Haver’s data services are provided through the DLX platform; delivering tools for data management, visualization, modeling and publishing. DLX is designed to increase productivity and integrates with Excel, PowerPoint, and major statistical software packages; MatLab, R, Python, SAS, E-views and Stata. DLX component application DLXVG3 offers precision graphics, publishing, analytic tools, and easy navigation for all Haver databases.

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

Advanced functions (growth rates, moving averages, aggregation, seasonal adjustment)

Analytical tools (cycle charts, scatterplots, trend lines, and recession shading)

Complete graph customization (axis scaling, sizing, formatting, styles)

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

Edit date ranges, archive data, apply functions

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

AutoUpdate provides fast and reliable data updates within seconds of source releases

Timer service runs continuously on an hourly basis when DLX is running

Manual updates offer clients the independence to update data retrievals on any desired schedule

All database updates retrieve only the data series that have changed and send only the data points that have been updated; including revisions

Timely Updates

DLX software tools to convert data into many different formats needed for diverse analytical frameworks

Haver supports a DLX API permitting clients to leverage and build processes with DLX data

Database Compatibility

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Data Link Express

Platform Independent site delivering DLX Databases across any workstation or device.

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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
- Store data in financial time-series objects to simplify data management, data transformation, missing-data handling, and date-math calculations
- Perform technical analysis with moving averages, oscillators, stochastics, and indices
- Create custom analysis routines and visualizations or animations to capture, present, and share your analysis processes and discoveries
- Customize your analysis environment with advanced functionality from signal processing, statistics, or econometrics

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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

Session 1: Bootcamp Part 1

Visualization with GGPlot2 and data analysis

Session 2: Bootcamp Part 2

Session 3: Univariate Models Part 1

Session 4: Univariate Models Part 2

Session 5: Vector Autoregressions

Session 6: Cointegration and error-correction models

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

Understanding the concept of non-stationarity and testing for unit roots

Estimating autoregressions, granger causality tests, and impulse response functions

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

Session 5: Multivariate Models Part 1

Session 6: Multivariate Models Part 2

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

AI-related outperformance of IP in Advanced Asia ex Japan

Robert Brusca

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Inflation in the United Kingdom has irregularly downshifted over the past two months. In January, consumer price inflation remained steady at 2.8% over three months, the same pace as over six months. Core inflation ticked up to 3.3% over three months from 3.1% over six months but settled below the 12-month pace of 3.4%. Yet another measure, the HICP, comparable to the inflation rates reported by ECB numbers, logs 2.5% over three months, a slight uptick from six-month pace but less than the 12-month pace of 3%.

**Diffusion**
The diffusion statistics that measure the breadth of acceleration of inflation across categories month-to-month came in at only 16.7% in January, down from 66.7% in December and compared to 33.3% in November. Diffusion readings below 50% indicate more deceleration than acceleration. So, inflation has been under control, with recent results showing more deceleration for inflation monthly than to accelerate. December was an exception. Over the 3 , 6 , and 12 month periods, inflation shows some acceleration tendency over 3 months, with diffusion at 58.3%; but that compares to 6-month diffusion at 16.7% and 12-month diffusion at 25%. Once again, the broad stroke for inflation, trending from 12 months to 6 months to 3 months, is showing more categories decelerating than accelerating.

**Inflation rate ranking**
The final right-hand column ranks inflation rates on data back to 2000 based on their year-over-year performance. The current HICP, at 3%, has a 73.8 percentile standing among inflation rates back to 2000, marking it near the upper 25 percentile of the collection of results. The CPIH has a 79.6 percentile standing, putting it closer to the top 20% of observations over that same span. Core inflation at 3.4% has an 83.7 percentile standing, putting it in nearly the top 15% of results on data back to 2000.

**Convergence around 2.8%**
The chart, supplemented by diffusion data, clearly shows that there is some inflation deceleration in progress; however, the level of year-over-year inflation still shows inflation among the upper ranges of what it's been over the last 25 years.

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**BOE**
A lot of attention is focused on the Bank of England and when it will cut rates. While there is some evidence of near term softness in inflation and certainly there is an evenness in economic growth and reason to wonder about the strength of economic growth, inflation results are still probably a little bit too high to allow for rate cuts at this point.

