Tom Moeller

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Price inflation at the wholesale level remains heated. The Producer Price Index for Final Demand increased 0.8% during May (10.8% y/y) after rising 0.4% in April, revised from 0.5%. These last two gains follow three consecutive months of 1.1%-to-1.6% increase. The latest increase matched expectations in the Action Economics Forecast Survey. The series dates back to November 2009.

Producer prices less food, energy & trade services increased 0.5% (6.8% y/y) in May after increasing 0.4% in April. A 0.6% rise had been expected for the PPI less food & energy.

A 5.0% increase in energy prices (45.3% y/y) led the PPI higher last month. It was the fifth consecutive month of strong increase. Gasoline prices surged 8.4% and were up by two-thirds y/y. Home heating oil prices rose 10.6% (116.8% y/y) and natural gas prices surged 6.2% (29.5% y/).

Food prices were fairly steady during May (13.0% y/y) after significant gains in the prior four months.

The PPI for goods less food & energy gained 0.7% (9.7% y/y) following two consecutive months of 1.1% increase. Prices for final demand finished goods less food & energy increased 0.8% (8.8% y/y). Finished consumer goods prices less food & energy rose 0.9% in May (8.4% y/y) following a 0.6% increase. Durable consumer goods prices rose 0.7% last month (8.9% y/y) after four months of roughly 0.9%. Core nondurable consumer goods prices rose 1.0% (8.1% y/y), the strongest increase in three months. Prices for private capital equipment rose 0.7% (9.3% y/y) after increasing 1.2% in April.

Services prices rose 0.4% during May (7.6% y/y) following a 0.2% April decline. Trade services prices also increased 0.4% last month (13.6% y/y) after falling 0.6%. Services prices less trade, transportation & warehousing edged 0.1% higher in May (3.0% y/y) after falling 0.2% in April.

Construction product prices increased 0.4% in May (19.0% y/y) after surging 3.7% in April.

Intermediate goods prices jumped 2.3% (21.6% y/y) due to a 4.6% gain (47.5% y/y) in processed fuel costs.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Energy prices continue to strengthen.
- Core goods prices remain strong.
- Services prices improve after an April decline.

U.S. Producer Price Inflation Picks Up in May

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Retail gasoline prices surged to $5.01 per gallon (63.1% y/y) in the week ended June 13 from $4.88 per gallon in the previous week. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price jumped ten cents to $4.88 per gallon.

The price of West Texas Intermediate crude oil strengthened to $120.45 per barrel (71.8% y/y) in the week ended June 10, up from $116.37 per barrel in the prior week. It was the highest price since the first week of August 2008, and prices have doubled since April of 2021. Yesterday, the price was $120.93 per barrel. The average price of Brent crude oil increased to $121.57 per barrel (68.4% y/y) in the week ended June 10 from $118.23 per barrel, the highest price since April 2012. Yesterday, the price was $122.93 per barrel.

The price of natural gas increased to $8.95/mmbtu (186.9% y/y) in the week ended June 10 after having eased to $8.54/mmbtu in the previous week. The price has generally risen from a low of $1.52/mmbtu averaged in the third week of June 2020. Yesterday, the price was $9.00/mmbtu.

In the four weeks ended June 3, gasoline demand eased 0.9% y/y. Demand for all petroleum products, however, rose 3.9% y/y. Crude oil input to refineries increased 4.4% y/y.

Gasoline inventories decreased 9.5% y/y in the week of June 3 while crude oil inventories declined 14.9% y/y.

The supply of gasoline inventories in the week ended June 3 fell to 24.2 days from 24.7 days in the previous week. The supply of crude oil declined to 25.8 days, down from 41.8 days in early-March of last year.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver's **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY.**

- Gasoline prices rise to record high.
- Crude oil prices continue to increase.
- Natural gas prices rebound.

U.S. Energy Prices Strengthen; Gasoline Pump Price Surges

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The U.S. Treasury Department reported a federal budget deficit of $66.2 billion in May 2022 compared to a $132.0 billion deficit one year earlier. Receipts fell 55.0% m/m and were off 16.1% y/y while outlays declined 18.0% (-23.6% y/y). The Action Economics Forecast Survey had expected a $210 billion deficit for May. So far in FY'22, the deficit has totaled $426.2 billion versus $2.064 trillion in the first eight months of FY'21.

