Tom Moeller

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The Mortgage Bankers Association reported that its total Mortgage Market
Volume Index declined 7.6% last week (+6.2% y/y), down for the sixth straight
week. Refinance applications retrenched 11.5% (-1.2% y/y) to the lowest
level since late-December. Purchase applications declined 3.0% (+14.5%
y/y).

The effective interest rate on a 15-year mortgage was fairly stable at 3.36%,
up from last month's low of 3.17%. The effective rate on a 30-year fixed rate
loan dipped to 4.12%. The rate on a Jumbo 30-year loan also fell to 4.10%. For
adjustable 5-year mortgages, the effective interest rate eased to 3.15% but
remained up from last month's low of 2.97%.

The average mortgage loan size fell to $263,300 (+3.7% y/y). For purchases,
it declined to $291,600 (+4.1% y/y) but for refinancings it increased to $234,000
(1.7% y/y).

Applications for fixed interest rate loans increased 7.5% y/y, but adjustable
rate loan applications declined 19.6% y/y.

The survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990. Respondents include
mortgage bankers, commercial banks and thrifts. The base period and value for
all indexes is March 16, 1990=100. The figures for weekly mortgage applications
and interest rates are available in Haver's SURVEYW database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" 0925 0918 >MBA Mortgage
 Applications (SA, 3/16/90=100)</th>
 <th scope="col" 0925 0918 >05/29/15</th>
 <th scope="col" 0925 0918 >05/22/15</th>
 <th scope="col" 0925 0918 >05/15/15</th>
 <th scope="col" 0925 0918 >Y/Y %</th>
 <th scope="col" 0925 0918 >2014</th>
 <th scope="col" 0925 0918 >2013</th>
 <th scope="col" 0925 0918 >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" 0925 0918 >Total Market Index</td>
 <td 0925 0918 >369.5</td>
 <td 0925 0918 >399.9</td>
 <td 0925 0918 >406.5</td>
 <td 0925 0918 >6.2</td>
 <td 0925 0918 >361.5</td>
 <td 0925 0918 >616.6</td>
 <td 0925 0918 >813.8</td>
 </tr>
 <tr>
 <td class="firstcol" 0925 0918 >&nbsp;Purchase</td>
 <td 0925 0918 >195.4</td>
 <td 0925 0918 >201.5</td>
 <td 0925 0918 >199.1</td>
 <td 0925 0918 >14.5</td>
 <td 0925 0918 >172.1</td>
 <td 0925 0918 >197.5</td>
 <td 0925 0918 >187.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0925 0918 >&nbsp;Refinancing</td>
 <td 0925 0918 >1,360.3</td>
 <td 0925 0918 >1,537.8</td>
 <td 0925 0918 >1,600.6</td>
 <td 0925 0918 >-1.2</td>
 <td 0925 0918 >1,449.8</td>
 <td 0925 0918 >3,070.0</td>
 <td 0925 0918 >4,505.0</td>
 </tr>
 <tr>
 <td class="firstcol" 0925 0918 >15-Year Mortgage Effective
 Interest Rate (%)</td>
 <td 0925 0918 >3.36</td>
 <td 0925 0918 >3.35</td>
 <td 0925 0918 >3.33</td>
 <td 0925 0918 >3.48 
 (5/14)</td>
 <td 0925 0918 >3.54</td>
 <td 0925 0918 >3.42</td>
 <td 0925 0918 >3.25</td>
 </tr>
 </tbody>
 </table>
 
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The Mortgage Bankers Association reported that its total Mortgage Market Volume Index declined 7.6% last week (+6.2% y/y), down for the sixth straight week. Refinance applications retrenched 11.5% (-1.2% y/y) to the lowest level since [...]

U.S. Mortgage Loan Applications Decline; Rates Are Stable

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The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing
Sector Business declined to 55.7 during May from an unrevised 57.8 in April.
The latest figure was the lowest since April of last year and fell short of expectations for
57.0 in the Action Economics Forecast Survey.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM
index and the ISM factory sector measure, released Monday. It fell sharply to
55.3, also the lowest level since last April. During the last ten years, there has been a
72% correlation between the index and the q/q change in real GDP.