**Summing up**
The Bank of England has a 2% inflation target and current numbers are hovering around or just below 3%. The only reading as low as 2.5% is the 3 month measure. The collection of results simply doesn’t show enough downward movement or stability at lower levels for the BOE to be taken seriously and for the bank to cut rates. Remember, of course, that when the central bank cuts rates, it's taking away some of the braking effects for interest rates on inflation. So, if inflation isn't where you want it and you cut rates, you're taking away a tool that is promoting the reduction of inflation to a lower level closer to your target. When you take that away, you’re acknowledging that you're going to allow inflation to progress more slowly toward the target. I'm not sure that's the signal that the Bank of England would like to make at this time.

United Kingdom

U.K. Inflation Waffles and Percolates

Winnie Tapasanun

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The Housing Market Index (HMI) from the National Association of Home Builders/Wells Fargo fell 2.7% m/m (-14.3% y/y) to a lower-than-expected 36 in February following a 5.1% decline to 37 in January (unrevised) and a 2.6% rise to 39 in December (unrevised). February marked the second successive m/m decline after three straight m/m increases. A reading of 38 had been expected in the INFORMA Global Markets survey. The HMI had been below the breakeven 50 level since May 2024. The February index, lower than 42 in February 2025, was 35.7% below a high of 56 in July 2023 and 60.0% below a record-high 90 in November 2020.

Notably, the average rate on a 30-year fixed rate mortgage fell to 6.09% in the February 12 week, the lowest in three weeks, from 6.11% in the February 5 week, according to Freddie Mac. The rate was below a high of 7.22% in the week of May 2, 2024 and a peak of 7.79% in the week of October 26, 2023.

Two of the three HMI components decreased this month. The index of present single-family sales conditions was unchanged m/m at 41 (-10.9% y/y) in February after a 2.4% decline in January. The index was 33.9% below a high of 62 in July 2023 and 57.3% below a record-high 96 in November 2020. The index of expected single-family sales for the next six months fell 6.1% (-2.1% y/y) to 46 in February after a 5.8% decrease to 49 in January, marking the third m/m fall in four months and the lowest level since September 2025. The index was 30.3% below a high of 66 in December 2024 and 48.3% below a peak of 89 in November 2020. The index measuring traffic of prospective buyers slid 8.3% (-24.1% y/y) to a five-month-low 22 in February on top of a 7.7% drop to 24 in January. The index was 45.0% below a high of 40 in July 2023 and 71.4% below a record-high 77 in November 2020.

By region, the HMIs mostly fell m/m this month. The index for the West dropped 11.8% (-14.3% y/y) to 30 in February, the lowest level since September 2025, after a 5.6% decline to 34 in January. The index for the Northeast decreased 10.6% (-16.0% y/y) to 42, down for the third time in four months, following a 14.6% January rebound to 47. The index for the Midwest fell 2.4% (-4.7% y/y) to 41 after a 10.6% January fall to 42, registering the third m/m decline in four months and the lowest reading since November. Meanwhile, the index for the South held steady at 35 for three consecutive months (-14.6% y/y).

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low". The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database. The Informa Global Markets survey is in Haver's **MMSAMER** database.

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- HMI continues to weaken in Feb., indicating most builders remain pessimistic about the current and near-term housing outlook.
- Two of three HMI components fall, w/ the steepest m/m decline in potential buyers' traffic (-8.3%).
- Regional weakness continues, w/ the sharpest m/m drop in the West (-11.8%).