Overall revenues have increased 29.5% y/y so far in FY'22. Individual income tax receipts increased 45.9% y/y as employment continued to rise. Corporate tax payments rose 17.0% with strength in business earnings. Social insurance taxes rose 8.7% y/y so far in FY'22 and excise taxes rose 23.3% y/y.

Federal government outlays have declined 18.6% year-to-date in FY'22 versus FY'21. Income security payments roughly halved so far this year in the absence of economic stimulus checks. National defense outlays fell 1.8 % y/y so far in FY'22. Outlays on health programs rose 18.2% y/y in the first eight months of FY'22. Social Security outlays increased 6.7% y/y this fiscal year and Medicare outlays rose 0.8% y/y so far this fiscal year. Interest payments surged by 29.6% y/y so far in FY'22.

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

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- Outlays & spending decline y/y.
- Income security outlays fall sharply.
- Interest payments surge.

U.S. Federal Government Budget Deficit Shrinks in May

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Retail pricing power heated up in May. The Consumer Price Index rose 1.0% last month following a 0.3% April increase. The 8.6% y/y gain was the strongest since December 1981. A 0.8% May rise had been expected in the Action Economics Forecast Survey.

Prices excluding food & energy remained strong, and rose 0.6% in May for the second consecutive month. The 6.0% y/y gain was below the March peak but remained up from a recent low of 1.3% y/y set in February 2021. A 0.5% May increase had been expected.

Energy prices led the price pick-up last month with a 3.9% rebound (34.6% y/y) after a 2.7% decline during April. Gasoline prices rose 4.1% (48.7% y/y) after falling 6.1% while fuel oil prices surged 16.9% (106.7% y/y). Natural gas prices strengthened 8.0% (30.2 % y/y) and the cost of electricity rose 1.3% (12.0% y/y).

Food pricing gained momentum last month. Prices rose 1.2% (10.1% y/y) after increasing 0.9% in the prior month. Dairy product prices surged 2.9% (11.8% y/y) and meat, poultry, fish & egg prices rose 1.1% (14.2% y/y). Cereal & bakery product prices also were strong and increased 1.5% (11.6% y/y). Fruit & vegetable prices improved 0.6% (8.2% y/y).

Services prices rose 0.6% (5.2% y/y) in May, roughly the same as in each of the prior three months. The cost of public transportation strengthened 8.6% (26.3% y/y). Shelter costs increased 0.6% (5.5% y/y). The owners' equivalent rent of primary residences gained 0.6% (5.1% y/y) and rents of primary residences rose 0.6% (5.2% y/y). The cost of medical care services increased 0.4% (4.0% y/y). Recreation services prices gained 0.5% (4.9 % y/y) while education prices edged 0.2% higher (1.7% y/y).

Goods prices excluding food & energy rose 0.7% (8.5% y/y) in May after a 0.2% April gain. Price changes within categories were mixed. Used car & truck prices strengthened 1.8% (16.1% y/y) and new vehicle prices rose 1.0% (12.6% y/y). Apparel prices rose 0.7% (5.0% y/y) as recreation product prices gained 0.1% (3.8% y/y). Home furnishings prices also rose 0.1% (9.7% y/y). Working lower, education & communication product prices fell 1.7% (-6.0% y/y) and household appliance prices weakened 0.7% (+6.4% y/y).

The Consumer Price Index data can be found in Haver's **USECON** database with additional detail in **CPIDATA**. The Action Economics survey figure is in the **AS1REPNA** database.

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- Energy & food prices surge.
- Core price gain remains strong.
- Core goods prices & services prices both strengthen.

U.S. Consumer Price Inflation Accelerates in May

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The U.S. trade deficit in goods and services (BOP basis) fell to $87.08 billion in April from $107.65 billion in March, revised from $109.80 billion. Expectations had been for an $89.4 deficit in the Action Economics Forecast Survey. Exports rose 3.5% (21.7% y/y) after a 4.9% March gain, revised from 5.6%. Imports fell 3.4% (+24.3% y/y) after rising 9.6% in April, revised from 10.3% (27.0% y/y).

The trade deficit in goods (customs value) narrowed to $106.70 billion from $125.66 billion. It compared to a deficit of $105.94 billion in the advance report released on May 27. Exports of goods rose 3.6% (21.7% y/y), the third consecutive month of strong increase. Gains were broad-based amongst categories. Industrial supplies exports gained 3.4% (35.3% y/y). Auto exports improved 0.7% (9.5% y/y) and foods, feeds & beverages surged 14.3% (28.0% y/y). Nonauto consumer goods exports rose 2.0% (24.0% y/y) and capital goods exports strengthened 2.7% (7.0% y/y).