Deterioration last month spread across the component series, led by a
collapse in the supplier delivery index to 50.0. It showed the quickest delivery
speeds in a year. The business activity reading of 59.5 was at its lowest point
in three months. The new orders series fell modestly to 57.9. The employment index
(55.3) deteriorated to its lowest point since January. During the last ten years, 
there has been an 88% correlation between the employment index and the m/m change in 
service plus construction payrolls.

The prices paid series improved to its highest point in nine months. Twenty percent (NSA) 
of respondents paid higher prices, a nine month high. Seven paid lower prices, the least since July.

The ISM data are available in Haver's USECON database. The expectations figure from 
Action Economics is in the AS1REPNA database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
 Nonmanufacturing Survey (SA)</a></th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >May'14</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Composite Diffusion Index</td>
 <td >55.7</td>
 <td >57.8</td>
 <td >56.5</td>
 <td >56.1</td>
 <td >56.3</td>
 <td >54.6</td>
 <td >54.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Business Activity</td>
 <td >59.5</td>
 <td >61.6</td>
 <td >57.5</td>
 <td >61.1</td>
 <td >59.7</td>
 <td >56.7</td>
 <td >57.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
 <td >57.9</td>
 <td >59.2</td>
 <td >57.8</td>
 <td >59.9</td>
 <td >58.6</td>
 <td >55.8</td>
 <td >56.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Employment</td>
 <td >55.3</td>
 <td >56.7</td>
 <td >56.6</td>
 <td >53.2</td>
 <td >54.9</td>
 <td >54.3</td>
 <td >53.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries (NSA)</td>
 <td >50.0</td>
 <td >53.5</td>
 <td >54.0</td>
 <td >50.0</td>
 <td >51.8</td>
 <td >51.7</td>
 <td >50.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Prices Index</td>
 <td >55.9</td>
 <td >50.1</td>
 <td >52.4</td>
 <td >60.2</td>
 <td >56.8</td>
 <td >55.6</td>
 <td >59.3</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business declined to 55.7 during May from an unrevised 57.8 in April. The latest figure was the lowest since April of last year and fell short of [...]

U.S. ISM Nonmanufacturing Index Deteriorates Sharply

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The U.S. foreign trade deficit in goods and services narrowed to $40.9
billion during April following a surge to $50.6 billion in March, revised from
$51.4 billion. A deficit of $44.1 billion had been expected in the Action Economics
Forecast Survey. In constant dollars, the trade deficit improved to $57.2 billion from
$66.4 billion. Exports of goods rose 2.4% (2.3% y/y) while goods imports declined 3.4% (+4.4% y/y).

Imports declined 3.3% (-3.6% y/y) following a 6.5% March jump, prompted by
the resolution of the West Coast labor dispute. Nonpetroleum imports declined 4.3% (+2.7% y/y)
as nonauto consumer goods imports fell 9.0% (+4.0% y/y). Auto imports declined
1.3% (+6.0% y/y) and industrial supplies imports were off 1.5% (-27.4% y/y).
Capital goods imports fell 1.2% (+6.0% y/y) while imports of foods, feeds &amp;
beverages eased 0.6% (+2.3% y/y). Services imports slipped 0.8% (+4.4% y/y) as
transportation imports fell 6.2% (+4.3% y/y). Travel imports gained 1.5% (7.7% y/y).

Petroleum imports gained 1.1% (-48.2% y/y) following several months of sharp
decline with lower crude oil prices. In constant dollars, petroleum imports rose 1.1% (-1.8% y/y).
The average per barrel cost of crude oil was fairly steady at $46.52 (-51.3% y/y), near the lowest
level since March 2009. The value of energy-related petroleum product imports increased 3.6%
(-49.2% y/y) as their quantity rose 2.8% (-0.9% y/y).