U.S. Housing Market Index Falls for Second Consecutive Month in February

Sandy Batten

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The Empire State Manufacturing Index of General Business Conditions slipped to 7.1 in February from 7.7 in January, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 8.0 for February had been expected by the Action Economics Forecast Survey. The positive February figure indicated that the business activity in the New York Fed district expanded for the fourth time in the past five months, though at a slightly slower pace than in January. The percentage of respondents reporting an increase in general business conditions rose to 36.0% in February from 34.2% in January and 31.7% in December; the percentage reporting a decrease increased to 28.9% in February from 26.5% in January but down from 35.4% in December. The latest survey was conducted between February 2 and February 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. In contrast to the small decline in the headline index, the ISM counterpart index increased to 52.0 in February, the highest reading since November, from 51.2 in January, indicating that the pace of economic activity picked up slightly in February. The ISM counterpart index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index came in at 5.8, pointing to an ongoing increase in orders in February, though this was down from 6.6 in January. The shipments index dropped seventeen points to -1.0, indicating shipments were little changed in February. Twenty-seven percent of respondents reported an increase in shipments, down from 39% in January while 28% reported a decrease, up from 22% in January. The unfilled orders index rose 17 points to 9.1, and delivery times were slightly longer. Inventories rose. The supply availability index came in at -1.0, suggesting supply availability was little changed in February, up from -4.1 in January.

On the labor front, the labor market indicators rebounded into positive territory in February. The number of employees index increased to 4.0 from -9.0 in January. Sixteen percent of respondents reported an increase in employment, up from 7.9% in January, while 11.8% reported a decrease, down from 16.8% in January. The average workweek index rose to 2.1 in February from -5.4 in January.

Inflation pressures intensified somewhat in February. The prices paid index rose to 49.1 in February, its highest reading in three months, from 42.8 in January. Fifty percent of respondents reported paying higher input prices in February, up from 44.5% in January, while only 1.2% reported paying lower input prices versus 1.7% in January. The prices received index jumped to 22.2 in February from 14.4 in January. Twenty-eight percent of respondents reported receiving higher prices, up from 18.9% in January, while 6.1% reported receiving lower prices, up from 4.4% in January. February readings for both indexes are well below those in late 2021 and early 2022 when general inflation soared but are meaningfully higher than in 2024.

Firms continued to be optimistic about the outlook. The index for future business conditions rose four points to 34.7, its highest reading since November 2024. New orders and shipments are expected to increase, and employment is expected to grow. The capital expenditures index rose eight points to 18.2, its highest reading since February 2023, indicating a marked strengthening in capital spending plans.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- The headline index edged down to 7.1 from 7.7 in January but continued to point to expansion.
- New orders slowed slightly while shipments plunged 17 points into negative territory.
- Prices paid and received both rebounded in February.
- Expected capital expenditures rose to a three-year high.

FRBNY Empire State Manufacturing Index Slipped Slightly in February

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Industrial output in the European monetary union fell by 1.4% in December. Manufacturing output fell by 1.3%. Output of consumer goods fell by 0.3%, output of intermediate goods fell by 0.1%, and output of capital goods fell by 1.9% in December. The subsector, consumer durables, showed an increase in output of 0.2% in December. Headline and manufacturing output in December reversed the increases seen in October and November. However, consumer goods, consumer nondurables, and intermediate goods saw two consecutive months of output declines for November and December.

Turning to sequential trends, overall industrial output rises by 1.1% over 12 months, falls at a 0.8% annual rate over six months, and then falls at a 1.2% annual rate over three months showing a tendency for deceleration. Manufacturing shows the same pattern of eroding growth rates for the one-year and shorter horizons.

**Sector stories**
However, for consumer goods, manufacturing output is accelerating steadily from a growth rate of 2% over 12 months, to a 7% pace over six months, and to a 16.6% annual rate over three months; the inclusion of ‘semi-durables’ in this category total makes it stronger than the two detailed subcategories of durable and nondurable goods. Consumer durables output transitions from falling 2.3% over 12 months to growing at a 3% pace over three months. Consumer nondurables output shows persistent declines, with slightly more intense over shorter periods, echoing the deceleration phenomenon. Intermediate goods and capital goods do not show clear sequential trends, but both categories show increases in output over all three horizons.

**Cross currents**
These cross currents among sectors make it hard to characterize what's happening with output trends in the European Monetary Union. The country detail shows a good deal of turbulence, with a number of countries showing decelerating output trends and others showing accelerating output trends. It's fair to say that manufacturing in the EMU continues in the grip of cross currents. While the short-term data in the table that look at growth rates from 12-months to 6-months to 3-months show more weakening than strengthening, the trends in the graph across recent 12-month growth rates seem to show a little more solidifying and expanding behavior – albeit with confusing volatility as well.

