Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430c.jpg" width="353">
Rising 0.8% last quarter, the employment cost index for private industry workers remained about steady with the 4Q &#39;07 increase. The gain matched Consensus expectations. In addition, the gain in total compensation in 1Q was roughly steady at 3.2% with the gains since 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430d.jpg" width="353">
During the last twenty years there has been a 54% correlation between the growth in employee compensation and the rise in the PCE price index. That level of correlation goes neither up or down, when either series is led or lagged the other. This suggests a self reinforcing effect between the two series.
Wage and salary growth held steady at 0.8%. Wages account for roughly 70% of the compensation index. Wages in the services industries rose 0.7% (3.2% y/y). Wages in the goods producing industries rose at an accelerated 1.0% (3.2% y/y).
The rise in benefit costs eased to 0.6% after a 0.8% 4Q rise. The rise in benefit costs in the service producing industries slipped to 0.6% (3.3% y/y) but in the goods producing sector benefits rose 0.8% (3.1% y/y). That is double the recent rates of growth. 
Health benefit costs rose a steady 4.6% y/y.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">1Q &#39;08</th>
<th scope="col">4Q &#39;07</th>
<th scope="col">3Q &#39;07</th>
<th scope="col">1Q Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>0.8%</td>
<td>0.9%</td>
<td>0.8%</td>
<td>3.2%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.8%</td>
<td>0.8%</td>
<td>0.8%</td>
<td>3.2%</td>
<td>3.4%</td>
<td>2.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.6%</td>
<td>0.8%</td>
<td>0.8%</td>
<td>3.2%</td>
<td>2.4%</td>
<td>2.9%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>


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Rising 0.8% last quarter, the employment cost index for private industry workers remained about steady with the 4Q '07 increase. The gain matched Consensus expectations. In addition, the gain in total compensation in 1Q was roughly [...]

U.S. Employment Cost Index Steady At 0.8% Quarterly Increase

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430e.jpg" width="353">
The ADP National Employment Report, from the payroll processor, reported that private nonfarm payrolls rose 10,000 this month after a slightly revised increase of 3,000 during March.
The U.S. Bureau of Labor Statistics employment figure for April will be published this Friday.Last month the 3,000 worker rise in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 98,000 worker decline in private sector payrolls as reported by BLS.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
The ADP sub-index for large payrolls fell 18,000 (-0.9% y/y) after a 53,000 worker decline during March.
A 42,000 worker increase (1.3% y/y) in small sized payrolls during April followed the 53,000 March rise.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430f.jpg" width="353">
Medium sized payrolls fell 14,000 (+0.8% y/y) and that followed a 3,000 worker March increase.
Employment in the goods producing industries fell 54,000 (-2.0% y/y) and the rate of decline has intensified as this year has progressed. Services payrolls rose 64,000 (1.4% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_Apr_08.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
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<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>10,000</td>
<td>3,000</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>


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The ADP National Employment Report, from the payroll processor, reported that private nonfarm payrolls rose 10,000 this month after a slightly revised increase of 3,000 during March.

