Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201c.jpg" width="353">
A 20,000 drop in initial unemployment insurance claims last week to 307.000 reversed half of the upwardly revised increase the prior week. Consensus expectations had been for 315,000 claims.
During the last ten years there has been a (negative) 77% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims fell to 304,750 (6.6% y/y).
Continuing claims for unemployment insurance jumped 71,000 (1.1% y/y).
The insured rate of unemployment remained at 1.9%, about where it&#39;s been since February.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">01/27/07</th>
<th scope="col">01/20/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>307</td>
<td>327</td>
<td>8.1%</td>
<td>313</td>
<td>332</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Continuing Claims</td>
<td>--</td>
<td>2,484</td>
<td>-3.2%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
</body>
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A 20,000 drop in initial unemployment insurance claims last week to 307.000 reversed half of the upwardly revised increase the prior week. Consensus expectations had been for 315,000 claims. During the last ten years there has been a [...]

Initial Jobless Insurance Claims Back Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201a.jpg" width="353">
Personal income increased 0.5% after two months of 0.3% rise and matched Consensus expectations. For the year, income rose 6.4%, faster than the 5.2% gain during 2005.
Wages &amp; salaries jumped 0.6% (6.4% y/y) and for the whole year rose 6.6% after the 5.1% increase during 2005. Last year&#39;s gain was the strongest since 2000. Factory sector wages made up for the prior month&#39;s slip with a 0.2% (3.8% y/y) increase. The full year gain of 4.7% also was the strongest since 2000. Wages in the private service-producing industries rose a strong 0.8% (7.0% y/y) and for the year rose 7.2%.
Interest income declined 0.4% (+3.0% y/y) for the third consecutive month and earlier months&#39; gains were revised away. Dividend income surged 1.1% (11.7% y/y) for the fourth month and for the year rose 11.3%.
Disposable personal income advanced 0.5% (5.2% y/y), better than the 0.3% increase during November and for the year rose 5.5%. Personal taxes increased 0.7% (10.9% y/y) and for the year rose 13.3%. Real disposable personal income rose 0.2% (2.9% y/y) last month and for the year rose 2.7%. Real disposable income per capita rose 1.8% last year, up from the 0.2% gain during 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201b.jpg" width="353">
Personal consumption surged 0.7% last month after an unrevised 0.5% gain during November and matched expectations. Last month&#39;s gain was helped by a 4.4% (-2.1% y/y) increase in unit auto sales. That lowered the year&#39;s gain in spending to 6.0% from 6.5% during 2005. Spending on nondurables grew 1.6% last month and 7.0% for the year but adjusted for higher prices nondurables spending grew just 0.6% in December and 3.8% last year. Real consumer spending rose 0.3% after a 0.5% November gain and grew 3.2% for the year, down from 3.5% during 2005.
The personal savings rate was a more negative -1.2% during December and in 2006 averaged -1.0%. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/2Q06garn.pdf">here</a>.
The PCE chain price index rose a firm 0.4% due to a 3.7% gain in gasoline prices which has since more than reversed. Prices less food &amp; energy ticked up 0.1% after no change in November. The three month change in core prices fell to 1.7% (AR), the lowest since February.

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.5%</td>
<td>0.3%</td>
<td>5.9%</td>
<td>6.4%</td>
<td>5.2%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.7%</td>
<td>0.5%</td>
<td>6.0%</td>
<td>6.0%</td>
<td>6.5%</td>
<td>6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>-1.2%</td>
<td>-1.0%</td>
<td>-0.3% (Dec. &#39;05)</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.0%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>


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Personal income increased 0.5% after two months of 0.3% rise and matched Consensus expectations. For the year, income rose 6.4%, faster than the 5.2% gain during 2005. Wages & salaries jumped 0.6% (6.4% y/y) and for the whole year [...]

