Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602d.jpg" align="left" height="265" width="353">
According to the outplacement firm of Challenger, Grey
&amp; Christmas the level of layoffs rose slightly m/m during May
to 38,810. Nevertheless, the figure was off by roughly two-thirds from
last year and just slightly above the lowest level since 2000. Planned
layoffs announced during the first five months of 2010 totaled 258,319,
down 68.6% from the 822,282 announced during early-2009. In virtually
all industries except entertainment/leisure and pharmaceutical layoffs
were down last month versus May 2009.
Challenger also samples firms' hiring plans. During May plans
fell slightly after a strong gain during April. Versus May '09 plans
rose 83.7% but during the first five months of this year they've fallen
slightly y/y. Plans eased during May in the transportation, health care
&amp; financial sectors but strengthened in the auto, energy,
industrial goods &amp; services industries.
During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
The Challenger figures are available in Haver's SURVEYS
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp;
Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>38,810</td>
<td>38,326</td>
<td>67,611</td>
<td>-65.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>14,922</td>
<td>15,654</td>
<td>13,994</td>
<td>83.7%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
</body></html>

According to the outplacement firm of Challenger, Grey & Christmas the level of layoffs rose slightly m/m during May to 38,810. Nevertheless, the figure was off by roughly two-thirds from last year and just slightly above the lowest [...]

Challenger Layoffs Near Lowest in Ten Years

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602a.jpg" p align="left" height="265" width="353">
The National Association of Realtors (NAR) reported that
pending sales of existing single-family homes rose 6.0% during April
versus March. The gain left home sales up 37.8% from the low in January
of last year. The latest marginally beat Consensus expectations for a
5.0% increase.
The m/m performance of home sales continued to vary across the
country. Last month sales rose in the Northeast (24.4 y/y), Midwest
(18.0% y/y) and in the West (12.0% y/y). A modest decline in sales was
logged in the South but sales still rose by nearly one-third versus
last year.
Pending home sales figures are analogous to the new home sales
data from the Commerce Department in that they measure existing home
sales when the sales contract is signed, not at the time the sale is
closed. The series dates back to 2001 and the data is available in
Haver's PREALTOR database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602b.jpg" height="265" width="314"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602c.jpg" height="265" width="314">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y %</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total</td>
<td>110.9</td>
<td>104.6</td>
<td>97.7</td>
<td>22.4</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>97.9</td>
<td>75.6</td>
<td>77.7</td>
<td>24.4</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>104.2</td>
<td>100.1</td>
<td>97.7</td>
<td>18.0</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>123.9</td>
<td>124.6</td>
<td>107.5</td>
<td>31.4</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>107.9</td>
<td>100.4</td>
<td>98.0</td>
<td>12.0</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</body></html>

The National Association of Realtors (NAR) reported that pending sales of existing single-family homes rose 6.0% during April versus March. The gain left home sales up 37.8% from the low in January of last year. The latest marginally [...]