**Quarter-to-date (concluded Q4)**
In the quarter to date, all of the sectors and subsectors show output rising except for the aggregate for manufacturing that is flat, and consumer nondurables that show a decline at 6.7% at an annual rate.  In the quarter to date, overall output is growing at a 1.4% annual rate, while consumer goods output is expanding at a 13.8% annual rate, immediate goods output is expanding at 1.5% annual rate, and capital goods output is expanding at a 3.7% annual rate. Those sector numbers look exceptionally healthy.

**Ranking the trends**
The far-right hand column analyzes the 12-month growth rates comparing them to historic growth rates since 2006. Most of the growth rate rankings over this span are moderate, with standings above their respective 50th percentiles, placing them above their historic medians. However, consumer durable goods and nondurable goods are exceptions, with rankings in their 31st percentile and 10th percentile, respectively. Consumer nondurables output is particularly weak in comparison with historical trends. On the other hand, intermediate goods and capital goods output have rankings in their 60th percentile, and for all consumer goods output, the ranking is near its 60th percentile. Looking only at manufacturing, the ranking slips to its 52.9 percentile; for the headline series which excludes construction, the ranking is at its 53.8 percentile.

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**Summing up**
On balance, it's the consumer sector that is holding back the advancements of output, and this is not surprising with such weak conditions in Europe for consumer confidence. However, in another respect, it's somewhat surprising because unemployment rates remain historically low in the European Monetary Union - and for Europe generally - and typically jobs are one of the more important ingredients in consumer confidence. Some of this disconnect could be because of the war on Europe's doorstep, and some of it may also be concern about the current rough spot the NATO is experiencing and that's reflected in the relations between Europe and the United States. Globally, growth is beginning to look a little bit more solid, but industrial production in the EMU continues to be touch-and-go, in part, because its largest economy, Germany, continues to struggle.

Europe

IP in EMU Weakens in December; Sector Trends Show Slow or Erratic Improvements

Michael J. Moran

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The consumer price index rose 0.2% in January, slower than the expected increase of 0.3% (and it rounded up to reach the published advance – 0.17% when calculated with more precision; annual rate of 2.04%). The latest monthly increase left the year-over-year at 2.4%, down from a recent high of 3.0% in September and bested by only one other recent reading: 2.3% in April of last year.

A drop of 1.5% in energy prices helped to contain the headline index. The drop was led by sharp retreats in the prices of both fuel oil and gasoline (off 5.7% and 3.2%, respectively). Energy prices have jumped around from month-to-month, but they have stayed within a narrow range in the past two years. Food prices rose 0.2% in January after a surge of 0.7% in the prior month. The food category experienced severe pressure during the inflation burst in 2022 (peak of 11.4%). Pressure settled in 2024, with annual food inflation easing to a low of 2.0% in August of that year. However, prices picked up again in 2025, with the year-over-year increase moving to 3.2% in August and staying close to that pace in subsequent months. The year-over-year increase in January totaled 2.9%.

The core component (ex food and energy) rose 0.3% in January, one of the sharpest advances of the past year or so. However, the increase was not especially troubling, as it was influenced by a jump of 6.5% in airfares, which added nearly a full tenth percentage point to the core component (0.08%). Airfares often move erratically, and the ups and downs in the past few years have left little net change. Discounting, most likely, will unfold in coming months. Even with the jump in airfares, the year-over-year increase in core prices moved to a new low for the current period of deceleration (2.5%). Core inflation appeared to be picking up in the spring and summer of last year (a recent peak of 3.1% in August), but pressure has eased since then.

The source of the waxing and waning in core prices lies primarily in the goods component of the CPI. Goods prices were declining noticeably in the first half of 2024 (deflation!), but, they began to shift direction in the second half of 2024 and moved to price increases in 2025. The upward trend seems to have peaked at 1.5% in September and October, with the year-over-year change easing to 1.1 percent in January. Service prices have been decelerating over the past few years, but the rate of decline began to slow last year, and the latest months have shown no further improvement, stuck at 3.0% in the past three months.