ADP Report: April Private Sector Payrolls Again Rose Slightly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430a.jpg" width="353">
U.S. real GDP growth during 1Q&#39;08 remained stable with the prior quarter at 0.6%, about as expected. Together, growth during the last two quarters was the weakest since the end of the last recession in 2001.
Negative 0.4% 1Q growth in final sales to domestic purchasers was the first sub-zero reading since the earlier recession in 1991.
Residential construction led that slip with a 26.6% (-21.2% y/y) drop which was the fastest rate of decline since the recession in 1981. For the quarter it alone reduced overall real GDP growth by 1.2 percentage points. 
Business fixed investment also was weak and posted a 2.5% (+5.8% y/y) decline which was its first negative print since 4Q&#39;06 and the largest negative reading since early 2004. Overall it reduced 1Q GDP growth by 0.3 percentage points. The decline was paced by a 6.2% (+11.5% y/y) decline in investment in structures while equipment spending fell at a 0.7% rate (+3.3% y/y). That decline represented a shortfall in investment in transportation equipment while growth in information processing equipment and also industrial equipment remained positive. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080430b.jpg" width="353">
Growth in real personal consumption also weakened to just 1.0% (1.9% y/y) which was its weakest since the recession year 2001. Fewer purchases of autos &amp; light trucks reduced spending here at an 11.4% (-4.3% y/y) while spending on furniture &amp; other household equipment also fell. In the nondurable area, spending on food as well as gasoline both dropped. Spending on services actually accelerated slightly due to faster growth in spending on household operation. Growth in real PCE added 0.7 percentage point to 1Q real GDP growth.
Earlier sizable additions to GDP growth from an improved foreign trade deficit eased to just a 0.2 percentage point contribution in 1Q. The lessened addition was due to weaker growth in exports of 5.5% after an 8.1% rise last year and an 8.4% gain in 2006. Imports grew at a 2.5% rate after a 1.9% rise last year and a 5.9% 2006 rise. 
Faster inventory accumulation added 0.8 percentage points to 1Q GDP growth but that only made up some of the 1.8 point subtraction in 4Q.
The GDP chain price index grew at a 2.6% annual rate which was its fastest gain in three quarters. The PCE price index rose at a 3.5% rate (3.4% y/y) which was down slightly from the 3.9% rise in 4Q. Less food &amp; energy consumer prices rose at a 2.2% rate which was stable with growth during the prior four years. The price index for business fixed investment fell a slight 0.1% which was the third decline in the last four quarters but prices for residential investment fell at a 2.3% rate which was the fastest rate of decline since 1970 (no typo). Quicker growth in the overall GDP price index was due to exports (9.0% y/y) and government consumption (6.9% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">1Q &#39;08</th>
<th scope="col">4Q &#39;07</th>
<th scope="col">3Q &#39;07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>0.6</td>
<td>4.9</td>
<td>2.5</td>
<td>2.2</td>
<td>2.9</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.8</td>
<td>-1.8</td>
<td>0.9</td>
<td>0.1</td>
<td>-0.3</td>
<td>0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-0.2</td>
<td>2.4</td>
<td>4.0</td>
<td>2.4</td>
<td>2.5</td>
<td>2.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>0.2</td>
<td>1.0</td>
<td>1.4</td>
<td>1.0</td>
<td>0.7</td>
<td>-0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-0.4</td>
<td>1.3</td>
<td>2.5</td>
<td>1.4</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.6</td>
<td>2.4</td>
<td>1.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
<td>3.2</td>
</tr>
</tbody>
</table>


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U.S. real GDP growth during 1Q'08 remained stable with the prior quarter at 0.6%, about as expected. Together, growth during the last two quarters was the weakest since the end of the last recession in 2001. Negative 0.4% 1Q growth in [...]

U.S. 1Q'08 GDP Stable at 0.6%, Two Quarter Growth At Recession Level

The Federal Open Market Committee again lowered the Federal funds rate today by 25 basis points to 2.00% in a move that was widely expected. The funds rate was last this low in December, 2004. The discount rate was lowered another 25 [...]

FOMC Lowers Fed Funds Rate by 25 Basis Points

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429l.jpg" align="left" border="0" height="265" width="353">
The INSEE household confidence reading is at its lowest mark
since 1990. Living standards in the past and next 12-months are
assessed as being in the bottom several percentage points of their
range for the period. The same is true of the assessment of their
financial situation by households.