U.S. Pending Home Sales Strong Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602a.jpg" p align="left" height="265" width="353">
The National Association of Realtors (NAR) reported that
pending sales of existing single-family homes rose 6.0% during April
versus March. The gain left home sales up 37.8% from the low in January
of last year. The latest marginally beat Consensus expectations for a
5.0% increase.
The m/m performance of home sales continued to vary across the
country. Last month sales rose in the Northeast (24.4 y/y), Midwest
(18.0% y/y) and in the West (12.0% y/y). A modest decline in sales was
logged in the South but sales still rose by nearly one-third versus
last year.
Pending home sales figures are analogous to the new home sales
data from the Commerce Department in that they measure existing home
sales when the sales contract is signed, not at the time the sale is
closed. The series dates back to 2001 and the data is available in
Haver's PREALTOR database.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602b.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602c.jpg" height="265" width="314">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y %</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total</td>
<td>110.9</td>
<td>104.6</td>
<td>97.7</td>
<td>22.4</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>97.9</td>
<td>75.6</td>
<td>77.7</td>
<td>24.4</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>104.2</td>
<td>100.1</td>
<td>97.7</td>
<td>18.0</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>123.9</td>
<td>124.6</td>
<td>107.5</td>
<td>31.4</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>107.9</td>
<td>100.4</td>
<td>98.0</td>
<td>12.0</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
Challenger Layoffs Near Lowest in
Ten Years 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 2, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602d.jpg" align="left" height="265" width="353">
According to the outplacement firm of Challenger, Grey
&amp; Christmas the level of layoffs rose slightly m/m during May
to 38,810. Nevertheless, the figure was off by roughly two-thirds from
last year and just slightly above the lowest level since 2000. Planned
layoffs announced during the first five months of 2010 totaled 258,319,
down 68.6% from the 822,282 announced during early-2009. In virtually
all industries except entertainment/leisure and pharmaceutical layoffs
were down last month versus May 2009.
Challenger also samples firms' hiring plans. During May plans
fell slightly after a strong gain during April. Versus May '09 plans
rose 83.7% but during the first five months of this year they've fallen
slightly y/y. Plans eased during May in the transportation, health care
&amp; financial sectors but strengthened in the auto, energy,
industrial goods &amp; services industries.
During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
The Challenger figures are available in Haver's SURVEYS
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp;
Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>38,810</td>
<td>38,326</td>
<td>67,611</td>
<td>-65.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>14,922</td>
<td>15,654</td>
<td>13,994</td>
<td>83.7%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
Euro-Area PPI Takes Off Slowly I
Turn... Err Scratch That 
by <a href="/comment/Brusca.html">Robert
Brusca</a> June 2, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602e.jpg" align="left" height="265" width="353">
Producer price trends have been rising sharply in EMU over the
past few months. The PPI has taken a decided and sharp turn for the
worse. Prices are accelerating in two of the three main sectors of the
PPI. Only consumer prices fail to show acceleration from three-months
to six months. Consumer prices and intermediate prices are still lower
Yr/Yr but their trends are nonetheless rising sharply. Intermediate
goods prices are up very strongly from past weakness.
Germany and France show manufacturing prices ex-energy or
ex-energy and ex-food trends (the former for Germany, the latter for
France) with accelerations in train. UK manufactures prices are
accelerating (the UK is an EU member). Italy&#8217;s prices are actually
decelerating over three months compared to stronger pressures earlier.
While the PPI is not the price a gauge of choice for the ECB,
having such pressures stirred up will not be good news. The dropping
euro undoubtedly has something to do with this.
Still Yr/Yr prices are contained for consumer goods and
capital goods. Intermediate goods prices are the biggest problem. There
the rise in the dollar price of oil and the dropping euro form a
double-whammy on prices. If these trends develop in the HICP they will
put the ECB on the spot since growth in the Zone is not doing well and
the ECB will not want inflation trends like this to take hold in
consumer prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area and UK
PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">TotalxConstruct</td>
<td>0.7%</td>
<td>0.6%</td>
<td>5.8%</td>
<td>6.4%</td>
<td>2.8%</td>
<td>-4.7%</td>
</tr>
<tr>
<td class="firstcol">Capital Gds</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Consurmer Gds</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.3%</td>
<td>-1.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate&amp;Cap
Gds</td>
<td>1.0%</td>
<td>0.8%</td>
<td>8.1%</td>
<td>6.8%</td>
<td>2.7%</td>
<td>-5.1%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.4%</td>
<td>0.6%</td>
<td>3.9%</td>
<td>6.2%</td>
<td>3.7%</td>
<td>-5.9%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Germany</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gy
ExEnergy</td>
<td>0.5%</td>
<td>0.2%</td>
<td>4.3%</td>
<td>3.1%</td>
<td>1.1%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td colspan="7">France:Tot</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fr
ExF&amp;Energy</td>
<td>0.6%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>3.3%</td>
<td>1.0%</td>
<td>-1.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>0.5%</td>
<td>0.5%</td>
<td>3.7%</td>
<td>6.7%</td>
<td>4.1%</td>
<td>-6.2%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.9%</td>
<td>0.6%</td>
<td>8.1%</td>
<td>7.1%</td>
<td>5.8%</td>
<td>1.3%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">Euro-Area
Harmonized
PPI ex construction</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Pending Home Sales StrongAgain