U.S. Personal Income Firm, Core Prices Tame

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201a.jpg" width="353">
Personal income increased 0.5% after two months of 0.3% rise and matched Consensus expectations. For the year, income rose 6.4%, faster than the 5.2% gain during 2005.
Wages &amp; salaries jumped 0.6% (6.4% y/y) and for the whole year rose 6.6% after the 5.1% increase during 2005. Last year&#39;s gain was the strongest since 2000. Factory sector wages made up for the prior month&#39;s slip with a 0.2% (3.8% y/y) increase. The full year gain of 4.7% also was the strongest since 2000. Wages in the private service-producing industries rose a strong 0.8% (7.0% y/y) and for the year rose 7.2%.
Interest income declined 0.4% (+3.0% y/y) for the third consecutive month and earlier months&#39; gains were revised away. Dividend income surged 1.1% (11.7% y/y) for the fourth month and for the year rose 11.3%.
Disposable personal income advanced 0.5% (5.2% y/y), better than the 0.3% increase during November and for the year rose 5.5%. Personal taxes increased 0.7% (10.9% y/y) and for the year rose 13.3%. Real disposable personal income rose 0.2% (2.9% y/y) last month and for the year rose 2.7%. Real disposable income per capita rose 1.8% last year, up from the 0.2% gain during 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201b.jpg" width="353">
Personal consumption surged 0.7% last month after an unrevised 0.5% gain during November and matched expectations. Last month&#39;s gain was helped by a 4.4% (-2.1% y/y) increase in unit auto sales. That lowered the year&#39;s gain in spending to 6.0% from 6.5% during 2005. Spending on nondurables grew 1.6% last month and 7.0% for the year but adjusted for higher prices nondurables spending grew just 0.6% in December and 3.8% last year. Real consumer spending rose 0.3% after a 0.5% November gain and grew 3.2% for the year, down from 3.5% during 2005.
The personal savings rate was a more negative -1.2% during December and in 2006 averaged -1.0%. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/2Q06garn.pdf">here</a>.
The PCE chain price index rose a firm 0.4% due to a 3.7% gain in gasoline prices which has since more than reversed. Prices less food &amp; energy ticked up 0.1% after no change in November. The three month change in core prices fell to 1.7% (AR), the lowest since February.