Within the core component, the movement of housing costs is notable. Rental rates rose 0.2% in January, a marked shift from the experience in 2022 and 2023, when increases in excess of 0.6% were common.  This component jumps around from month-to-month, but the downtrend is unmistakable. After peaking at 8.2% in 2022, the latest year-over-increase totaled 3.0% in January.

The cost of electricity is now gathering the attention of the public and politicians because of the pressure being exerted by the infrastructure requirements of artificial-intelligence. Costs were tame in January (down 0.1%), but increases have largely been the norm in the past year or so. The year-over-year increase totaled 6.3% in January, down from 7.0% in November but still a challenge for many households. Many observers are expecting more upward pressure down the road. Some observers perhaps recall (and fear) the experience in 2022, when electricity inflation touched 15.8%.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- The year-over-year change in the headline index moved to the bottom of its recent range.
- The annual change in the core index moved to a new low for the current cycle.

Consumer Price Index: Slow, but Steady, Deceleration

Andrew Cates

**The Blue Chip Growth Consensus**
The first chart this week highlights a striking feature of recent forecast revisions: the outperformance of Asia, and Taiwan in particular. Over the past six months, Blue Chip panelists have upgraded their 2026 GDP growth forecasts most aggressively for Taiwan, far outpacing revisions elsewhere. This reflects the central role Taiwan plays in the global AI supply chain, especially in advanced semiconductors, where demand linked to data centres, AI accelerators and high-performance computing continues to strengthen. More broadly, positive revisions across parts of Asia suggest that the current AI-driven investment cycle is not just a US story, but one that is increasingly feeding through global tech supply chains, boosting exports, industrial production and capital spending across the region. In contrast, forecast changes elsewhere remain far more muted, underscoring how tightly the near-term growth impulse from AI is concentrated in economies most directly exposed to the semiconductor and hardware build-out.

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**The Blue Chip Inflation Consensus**
The second chart highlights a growing theme of cross-country divergence, this time through the lens of inflation and monetary policy. Recent changes to Blue Chip CPI forecasts for 2026 show upward revisions in economies such as Japan, Australia and Canada, where inflation pressures are proving more persistent and policy tightening is either already under way or increasingly expected. In contrast, inflation forecasts in the US have been revised lower, consistent with softer recent data and reinforcing expectations of further monetary easing. The result is an increasingly asymmetric global policy backdrop: some central banks are still leaning against residual inflation risks, while others are preparing to shift toward rate cuts. This divergence, moreover, could matter more for global capital flows, exchange rates and financial conditions in the period ahead.

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**South Korea’s Semiconductor Trade**
The third chart provides a concrete, high-frequency illustration of the forces underpinning the forecast upgrades seen earlier for Asia. South Korea’s semiconductor exports have surged sharply on a year-on-year basis, marking one of the strongest upswings of the past decade and underscoring the revival of the global tech cycle. This acceleration is closely linked to AI-related demand, particularly for advanced memory chips used in data centres and high-performance computing. Alongside Taiwan, South Korea sits at the core of the AI hardware supply chain, and the strength of semiconductor exports helps explain why growth expectations in parts of Asia have been revised higher so decisively. In this sense, the chart offers a real-economy counterpart to the consensus forecast revisions: the AI boom is not just a financial or expectations story, but one that is already showing up clearly in trade and industrial data across the region.

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**Global Supply Chain Pressures**
The fourth chart places recent inflation dynamics in a broader supply-chain context and offers little evidence that current US tariff policies are materially exacerbating global bottlenecks. The Global Supply Chain Pressure Index has remained close to historical norms in recent months, a sharp contrast with the extreme dislocations seen during the pandemic period. Consistent with this, producer price inflation across advanced economies has remained muted, reinforcing the tight relationship between supply-chain stress and upstream price pressures. While tariffs may still influence relative prices at the margin and contribute to sector-specific adjustments, the data do not point to a broad-based resurgence in supply-chain pressures of the kind that would generate renewed, systemic inflationary pressure.