Overall exports improved 1.0% (-2.6% y/y) as goods exports jumped 1.7% (-4.6%
y/y). Capital goods exports surged 4.6% (3.1% y/y). Exports of industrial
supplies &amp; materials rose 1.8% (-12.0% y/y) and auto exports gained 1.3%
(-3.1% y/y). To the downside, foods, feeds &amp; beverage exports were off 1.7%
(-11.6% y/y) and consumer goods exports fell 0.5% (-2.2% y/y). Services exports
were unchanged (2.4% y/y) and travel exports improved 0.3% (2.7% y/y).

By country, the trade deficit in goods with China narrowed
to $26.5 billion. Exports rose 3.2% y/y while imports declined 1.5 y/y. The deficit
with Japan remained stable at $7.1 billion as exports recovered 5.7% y/y and imports gained
12.1% y/y. The trade deficit with the European Union rose deepened to $13.3 billion.
Exports rose 1.1% y/y and imports declined 0.8% y/y.

The international trade data can be found in Haver's USECON database.
Detailed figures are available in the USINT database. The expectations
figures are from the Action Economics Forecast Survey, which is carried in the AS1REPNA.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Foreign Trade (Current
 Dollars)</th>
 <th>Apr</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Y/Y</th>
 <th>2014</th>
 <th>2013</th>
 <th>2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" scope="col" >U.S. Trade Deficit</td>
 <td >$40.9 bil.</td>
 <td >$50.6 bil.</td>
 <td >$37.2 bil.</td>
 <td >$44.3 bil. 
 (4/14)</td>
 <td >$508.3</td>
 <td >$478.4 bil.</td>
 <td >$536.8 bil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Exports (% Chg)</td>
 <td >1.0</td>
 <td >0.7</td>
 <td >-1.4</td>
 <td >-2.6</td>
 <td >2.8</td>
 <td >2.7</td>
 <td >4.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Imports</td>
 <td >-3.3</td>
 <td >6.5</td>
 <td >-3.4</td>
 <td >-3.6</td>
 <td >3.4</td>
 <td >0.1</td>
 <td >3.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Petroleum</td>
 <td >1.1</td>
 <td >-7.2</td>
 <td >-14.8</td>
 <td >-48.2</td>
 <td >-9.6</td>
 <td >-11.0</td>
 <td >-5.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nonpetroleum</td>
 <td >-4.3</td>
 <td >9.1</td>
 <td >-3.0</td>
 <td >2.7</td>
 <td >6.1</td>
 <td >2.0</td>
 <td >5.2</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. foreign trade deficit in goods and services narrowed to $40.9 billion during April following a surge to $50.6 billion in March, revised from $51.4 billion. A deficit of $44.1 billion had been expected in the Action Economics [...]

U.S. Trade Deficit Narrows; Business Returns to Normal on the West Coast

Robert Brusca

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The May EMU finalized PMI fell to 53.6 from 53.9 in April. Germany, Italy and Spain lost momentum. Only France showed improvement of its total PMI in May. 

The EMU has a queue standing of its overall PMI gauge in the 68th percentile in May, with France at the same level, Italy at its 84th percentile and Spain at its 96th percentile. Germany has lagging standing that is only in its 36th percentile. In terms of raw scores, Germany is only showing a higher overall PMI than France. 

There are still many cross currents in the EMU as well as in the global economy. The EMU showed its lowest unemployment rate in April since March 2012. The unemployment rate fell to 11.1% from 11.2%. Still, this rate is in the top 25th percentile of all rates of unemployment since late 1998. While the EMU unemployment picture is improving, it is improving at a very slow pace and the differences within the community are not dissipating with any speed.

The OECD today cut its outlook for global growth. The Paris-based OECD cut the world growth forecast for this year to 3.1% from 3.6%. However, it says that it expects lower oil prices to ensure a gradual recovery, even if weak investment remains weak. This seems a bit Pollyannaish. It's a weaker outlook for an already weak economy. And risks still abound.