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.5%</td>
<td>0.3%</td>
<td>5.9%</td>
<td>6.4%</td>
<td>5.2%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.7%</td>
<td>0.5%</td>
<td>6.0%</td>
<td>6.0%</td>
<td>6.5%</td>
<td>6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>-1.2%</td>
<td>-1.0%</td>
<td>-0.3% (Dec. &#39;05)</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.0%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Back Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201c.jpg" width="353">
A 20,000 drop in initial unemployment insurance claims last week to 307.000 reversed half of the upwardly revised increase the prior week. Consensus expectations had been for 315,000 claims.
During the last ten years there has been a (negative) 77% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims fell to 304,750 (6.6% y/y).
Continuing claims for unemployment insurance jumped 71,000 (1.1% y/y).
The insured rate of unemployment remained at 1.9%, about where it&#39;s been since February.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">01/27/07</th>
<th scope="col">01/20/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>307</td>
<td>327</td>
<td>8.1%</td>
<td>313</td>
<td>332</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Continuing Claims</td>
<td>--</td>
<td>2,484</td>
<td>-3.2%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
January ISM Manufacturing Survey Gives Back December Gains 
by <a href="/comment/Moeller.html">Carol Stone (for Tom Moeller)</a> February 1, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201h.jpg" width="353">
The ISM Manufacturing Index fell back below 50 in January to 49.3, reversing December&#39;s gain and confounding forecasts of a further gain to over 51. Readings above 50 indicate that activity is expanding at half or more of the responding companies, taken to mean that the manufacturing sector is generally growing. Thus, the January figure just below 50 describes a basically flat pattern for the month, taking account of seasonal adjustment.
The change in the index was driven by inventories, which plunged from December&#39;s 48.5 to 39.9. This is the lowest reading since February 2002 and the sharpest month-on-month drop since July/August 1984. It indicates that manufacturers are reducing their holdings of materials and supplies. This item has only a 10% weight in the composite index, but the size of the decline means it reduced the index by 0.84 point.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201i.jpg" width="353">
Production was the next largest contributing factor, decreasing 2.8 points to 49.6. It has a 25% weight, so it took 0.7 point away from the total index.
New orders were also weaker, but much more modestly, downshifting to 50.3 from 51.9 in December. This has the largest weight in the index calculation, 30%, and thus subtracted 0.48 from the total. Supplier deliveries are still positive, but less so, easing from 53.3 to 52.7 in January. This means that activity at vendors is moderating so fewer companies face protracted waiting times for deliveries of supplies.
Employment actually moved favorably, from 49.4 in December to 49.5 in January. The tiny improvement indicates that employment is falling at fewer companies, and indeed, with the reading so close to 50%, it is best described as &quot;steady&quot;.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070201j.jpg" width="353">
Prices paid by survey participants rebounded in January to 53.0 from 47.5 in December, largely recouping that month&#39;s decline. The press release from the Institute of Supply Management reports that aluminum, nickel and stainless steel went up in price, along with corn products. Copper, resins, natural gas and basic steel were all down. Note that the index is based on the number of companies reporting higher prices, not the number of commodities or materials with higher prices.
Finally among survey items of note this month, companies reported that their customers&#39; inventories rose further to 52.6 from 50.5. This measure has been above 50 for four months, but before October, had been below 50 since the middle of 2001. This item is read negatively: more survey respondents in January judged that their customers stocks&#39; are excessive, suggesting that those customers could cut back on future orders.
Taken together, this ISM report portrays a flat manufacturing sector, with little change in activity and sharp inventory reductions. A slowing in activity was indicated by industrial production data through December, and this ISM report implies that has carried forward into early 2007.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ISM Manufacturing Survey</th>
<th scope="col">Jan 2007</th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</th>
<th scope="col">Jan 2006</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>49.3</td>
<td>51.4</td>
<td>49.9</td>
<td>55.3</td>
<td>53.9</td>
<td>55.5</td>
<td>60.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index (NSA)</td>
<td>53.0</td>
<td>47.5</td>
<td>53.5</td>
<td>65.0</td>
<td>65.0</td>
<td>66.4</td>
<td>79.8</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/070131h.jpg" width="353">
The trade deficit in Turkey shrank markedly in December. The Turkish Statistical Institute reported it at $3.08 billion, compared with $4.18 billion in November and $4.44 billion in December 2005. This was the smallest deficit since $3.01 billion in January 2006. After seasonal adjustment by Haver Analytics, the comparison is more distinct. December&#39;s $2.03 billion deficit was the lowest since $1.30 billion in November 2003.
Exports totaled $7.87 billion in the month, actually down 8.6% from November, but up 16.6% from a year ago. The largest categories were in the machinery sector, especially including transport equipment. Turkey is growing rapidly as a producer of cars and trucks. In 2006 as a whole, plants in the country produced 916,008 cars and pick-up trucks. Exports of these and other vehicles totaled $11.7 billion, making 13.8% of total goods exports. Total exports grew 15.9% last year, with &quot;road vehicles&quot; up 24.4%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131i.jpg" width="353">
Imports were $9.90 billion, seasonally adjusted, in December, down from November by $2.9 billion or 22.5%. The unadjusted data were down 9.5% in the month. In most recent years, before seasonal adjustment, imports have spiked in December, then fallen sharply in January. So the outright decline in December&#39;s actual figure translated into a sizable cut in the seasonally adjusted result. Sources of the decline included petroleum and natural gas, chemicals, metals and transport equipment. For all of 2006, imports totaled $137.03 billion, up 17.3% from 2005.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131j.jpg" width="353">
Data on Turkey from its official national sources are contained in Haver&#39;s EMERGEMA database. That rapidly expanding database now includes 18 Middle East and African countries.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEMA/@M3/@M307/@M307.HTM">TURKEY (Mil.$)</a></th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</th>
<th scope="col">Oct 2006</th>
<th scope="col">Dec 2005</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr>
<td class="firstcol">Trade Balance, SA</td>
<td>-2,026</td>
<td>-4,161</td>
<td>-5,043</td>
<td>-3,254</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; NSA</td>
<td>-3,083</td>
<td>-4,183</td>
<td>-4,446</td>
<td>-4,437</td>
<td>-4,353</td>
<td>-3,606</td>
<td>-2,865</td>
</tr>
<tr>
<td class="firstcol">Exports, SA</td>
<td>7,873</td>
<td>8,618</td>
<td>6,307</td>
<td>6,769</td>
<td>7,095</td>
<td>6,123</td>
<td>5,264</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Yearly % Chg</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>+15.9</td>
<td>+16.3</td>
<td>+33.7</td>
</tr>
<tr>
<td class="firstcol">Imports, SA</td>
<td>9,899</td>
<td>12,779</td>
<td>11,350</td>
<td>10,023</td>
<td>11,419</td>
<td>9,731</td>
<td>8,128</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Yearly % Chg</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>17.3</td>
<td>19.7</td>
<td>40.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The trade deficit in Turkey shrank markedly in December. The Turkish Statistical Institute reported it at $3.08 billion, compared with $4.18 billion in November and $4.44 billion in December 2005. This was the smallest deficit since [...]