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**Uncertainty in the US versus Europe** 
The fifth chart highlights a striking shift in the global policy uncertainty landscape. The US news-based economic policy uncertainty index has risen sharply and is now approaching levels more typically associated with Europe — a vivid contrast with the post-GFC and post-pandemic period, when US policy uncertainty was consistently well below European norms. This convergence likely reflects a combination of factors: renewed uncertainty around US trade policy and tariffs, questions over fiscal sustainability and debt dynamics, and growing debate around institutional independence, including the role of the Federal Reserve. At the same time, political polarisation and an increasingly unpredictable policy environment have become more prominent features of the US backdrop. The implications are potentially important for markets. A sustained rise in policy uncertainty would argue for a higher risk premium on US assets, particularly if it begins to influence corporate investment decisions, capital flows or the perceived safe-haven status of US markets.

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**The Global Business Cycle** 
The final chart brings the story together by highlighting a further strengthening in global economic sentiment in February. The Sentix global expectations index moved higher alongside a renewed run of positive economic surprises across a number of major economies, as captured by the Citi Global Economic Surprise Index. This combination points to an environment in which incoming data have consistently exceeded expectations, helping to reinforce investor confidence and support risk appetite. Taken together, the improvement in sentiment and the upside surprise in activity data underscore the constructive macroeconomic backdrop that markets have been responding to in recent months — one characterised by resilient growth, easing inflation pressures and still-supportive financial conditions, even as policy paths and regional dynamics continue to diverge.

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While markets have been unsettled at times by shifting policy expectations, geopolitical noise and questions around valuation, underlying global macroeconomic signals remain broadly supportive. Upgrades to Blue Chip consensus growth forecasts for parts of Asia — led by Taiwan — point to the tangible impact of the AI-driven tech cycle, a theme reinforced by the sharp rebound in semiconductor exports from South Korea (charts 1 and 3). At the same time, revisions to inflation forecasts underline a growing divergence in monetary policy paths, with easing still expected in the US and UK, while tighter stances persist elsewhere (chart 2). Importantly, there is little evidence so far that global supply-chain pressures are re-emerging in a way that would reignite inflation, notwithstanding lingering trade policy tensions (chart 4). Against this backdrop, rising policy uncertainty — particularly in the US — stands out as a potential source of risk, with implications for asset pricing and risk premia (chart 5). Yet the improvement in global sentiment surveys and a continued run of positive economic surprises suggest that markets are responding not just to policy noise, but to a genuinely resilient and improving macroeconomic environment (chart 6).

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Charts of the Week: AI-Led Growth Meets Monetary Divergence

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Existing home sales fell 8.4% m/m (-4.4% y/y) to a lower-than-expected 3.91 million units (SAAR) in January following a downwardly revised 4.4% gain to 4.27 million in December (previously +5.1%; 4.35 mil.), according to the National Association of Realtors (NAR). January sales registered the lowest level since September 2024 and the deepest m/m drop since February 2022, well below the Action Economics Forecast Survey expectation of 4.20 million. Sales were 39.2% below a high of 6.43 million in January 2022 and 40.8% below a peak of 6.60 million in January 2021. The sales fall accompanied a drop in the average 30-year fixed mortgage rate to 6.11% in January, the lowest since September 2022, after declining to 6.20% in December, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales slid 9.0% (-4.3% y/y) to 3.53 million units in January, the lowest level since September 2024, after a 4.3% gain to 3.88 million in December. Sales of condos and co-ops fell 2.6% (-5.0% y/y) to 380,000 following a 5.4% December rebound to 390,000.

By region, January existing home sales decreased m/m across all major regions. Sales in the West slumped 10.3% (-7.9% y/y) to 700,000 in January after a 4.0% increase in December, marking the third m/m decline in four months and the lowest level since December 2023. Sales in the South dropped 9.0% (-1.6% y/y) to 1.81 million, the lowest reading since October 2024, reversing a 6.4% December gain. Sales in the Midwest fell 7.1% (-7.1% y/y) to 920,000, the lowest level since September 2024, after a 2.1% December increase. Sales in the Northeast declined 5.9% (-4.0% y/y) to 480,000, the lowest level since June 2025, after rising 2.0% in December and November. The South remained the dominant region, accounting for 46.3% of total U.S. existing home sales.