Economists are complacent about the outlook on the notion that it takes some sort of a shock to create a recession. Yet, the global economy continues to struggle and trade continues to be a battle among weak currencies as nations use foreign exchange weakness to try to get a bigger share of an ever disappointing global market. These forces continue to put growth at risk. No nation is really trying to create more growth; instead this is a zero sum game in which nations are using exchange rates to try to get a share of whatever growth they find overseas. There is no pump-priming. We have globally aging populations and global fiscal austerity with few exceptions (China now and then). The aging population is saving more instead of spending while governments are keeping the reins on fiscal spending. There is monetary stimulus, but it can't work amid such conditions of slack demand; instead, such monetary excess brings risk. After all, what sense is there in pumping up equity markets because interest costs are low if earnings can't be stimulated?

Europe is still juggling Greece. Europe finally has come together with a take-it-or-leave-it plan it is offering up to Greece this week. Greece has its own plan, but that is not likely to get any consideration. Greece has dropped its `nice-debtor' face and has said without a deal it will not pay the IMF at the week's end. That means this week is the key one. Most expect Greece to knuckle under and submit to the EU's plan even though that plan just kicks the can down the road.

We cannot help but look at Europe's PMI progress and bemoan its sluggishness. Most PMI gauges are above 50 and few have been much stronger. But the there is only weak momentum. The EMU, too, is relying on its weak exchange rate to pull it ahead. But when you see how poorly Germany, the most competitive country in the EMU, is doing with such a weak manufacturing sector PMI reading, you realize that there is not much demand out there to exploit even with the cheapest prices on the block. I fear that the growth situation for Europe and for the U.S. is more dangerous than policy makers appreciate.


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The May EMU finalized PMI fell to 53.6 from 53.9 in April. Germany, Italy and Spain lost momentum. Only France showed improvement of its total PMI in May. The EMU has a queue standing of its overall PMI gauge in the 68th percentile in [...]

Services Sector and Total EMU PMI Slip in May

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The ADP/Moody's National Employment Report indicated that nonfarm
private sector payrolls increased 201,000 during May following a 165,000 April
increase, revised from 169,000. The latest rise was the firmest since January
and beat consensus expectations for a 188,000 increase in the Action Economics
Forecast Survey.

The ADP survey is based on ADP's business payroll transaction system covering
411,000 companies and nearly 24 million employees. The data are processed by
Moody's Analytics Inc., then calibrated and aligned with the BLS establishment
survey data.

Small-sized payrolls jumped 122,000 (2.7% y/y), the firmest rise increase
since December. Medium-sized payrolls rose a steady 65,000 (2.3% y/y) in May.
Large payrolls rebounded with a 13,000 increase (1.7% y/y) though that still was
down from the 80,000 increase in September.

Employment in the goods-producing sector nudged 9,000 higher (2.1% y/y),
compared to a 64,000 peak rise in September. Hiring in the construction sector
remained firm and posted a 27,000 increase (5.3% y/y) while manufacturing sector
businesses shed another 5,000 workers (+1.0% y/y), the third consecutive month
of decline. Jobs in the service sector increased 192,000 (2.4% y/y), the
strongest gain since December. Jobs in trade, transportation &amp; utilities
increased 56,000 (2.0% y/y). Professional &amp; business employment gained 28,000
(2.9% y/y) while employment in the financial sector improved 12,000 (1.7% y/y).