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601e.jpg" align="left" height="265" width="353">
The market MFG barometers for EMU fell across the bard in May.
Only Ireland among the main reports showed a month-to-month boost and
the EU&#8217;s UK edged higher. Greece the well-know troubled EMU ember shows
what troubled straits it is in as it is the only example of a MFG PMI
that is down over three-, six- and twelve-months. Moreover, every other
EU/EMU report in the table is up by 20 index points (or almost) from
its respective cycle low. Greece is not. Notably Greece&#8217;s MFG index is
up by just 3.6 points from its low. The whole of the e-Zone is not even
down that much from its cycle peak! Greece&#8217;s problems are not just
problems with debt but are about problems in getting economic growth
going and improving its tax revenues. The manufacturing sector has been
leading EMU into recovery.
Today EMU unemployment was reported and it ticked up by 0.1%.
In Germany the rate fell and the number unemployed fell by more than
expected as Greece&#8217;s woes are helping German growth by having knocked
down the value of the euro. Germany is benefitting from export
strength. Still it is well recognized that Greece&#8217;s problems could
become a net negative for the Zone. And, of course, Greece is not the
only thing Europe is worried about.
Spain was downgraded by Fitch just before the weekend at the
end of the US trading day. Over the weekend the ECB released estimates
for the first time on the amount of bank loan losses that the Zone&#8217;s
banking system probably faces. The ECB pointed to 195bln euros in loan
losses for 2010 and 2011 saying that it could be worse if growth were
hit hard. Add to this to the news of China slowing and we have a
US-holiday shortened week that has just begun and already is jam-packed
full of negative news. Welcome back!

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Changes in Markit
MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Changes Mo/Mo</td>
<td colspan="3">Change on Frequency</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>May-10</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>From Peak</td>
<td>From Low</td>
</tr>
<tr class="even">
<td class="firstcol">Euro-13</td>
<td>-1.69</td>
<td>0.90</td>
<td>2.42</td>
<td>1.63</td>
<td>4.66</td>
<td>15.18</td>
<td>-2.9</td>
<td>22.3</td>
</tr>
<tr class="even">
<td class="firstcol">Germany</td>
<td>-3.14</td>
<td>1.34</td>
<td>3.02</td>
<td>1.22</td>
<td>5.99</td>
<td>18.85</td>
<td>-3.1</td>
<td>26.5</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>-0.77</td>
<td>0.08</td>
<td>1.59</td>
<td>0.90</td>
<td>1.38</td>
<td>12.46</td>
<td>-8.2</td>
<td>21.0</td>
</tr>
<tr class="even">
<td class="firstcol">Italy</td>
<td>-0.28</td>
<td>0.57</td>
<td>2.10</td>
<td>2.39</td>
<td>3.93</td>
<td>12.91</td>
<td>-3.6</td>
<td>19.4</td>
</tr>
<tr class="even">
<td class="firstcol">Spain</td>
<td>-1.80</td>
<td>1.46</td>
<td>2.75</td>
<td>2.41</td>
<td>6.23</td>
<td>11.68</td>
<td>-5.7</td>
<td>23.0</td>
</tr>
<tr class="even">
<td class="firstcol">Austria</td>
<td>-2.11</td>
<td>3.62</td>
<td>1.31</td>
<td>2.82</td>
<td>8.29</td>
<td>18.92</td>
<td>-2.1</td>
<td>25.1</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Greece</td>
<td>-1.85</td>
<td>0.71</td>
<td>-1.26</td>
<td>-2.40</td>
<td>-5.45</td>
<td>-4.28</td>
<td>-14.2</td>
<td>3.6</td>
</tr>
<tr class="even">
<td class="firstcol">Ireland</td>
<td>0.67</td>
<td>0.42</td>
<td>4.35</td>
<td>5.44</td>
<td>5.29</td>
<td>14.73</td>
<td>-1.3</td>
<td>20.9</td>
</tr>
<tr class="grey3">
<td colspan="9" class="firstcol">EU</td>
</tr>
<tr class="even">
<td class="firstcol">UK</td>
<td>0.02</td>
<td>0.69</td>
<td>0.67</td>
<td>1.38</td>
<td>5.38</td>
<td>12.92</td>
<td>0.0</td>
<td>22.8</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">percentile
is over
range since March 2000</td>
</tr>
</tbody>
</table>
</body></html>

The market MFG barometers for EMU fell across the bard in May. Only Ireland among the main reports showed a month-to-month boost and the EU’s UK edged higher. Greece the well-know troubled EMU ember shows what troubled straits it is [...]