Turkey's Trade Deficit Much Smaller in December; Auto Sector Boosts Exports

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131l.jpg" width="353">
The total number of mortgage applications rose 3.2%% last week, after the sharp 8.4% decline the prior week according to the Mortgage Bankers Association.
Purchase applications recovered just 1.3% after declines of 8.4% and 7.0% during the two weeks.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance recovered a larger 4.9%. Applications to refinance in January are 2.0% above the December average which was unchanged from November.
The effective interest rate on a conventional 30-year mortgage rose w/w to 6.50% the highest level this year and compared to the December average of 6.28%. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing also rose to 6.28%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">01/26/07</th>
<th scope="col">01/19/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>631.1</td>
<td>611.3</td>
<td>0.7%</td>
<td>584.2</td>
<td>708.6</td>
<td>735.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>408.0</td>
<td>402.7</td>
<td>-6.4%</td>
<td>406.9</td>
<td>470.9</td>
<td>454.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,940.2</td>
<td>1,848.8</td>
<td>11.0%</td>
<td>1,634.0</td>
<td>2,092.3</td>
<td>2,366.8</td>
</tr>
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The total number of mortgage applications rose 3.2%% last week, after the sharp 8.4% decline the prior week according to the Mortgage Bankers Association. Purchase applications recovered just 1.3% after declines of 8.4% and 7.0% [...]

Mortgage Applications Rose A Bit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131k.jpg" width="353">
The Chicago Purchasing Manager&#39;s Assn. reported that its January business barometer fell to 48.8. It was the first month the diffusion index of factory sector activity fell below the break even line of 50 since 2003.
During the last ten years there has been a 69% correlation between the index and the three month change in US factory sector industrial production.
Lower new orders and weaker employment accounted for much of the weakening while production was up.
The prices paid index dropped to to the lowest level since late 2003.During the last ten years there has been an 89% correlation between the level of the prices diffusion index and the three month change in the core PPI for intermediate good.
The latest statement from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2007/20070131/default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S203/@S203.htm">Chicago PMI</a></th>
<th scope="col">&nbsp;January</th>
<th scope="col">&nbsp; December</th>
<th scope="col">Jan. &#39;06 </th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Chicago PMI Business Barometer Index</td>
<td>48.8</td>
<td>51.6</td>
<td>58.1</td>
<td>56.8</td>
<td>60.4</td>
<td>62.8</td>
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The Chicago Purchasing Manager's Assn. reported that its January business barometer fell to 48.8. It was the first month the diffusion index of factory sector activity fell below the break even line of 50 since 2003. During the last [...]

Chicago Purchasing Managers Survey Soft

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131g.jpg" width="353">
The value of construction put in place in December fell 0.4% after an upwardly revised 0.1% November uptick. Consensus expectations had been for no change.
For the full year, construction spending grew 4.8%, the weakest since 2002 after 2005&#39;s 10.7% surge.
Residential building continued it&#39;s recent rate of decline, despite warmer temperatures, and fell 1.6%. New single family building dropped 2.2% after a 3.o% slide during November and it lowered activity 22.2% below the peak this past February. Spending on improvements also slipped 0.2% (+7.8% y/y).
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.
Nonresidential building rose 0.9% after an unrevised 1.4% November jump. Office construction surged 1.4% (22.1% y/y) and multi-retail building soared 4.1% (21.4% y/y).
Public construction spending rose 0.6%. Spending on highways &amp; streets, nearly one third of the value of public construction spending, fell 1.1% (+9.6% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4%</td>
<td>0.1%</td>
<td>-1.4%</td>
<td>4.8%</td>
<td>10.7%</td>
<td>11.5%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.8%</td>
<td>-0.5%</td>
<td>-4.6%</td>
<td>-4.6%</td>
<td>12.0%</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.6%</td>
<td>-1.4%</td>
<td>-12.5%</td>
<td>-1.7%</td>
<td>13.9%</td>
<td>18.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.9%</td>
<td>1.4%</td>
<td>14.5%</td>
<td>16.2%</td>
<td>7.4%</td>
<td>5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.6%</td>
<td>2.2%</td>
<td>10.5%</td>
<td>10.2%</td>
<td>6.2%</td>
<td>2.8%</td>
</tr>
</tbody>
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The value of construction put in place in December fell 0.4% after an upwardly revised 0.1% November uptick. Consensus expectations had been for no change. For the full year, construction spending grew 4.8%, the weakest since 2002 [...]

