Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606b.jpg" width="353">
Retail gasoline prices rose two cents last week to $2.89 per gallon (36.7% y/y). The rise left gas prices in early June off just slightly from an average $2.91 during May.
The spot market price for regular unleaded gasoline rose eight cents yesterday and that added to a four cent increase on Friday. As a result, the spot price at $2.09 per gallon in early June is up from $2.04 averaged during May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606c.jpg" width="353">
The price of West Texas Intermediate crude oil also moved up yesterday to $72.60 per barrel versus $70.94 averaged during May.
Demand for gasoline demand has begun its usual seasonal rebound. During the last four weeks the demand for gasoline is up 5.0% versus a January low. That increase, however, is somewhat less than the 6-9% recoveries during early 2004 and early 2005. As a result, the four week average of gasoline demand versus the year ago level was roughly unchanged (-0.1%).
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">06/05/06</th>
<th scope="col">05/29/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.89</td>
<td>$2.87</td>
<td>36.7%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
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Retail gasoline prices rose two cents last week to $2.89 per gallon (36.7% y/y). The rise left gas prices in early June off just slightly from an average $2.91 during May. The spot market price for regular unleaded gasoline rose eight [...]

Gasoline Prices Rose Last Week

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline.
As a result of w/w declines during May, sales in the opening week of June were 1.0% below the May average which fell 0.4% from April. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose for the first time since early March. A 0.2% increase nevertheless left the series down 2.5% versus one year ago and 4.1% from the recent peak in January.
Comments on the Outlook for the U.S. Economy and Monetary Policy, remarks by Chairman Ben S. Bernanke at the International Monetary Conference in Washington, D.C. can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060605/default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/03/06</th>
<th scope="col">05/27/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>468.1</td>
<td>467.5</td>
<td>3.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline. As a result of w/w declines during May, sales in the opening [...]