Market Indices For MFG Drop Sharply Off-Peak

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601a.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601b.jpg" height="265" width="314">
Rising trends don't have unending momentum. And the current
rebound in factory sector activity appears to be no exception. The
Institute for Supply Management indicated that their May composite
index of factory sector activity slipped to 59.7 from 60.4 in April.
While May's figure was higher than Consensus expectation's for a
decline to 59.0, recent levels have been historically hard to sustain.
Still, the latest figure is up from the low of 32.5 reached in December
'08. (Any figure above the break-even point of 50 suggests rising
activity.) The ISM data is available in Haver's USECON database.
A slower rate of inventory accumulation was the main source of
the composite index's May weakness. The new orders, production and
vendor performance components were roughly unchanged. Notable, however,
was the slight gain in the employment index to 59.8. It was the highest
level since early-2004. During the last ten years there has been an 89%
correlation between the ISM employment index and the m/m change in
factory sector payrolls.
Also showing lift was the separate index of export orders to
62.0 which was the highest level since 1988. During the last ten years
there has been an 88% correlation between the level of the index and
the quarterly change in merchandise exports. Twenty-eight percent of
respondents reported higher export orders while fourteen reported lower
orders.
The separate index of prices paid slipped to 77.5 from its
high for this recovery. It remained up from the December '08 low of
18.0. Sixty percent of respondents reported higher prices while only 5%
indicated lower prices. During the last twenty years there has been an
83% correlation between the price index and the three-month change in
the PPI for intermediate goods.
The ISM data are available in Haver's USECON
database.
The Policy Response to the Crisis in Korea and Other
Emerging Market Economies is Saturday's speech by Fed
Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100530a.htm">here</a>.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601c.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601d.jpg" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>59.7</td>
<td>60.4</td>
<td>59.6</td>
<td>43.2</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>65.7</td>
<td>61.5</td>
<td>51.4</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>59.8</td>
<td>58.5</td>
<td>55.1</td>
<td>35.1</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.6</td>
<td>66.9</td>
<td>61.1</td>
<td>47.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.0</td>
<td>61.3</td>
<td>64.9</td>
<td>50.0</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>45.6</td>
<td>49.4</td>
<td>55.3</td>
<td>32.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>77.5</td>
<td>78.0</td>
<td>75.0</td>
<td>43.5</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
</body></html>

Rising trends don't have unending momentum. And the current rebound in factory sector activity appears to be no exception. The Institute for Supply Management indicated that their May composite index of factory sector activity slipped [...]

