative effects of policy easing, including targeted fiscal support, infrastructure spending and further efforts to stabilise the property sector. Export demand has also remained more resilient than many expected, helped in part by the continued strength of global technology and AI-related supply chains. At the same time, improving domestic mobility and energy usage indicators point to firmer underlying activity momentum. The Yicai index itself is designed to provide a near real-time pulse of the Chinese economy using a basket of high-frequency indicators including subway usage, air pollution, coal consumption, freight activity, unemployment and bankruptcy trends. While China still faces significant structural headwinds — including weak household confidence, property-sector fragilities and deflationary pressures — the recent pickup suggests that growth momentum may be stabilising at a time when several other major economies are becoming more vulnerable to geopolitical and energy-related shocks.

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The global economy is still caught between two powerful and competing forces. On one side, the AI investment boom continues to support growth, industrial activity and equity markets, particularly in the US and parts of Asia. On the other, renewed Middle East tensions and higher energy prices are adding to inflation risks and broader policy uncertainty. The latest Blue Chip survey reflects this divide clearly: growth expectations have generally held up best in economies tied to AI-related investment and technology supply chains, while inflation forecasts have risen more sharply in more energy-exposed economies such as the UK and euro area (chart 1). Forecasters still largely expect only limited pass-through from higher energy prices into core inflation, although recent US CPI data suggest underlying price pressures remain somewhat sticky (charts 2 and 3). At the same time, the extraordinary continued surge in global AI investment — now approaching $300 billion annually — highlights the sheer scale of capital being deployed into semiconductors, data centres and digital infrastructure, particularly in the United States (chart 4). The divergence in industrial production trends also reinforces the growing gap between economies benefiting from structural growth drivers — such as Taiwan’s semiconductor sector and Denmark’s pharmaceutical industry — and those struggling with higher energy costs and weaker competitiveness, notably Germany and the UK (chart 5). Meanwhile, improving Chinese activity indicators suggest policy support and stronger technology demand may finally be helping to stabilise growth (chart 6). Overall, the world economy remains resilient, but increasingly uneven, with AI-related investment continuing to offset — though not eliminate — the drag from geopolitical fragmentation and rising energy insecurity.

Charts of the Week: The Tug of War

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Total retail sales rose a solid 0.5% m/m (4.9% y/y) in April on top of a slightly downwardly revised 1.6% monthly jump in March (previously 1.7%), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 05% m/m gain. Excluding autos, other sales increased 0.7% m/m (6.3% y/y) in April following an unrevised 1.9% monthly jump in March. Expectations were for a 0.6% monthly increase. The strong performance in March and the additional solid gain in April put the April level up 7.8% at an annual rate from the Q1 average, providing a very solid start for Q2.

As expected, the continued rise in retail gasoline prices boosted gasoline sales further in April. Gasoline sales increased 2.8% m/m in April following a 13.7% m/m surge in March and accounted for more than 40% of the April increase in total sales. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.3% m/m in April versus a 0.7% monthly gain in March. Sales excluding both autos and gasoline increased 0.5% m/m in April following a 0.7% m/m rise in March.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in March, rising 0.5% m/m in April following an upwardly revised 0.8% m/m increase in March (previously (0.7% m/m). The solid performances of the control group sales in March and April provide a strong start to Q2. April control-group sales are 5.4% at an annual rate above the Q1 average, in line with the 5.7% annualized increase in Q1. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales across major sectors were varied in April. Consumers clearly spent more on necessities, owing largely to higher prices. Food sales increased 0.8% m/m in April on top of a 1.0% m/m rise in March. And as already noted, gasoline sales posted another outsized monthly increase. By contrast, department store sales slumped 3.2% m/m, clothing sales fell 1.5% m/m, auto sales declined 0.4% m/m and furniture sales fell 2.0% m/m. More encouragingly, sales of nonstore retailers rose 1.1% m/m, their fourth consecutive solid monthly gain. And sales at restaurants increased 0.6% m/m in April, their third consecutive monthly rise. Analysts frequently use restaurant sales as a barometer of consumer attitudes, believing that consumers would not eat out regularly if they were under serious financial stress.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.


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- Total sales increase 0.5% m/m in April after a 1.6% monthly jump in March.
- Gasoline sales rose 2.8% m/m in April on top of a 13.7% surge in March.
- Auto sales fell 0.4% m/m after a 0.6% m/m rise in March.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in April versus a 0.7% m/m rise in March.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in April and are 5.4% annualized above the Q1 average, providing a good start to Q2.