Unemployment expectations remain subdued however in the lower
35% of their range and they are not on a clear rising trend either.
Price developments are, however, high and rising reading in the 96th
percentile of their range. The spending environment is assessed as
beginning in the bottom quarter of its range since 1990. On balance
French consumers are under pressure and showing some of the same
conditions we see in Italy and in the UK. The last German assessment by
consumers was up. So Germany has some very different dynamics in play
despite the fact its industrial indicators are a tattered its consumers
have gotten a second wind. The Euro Area is generally showing the
impact from financial turmoil and high commodity prices along with a
too-strong currency. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> INSEE
Household Monthly Survey</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Confidence</td>
<td>-37</td>
<td>-36</td>
<td>-35</td>
<td>-35</td>
<td>0.0</td>
<td>215</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Living
Standards</td>
</tr>
<tr class="odd">
<td class="firstcol">Past 12-Mos</td>
<td>-69</td>
<td>-71</td>
<td>-68</td>
<td>-65</td>
<td>2.2</td>
<td>214</td>
</tr>
<tr class="odd">
<td class="firstcol">Next 12-Mos</td>
<td>-43</td>
<td>-40</td>
<td>-42</td>
<td>-44</td>
<td>1.7</td>
<td>214</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment: Next 12</td>
<td>3</td>
<td>11</td>
<td>11</td>
<td>9</td>
<td>36.4</td>
<td>176</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Price
Developments</td>
</tr>
<tr class="odd">
<td class="firstcol">Past 12-Mos</td>
<td>56</td>
<td>60</td>
<td>43</td>
<td>39</td>
<td>96.6</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">Next 12-Mos</td>
<td>-36</td>
<td>-41</td>
<td>-25</td>
<td>-12</td>
<td>26.4</td>
<td>108</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Savings</td>
</tr>
<tr class="odd">
<td class="firstcol">Favorable to Save</td>
<td>24</td>
<td>25</td>
<td>24</td>
<td>27</td>
<td>55.6</td>
<td>101</td>
</tr>
<tr class="odd">
<td class="firstcol">Ability to Save Next 12 Mos</td>
<td>-13</td>
<td>-16</td>
<td>-13</td>
<td>-12</td>
<td>34.5</td>
<td>161</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Spending</td>
</tr>
<tr class="odd">
<td class="firstcol">Favorable for major purchase</td>
<td>-28</td>
<td>-28</td>
<td>-26</td>
<td>-25</td>
<td>24.1</td>
<td>198</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Financial
Situation</td>
</tr>
<tr class="odd">
<td class="firstcol">Current</td>
<td>12</td>
<td>13</td>
<td>13</td>
<td>14</td>
<td>42.9</td>
<td>104</td>
</tr>
<tr class="odd">
<td class="firstcol">Past 12-Mos</td>
<td>-29</td>
<td>-30</td>
<td>-27</td>
<td>-25</td>
<td>4.0</td>
<td>214</td>
</tr>
<tr class="odd">
<td class="firstcol">Next 12-Mos</td>
<td>-16</td>
<td>-14</td>
<td>-14</td>
<td>-14</td>
<td>0.0</td>
<td>214</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Number of observations in the period</td>
<td>220</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The INSEE household confidence reading is at its lowest mark since 1990. Living standards in the past and next 12-months are assessed as being in the bottom several percentage points of their range for the period. The same is true of [...]

Household Confidence in Near Free Fall in France

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429k.jpg" align="left" border="0" height="265" width="353">
The CBI survey shows sharp weakness on the part of consumers
in April. Sales from one year ago register a -26 on this net balance
scale. Orders are a -28.and sales for the time of year are assessed an
even weaker looking -38. Indeed, sales for the time of year are in the
bottom 9% of their range, the same as for year-ago sales. Orders are in
the bottom 12 percent of their range. The expected readings that apply
to May are similarly weak with orders in the bottom 25 percentile of
their range. Sales for the time of year, as well as the Yr/Yr change in
sales, stand in the lower 10 percentile of their respective readings.
The UK retail sector is beginning to feel some pain. Inventories are
rising and are expected to rise further next month. That could compound
problems in the sector. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK Retail
volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>12Mo Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Sales/Year Ago</td>
<td>&nbsp;</td>
<td>-26</td>
<td>1</td>
<td>-3</td>
<td>8</td>
<td>9%</td>
<td>67</td>
<td>-35</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Orders/Year Ago</td>
<td>&nbsp;</td>
<td>-28</td>
<td>-10</td>
<td>-4</td>
<td>7</td>
<td>12%</td>
<td>48</td>
<td>-38</td>
<td>86</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Year</td>
<td>&nbsp;</td>
<td>-38</td>
<td>-14</td>
<td>-7</td>
<td>-5</td>
<td>9%</td>
<td>41</td>
<td>-46</td>
<td>87</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>&nbsp;</td>
<td>17</td>
<td>10</td>
<td>11</td>
<td>14</td>
<td>57%</td>
<td>30</td>
<td>0</td>
<td>30</td>
</tr>
<tr class="odd">
<td class="firstcol">Expected:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>May-08</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Sales/Year Ago</td>
<td>-15</td>
<td>-3</td>
<td>-2</td>
<td>10</td>
<td>8</td>
<td>9%</td>
<td>67</td>
<td>-23</td>
<td>90</td>
</tr>
<tr>
<td class="firstcol">Orders/Year Ago</td>
<td>-14</td>
<td>-6</td>
<td>-3</td>
<td>10</td>
<td>6</td>
<td>25%</td>
<td>47</td>
<td>-34</td>
<td>81</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Year</td>
<td>-26</td>
<td>-15</td>
<td>-10</td>
<td>-5</td>
<td>-5</td>
<td>11%</td>
<td>45</td>
<td>-35</td>
<td>80</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>18</td>
<td>11</td>
<td>10</td>
<td>11</td>
<td>12</td>
<td>65%</td>
<td>26</td>
<td>3</td>
<td>23</td>
</tr>
</tbody>
</table>
</body></html>