U.S. ISM Index Indicates Topping Of Factory Sector Growth

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601a.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601b.jpg" height="265" width="314">
Rising trends don't have unending momentum. And the current
rebound in factory sector activity appears to be no exception. The
Institute for Supply Management indicated that their May composite
index of factory sector activity slipped to 59.7 from 60.4 in April.
While May's figure was higher than Consensus expectation's for a
decline to 59.0, recent levels have been historically hard to sustain.
Still, the latest figure is up from the low of 32.5 reached in December
'08. (Any figure above the break-even point of 50 suggests rising
activity.) The ISM data is available in Haver's USECON database.
A slower rate of inventory accumulation was the main source of
the composite index's May weakness. The new orders, production and
vendor performance components were roughly unchanged. Notable, however,
was the slight gain in the employment index to 59.8. It was the highest
level since early-2004. During the last ten years there has been an 89%
correlation between the ISM employment index and the m/m change in
factory sector payrolls.
Also showing lift was the separate index of export orders to
62.0 which was the highest level since 1988. During the last ten years
there has been an 88% correlation between the level of the index and
the quarterly change in merchandise exports. Twenty-eight percent of
respondents reported higher export orders while fourteen reported lower
orders.
The separate index of prices paid slipped to 77.5 from its
high for this recovery. It remained up from the December '08 low of
18.0. Sixty percent of respondents reported higher prices while only 5%
indicated lower prices. During the last twenty years there has been an
83% correlation between the price index and the three-month change in
the PPI for intermediate goods.
The ISM data are available in Haver's USECON
database.
The Policy Response to the Crisis in Korea and Other
Emerging Market Economies is Saturday's speech by Fed
Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100530a.htm">here</a>.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601c.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601d.jpg" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>59.7</td>
<td>60.4</td>
<td>59.6</td>
<td>43.2</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>65.7</td>
<td>61.5</td>
<td>51.4</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>59.8</td>
<td>58.5</td>
<td>55.1</td>
<td>35.1</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.6</td>
<td>66.9</td>
<td>61.1</td>
<td>47.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.0</td>
<td>61.3</td>
<td>64.9</td>
<td>50.0</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>45.6</td>
<td>49.4</td>
<td>55.3</td>
<td>32.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>77.5</td>
<td>78.0</td>
<td>75.0</td>
<td>43.5</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
Market Indices For MFG Drop
Sharply Off-Peak 
by <a href="/comment/Brusca.html">Robert
Brusca</a> June 1, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601e.jpg" align="left" height="265" width="353">
The market MFG barometers for EMU fell across the bard in May.
Only Ireland among the main reports showed a month-to-month boost and
the EU&#8217;s UK edged higher. Greece the well-know troubled EMU ember shows
what troubled straits it is in as it is the only example of a MFG PMI
that is down over three-, six- and twelve-months. Moreover, every other
EU/EMU report in the table is up by 20 index points (or almost) from
its respective cycle low. Greece is not. Notably Greece&#8217;s MFG index is
up by just 3.6 points from its low. The whole of the e-Zone is not even
down that much from its cycle peak! Greece&#8217;s problems are not just
problems with debt but are about problems in getting economic growth
going and improving its tax revenues. The manufacturing sector has been
leading EMU into recovery.
Today EMU unemployment was reported and it ticked up by 0.1%.
In Germany the rate fell and the number unemployed fell by more than
expected as Greece&#8217;s woes are helping German growth by having knocked
down the value of the euro. Germany is benefitting from export
strength. Still it is well recognized that Greece&#8217;s problems could
become a net negative for the Zone. And, of course, Greece is not the
only thing Europe is worried about.
Spain was downgraded by Fitch just before the weekend at the
end of the US trading day. Over the weekend the ECB released estimates
for the first time on the amount of bank loan losses that the Zone&#8217;s
banking system probably faces. The ECB pointed to 195bln euros in loan
losses for 2010 and 2011 saying that it could be worse if growth were
hit hard. Add to this to the news of China slowing and we have a
US-holiday shortened week that has just begun and already is jam-packed
full of negative news. Welcome back!