The ADP National Employment Report data are maintained in Haver's USECON
database; historical figures date back to April 2001. The figures in this report
cover jobs only in the private sector. The expectation figure is available in
Haver's AS1REPNA database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >ADP/Moody's National
 Employment Report</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Nonfarm Private Payroll Employment (m/m
 chg, 000s)</td>
 <td >201</td>
 <td >165</td>
 <td >176</td>
 <td >2.4%</td>
 <td >2.3%</td>
 <td >1.9%</td>
 <td >2.3%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Small Payroll (1-49)</td>
 <td >122</td>
 <td >97</td>
 <td >110</td>
 <td >2.7</td>
 <td >2.1</td>
 <td >1.9</td>
 <td >2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Medium Payroll (50-499)</td>
 <td >65</td>
 <td >65</td>
 <td >60</td>
 <td >2.3</td>
 <td >2.8</td>
 <td >2.2</td>
 <td >2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Large Payroll (&gt;500)</td>
 <td >13</td>
 <td >3</td>
 <td >5</td>
 <td >1.7</td>
 <td >1.8</td>
 <td >1.6</td>
 <td >2.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Goods-Producing</td>
 <td >9</td>
 <td >1</td>
 <td >1</td>
 <td >2.1</td>
 <td >2.3</td>
 <td >1.7</td>
 <td >2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Construction</td>
 <td >27</td>
 <td >24</td>
 <td >19</td>
 <td >5.3</td>
 <td >4.6</td>
 <td >3.5</td>
 <td >2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Manufacturing</td>
 <td >-5</td>
 <td >-8</td>
 <td >-1</td>
 <td >1.0</td>
 <td >1.2</td>
 <td >0.9</td>
 <td >1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Service-Producing</td>
 <td >192</td>
 <td >164</td>
 <td >175</td>
 <td >2.4</td>
 <td >2.3</td>
 <td >2.0</td>
 <td >2.3</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The ADP/Moody's National Employment Report indicated that nonfarm private sector payrolls increased 201,000 during May following a 165,000 April increase, revised from 169,000. The latest rise was the firmest since January and beat [...]

U.S. ADP: Job Growth Is Improving

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Sales of light vehicles reached a fifteen year high last month. At
17.79 million (AR), sales of total light vehicles in May increased 7.8% m/m
(6.3% y/y) to the highest level since July 2005. Recent sales were revised
slightly higher from last month's report due to raised light truck sales.

It continues to be a market where light truck sales are relatively firm. 
Light truck purchases improved 5.9% versus April to 9.68 million units. 
The gain lifted them 12.0% y/y and left trucks share of the total 
vehicle market at 54.4%, slightly below the ten year record. Domestic
light truck sales increased 6.3% to 8.36 million (10.3% y/y), the highest level
since July 2005. Imported truck sales gained 3.5% to 1.32 million (24.1% y/y),
the highest level since April 2008.

Auto sales increased 10.1% last month to 8.11 million but were up just
0.3% y/y. Domestic auto sales rose 10.7% (3.0% y/y) to 5.87 million. Imported
car sales gained 8.6% to 2.23 million (-6.5% y/y) following a like decline in
April.

Imports share of the market for light vehicles was little changed m/m
at 20.0%, down versus a high of 30.7% in February 2009. Imports share of the
passenger car market slipped to 27.6%, off versus the March high of 29.3%.
Imports share of the light truck market slipped to 13.7% but remained near the
highest level since November 2013.

U.S. vehicle sales figures are published by Autodata and can be found in
Haver's USECON database.

<a href="/comment/150602l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/150602l.png"></a>
 <a href="/comment/150602m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/150602m.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Light Vehicle Sales (SAAR,
 Mil. Units)</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >17.79</td>
 <td >16.50</td>
 <td >17.15</td>
 <td >6.3</td>
 <td >16.49</td>
 <td >15.58</td>
 <td >14.48</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Autos</td>
 <td >8.11</td>
 <td >7.36</td>
 <td >7.70</td>
 <td >0.3</td>
 <td >7.91</td>
 <td >7.78</td>
 <td >7.42</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
 <td >5.87</td>
 <td >5.31</td>
 <td >5.45</td>
 <td >3.0</td>
 <td >5.68</td>
 <td >5.48</td>
 <td >5.10</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Imported</td>
 <td >2.23</td>
 <td >2.06</td>
 <td >2.26</td>
 <td >-6.3</td>
 <td >2.23</td>
 <td >2.30</td>
 <td >2.32</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Light Trucks</td>
 <td >9.68</td>
 <td >9.14</td>
 <td >9.44</td>
 <td >12.0</td>
 <td >8.58</td>
 <td >7.81</td>
 <td >7.06</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
 <td >8.36</td>
 <td >7.86</td>
 <td >8.24</td>
 <td >10.3</td>
 <td >7.50</td>
 <td >6.73</td>
 <td >6.09</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Imported</td>
 <td >1.32</td>
 <td >1.28</td>
 <td >1.20</td>
 <td >24.1</td>
 <td >1.08</td>
 <td >1.08</td>
 <td >0.97</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Sales of light vehicles reached a fifteen year high last month. At 17.79 million (AR), sales of total light vehicles in May increased 7.8% m/m (6.3% y/y) to the highest level since July 2005. Recent sales were revised slightly higher [...]