Chain Store Sales Stabilize

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline.
As a result of w/w declines during May, sales in the opening week of June were 1.0% below the May average which fell 0.4% from April. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose for the first time since early March. A 0.2% increase nevertheless left the series down 2.5% versus one year ago and 4.1% from the recent peak in January.
Comments on the Outlook for the U.S. Economy and Monetary Policy, remarks by Chairman Ben S. Bernanke at the International Monetary Conference in Washington, D.C. can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060605/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/03/06</th>
<th scope="col">05/27/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>468.1</td>
<td>467.5</td>
<td>3.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Gasoline Prices Rose Last Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606b.jpg" width="353">
Retail gasoline prices rose two cents last week to $2.89 per gallon (36.7% y/y). The rise left gas prices in early June off just slightly from an average $2.91 during May.
The spot market price for regular unleaded gasoline rose eight cents yesterday and that added to a four cent increase on Friday. As a result, the spot price at $2.09 per gallon in early June is up from $2.04 averaged during May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606c.jpg" width="353">
The price of West Texas Intermediate crude oil also moved up yesterday to $72.60 per barrel versus $70.94 averaged during May.
Demand for gasoline demand has begun its usual seasonal rebound. During the last four weeks the demand for gasoline is up 5.0% versus a January low. That increase, however, is somewhat less than the 6-9% recoveries during early 2004 and early 2005. As a result, the four week average of gasoline demand versus the year ago level was roughly unchanged (-0.1%).
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">06/05/06</th>
<th scope="col">05/29/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.89</td>
<td>$2.87</td>
<td>36.7%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
JOLTS: Job Openings Steady, Hires Rate Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606d.jpg" width="353">
The April job openings rate as reported by the Bureau of Labor Statistics in the Job Openings &amp; Labor Turnover Survey (JOLTS) was unchanged at 2.9%, where it has been all year. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The actual number of job openings, however, ticked 0.1% higher to 4.095 million. That added to strong monthly gains earlier in the year and pulled the number of openings up 14.1% y/y.
Moving in the other direction the hires rate fell to 3.4%, the lowest level in a year, from 3.6% in March. The hires rate is the number of hires during the month divided by employment. The actual number of hires fell a sharp 7.0% (-0.7% y/y) after a 1.4% March decline.
The job separations rate fell to 3.3% from 3.5% in March and 3.4% in February. Separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment. The level of job separations dropped 5.6% (-4.2% y/y) to 4.419 million.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.9%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.5%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Good News for the Service Industries in the Euro Zone from the May PMI Surveys 
by <a href="/comment/Curley.html">Louise Curley</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606e.jpg" width="353">
Like the NTC Economics Ltd. surveys of the intentions of purchasing managers in the manufacturing industries, that Carol Stone commented on last week, theMay survey of purchasing managers in the service industries is another sign of more growth to come in the Euro Zone despite rising oil prices and a strong euro.Growth has been stronger in the service industries than in the manufacturing as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606g.jpg" width="353">
For the Euro Zone, as a whole, the index rose to 58.69 in May from 58.33 in April. This is the highest value since November, 2003. (A value over 50 indicates expansion, one under 50, contraction.) PMI&#39;s are not available for all the individual members of the Euro Zone. For the service industries, only data for France, Germany, Ireland, Italy and Spain are available. Although the over-all index for the Euro Zone increased in May, the indexes for Spain and Germany fell. Some of the variations in purchasing managers intentions over the past year can be seen in the second chart. The intentions of purchasing managers in Italy have increased steadily and sharply over the past year while those in Spain have increased at slower rate and have had a more erratic path.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606f.jpg" width="353">
In addition to the purchasing managers intentions, NTC Economics also publishes monthly GDP Indicators for selected countries and areas. These indicators are based on the data collected in the surveys of the intentions of the purchasing managers in the manufacturing, service and construction industries. In the latest surveys, the indicators point to a 2.9% year-over-year growth for the Euro Zone. This indicator has been a fairly good predictor of GDP growth as can be seen in the third chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PMI Survey of Service Industries &gt;50=Growth &lt;50=Contraction</th>
<th scope="col">May 06</th>
<th scope="col">Apr 06</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone</td>
<td>58.69</td>
<td>58.33</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>60.58</td>
<td>59.39</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>56.67</td>
<td>57.25</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>66.16</td>
<td>65.58</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>61.82</td>
<td>59.63</td>
</tr>
<tr>
<td class="firstcol">Spain&nbsp;</td>
<td>54.69</td>
<td>56.49</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605c.jpg" width="353">
Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver&#39;s Japan data base.
Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first quarter from the fourth quarter of last yearand were 4.05% above the first quarter of 2005. Profits as a percentage of sales reached are at an historically high level. To put the current data in perspective, we show, in the first chart, annual profits before taxes as a percentage of sales for the last fifty years. We use the annual data because of the seasonality in the quarterly data. In 2005, the percentage was 3.6% a figure not seen since the sixties and seventies. In the first quarter of this year, the ratio was 4.2%<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605d.jpg" width="353">
Reflecting the improved profitability, nonfinancial corporations have stepped up capital spending. The excess of capital spending over depreciation allowances continues to grow as can be seen in the second chart. In the first quarter, capital spending increased 29.07% over the fourth quarter of last year and was 13.93% above the first quarter of 2005.Again, in view of the seasonality of the data, the year to year comparison is the more meaningful.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">Japan:</a><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">&nbsp; Corporate Financial Statistics</a></th>
<th scope="col">Q1 06</th>
<th scope="col">Q4 05</th>
<th scope="col">Q1 05</th>
<th scope="col">Q/Q % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sales&nbsp;(Trillion Yen)</td>
<td>372.7</td>
<td>257.6</td>
<td>355.1</td>
<td>4.26</td>
<td>5.00</td>
<td>1378.1</td>
<td>1314.9</td>
<td>1257.1</td>
</tr>
<tr>
<td class="firstcol">Profits Before Taxes (Trillion Yen)</td>
<td>15.5</td>
<td>13.8</td>
<td>14.9</td>
<td>12.3</td>
<td>4.05</td>
<td>53.5</td>
<td>47.8</td>
<td>37.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Profits as Percent of Sales (%)</td>
<td>4.2</td>
<td>3.9</td>
<td>4.2</td>
<td>0.3*</td>
<td>0.0*</td>
<td>3.6</td>
<td>3.0</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Capital Expenditures (Trillion Yen)</td>
<td>15.6</td>
<td>12.1</td>
<td>13.7</td>
<td>29.07</td>
<td>13.93</td>
<td>48.8</td>
<td>45.0</td>
<td>41.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Depreciation Allowances (Trillion Yen)</td>
<td>11.5</td>
<td>10.1</td>
<td>11.4</td>
<td>13.98</td>
<td>0.96</td>
<td>40.5</td>
<td>40.1</td>
<td>28.4</td>
</tr>
</tbody>
</table>
</body>
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Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver's Japan data base. Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first [...]