Imports of goods declined 4.4% (+22.4% y/y), the first decline in nine months. Industrial supplies imports weakened 7.0% (+42.1% y/y) and nonauto consumer goods imports fell 7.7% (+20.7% y/y). Auto imports rose 4.3% (15.9% y/y) and capital goods imports declined 3.5% (+13.0% y/y). Foods, feeds & beverages imports rose 2.5% (24.4% y/y).

Petroleum imports rose 2.6% in April and increased by two-thirds y/y with higher prices. Crude oil prices rose to $95.69 per barrel from $88.93 per barrel in March. Nonpetroleum imports fell 5.0% (+19.3% y/y) following an 11.3% March increase.

The real (inflation-adjusted) goods trade deficit narrowed to $116.20 billion (chained 2012 dollars) in April from $135.50 in March. Real exports of goods rose 3.2% (5.5% y/y) after a 1.7% increase. Real imports of goods declined 5.1% (+10.3% y/y) following an 8.8% increase.

The surplus on services trade rose to $20.66 billion in April, its second month of improvement. The surplus remained significantly below a high of $26.72 billion in January 2018. Services exports rose 3.3% (20.1% y/y), the third consecutive monthly increase. Travel exports strengthened 16.5% (129.9% y/y). Services imports improved 1.7% (33.1% y/y), the first rise in three months. Travel imports rose 7.5% (160.9% y/y) after a 15.9% March increase.

The goods trade deficit with China narrowed to a seasonally adjusted $34.93 billion in April from the record $43.24 billion set in March. Exports fell 11.6% (-6.2% y/y) while imports weakened 17.7% (+11.8% y/y). The trade deficit with Japan eased to $5.61 billion from $6.18 billion as exports declined 9.5% (-5.0% y/y) and imports were off 9.4% (-0.8% y/y). The goods trade deficit with the European Union deepened to $16.98 billion in April from $15.93 billion in March. Exports increased 1.7% (33.4% y/y) and imports rose 3.4% (18.2% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver's **USECON** database. Detailed figures on international trade are available in the **USINT** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Exports strengthen but imports decline.
- Petroleum imports rise with higher prices.
- Export gain is broad-based.

U.S. Trade Deficit Narrows in April from Record

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Consumer credit outstanding increased $38.1 billion (7.5% y/y) in April following a record $47.4 billion March gain, revised from $52.4 billion. A $34.0 billion rise had been expected in the Action Economics Forecast Survey. The ratio, of consumer credit outstanding to disposable personal income edged higher to 24.8%, the highest level since March 2020.

Revolving consumer credit balances rose $17.8 billion (13.1% y/y) following a record $25.6 billion March increase, revised from $31.4 billion. Revolving credit provided by depository institutions (90% of the total and mostly credit card debt) rose 15.2% y/y, the quickest growth since February 1997. Borrowing from credit unions (6% of the total) rose 10.8% y/y in April. Nonfinancial business loans (2% of the total) were unchanged in April from a year ago. The value of finance company loans (1% of loans) declined 16.5% y/y in April.

The rise in nonrevolving credit slowed to $20.3 billion (5.8% y/y) in April following a record $21.7 billion March advance, revised from $21.1 billion. Federal government lending, which issued 42% of nonrevolving credit, rose 3.0% y/y. Nonrevolving loans provided by depository institutions (26% of credit) grew 10.7% y/y, the quickest growth since April 1995. Finance company lending (16% of loans) grew a diminished 2.4% y/y. Growth of credit union nonrevolving loans (14% of the total) accelerated to 10.8% y/y.

These Federal Reserve Board figures are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of the Census and Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver's **USECON** database. The Action Economics figures are contained in the **AS1REPNA** database.

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- Revolving credit usage weakens.
- Nonrevolving credit usage eases.

U.S. Consumer Credit Growth Slows in April

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) weakened 3.5% during the last four weeks. The decline left prices 7.4% below the peak in the second week of March.

Prices in the **metals** group continued to weaken, off 8.5% during the last four weeks. This decline was led by a 17.7% decline in steel scrap prices. The price of zinc, which is used in batteries, fell 4.6% during the last four weeks while aluminum prices weakened 7.0%. Copper scrap prices fell 1.9% in the same period, while tin and lead prices also fell sharply.