The CBI survey shows sharp weakness on the part of consumers in April. Sales from one year ago register a -26 on this net balance scale. Orders are a -28.and sales for the time of year are assessed an even weaker looking -38. Indeed, [...]

CBI Sales and Order Trends Weaken

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429h.jpg" align="left" border="0" height="265" width="353">
The latest ISAE (Institute for Studies and Economic Analysis)
surveys of confidence among entrepreneurs in Italy continue to show
weakness. Even among retailers where confidence has held up fairly
well, it declined 4.0% in April from March but was still only 2.5%
below April 2007. Confidence among manufacturers and miners, which has
been declining for over a year, declined 2.1% in April from March, and
was 11.4% below April 2007. Confidence in the construction industry is
available only through March. In that month confidence in the
construction industry was down 3.7% from February and was 16.4% below
March, 2007. These three confidence indicators are expressed as indexes
with base year 2000 and are shown in the first chart.
The ISAE survey of confidence in the service industries is
expressed in terms of percent balances. In April the excess of
optimists over pessimists in all the service industries increased from
2.7% to 4.0% but in April 2007, the excess of optimists was 44.7%.
Confidence in the personal service sector declined the most (-13 basis
points) from March to April. Confidence in the business sector declined
by 5 basis points and confidence in the financial sector services rose
2 basis points. Trends in confidence in the total, business, personal
and financial sectors of the service industry are shown in the second
and third charts where the steep declines in confidence over the past
year in all areas are apparent.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429j.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ITALY
ISAE SURVEYS&nbsp;</th>
<th scope="col">Apr 08</th>
<th scope="col">Mar&nbsp; 08&nbsp;</th>
<th scope="col">Apr 07</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Manufacturing
&amp; Mining (2000=100)</td>
<td>86.9</td>
<td>88.8</td>
<td>98.1</td>
<td>-2.14</td>
<td>-11.42</td>
<td>94.3</td>
<td>95.8</td>
<td>87.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade (2000=100)</td>
<td>106.2</td>
<td>110.6</td>
<td>108.9</td>
<td>-3.98</td>
<td>-2.48</td>
<td>110.2</td>
<td>108.2</td>
<td>101.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Services (%
balance)&nbsp;</td>
<td>4.0</td>
<td>2.7</td>
<td>44.7</td>
<td>1.3</td>
<td>-40.7</td>
<td>27.7</td>
<td>28.9</td>
<td>13.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Personal
Services</td>
<td>2</td>
<td>11</td>
<td>42</td>
<td>-13</td>
<td>-40</td>
<td>25</td>
<td>24</td>
<td>14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business
Services</td>
<td>8</td>
<td>13</td>
<td>47</td>
<td>-5</td>
<td>-39</td>
<td>30</td>
<td>33</td>
<td>13</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Financial
Services</td>
<td>-14</td>
<td>-16</td>
<td>8.0</td>
<td>2</td>
<td>-22</td>
<td>0</td>
<td>9</td>
<td>12</td>
</tr>
</tbody>
</table>

</body></html>

The latest ISAE (Institute for Studies and Economic Analysis) surveys of confidence among entrepreneurs in Italy continue to show weakness. Even among retailers where confidence has held up fairly well, it declined 4.0% in April from [...]