The median price of all existing homes (NSA) fell 2.0% (+0.9% y/y) to $396,800 in January after a 1.2% decline to $405,100 in December ($405,400 initially), representing the sixth m/m fall in seven months and the lowest level since February 2025. Prices were 8.3% below a high of $432,700 in June 2025. The median price of an existing single-family home, also down for the sixth time in seven months, slid 2.2% (+0.6% y/y) to a one-year-low $400,300 in January after a 1.3% decline to $409,500 in December. The median price of condos and co-ops, up for the third time in four months, rose 0.9% (3.8% y/y) to $364,600, the highest level since August, after a 0.4% December increase to $361,200. Regionally, overall prices fell m/m in the Midwest (-3.6%; +2.3% y/y) and South (-2.3%; +0.1% y/y) in January, but increased m/m in the Northeast (+1.1%; +5.8% y/y) and West (+0.4%; -1.4% y/y).

Inventories of homes for sale weakened further in January. The number of existing homes for sale (NSA) fell 0.8% (+3.4% y/y) to 1.22 million units on top of a 14.6% December plunge to 1.23 million, posting the fourth consecutive m/m fall and the lowest level since January 2025. The supply of homes on the market at the current selling rate (NSA) rose to 3.7 months in January after falling to 3.5 months in December (the lowest since January 2025). The most recent high of 4.6 months was in August 2025, while a record low in supply of 1.6 months was 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.

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- January sales -8.4% (-4.4% y/y) to 3.91 mil., below expectations; steepest m/m fall since Feb. ’22.
- Widespread regional m/m declines: West (-10.3%), South (-9.0%), Midwest (-7.1%), Northeast (-5.9%); all regions down y/y.
- Median sales price -2.0% (+0.9% y/y) to $396,800, lowest since Feb. ’25.
- Unsold inventory -0.8% (+3.4% y/y) to 1.22 mil. units, a one-year low; 3.7 months' supply.

U.S. Existing Home Sales Drop in January; Lowest Level Since Sept. ’24

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance dropped 5,000 to 227,000 in the week of February 7, from 232,000, revised from 231,000, in the week ended January 31. The four-week average rose 7,000 to 219,500 from 212,500. The Action Economics Forecast Survey looked for 225,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 21,000 to 1.862 million in the week ending January 31, from 1.841 million, revised from 1.844 million, in the week ending January 24. The four-week moving average stood at 1.847 million in the January 31 week, the lowest level for this average since October 5, 2024, when it was 1.846 million. The prior week was 1.850 million. The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous nine weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 24, the highest unemployment rates were in Rhode Island (2.95%), New Jersey (2.78%), Massachusetts (2.68%), Minnesota and Washington (both 2.58%), California (2.30%), and Montana (2.21%). The lowest rates were in Florida (0.31%), Arkansas (0.39%), North Carolina (0.43%), Louisiana (0.41%), and Alabama (0.45%). Rates in other notable states include Illinois (2.23%), New York (2.11%), Pennsylvania (1.91%), and Texas (1.16%). 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 dropped 5,000 to 227,000.
- Continuing claims rose to 1.862 million.
- The insured unemployment rate remained at 1.2% for the tenth consecutive week.

U.S. Initial Unemployment Claims Declined in Latest Week

**The US risk premium** 
Over the past three months, global equities excluding the US have outperformed the S&P 500, while the broad US dollar index has edged lower — a subtle but potentially meaningful shift in market dynamics. After several years of US exceptionalism driven heavily by a narrow group of AI-exposed mega-cap stocks, investors appear increasingly sensitive to elevated US valuations, geopolitical noise and questions about how much of the AI upside is already priced in. The combination of relative US equity underperformance and a softer dollar suggests a modest rise in the US risk premium and a gradual rotation of capital toward the rest of the world. It is far from a wholesale reversal, but it does hint that the automatic bid for US assets may no longer be quite as unquestioned as it once was.