U.S. Retail Sales Slowed in April But Remained Solid

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance rose by 12,000 to 211,000 in the week ending May 9, from 199,000 in the week ending May 2, revised from 200,000. The four-week average rose 750 to 203,750 in the week ending May 9, from 203,000 the May 2 week, revised from 203,250. The Action Economics/Haver Analytics Survey looked for 205,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 24,000 to 1.782 million in the week ending May 2, from 1.758 million in the week ending April 25, revised from 1.766 million. The four-week moving average declined to 1.781 million in the latest week from 1.788 million in the April 25 week. The four-week moving average reached the lowest level since May 2024. The insured unemployment rate rose back to 1.2% in the week of May 2 from the one-week dip to 1.1% in the April 25 week. It had been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 25, the highest unemployment rates were in Rhode Island (2.29%), New Jersey and Massachusetts (both 2.20%), and Washington (2.15%). The lowest rates were in Florida and Louisiana (both 0.31%), South Dakota (0.32%), Alabama and Arkansas (both 0.36%), North Carolina (0.38%), Tennessee (0.47%) and Iowa, Kansas and Virginia (all 0.48%). Rates in other notable states include California (1.99%), New York (1.66%), Illinois (1.56%), Pennsylvania (1.28%), and Texas (1.03%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, 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.


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- New claims rose by 12,000 to 211,000.
- Continuing claims rose by 24,000 to 1.782 million.
- The insured unemployment rate was back up to 1.2% in the week of May 2, from the one-week dip to 1.1% the prior week.

U.S. Initial Unemployment Claims rose in the Week of May 9

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UK GDP grew by 2.5% in 2026-Q1. GDP growth quarterly was last this strong in 2024-Q2 and last stronger in 2024-Q1. This is the strongest quarterly growth in about two years. Private consumption surged in 2026-Q1, rising at a 2.4% annual rate. Capital formation and housing each backed off in the last two quarters. This is the opposite form the US where investment is strongly pushing growth ahead.

On the international side of the ledger, UK exports rose at a 0.4% annualized rate in the quarter while imports rose by a strong 2.6% annual rate, still, viewed on its own, domestic demand rose at a 3.2% annual rate.

Domestic demand growth has picked up to over 1% at 1.5% on a year-over-year basis. That is a good development. However, it is still a weak showing. Over the last 26 years domestic demand’s Year-on-year gain ranks at its 30th-percentiel; it has been weaker than this only about 30% of the time. But over the last nearly four-years the 1.5% gain is just below its median. This gives some indication of how weak growth has been in the post-Covid period. The UK was still in a post Brexit environment, when it had to deal with Covid, the invasion of Ukraine, and now the Middle East. At the same time, it has had a considerable amount of its own political turmoil and still does. 

The chart above shows the snake crawl of GDP that continues to depict growth in the EMU area. That is a continuing weak environment- one of the UK’s important export markets. Europe’s fixation on social welfare spending and the need to tax to pay for it has robbed the economy of its dynamism. Still, both the UK and the Euro-Area continue to have lingering inflation issues. And both show current inflation in an upswing. 

**Central bankers' inflation and growth** 
Central banks are playing a waiting game, the best that they can. Major money center country central banks have been consistently overshooting their inflation targets since Covid. And despite excess inflation banks have been reluctant to hike rates and have instead pursued a strategy of persisting slow rate reduction. It has been a curious period in which central banks have kept their inflation target goals but simply have been content to miss their targets in the short run and promise to thit them in the long run. This is clearly a policy of only temporary usefulness because it is bound to blow up, the longer inflation fails to be controlled at its targeted pace. For now, UK interest rates remain higher than in Europe, closer to the level in the US and with a monetary policy committee that seems determined to stop the overshoot as oil prices flare. We’ll see if the BOE MPC members are really ready to pull the trigger on higher rates as UK GDP growth looks firmer. 



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United Kingdom

UK Q1 GDP Growth Steps Up  

**Inflation angst and renewed bond market jitters**
The recent rise in US Treasury yields has coincided with a renewed upswing in US economic surprises, particularly on the inflation and labour market fronts. As chart 1 illustrates below, our newly developed and combined Haver US Labour Market Surprise Index and Inflation Surprise Index (see methodological note at the end of this document) has moved back into positive territory, indicating that incoming data for labour market activity and inflation have, on balance, been coming in stronger than consensus expectations. This rebound has occurred against an increasingly fragile global backdrop marked by rising oil prices, shipping disruptions and renewed geopolitical tensions linked to the Middle East conflict. Markets are becoming increasingly concerned that higher energy costs could feed into broader inflation pressures at a time when underlying labour market momentum remains firmer than many expected. 

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**Central banks face renewed inflation concern**
A rise in short-term government bond yields has become increasingly broad-based across the major developed economies, with UK, US and Japanese two-year yields all trending higher in recent weeks. Investors are increasingly concerned that renewed geopolitical instability in the Middle East and higher energy prices could prolong global inflation pressures just as many central banks had been preparing for a gradual easing cycle. UK yields remain elevated amid persistent domestic inflation concerns, while Japanese yields have also continued to edge higher as markets reassess the outlook for Bank of Japan policy normalization in a world of rising imported energy costs. The synchronized move higher in front-end yields reflects growing unease that central banks may ultimately face a more difficult trade-off between supporting growth and containing another inflationary impulse.