Italian Business Confidence

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429f.jpg" align="left" border="0" height="265" width="353">
The S&amp;P/Case-Shiller Composite 20
home price index fell 2.7% m/m in February and that followed declines
of similar magnitude during the prior three months. This index of U.S.
home prices has fallen in each month since its peak in July
of 2006 and the decline totals 14.8% during that period. The series
dates back only to 2000.
The index of 20 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of a home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that during the fourth
quarter of 2007 house prices rose a negligible 0.8% y/y, the weakest
gain since 1990.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080429g.jpg" align="right" border="0" height="265" width="353">
The Case-Shiller composite index of homes in 10 metropolitan
areas fell 2.8% (-13.6% y/y) in February. This series dates back to
1987.
Home prices in Las Vegas Nevada were quite weak and fell 22.8%
y/y while prices in Miami were off 21.7%. Home prices also fell a sharp
19.2% y/y in San Diego, where they are off by one quarter from their
2006 peak, and in Los Angeles prices fell 19.4% y/y.
Relatively moderate declines were again registered in New York
(-6.6% y/y), Chicago (-8.5% y/y), Denver (-5.5% y/y), Seattle (-2.7%
y/y) and Dallas (-4.1% y/y).
The latest press release from Standard &amp; Poor's can be
found <a href="http://www2.standardandpoors.com/spf/pdf/index/CS_HomePrice_Release_042952.pdf">
here</a>. An overview of the S&amp;P/Case-Shiller home price
series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>175.94</td>
<td>180.75</td>
<td>-12.7%</td>
<td>-3.8%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>
</body></html>

The S&P/Case-Shiller Composite 20 home price index fell 2.7% m/m in February and that followed declines of similar magnitude during the prior three months. This index of U.S. home prices has fallen in each month since its peak in July [...]

Case-Shiller Home Price Index Posts 12.7% y/y Decline

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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Initial claims for unemployment insurance rose 9,379 during the week ended November 1 to 228,899 (3.4% y/y) and mostly reversed the prior week’s 12,643 decline to 219,520. The four-week moving average of initial claims eased to 225,213 from 226,766. The four-week average hit a low of 200,323 in January 2024.

Federal government employees filed 7,482 initial jobless insurance claims last week after 9,435 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.964 million (4.4% y/y) in the week ended October 25 from 1.957 million in the prior week. The four-week moving average rose to 1.949 million from 1.940 million. It was the highest level since the last week of August.

Federal government employees continuing benefits rose to 30,649 in the week ended October 25 from 23,188 in the prior week. These figures are increased from 8,676 at the end of September.

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.

- Increase in initial claims reverses most of earlier decline.
- Continuing claims continue to increase.

U.S. Initial Claims for Unemployment Insurance Rise in Latest Week

251110E.jpg

Industrial production for the European Monetary Union (EMU) is not yet available for the union as a whole; however, a number of European countries have reported production, and they give us a good sense of what's happening. In September, among the 13 European countries that reported in the table, all but four of them showed increases in industrial production. Declines were posted in Ireland where production fell by 9.4% in one month, Luxembourg where it fell by 6.1%, Malta where it fell by 1.7%, and in Finland where it fell by 0.4%. In the remaining nine countries, production increased. The median increase for monetary union members in the table was a rise of 0.8% month-to-month. 45.5% of the reporters in the monetary union showed production acceleration.

In August, there were 5 European members with production decreasing. Among European Monetary Union members, the median was a decline of 0.5% with 46.2% of the reporters showing output accelerating on the month. July had been a much worse month with 8 reporting European countries showing declines and with the monetary union median showing a decline of 0.3% and only 38.5% of the reporting EMU members showing output accelerating month-to-month.

There has been gradual moderate improvement in these monthly statistics both in terms of improvement in the median and improvement in the breadth as output has accelerated, with a step back in August.