U.S. Light Vehicle Sales Strengthen

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New orders in the manufacturing sector edged 0.4% lower during April (-6.4%
y/y) following a 2.2% March increase, revised from 2.1%. Durable goods orders
declined 1.0% (-2.8% y/y) following a 5.1% rise. The drop compared to a 0.5%
easing in the advance report. Orders for computers &amp; electronic products
declined 4.0% (+3.0% y/y) and transportation orders fell 2.4% (-5.1% y/y).
Offsetting these declines was a 0.9% rise (-7.3% y/y) in machinery orders and a
1.0% gain (-0.5% y/y) in fabricated metals. Nondurable goods orders (which equal
shipments) improved 0.2% (-9.6% y/y) after a 0.4% decline. Textile products
orders increased 2.2% (0.5% y/y), paper product orders gained 0.8% (3.4% y/y)
and basic chemical orders rose 0.5% (-4.1% y/y). To the downside, petroleum
refinery orders fell 0.2% (-31.6% y/y) and food product orders were off 0.5%
(-2.5% y/y).

Shipments of durable goods slipped 0.2% (+3.2% y/y) after a 1.5% rise.
Transportation sector shipments eased 0.3% (+10.0% y/y) and electrical equipment
shipments slipped 0.1% (+1.7% y/y). Offsetting these declines was a 0.4% rise
(-1.0% y/y) in machinery shipments and a 0.1% gain (+2.2% y/y) in shipments of
computers &amp; electronic products.

Unfilled orders eased 0.1% (+7.0% y/y) following a 0.1% gain. Machinery
backlogs were off 1.1% (-1.7% y/y) and fabricated metals unfilled orders fell
0.5% (+12.5% y/y). These declines were offset by a 0.6% rise (8.9% y/y) in
electrical equipment and no change in transportation equipment backlogs (9.0%
y/y).

Inventories in the factory sector inched 0.1% higher (0.1% y/y) extending
little change during the prior two months. Durable goods inventories rose 0.2%
(5.0% y/y) as electrical equipment inventories gained 1.0% (6.6% y/y).
Transportation equipment inventories rose 0.4% (7.6% y/y) while electrical
equipment inventories gained 0.3% (2.3% y/y). Nondurable goods inventories
slipped 0.1% (-7.0% y/y) as a 2.3% rise (16.8% y/y) in apparel inventories was
offset by a 0.4% decline (-3.3% y/y) in basic chemicals. Textile mill
inventories also were off 1.2% (-1.6% y/y) and textile products inventories
declined 0.4% (-4.1% y/y).