U.S. Construction Spending Off Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070131f.jpg" width="353">
The ADP Nat&#39;l Employment Report, reported by the payroll processor, indicated that private nonfarm payrolls rose 152,000 during January. The U.S. Bureau of Labor Statistics employment figure will be published this Friday.
Last month, ADP&#39;s measure of private nonfarm payrolls for December indicated a 40,000 decline in jobs that was followed by a BLS report that private nonfarm payrolls rose 150,000.
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.
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 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/NER_December_Release_FINAL.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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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">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (Chg.)</td>
<td>152,000</td>
<td>-40,000</td>
<td>1.6%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>1.3%</td>
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The ADP Nat'l Employment Report, reported by the payroll processor, indicated that private nonfarm payrolls rose 152,000 during January. The U.S. Bureau of Labor Statistics employment figure will be published this Friday. Last month, [...]

ADP Report: Private Payrolls Improved

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

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

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Robert Brusca

260209E.jpg

Japan's economy watchers index has flattened out and backed off slightly for the current and future outlooks depending on the time horizon that you seek. However, what's clear is that the index reached the low point around the middle of last year, has been rebounding and now the rebound has either run out of gas or slowed after the index has rebuilt itself considerably.  

It is certainly too early to get pessimistic on Japan's economy, with Prime Minister Sanae Takaichi having just won a significant - essentially a landslide - snap election that she called after recently having been elected. The LDP would appear to be back in the driver's seat, and she has her sights set on more fiscal stimulus and expanded military spending. She is apparently much more on the same wavelength as Donald Trump in the United States. Mr. Trump was an Abe supporter, and Ms. Takaichi is a disciple of Mr. Abe.

At the moment, Japan would seem to have a groundswell of support behind the government and that government is set to try to rekindle some growth which could potentially put the Bank of Japan in a more decisively defensive track as far as setting rates and potentially raising rates.

**Economy watchers index is trending**
In January, the economy watchers index backed off for the second month in a row. However, it still has a percentile standing in its 51-percentile, slightly above its median standing since early-2005. The headline and all the components have standings above their respective 50th percentiles on this timeline, with the exception of housing, services, and employment; three readings that are extremely important to consumers. Housing has a 26.1 percentile standing, services (the employment sector) have a 45.8 percentile standing, while employment has a 22.9 percentile standing. Despite the otherwise solid and strong set of readings, there are these three significant flies in the ointment. Corporate Japan is doing extremely well with corporations having a 66.8 percentile standing; manufacturers and nonmanufacturers, separately, each come in with readings in their mid-to-upper 60th percentiles.

**The future index**
The future readings from the economy watchers index show continued but slight increases over the last few months. Only two future readings weaken month-to-month: housing and employment—once again two key readings as far as consumers are concerned. However, in terms of current monthly diffusion readings, the assessment of households, retailing, housing, and employment all have current diffusion values below 50, indicating net declines rather than increases. The percentile standing is for the future index are, like those for the current index, generally upbeat - and generally stronger than for the current indexes - with the future headline posting a 66.4 percentile standing in January. However, like the current index, the standing for housing is at its 21.3 percentile and the standing for employment is at its 30th percentile, both well below the neutral level that would place the ranking at the 50th percentile. Corporations show high readings, higher for the future indexes than for the current index standings. There also are high readings and standings for eating and drinking places as well as services. It's good to see services come up with a strong rating since it creates hope for the future for employment because services are the core employment sector. It will be interesting to see how this value changes in the coming months as Takaichi’s new policies are implemented and take hold.

**Summing up**
On balance, the economy watchers index has been firm to strong. There is some slight give-back in the current index in terms of trend. But beyond the index, there's more immediate reason to be more positive because Japan has just executed a very decisive and pro-growth snap election that is going to put the new Prime Minister Takaichi and strong control of the economy at a time where she seeks to cement economic strength. These elections were just completed over the weekend, and we will see the results reflected in data in the weeks and months to come.

260209.jpg

Japan

Economy Watchers Indexes Show Firmness; Impact of Takaichi Election to Come in Months Ahead

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

Economy in Brief: 2007

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Initial Jobless Insurance Claims Back Down

U.S. Personal Income Firm, Core Prices Tame

U.S. Personal Income Firm, Core Prices Tame

Turkey's Trade Deficit Much Smaller in December; Auto Sector Boosts Exports

Mortgage Applications Rose A Bit

Chicago Purchasing Managers Survey Soft

U.S. Construction Spending Off Again

ADP Report: Private Payrolls Improved