Looking at the sequential data that compare three-month results to six-month results to 12-month results, we see a median annualized increase of 2.9% for output across monetary union members over three months; that's up from 0.8% over six months and compares to a 2.1% increase for monetary union members over twelve months. The breadth of increase over the period is above 50% on all the horizons and it's fairly steady over three months and six months at about a 54-percentile standing.

September data conclude the results for the third quarter. In this quarter-to-date calculation, 6 of the 13 reporters in the table shows output declining in the third quarter. Monetary Union members generate a median increase of 0.3% in terms of annualized quarter-to-quarter industrial output changes. The pattern and the monthly data seem to be slightly stronger than what we see in the quarter-to-date.

The final column of the table presents the queue standings that calculate the positioning of the year-over-year growth rates across country-reporters among growth rates back to late-2007. Ranked among this cluster of growth rates, only five of the current year-over-year rates stand at levels that are below their median growth rate for the period. Countries with below median growth rates (below a standing of 50%) for industrial production growth are Austria, Germany, Finland, Luxembourg, and Malta. Among these, only one belongs to the four largest economies in the monetary union—Germany, which is also the largest of them. Germany has the standing only its 39th percentile. The unweighted median ranking for the group of monetary union economies is at 57.3%, above the 50% mark and therefore above the historic median.

The industrial production data for the monetary union in September is somewhat encouraging but certainly not crystal clear. There continues to be a lot of weaknesses displayed in the data. While the aggregate ranking is above its historic median, it's not above it by very much and clearly the growth rates are still relatively weak. There still is not a clear trend of acceleration in the group. However, what's lacking in the data is any sign of real deterioration. There clearly is weakness across countries but not a sense of deterioration. The best news in the report may be that there's not any really bad news.

251110.jpg

Europe

Production in a Gradual Recovery in Europe Despite Recent Setbacks

Tian Yong Woon

This week, we review key developments across several Asian economies as the year nears its close. On balance, many of investors’ and policymakers’ worst fears did not materialize. Despite US tariffs, regional exports have shown resilience (chart 1), partly supported by stronger intra-Asia trade, even as exports to the US declined in some cases.

In China, factors including importer front-loading, stronger exports to non-US markets, and government efforts to boost consumption—albeit with potentially one-off effects—have kept the economy on track to meet its 5% growth target this year (chart 2), barring a substantial slowdown in Q4. In Japan, political uncertainty has eased following Prime Minister Takaichi’s rise, though her pro-growth, pro-loose monetary stance has contributed to further yen weakness (chart 3). India, while still likely Asia’s fastest-growing major economy this year, has seen trade setbacks (chart 4) as US–India discussions continue, though recent progress suggests a deal may be near.

However, not all developments in Asia have avoided worst-case outcomes. For example, the Philippines, which has already been hit by a string of storms this year, continues to reel from the effects of Typhoons Fung-wong and Kalmaegi. These storms have highlighted corruption in the Philippines’ flood control systems, rattling investors and pressuring the peso (chart 5), in a manner reminiscent of the rupiah’s decline during Indonesia’s political turmoil earlier this year. In Thailand, political uncertainty continues ahead of general elections eyed at next March, while the expected full return of Chinese tourists has yet to materialize (chart 6).

**Trade in Asia**
For Asia, the year has ultimately not played out as bleakly as investors once feared, particularly on the trade front. Despite US President Trump’s tariffs and a persistent backdrop of uncertainty, export performance in several Asian economies has proven more resilient than expected. This is most clearly reflected in export growth readings for China and key Southeast Asian economies (chart 1), which have remained firm—and at times exceeded expectations—even as China’s shipments to the US fell sharply. Much of this resilience reflects a redirection of exports toward other markets, often within the region. India, however, has seen more limited gains, with exports in US dollar terms struggling to materially surpass last year’s levels.