The **miscellaneous** group also weakened 5.9% during the last four weeks, led by a one-third decline in framing lumber prices. They have fallen by one half during the last year. Moving upward by 5.8% were natural rubber prices.

**Textile** group prices tracked 1.3% lower in the last four weeks but remained near thirty-year highs. Cotton prices weakened 8.0% but rose by roughly two thirds y/y. The cost of burlap, used for sacks, bags and gardening, rose 0.2% in the last four weeks and were near the record high.

Offsetting these declines was an 8.2% increase in prices in the **crude oil & benzene** group, which have risen by one-third during the last year. Crude oil costs alone also rose 8.2% during the last four weeks and were up 68.2% y/y. The per barrel price of crude oil of $114.87 compared to $75.80 at the end of 2021. The price of the petro-chemical benzene rose 28.7% in four weeks and was 56.3% higher y/y. Excluding crude oil, industrial commodity prices weakened 4.1% in the latest four weeks but have risen 1.3% y/y.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Declines were broad-based in last four weeks.
- Oil prices continue to strengthen.

FIBER: Industrial Commodity Prices Remain Weak

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The signals from the May labor market report are part of a story of continued expansion overall. Nonfarm payroll employment increased 390,000 (4.5% y/y) last month following a 436,000 April rise, revised from 428,000. A 325,000 May gain had been expected in the Action Economics Forecast Survey. The 436,000 April rise was revised from 428,000, but the March rise was revised down to 398,000 from 428,000.

Wage growth remains solid. Average hourly earnings rose 0.3% in May, the same as in April. A 0.4% rise had been expected. The 5.2% y/y gain in May remained up significantly from the 4.2% growth registered for all of 2021.

The unemployment rate held steady m/m in May at 3.6%. A dip to 3.5% had been expected. Employment in the household survey rose 321,000 after declining 353,000 in April. The labor force rose by 330,000 after falling 363,000 in April. The overall unemployment rate, including those who were marginally attached or working part-time for economic reasons, edged higher to 7.1%, its highest point in three months.

Last month's gain in **payroll** employment reflected variation in business sector hiring in the private service sector, where jobs increased 274,000 (5.2% y/y) following a 336,000 April rise. It was the smallest since April of 2021. The slowdown primarily reflected a minimal 1,000 worker rise (4.0% y/y) in trade, transportation & utilities employment which included a fall in retail trade employment of 60,700 (+27% y/y). Elsewhere, there was improvement. Growth in leisure & hospitality sector jobs of 84,000 (12.7% y/y) was almost the same as April's 83,000 increase, although a fraction of the 196,00 average monthly increases last year. Employment in the professional & business sector rose an improved 75,000 (5.5% y/y) as temporary help rose 19,300 (12.4% y/y). The number of education & health workers rose 74,000 (2.7% y/y).

Government sector payrolls strengthened 57,000 (1.3% y/y) in May as the number of state government jobs jumped 36,000 (1.0% y/y), the largest increase in twelve months. Local government jobs rose 16,000 (1.7% y/y) while federal government employment improved 5,000 (-0.3% y/y).

Factory sector employment remained strong last month, rising 18,000 (4.2% y/y). Construction sector payrolls grew 36,000 (3.8% y/y).

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Workers' pay continues to benefit from competition to fill job vacancies. The 0.3% rise in average hourly earnings last month was paced by a 0.7% increase (3.4% y/y) in information sector pay. Leisure & hospitality sector earnings strengthened 0.5% (10.3% y/y) while professional & business sector earnings rose 0.3% (6.6% y/y). Education & health service sector earnings also increased 0.3% (5.7% y/y). Financial sector earnings fell 0.2% (+2.3% y/y).

The length of the private sector average workweek held at 34.6 hours, where it's been for three months. Construction sector hours rose to 39.0 but have trended sideway for years. Factory sector hours eased to 40.4 and also have trended sideways. Private service sector hours slipped to 33.5 in May from 33.6 the prior three months as professional & business services hours slipped to 36.6 from 36.7.

From the **household** employment survey, the steady 3.6% unemployment rate in May reflected a slightly higher labor force participation rate of 62.3%, up from 62.2% in April and just below its two-year high of 62.4% reached in March. It has trended up, nevertheless, from 61.4% early in 2021.

The employment/population ratio for all workers edged higher from 60.0% in April to 60.1% in May. It remained well above its pandemic-period low of 51.3% low in April 2020. In February 2020, the ratio had reached a high of 61.2%.