First Quarter, 2006 Corporate Profitability in Japan At Peak Levels: Fuels Increase in Capital Spending

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605b.jpg" width="353">
The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was in line with Consensus expectations for a drop to 60.0.
For 2Q, the index has averaged 61.6 versus 59.1 during 1Q. Since the series&#39; inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
A five point decline in the new orders index to 59.6 gave back all of the prior month&#39;s improvement but the employment index rose for the second consecutive month to near the 2006 high. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605a.jpg" width="353">
Pricing power surged to the highest level (77.5) since last September. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
New Views on Immigration from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20060601/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>63.0</td>
<td>59.2</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>77.5</td>
<td>70.5</td>
<td>62.4</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>


</html>

The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was [...]

ISM Nonmanufacturing Index Decline As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605b.jpg" width="353">
The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was in line with Consensus expectations for a drop to 60.0.
For 2Q, the index has averaged 61.6 versus 59.1 during 1Q. Since the series&#39; inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
A five point decline in the new orders index to 59.6 gave back all of the prior month&#39;s improvement but the employment index rose for the second consecutive month to near the 2006 high. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605a.jpg" width="353">
Pricing power surged to the highest level (77.5) since last September. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
New Views on Immigration from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20060601/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>63.0</td>
<td>59.2</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>77.5</td>
<td>70.5</td>
<td>62.4</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>
First Quarter, 2006 Corporate Profitability in Japan At Peak Levels: Fuels Increase in Capital Spending  
by <a href="/comment/Curley.html">Louise Curley</a> June 5, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605c.jpg" width="353">
Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver&#39;s Japan data base.
Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first quarter from the fourth quarter of last yearand were 4.05% above the first quarter of 2005. Profits as a percentage of sales reached are at an historically high level. To put the current data in perspective, we show, in the first chart, annual profits before taxes as a percentage of sales for the last fifty years. We use the annual data because of the seasonality in the quarterly data. In 2005, the percentage was 3.6% a figure not seen since the sixties and seventies. In the first quarter of this year, the ratio was 4.2%<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605d.jpg" width="353">
Reflecting the improved profitability, nonfinancial corporations have stepped up capital spending. The excess of capital spending over depreciation allowances continues to grow as can be seen in the second chart. In the first quarter, capital spending increased 29.07% over the fourth quarter of last year and was 13.93% above the first quarter of 2005.Again, in view of the seasonality of the data, the year to year comparison is the more meaningful.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">Japan:</a><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">&nbsp; Corporate Financial Statistics</a></th>
<th scope="col">Q1 06</th>
<th scope="col">Q4 05</th>
<th scope="col">Q1 05</th>
<th scope="col">Q/Q % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sales&nbsp;(Trillion Yen)</td>
<td>372.7</td>
<td>257.6</td>
<td>355.1</td>
<td>4.26</td>
<td>5.00</td>
<td>1378.1</td>
<td>1314.9</td>
<td>1257.1</td>
</tr>
<tr>
<td class="firstcol">Profits Before Taxes (Trillion Yen)</td>
<td>15.5</td>
<td>13.8</td>
<td>14.9</td>
<td>12.3</td>
<td>4.05</td>
<td>53.5</td>
<td>47.8</td>
<td>37.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Profits as Percent of Sales (%)</td>
<td>4.2</td>
<td>3.9</td>
<td>4.2</td>
<td>0.3*</td>
<td>0.0*</td>
<td>3.6</td>
<td>3.0</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Capital Expenditures (Trillion Yen)</td>
<td>15.6</td>
<td>12.1</td>
<td>13.7</td>
<td>29.07</td>
<td>13.93</td>
<td>48.8</td>
<td>45.0</td>
<td>41.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Depreciation Allowances (Trillion Yen)</td>
<td>11.5</td>
<td>10.1</td>
<td>11.4</td>
<td>13.98</td>
<td>0.96</td>
<td>40.5</td>
<td>40.1</td>
<td>28.4</td>
</tr>
</tbody>
</table>