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**Weak labour bargaining power may limit inflation persistence**
Despite growing market anxiety about renewed inflation pressures, an important structural counterpoint comes from the continued weakness in labour’s share of US national income. As the next chart illustrates, labour’s share of nonfarm business income has declined to multi-decade lows. Historically, sustained inflation cycles have often been associated with stronger labour bargaining power, rising wage shares and the emergence of wage-price dynamics. Today, however, workers appear to retain relatively limited pricing power within the broader economy, particularly compared with earlier inflationary eras such as the 1970s. This may help explain why longer-term inflation expectations have, so far, remained relatively contained despite higher energy prices and geopolitical instability. 

At the same time as this, the prolonged decline in labour’s share of income may also help explain the broader rise of populist politics across many advanced economies. Weak wage growth relative to profits, rising inequality and a growing perception that the gains from globalization and asset appreciation have been unevenly distributed have contributed to mounting political dissatisfaction. 

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**Energy markets remain under strain**
Yet the principal counterargument to the more benign inflation outlook suggested by weak labour bargaining power lies on the supply side — most notably in energy markets. As the chart shows, oil prices have remained elevated even as broader measures of geopolitical risk have started to retreat from their recent extremes. The Caldara-Iacoviello Geopolitical Risk Index suggests that fears of a major regional escalation in the Middle East have eased somewhat. However, Brent crude prices continue to reflect persistent disruption to energy flows and shipping routes, particularly given the ongoing effective closure and disruption surrounding the Strait of Hormuz. This divergence matters because financial markets and central banks are increasingly confronting the possibility that supply-side inflation pressures may persist even without a further escalation in military conflict. In other words, fading war fears do not necessarily imply a normalization in energy markets. Instead, the global economy may be entering a more prolonged period of structurally higher energy and transport costs, adding to inflation pressures even as underlying demand conditions soften. The result is an increasingly uncomfortable backdrop for policymakers, combining weaker growth momentum with renewed upside risks to inflation and interest rates.

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**Benign Core CPI Inflation For Now**
Ultimately, what will matter most for central banks is not simply higher oil prices themselves, but the extent to which those higher costs feed through into broader underlying inflation. On that front, the recent inflation data from several advanced economies have, so far, remained remarkably benign. As the chart illustrates, core inflation measures pubished this week in the UK, Canada and Austria have all continued to moderate despite renewed geopolitical tensions and rising energy prices. This suggests that the broader inflationary impulse across goods, services and wages remains contained for now.

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**The AI Investment Boom**
Yet even as markets grapple with inflation risks, energy shocks and slowing global demand, financial markets continue to be dominated by one extraordinarily powerful countervailing force: the AI investment boom. As the chart illustrates, capital expenditure among the major technology firms — including Meta, Oracle, Amazon, Alphabet and Microsoft — has exploded higher over the past several years as the race to build generative AI infrastructure intensifies. Collectively, these firms have spent almost $1.5 trillion on capital expenditure since early 2021, with spending in Q1 2026 alone reaching an extraordinary $179 billion, nearly double the level of a year earlier.

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Ongoing geopolitical tensions in the Middle East and the associated surge in energy prices have pushed inflation and bond market concerns back to the forefront of global financial markets. Investors are increasingly worried that central banks may now face even greater difficulty in bringing inflation fully under control, particularly in economies where underlying price pressures had already remained sticky prior to the latest energy shock. Recent upside surprises in US labour market and inflation data have already contributed to higher Treasury yields and a broader global backup in short-term government bond yields across the major economies (charts 1 and 2). Yet the picture is not entirely one-sided. Labour’s share of US national income remains historically weak, suggesting limited underlying wage bargaining power and helping explain why broader inflation persistence could ultimately remain contained (chart 3). Meanwhile, oil prices have remained elevated despite some moderation in broader geopolitical risk indicators, reflecting persistent supply-side disruption and ongoing stress surrounding key global energy and shipping routes (chart 4). Even so, recent core inflation data from economies including the UK, Canada and Austria suggest that pass-through from higher energy costs into broader underlying inflation has so far remained relatively limited (chart 5). At the same time, financial markets continue to be supported by an extraordinary AI-driven investment boom, with technology firms engaged in an unprecedented surge in spending on data centres, semiconductors and energy infrastructure (chart 6). Increasingly, the global economy appears caught between two powerful and competing forces: renewed supply-side inflation risks on one side and a historic wave of AI-driven technological investment on the other.

Charts of the Week: Surprise, Surprise

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