The average duration of unemployment fell to 22.5 weeks in May from 25.0 in April and remained below the high of 31.6 weeks in June of last year. The median unemployment duration rose to 9.6 weeks in May from 7.5 weeks in April, but remained below a recent high of 19.6 weeks in June of last year.

The employment & earnings data are collected from surveys taken each month during the week containing the 12th of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Pattern of employment gains moderates versus 2021.
- Hourly earnings growth is mixed amongst industries.
- Jobless rate hovers near 50-year low.

U.S. Employment Growth Stays Firm in May; Earnings Growth & Jobless Rate Steady

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Job creation continued to slow considerably last month, according to the ADP National Employment Report. Nonfarm private sector payrolls increased 128,000 (4.2% y/y) during May after a 202,000 April increase, revised from 247,000 reported initially. It was the weakest gain since a decline in April 2020. A 306,000 May rise had been expected in the Action Economics Forecast Survey.

Small-sized payrolls weakened 91,000 (1.6% y/y) last month after a 123,000 April falloff, revised from -120,000. It wa the third decline in the last four months. Large-sized payrolls rose 122,000 (5.3% y/y) after increasing 278,000 in April, revised from 321,000. Medium-sized payrolls increased 97,000 (4.9% y/y) after rising an unrevised 46,000 in April.

Within industry sectors, weakness in payroll growth was widespread. Private services employment rose 104,000 last month (4.3% y/y) after increasing 171,000 during April, revised from 202,000. Leisure & hospitality jobs increased 17,000 (12.4% y/y) after gaining 47,000 in April. It compared to a 237,000 rise this past December. The number of education & health services jobs rose 46,000 (3.0% y/y) after a 60,000 April increase. Professional & business services jobs increased 23,000 (3.8% y/y) following a 41,000 rise. The number of trade, transportation & utilities jobs grew 8,000 in May (2.8% y/y) after a 15,000 April rise. Employment in financial services rose 10,000 in May (1.7% y/y) after rising 7,000 in April. The number of information sector jobs fell 2,000 (+1.7% y/y) in May, the third consecutive month of decline.

Employment in the goods-producing sector improved 24,000 in May (3.9% y/y) following a 31,000 increase. It was the smallest increase since last July. The number of factory sector jobs rose 22,000 (3.3% y/y) following a 15,000 April gain. Construction sector payrolls eased 2,000 (4.5% y/y) after gaining 12,000 in April. Employment in the natural resource & mining sector improved 5,000 (8.5% y/y) after a 4,000 increase.

The Automatic Data Processing Research Institute survey covers 411,000 companies and includes about one-fifth of U.S. private payroll employment. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's **USECON** database. Historical figures date back to 2001 for private employment and the industry breakdown and 2005 for the business size breakout. The expectation figure is available in Haver's **AS1REPNA** database.

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Europe

- Overall gain is weakest since 2020 recession.
- Services bare brunt of slowdown.
- Small business hiring declines.

U.S. ADP Nonfarm Private Payroll Growth Slows Unexpectedly in May

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Manufacturers' new orders rose 0.3% (14.0% y/y) during April following a 1.8% March rise, revised from a 2.2% increase reported initially. A 0.6% rise had been expected in the Action Economics Forecast Survey. Orders excluding transportation increased 0.3% (12.4% y/y) after strengthening 2.2% in March.

Durable goods orders rose 0.5% in April (12.2% y/y), revised from 0.4% in the advance report. The gain followed a 0.7% March rise. Machinery orders increased 1.0% (9.9% y/y) after rising 0.6% in March. Orders for computers and electronic equipment rose 0.1% (4.3% y/y) after rising 1.8% in March while electrical equipment & appliance orders fell 0.2% (+11.6% y/y) after a 2.6% rise.

New orders for nondurable goods, which equal shipments, improved 0.2% (15.8% y/y) in April following a 2.9% March increase. Shipments from petroleum refineries eased 0.5% (+63.4% y/y) despite higher prices. Apparel shipments gained 0.3% (5.3% y/y) after rising 2.3% in March. Shipments of basic chemicals fell 0.3% (+7.8% y/y) after five months of modest increase.

Total shipments edged 0.2% higher (14.0% y/y) in April after a 2.2% March rise. Shipments excluding transportation rose 0.2% (13.8% y/y) after improving roughly 1.5% in each of the prior three months. Durable goods shipments rose 0.1% (12.2% y/y) after a 1.4% gain. Transportation equipment shipments held steady (15.3% y/y) after they rose 2.6% In March. Machinery shipments increased 0.3% last month (14.2% y/y) after rising 0.9%. Shipments of computers & electronic products improved 0.5% (3.9% y/y) after easing 0.3% in March.