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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602d.jpg" width="353">
For the last several months, we have been working to expand and reorganize Haver&#39;s EMPL database, which consists of the BLS&#39;s massive collection of details on the Household Employment Survey. We&#39;ve recoded the entire database, hopefully making the codes simpler, more intuitive and less like serial numbers. We&#39;ve added about 1,700 new series, including more detail on employment of various resident Hispanic groups, such as Puerto Ricans. There is also greater detail now on educational status, a topic that receives much attention among the BLS data offerings. The database&#39;s menus in DLXVG3 are being restructured so they follow more closely the logic of the tables in Employment and Earnings. This &quot;maintenance&quot; has achieved much in facilitating the use of this enormous database -- now running toward 12,000 series -- and the work continues. Obviously, if you have suggestions, please offer them at <a href="mailto:data@haver.com">data@haver.com</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602e.jpg" width="353">
Meantime, we can address numerous questions and topics in the relationships of people to the labor market. We picked something at random to illustrate: labor force participation by age and race, with a highlight on older workers. The first graph shows that in recent years, total labor force participation has decreased somewhat: from 67% of the civilian noninstitutional population in the late 1990s to 66% in 2004 and 2005; it stood at 66.1% in
May, according to the latest data, reported this morning.This modest decline masks widely varying trends among age groups. Teen-agers (16-19 years old) participation has plunged, from 52% at the turn of the decade to just 43.5% last month. This rate has stabilized, however, creeping up from a low of 42.8% in March 2004. So a larger proportion of kids is once again starting to want to work. Other parts of EMPL will tell you how many of kids aged 16-24 are in school, whether they&#39;ve graduated high school or are perhaps enrolled in college part-time. If they&#39;re unemployed, the data will tell you if how many are looking for full- or part-time work.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602f.jpg" width="353">
The opposite trend is seen in older workers. For people over age 65, labor force participation is rising; from an average of 12.2% of the population in 1995, the rate reached 15.5% in May. This is also seen in an almost parallel move among white workers in that age group. Other racial and ethnic groups have experienced even larger proportional increases. For blacks and Hispanics, this reflected lower participation in the mid-1990s, just around 10.5%. By now, that for Hispanics is as high as for whites, and blacks are not much below. Since 2000, the BLS has reported separate data for Asian workers. Their participation rates, at 13.7% for the 65 years &amp; older age category, were above the rate for the total labor force in 2000, and while those rates are still relatively high, they also have been more erratic, so it is hard to draw strong conclusions about their labor force status. Nonetheless, an uptrend is clearly identifiable.
Older workers are thus increasingly &quot;economically active&quot;, to apply the phrase used in several European countries. This could be simply because they are healthier than before. It could also be that basic living costs necessitate the earning of wage income. But there is one other policy factor that may be important. In April 2000, Congress and the President enacted a law repealing the earnings ceiling on social security benefits. Previously, a recipient&#39;s benefits were reduced $1 for every $3 they had in earnings above this ceiling, a clear disincentive to work in more than casual employment. Since then, however, there has been no such rule, and upturns in labor force participation can be marked to roughly the time of the law change. The increased participation even included the months of recession in 2001, a time when people usually pull back from job-hunting. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% of Noninstitutional Population</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2000</th>
<th scope="col">1995</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total*</td>
<td>66.1</td>
<td>66.1</td>
<td>66.0</td>
<td>66.0</td>
<td>66.2</td>
<td>67.1</td>
<td>66.6</td>
</tr>
<tr>
<td class="firstcol">Age 16-19*</td>
<td>43.5</td>
<td>43.4</td>
<td>43.7</td>
<td>43.8</td>
<td>44.5</td>
<td>52.0</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Age 25-54*</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>83.0</td>
<td>84.0</td>
<td>83.5</td>
</tr>
<tr>
<td class="firstcol">Age 65 &amp; Over</td>
<td>15.5</td>
<td>15.4</td>
<td>15.0</td>
<td>14.4</td>
<td>14.0</td>
<td>12.9</td>
<td>12.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; White</td>
<td>15.6</td>
<td>15.5</td>
<td>15.1</td>
<td>14.6</td>
<td>14.1</td>
<td>13.0</td>
<td>12.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Black</td>
<td>14.8</td>
<td>13.1</td>
<td>13.6</td>
<td>13.1</td>
<td>12.9</td>
<td>11.6</td>
<td>10.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asian</td>
<td>16.3</td>
<td>20.4</td>
<td>15.5</td>
<td>13.1</td>
<td>13.7</td>
<td>13.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Hispanic</td>
<td>15.5</td>
<td>15.8</td>
<td>13.9</td>
<td>14.5</td>
<td>12.8</td>
<td>12.2</td>
<td>10.5</td>
</tr>
</tbody>
</table>
</body>
</html>