251110T1.jpg

**China**
Among the main investor concerns earlier this year was China, which once again came under close scrutiny as President Trump sought to address issues ranging from the large US–China trade imbalance to intensifying AI competition and perceived overcapacity. Yet China’s growth—particularly on the export front—has proven more resilient than expected, with increased shipments to other markets more than offsetting reduced trade with the US. Earlier front-loading by importers ahead of anticipated tariff hikes also temporarily supported export figures. Domestically, government initiatives to stimulate consumption led to a brief lift in retail spending, though signs suggest these effects may be fading, indicating their largely one-off nature. Even so, China has maintained year-to-date growth above its 5% annual target (chart 2), keeping that goal within reach provided momentum does not weaken significantly in Q4. Meanwhile, the more conciliatory tone in recent US–China discussions, including the halving of US fentanyl-related tariffs, offers a modest further relief. That said, longer-term structural issues still loom, including the difficult shift toward a more consumption-led economy, demographic pressures, and questions around sustained overcapacity in key industries.

251110T2.jpg

**Japan**
In Japan, the political uncertainty that followed the Liberal Democratic Party’s weak election performances earlier in the year has largely eased with Takaichi’s appointment as the country’s first female Prime Minister. Attention now turns to her supplementary budget—reported to be around $65 billion—which aims to address the rising cost of living while also bolstering defence and diplomatic capabilities. Investors, however, are already contemplating the policy implications. In particular, expectations that Takaichi’s agenda could make it harder for the Bank of Japan to pursue further significant tightening have added renewed pressure on the yen, pushing it to multi-year lows (chart 3). And while a weaker yen could, in theory, support tourism, forthcoming measures to curb overtourism—such as Kyoto’s planned 900% increase in accommodation taxes—may act as offsetting factors.

251110T3.jpg

**India**
Turning to India, the economy remains on track to be the region’s fastest-growing major economy. Growth forecasts were downgraded earlier in the year by the IMF and Blue Chip survey panellists, but these revisions were later reversed. These early-year downgrades reflected India’s heavy exposure to US trade, a concern that materialized when the US raised its reciprocal tariff rate on India from 25% to 50%. This contrasts with the situation of many other Asian economies, who successfully negotiated lower rates below the “Liberation Day” baseline. Although India managed to expand exports to other trading partners, this gain resulted in only a muted net impact on overall exports and, in turn, GDP growth. That said, US–India discussions have made some progress over the year, particularly on previously contentious issues such as India’s purchases of Russian crude. While these developments bring India closer to a potential trade deal, the benefits are likely to materialize beyond this year, meaning current growth readings still largely reflect the impact of the steep US tariffs in place today.

251110T4.jpg

**The Philippines**
Moving to the Philippines, the country is grappling with the impact of Typhoon Fung-wong, which struck the northern regions on Sunday, forcing over a million people to evacuate and causing widespread landslides and damaged roads. Fung-wong follows a string of storms this year, including Typhoon Kalmaegi, which also inflicted substantial damage just a few days ago. The disasters have reignited concerns over longstanding corruption in the country’s flood control systems, spooking investors and prompting capital outflows, which have weighed on the Philippine peso (chart 5). The currency’s weakness has been compounded by the central bank’s ongoing easing, which has cut the policy rate from last year’s peak of 6.5% to 4.75%—nearly 200 basis points—and with markets still pricing in further cuts.

251110T5.jpg

**Thailand**
Lastly, Thailand’s economy continues to struggle to regain the footing it had before the pandemic, weighed down by both domestic and external factors. Politically, the country remains in a transitional phase, with new Prime Minister Anutin under scrutiny to deliver on his pledge to hold general elections soon. Deputy Prime Minister indications suggest March 29, 2026 as a likely date, leaving a period of uncertainty in the meantime, as the durability of policies enacted during this interim phase remains unclear. Externally, tourism—which should have been a key growth driver—has underperformed, as the return of Chinese visitors to pre-pandemic levels did not materialize, partly due to tourism-related scares. In contrast, Vietnam appears to have captured a larger share of Chinese tourists this year (chart 6).

251110T6.jpg

Asia

Economic Letter from Asia: As the Dust Settles

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251107G5.jpg

Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

The consumer credit figures from the Federal Reserve Board 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 data from the Census and the 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 forecast figures are contained in the **AS1REPNA** database.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

251107H5.jpg

251107I5.jpg

- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

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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251107B2.jpg

- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

Economy in Brief: 2008

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