Unfilled orders increased 0.5% in April (7.8% y/y) after a 0.5% rise in March. Excluding transportation, unfilled orders gained 0.4% (9.3% y/y) following a 0.3% rise in March. Transportation backlogs increased 0.7% (6.8% y/y) while unfilled orders of machinery rose 0.6% (12.4% y/y).

Inventories of manufactured goods rose 0.6% in April (10.7% y/y). Transportation equipment inventories rose 0.7% (4.8% y/y) while excluding transportation, inventories gained 0.5% (12.2% y/y) after a 1.5% March rise.

The factory sector data are available in Haver's **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Durable & nondurable goods orders are mixed.
- Shipments increase slows.
- Unfilled orders & inventories continue to rise.

U.S. Factory Orders & Shipments Rise Modestly in April

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The Institute for Supply Management (ISM) reported that its Composite Index of Manufacturing Sector Activity rose to 56.1 during May after falling to 55.4 in April. A decline to 54.5 had been expected in the Action Economics Forecast Survey. Despite the rise, the index remained down from the high of 63.7 last March. During the last 15 years, there has been a 42% correlation between the composite index and the quarterly change in real GDP.

Leading the improvement in the component series was the inventory index which surged to 55.9 from 51.6. It was the highest level in six months. An increase in the new orders index followed with a rise to 55.1 after falling to 53.5 in April. Twenty-eight percent (NSA) of respondents reported higher new orders versus 25.1% during April, but 13.3% reported a decline versus 10.9% a month earlier. Rounding out the gains, the production index edged higher to 54.2 last month after falling to 53.6 in April. It remained below the March 2021 high of 66.4.

Countering these increases, the employment index declined from 50.9 in April to 49.6 in May. Below the break-even level of 50, it was the lowest level since November 2020. An increased 22.8% (NSA) of respondents reported a decline in jobs in May versus 17.1% in April, while 21.8% reported more hiring versus 21.0% in April.

Also falling was the supplier delivery series. It fell to 65.7 after rising to 67.2 in April. It thus suggested quicker product delivery speeds.

The prices paid index declined to 82.2 last month after falling to 84.6 in April. It was below the high of 92.1 in June 2021. Seventy percent (NSA) of respondents reported higher prices versus 73.5% in April, while 5.6% reported price declines compared to 4.4% in April.

In other ISM series not included in the composite, the new export measure was little-changed at 52.9. It reached a recent high of 57.1 in February. The imports index fell to 48.7 from 51.4 in April. It was down from a high of 55.4 in February.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver's **AS1REPNA** database.

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- Index level rebounds after two straight months of decline.
- Component movement is mixed.
- Prices paid index falls for a second month.

U.S. Manufacturing Activity Improves Unexpectedly in May

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The Mortgage Bankers Association's Loan Applications Index weakened 2.3% (-53.7% y/y) in the week ended May 27 after declining 1.2% in the prior week. Applications to refinance an existing loan continued to lead the decline with 5.4% drop (-75.1% y/y) after falling 3.9% in the week earlier. Applications for purchase eased 0.6% (-14.3% y/y) after rising 0.2% in the prior week.

The share of applications for refinancing fell to 31.5% in the week ended May 27, half the percentage in December 2021 and nearly the lowest reading since December 2000. The percentage that were ARMs fell to 8.7%

Applications for fixed-rate loans fell 1.5% (-56.1% y/y) in the week ended May 27. Meanwhile, applications for adjustable-rate mortgages fell 10.1% (+8.0% y/y).

The effective rate on 30-year fixed-rate loans fell to 5.48% last from 5.64% in the prior week. It remained near the highest reading since June 2009. The rate for 15-year fixed mortgages slipped to 4.75% and for 30-year Jumbos slipped to 5.05%. The rate on 5-year ARMs was little-changed w/w at 4.71%, up from 2.57% at the end of last year.

The average loan size of $385,600 was down sharply from $401,900 at the beginning of the month. The average size of a purchase loan rose slightly to $433,200. The average refinancing loan size was $282,100.

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.

These figures for weekly mortgage applications and interest rates are available in Haver's **SURVEYS** database.

- Loan refinancing continues to fall sharply.
- Purchase applications slip.
- Interest rates ease.

U.S. Mortgage Applications Decline Further

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