For the last several months, we have been working to expand and reorganize Haver's EMPL database, which consists of the BLS's massive collection of details on the Household Employment Survey. We've recoded the entire database, [...]

EMPL Database Facilitates Labor Force Analysis; Example: Elderly Workers on the Rise

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602g.jpg" width="353">
Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised.
Machinery inventories rose 0.6% (4.9% y/y) while inventories of computers &amp; electronic products rose 1.2% (6.3% y/y) after a 2.9% March rise. Inventories of electrical equipment rose 0.6% (6.5% y/y) though inventories of furniture &amp; related products fell 0.2% (5.0% y/y) after the 2.1% jump during March. Primary metals inventories rose 1.2% (1.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602h.jpg" width="353">
Total factory orders gave back half of the prior month&#39;s jump with a 1.8% decline. Durable goods orders fell 4.4% and that was little revised from the advance report of a 4.8% slide. Factory orders less transportation rose 0.2% (7.9% y/y).
Factory shipments were unchanged following the 1.0% spike in March. Less transportation shipments added 0.6% (6.9% y/y) to the 0.9% March increase. Petroleum shipments rose 3.5% (20.5% y/y). Factory shipments less transportation &amp; petroleum rose 0.3% (5.4% y/y).
Unfilled orders increased another 1.5% due to a 3.7% (74.1% y/y) jump in civilian aircraft. Less the transportation sector altogether backlogs still rose a strong 1.1% (13.7% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.7%</td>
<td>0.9%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-1.8%</td>
<td>4.0%</td>
<td>8.7%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>1.0%</td>
<td>6.0%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.5%</td>
<td>3.0%</td>
<td>22.8%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised. [...]

U.S. Factory Inventory Accumulation Regained Momentum

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

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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Andrew Cates

**The US labour market**
The latest data highlight a growing sense of fragility in the US labour market. The unemployment rate, while still relatively low by historical standards, has been edging higher through the course of this year. More telling, however, is the signal from this week’s consumer confidence survey from Conference Board and specifically the labour market differential — the gap between the share of consumers saying jobs are plentiful versus those saying jobs are hard to get. That balance has narrowed sharply, moving back toward levels historically associated with softer labour demand and rising unemployment.

250828Z1.jpg

**Goods and services inflation** 
Haver’s breakdown of goods and services CPI inflation in the advanced economies highlights where fresh risks are emerging. Goods inflation, which had been receding sharply after the pandemic supply shocks, has recently shown signs of firming again. Some of this probably reflects the impact of US tariff policies, which are raising import costs and putting renewed upward pressure on traded goods prices. While services inflation remains the more stubborn component in most advanced economies, the risk is that tariffs could reintroduce stickiness into goods prices, slowing the overall disinflation process.