The factory sector figures are available in Haver's USECON database.
The expectations figure from the Action Economics Forecast Survey is available
in AS1REPNA.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >New Orders</td>
 <td >-0.4</td>
 <td >2.2</td>
 <td >-1.0</td>
 <td >-6.4</td>
 <td >3.4</td>
 <td >2.2</td>
 <td >4.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td >-0.0</td>
 <td >0.5</td>
 <td >0.1</td>
 <td >-3.6</td>
 <td >2.5</td>
 <td >2.1</td>
 <td >4.4</td>
 </tr>
 <tr>
 <td class="firstcol" >Unfilled Orders</td>
 <td >-0.1</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >7.0</td>
 <td >11.4</td>
 <td >6.4</td>
 <td >7.5</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >0.1</td>
 <td >-0.1</td>
 <td >0.1 </td>
 <td >0.1</td>
 <td >2.4</td>
 <td >1.9</td>
 <td >3.8</td>
 </tr>
 </tbody>
 </table>
 
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New orders in the manufacturing sector edged 0.4% lower during April (-6.4% y/y) following a 2.2% March increase, revised from 2.1%. Durable goods orders declined 1.0% (-2.8% y/y) following a 5.1% rise. The drop compared to a 0.5% [...]

U.S. Factory Sector Orders Ease

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Gasoline prices nudged up last week to an average $2.78 per gallon at
the pump (-24.7% y/y) from $2.77 in the prior week. It remained the highest
level of prices since early-December and prices were roughly one-third higher
versus the low of $2.04 late in January. Haver Analytics constructs factors
adjusting for the seasonal variation in pump prices. The seasonally adjusted
price of $2.64 per gallon was 17.8% higher than the early-February low, less of
an increase than at the pump since prices typically rise ahead of the summer
driving season. Spot market gasoline prices were little-changed w/w at an
average $1.92 per gallon (-32.4% y/y) but they were down slightly from the high
early in the week.

WTI crude oil costs again moved lower last week to an average $58.20
per barrel (-44.0% y/y) but remained up versus the March low of $44.39. This
remained the most expensive price since the second week of December. Yesterday,
prices reversed course and increased to $60.20 per barrel. These prices compare
to a June 2014 high of $107.95. The seasonally adjusted price, generated by
Haver Analytics, slipped last week to $57.36 per barrel. Brent crude oil prices
declined last week to $61.57 per barrel.

Natural gas prices declined to $2.76 per mmbtu last week (-38.8% y/y)
and fell further to $2.60 yesterday.

Gasoline inventories grew 4.3% y/y while inventories of all petroleum
products increased 8.6% y/y. Gasoline demand increased 1.6% y/y while
demand for all petroleum products rose 3.5% y/y.

The energy price data are reported by the U.S. Department of Energy. The
petroleum demand and inventory figures are from the Oil &amp; Gas Journal
Weekly. These data can be found in Haver's WEEKLY database. The daily
figures are in DAILY and greater detail on prices, demand and production,
along with regional breakdowns, are in OILWKLY.

What have we learned from the crises of the last 20 years? is
the title of yesterday's speech by Fed Vice Chairman Stanley Fischer and it can
be found <a href="http://www.federalreserve.gov/newsevents/speech/fischer20150601a.htm">here</a>.

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 <a href="/comment/150602d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/150602d.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >06/01/15</th>
 <th scope="col" >05/26/15</th>
 <th scope="col" >05/18/15</th>
 <th scope="col" >Y/Y%</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Retail Gasoline ($ per Gallon, Regular)</td>
 <td >2.78</td>
 <td >2.77</td>
 <td >2.74</td>
 <td >-24.7</td>
 <td >2.30</td>
 <td >3.33</td>
 <td >3.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl.,
 WSJ)</td>
 <td >58.20</td>
 <td >58.95</td>
 <td >60.01</td>
 <td >-44.0</td>
 <td >93.64</td>
 <td >97.96</td>
 <td >94.20</td>
 </tr>
 <tr>
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, WSJ)</td>
 <td >2.76</td>
 <td >2.98</td>
 <td >2.88</td>
 <td >-38.8</td>
 <td >4.37</td>
 <td >3.73</td>
 <td >2.7</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Gasoline prices nudged up last week to an average $2.78 per gallon at the pump (-24.7% y/y) from $2.77 in the prior week. It remained the highest level of prices since early-December and prices were roughly one-third higher versus the [...]

U.S. Gasoline Prices Post Minimal Increase; Crude Oil Declines

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

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

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

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

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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