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**Bank lending growth**
A key pillar underpinning the still-upbeat tone in global equity markets is the turn in the monetary cycle. As this chart shows, bank lending growth has begun to firm again across several major economies, most notably in the US and Japan, while the euro area has stabilised after last year’s contraction. Recent and prospective rate cuts — alongside earlier liquidity support — are now feeding through into credit creation. Stronger bank lending flows suggest that financial conditions are no longer tightening and may, in fact, be becoming more supportive of activity. For equity investors, this matters: improving credit momentum reinforces the view that the global economy can avoid a hard landing and that policy easing will cushion growth, helping to justify still-elevated valuations.

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**US productivity growth and AI**
Turning to productivity, the recent improvement in US labour productivity is striking — but its composition matters. As the chart shows, much of the acceleration has coincided with a sharp rise in capital input, reflecting the surge in AI-related infrastructure spending: data centres, semiconductors and high-performance computing. In other words, what we are seeing is primarily a capital-deepening effect — the production of AI — rather than clear evidence that the widespread use of AI is yet transforming efficiency across the broader economy. Total factor productivity, the cleaner measure of underlying technological progress, has not exhibited a sustained breakout. That does not invalidate the AI story — diffusion lags are typical with general-purpose technologies — but it does suggest that markets may be extrapolating productivity gains that have yet to show up convincingly in the data.

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**Industrial production in Advanced Asian economies versus the RoW**
If the productivity story in the US is being driven by the production of AI infrastructure, the industrial production data show where much of the early stages of that production process is physically taking place. Advanced Asia excluding Japan has clearly outperformed, with industrial output rising markedly relative to both the US and the euro area. This divergence neatly reflects the region’s central role in the semiconductor and electronics supply chain — from advanced chip fabrication in Taiwan and Korea to high-end components across the broader region. As AI-related capital expenditure has surged, demand for chips, servers and related hardware has provided a powerful cyclical boost to manufacturing activity in these economies. In that sense, Asia is not merely a passive beneficiary of the AI boom; it sits at its industrial core, supplying the physical backbone of the global AI build-out.

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**US manufacturing orders of high-tech products**
The strength in advanced Asia’s industrial production is mirrored by developments in the United States, where new orders for computers and electronic products have continued to climb steadily. As the chart shows, US manufacturers’ orders for high-tech goods — a category that includes semiconductors, communications equipment and other AI-related hardware — have risen to fresh highs in recent months. This reinforces the view that the AI investment cycle remains firmly intact, with strong upstream demand for chips and electronic components feeding through both sides of the Pacific supply chain.

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**Portfolio flows in Emerging Markets**
Capital flows are beginning to reflect that same industrial divergence. Emerging market equity inflows have turned more supportive in recent months, with Emerging Asia accounting for a meaningful share of the rebound. This aligns closely with the strength in industrial production across advanced Asia ex Japan, where AI-related demand for semiconductors and hardware has lifted manufacturing momentum. Investors appear increasingly willing to allocate capital toward economies most directly embedded in the AI supply chain. In that sense, the AI infrastructure cycle is not only reshaping trade and production patterns — it is also influencing global portfolio flows, reinforcing Asia’s central role in the current technology-driven upswing.

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Recent weeks have seen renewed market swings — a softer US dollar, rotation within equities and shifting rate expectations — as investors reassess valuations, policy risks and the durability of US exceptionalism. Yet a consistent macro thread runs through our charts this week. Global equities continued to outperform the US, hinting at a modest rise in the US risk premium alongside AI-valuation concerns (chart 1). At the same time, firmer bank lending growth across major economies reflects looser monetary policy and arguably helps explain why risk assets remain broadly supported despite volatility (chart 2). On productivity, a US pickup is evident but likely reflects capital deepening from AI infrastructure rather than a decisive surge in total factor productivity (chart 3). Industrial production in advanced Asia reinforces where that build-out is concentrated — at the heart of the semiconductor supply chain (chart 4) — while strong US orders for computers and electronic products underline the intensity of domestic demand for high-tech and AI-related equipment (chart 5). Finally, renewed equity inflows into Emerging Asia show investors positioning around this AI-centric growth dynamic (chart 6). In short, easier policy and AI-driven investment are sustaining momentum — but the breadth and durability of the productivity dividend remain a key open question.

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Charts of the Week: AI, Policy Easing and a Shifting Risk Premium

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