250828Z2.jpg

**China, Europe and US trade policy**
A consequence of US tariff policies has been a sharp contraction in Chinese exports to the US market, with much of the surplus redirected elsewhere. Europe in particular has recorded near double-digit import growth in recent months, raising concerns that Beijing is deflecting its industrial overcapacity problem rather than resolving it, effectively transferring the pressure onto trading partners. China’s authorities, however, have begun to push back, introducing measures to curb excess supply and rein in so-called “involution,” including clampdowns on price wars across several industries.

250828Z3.jpg

**China’s excess capacity and Europe**
A closer look at Europe–China trade shows that electric vehicles remain a key flashpoint. Import volumes from China have continued to rise even as per-unit prices fall sharply from a year ago —evidence suggesting that industrial overcapacity persists, with low-cost Chinese EVs increasingly challenging European automakers. The surge has carried on despite EU tariffs of up to 45% on battery EVs, as Chinese producers have adapted by pushing plug-in hybrids and expanding onshore production in Europe to bypass duties and defend market share.

250828Z4.jpg

**Wage growth in the US and Europe** 
Turning back to inflation dynamics, the UK stands out for its persistent wage pressures. While posted wage growth has cooled across the US and euro area, the UK measure has remained elevated at around 6% year-on-year, well above pre-pandemic norms. This stickiness reflects a still-tight labour market in key service sectors, even as broader activity has slowed and unemployment has edged higher. For the Bank of England, it underscores the dilemma: headline inflation is easing, but underlying pay growth risks keeping services inflation uncomfortably high, complicating the timing and scale of policy easing.

250828Z5.jpg

**The UK economy**
The UK’s net international investment position has deteriorated noticeably in recent years, with both direct investment and portfolio flows showing persistent weakness. The latest data underline how net FDI has turned increasingly negative, while the portfolio investment balance has also eroded, leaving the UK more reliant on volatile short-term funding sources. This deterioration comes against a backdrop of heightened investor unease about the riskiness of UK debt markets, where elevated gilt yields and rising debt-servicing costs have amplified concerns over fiscal sustainability. Taken together, these trends underscore the vulnerability of the UK’s external position at a time when global capital is arguably proving more selective and risk sensitive.

250828Z6.jpg

Global markets have continued to rally into late summer, buoyed by AI optimism, dovish signals from central bankers at Jackson Hole, and expectations of easier policy ahead. Yet beneath the surface, risks to the world economy are accumulating. In the US, labour market indicators point to softening conditions (chart 1), while tariff-driven pressures are beginning to push goods prices higher (chart 2). Global trade flows are being reshaped by US policy, with China’s excess capacity increasingly diverted toward Europe, most visibly through surging exports of electric vehicles (EVs) (charts 3 and 4). At the same time, wage growth remains stubbornly elevated in the UK, complicating disinflation (chart 5), while concerns are mounting over the country’s external vulnerabilities as net FDI and portfolio positions weaken against the backdrop of jittery debt markets (chart 6). Together, these dynamics highlight the tension between buoyant market performance and a global economy still grappling with structural fragilities.

Charts of the Week: Riskbusters

250828N8.jpg

250828C8.jpg

Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

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Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

U.S. GDP Q2’25 Growth Revised Up; Profits Improve

Sandy Batten

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The Kansas City Fed manufacturing composite index was unchanged at 1 in August from July. This was the second consecutive month that the index has been positive, indicating the manufacturing in the KC Fed district continue to inch up in August. Prior to the positive reading in July, the index had been negative for 22 consecutive months. The index’s most recent high was 31 reached in both April 2021 and October 2021. The durable manufacturing sector was mostly flat in August, while nondurable manufacturing activity declined slightly driven by printing activities and paper and chemical manufacturing. 

The August survey was open for a six-day period from August 20-25, 2025 and included 103 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The ISM-adjusted index calculated by Haver Analytics rose to 51.1 (NSA) in August from 50.2 in July. This was the fifth reading above the critical 50 level that separates expansion from contraction in the past six months, a further indication of expanding manufacturing activity.

For the major component indexes, the production index was 0 in August, but this was up from -3 in July. The new orders index rose to 5 in August, its highest reading since May 2022, from 2 in July. The shipments index increased to 6 in August from 3 in July. The employment index was 0 in August, but this was up from -11 in July. Also, the average workweek index rebounded to 3 in August after having been in negative territory for the previous four months. Supplier delivery times were unchanged at 7 in August. The elevation of this index since April may indicate some incipient supply-chain disruptions from higher tariffs. In contrast, raw materials inventories fell to -7 in August from 8 in July.

On the inflation front, the prices paid for raw materials index remained elevated but fell to 43 in August from 47 in July and a local high of 51 in June. Forty-four percent of respondents reported an increase in raw materials prices in August, down from 48% in July and 53% in June, while only 4% reported a decrease, down from 5% in July and 6% in June. The prices received for finished products index increased to 21 in August from 18 in July. This index has fluctuated in a range between 17 and 21 for the past four months.

Expectations for future activity remained positive, with the composite index rising to 11 from 8, as firms anticipate an improvement in production and new orders. While expectations have been trending up over the past several months, they remain depressed relative to the recent high reading of 17 last December. Capital expenditures expectations remained in negative territory in August for the second consecutive month but edged up to -3 from -4 in July.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

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- Index remained (though barely) in positive territory for the second consecutive month, indicating that manufacturing activity was inching up.
- Prior to last month, the index had been negative for 22 consecutive months.
- Positive readings across most key components.

FRB Kansas City Manufacturing Index Unchanged in August

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The Pending Home Sales Index weakened 0.4% in July (+0.7% y/y) to 71.7 after falling an unrevised 0.8% in June and rising an unrevised 1.8% in May, according to the National Association of Realtors (NAR). The Index remained 42.7% below its most recent peak of 125.1 in October 2021. The index is a forward-looking measure of home sales based on contract signings.

The fall in pending home sales occurred as the average rate on a 30-year mortgage rose to 6.72% in July after holding steady m/m at 6.82% in June. These rates remained well above a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales were mixed last month in the four major regions of the country. Sales in the Midwest declined 4.0% (+1.3% y/y) in July after easing 0.8% in June. Sales in the Northeast fell 0.6% both m/m and y/y, after holding steady in June. In the South, sales eased 0.1% (+1.8% y/y) following a 0.6% June decline, but sales in the West increased 3.7% (-1.9% y/y), reversing a 3.9% June drop.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Decline adds to June weakness.
- Regional changes are mixed.


U.S. Pending Home Sales Decline in July

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined to 229,000 during the week of August 23, after rising to 234,000 in the week of August 16, revised from 235,000. The Action Economics Forecast Survey expected 230,000 initial claims for last week. The four-week moving average of initial claims increased to 228,500 from 226,000, revised from 226,250. It was the highest level since the second week of July.

In the week ended August 16, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – decreased by 7,000 to 1.954 million from 1.961 million in the prior week, revised down by 11,000 from 1.972 million. The four-week moving average rose to 1.956 million in the week ending August 16, the highest level in six weeks, and up from 1.952 million in the prior week, revised from 1.955 million.

In the week ending August 16, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was 1.3% for the twelfth consecutive week.

The insured unemployment rate varied greatly across individual states and territories. In the week ended August 9, the highest unemployment rates were in New Jersey (2.75%), Rhode Island (2.58%), Massachusetts (2.18%), Minnesota (2.17%), California (2.11%), Washington (2.08%), District of Columbia (2.04%), and Puerto Rico (2.02%). The lowest were in South Dakota (0.28%), Florida (0.42%), and Alabama and North Carolina (both 0.47%). Rates in other notable states include Pennsylvania (1.92%), New York (1.73%), Illinois (1.72%), and Texas (1.24%). 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. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims declined in latest week after a surge in the prior week.
- Continuing claims declined.
- Insured unemployment rate holds steady.

Economy in Brief: June 2006

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Gasoline Prices Rose Last Week

Chain Store Sales Stabilize

Chain Store Sales Stabilize

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ISM Nonmanufacturing Index Decline As Expected

ISM Nonmanufacturing Index Decline As Expected

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