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup><thead><tr>
<th colspan="9" scope="col"> Changes in Markit
MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Changes Mo/Mo</td>
<td colspan="3">Change on Frequency</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>May-10</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>From Peak</td>
<td>From Low</td>
</tr>
<tr class="even">
<td class="firstcol">Euro-13</td>
<td>-1.69</td>
<td>0.90</td>
<td>2.42</td>
<td>1.63</td>
<td>4.66</td>
<td>15.18</td>
<td>-2.9</td>
<td>22.3</td>
</tr>
<tr class="even">
<td class="firstcol">Germany</td>
<td>-3.14</td>
<td>1.34</td>
<td>3.02</td>
<td>1.22</td>
<td>5.99</td>
<td>18.85</td>
<td>-3.1</td>
<td>26.5</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>-0.77</td>
<td>0.08</td>
<td>1.59</td>
<td>0.90</td>
<td>1.38</td>
<td>12.46</td>
<td>-8.2</td>
<td>21.0</td>
</tr>
<tr class="even">
<td class="firstcol">Italy</td>
<td>-0.28</td>
<td>0.57</td>
<td>2.10</td>
<td>2.39</td>
<td>3.93</td>
<td>12.91</td>
<td>-3.6</td>
<td>19.4</td>
</tr>
<tr class="even">
<td class="firstcol">Spain</td>
<td>-1.80</td>
<td>1.46</td>
<td>2.75</td>
<td>2.41</td>
<td>6.23</td>
<td>11.68</td>
<td>-5.7</td>
<td>23.0</td>
</tr>
<tr class="even">
<td class="firstcol">Austria</td>
<td>-2.11</td>
<td>3.62</td>
<td>1.31</td>
<td>2.82</td>
<td>8.29</td>
<td>18.92</td>
<td>-2.1</td>
<td>25.1</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Greece</td>
<td>-1.85</td>
<td>0.71</td>
<td>-1.26</td>
<td>-2.40</td>
<td>-5.45</td>
<td>-4.28</td>
<td>-14.2</td>
<td>3.6</td>
</tr>
<tr class="even">
<td class="firstcol">Ireland</td>
<td>0.67</td>
<td>0.42</td>
<td>4.35</td>
<td>5.44</td>
<td>5.29</td>
<td>14.73</td>
<td>-1.3</td>
<td>20.9</td>
</tr>
<tr class="grey3">
<td colspan="9" class="firstcol">EU</td>
</tr>
<tr class="even">
<td class="firstcol">UK</td>
<td>0.02</td>
<td>0.69</td>
<td>0.67</td>
<td>1.38</td>
<td>5.38</td>
<td>12.92</td>
<td>0.0</td>
<td>22.8</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">percentile
is over
range since March 2000</td>
</tr>
</tbody>
</table>
U.S. Construction Activity
Rebounds Across-the-Board 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 1,2010 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601f.jpg" align="left" height="265" width="353">
Perhaps busting out of its malaise, construction activity
rebounded a sharp 2.7% during April after a 0.4% March uptick. The
latest increase vastly exceeded Consensus expectations for a 0.1%
uptick. The impetus for the April rise was a 2.9% jump in private
sector building off the March low. Nevertheless, private sector
building was off 13.5 y/y and 41.2% from the early-2006 high.
Higher residential building activity provided the impetus
behind the gain in the total with a 4.4% increase. A 6.3% jump (2.7%
y/y) in spending on home improvements led the April gain. It was
followed by single-family construction activity which rose 3.4% rise
(29.0% y/y) and was the eleventh consecutive monthly increase. It
lifted activity by more than one-third from last year's low. However,
building remained off three-quarters from the 2006 high. Multi-family
building fell another 1.9% during April to a new series' low (-57.4%
y/y).
Nonresidential building activity also recovered 1.7%, though
that was the cycle's first meaningful monthly gain. Since the 2008
peak, activity has fallen by 29.0%. Higher factory sector building led
the April gain with a 2.7 increase (-31.3% y/y) followed by a 1.3% rise
(-15.7% y/y) in health-care building. Office building (-36.4% y/y) and
educational construction (-16.6% y/y) both fell sharply. In the public
sector, building activity also firmed by 2.4% (-4.4% y/y) led by a 3.6%
jump in spending on highways &amp; streets (5.1% y/y).
The construction put-in-place figures are available in Haver's
USECON database.
Policy Challenges for Central Banks in the Aftermath
of the Crisis is last week's speech by St. Louis Fed
President James Bullard and it can be found here <a href="http://www.stlouisfed.org/newsroom/displayNews.cfm?article=688">here</a>.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601g.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100601h.jpg" height="265" width="314">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
Put In Place (%)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total</td>
<td>2.7</td>
<td>0.4</td>
<td>-2.4</td>
<td>-10.5</td>
<td>-12.5</td>
<td>-6.9</td>
<td>-1.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Private</td>
<td>2.9</td>
<td>-0.5</td>
<td>-2.9</td>
<td>-13.5</td>
<td>-18.8</td>
<td>-11.1</td>
<td>-5.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>4.4</td>
<td>0.0</td>
<td>-4.4</td>
<td>4.1</td>
<td>-28.0</td>
<td>-29.1</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>1.7</td>
<td>-0.9</td>
<td>-1.7</td>
<td>-24.6</td>
<td>-11.1</td>
<td>13.2</td>
<td>23.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>2.4</td>
<td>2.0</td>
<td>-1.3</td>
<td>-4.4</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
</tr>
</tbody>
</table>
</body></html>

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100528e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
According to the Nationwide Building Society&#8217;s measure, U.K.
consumer confidence fell in March by the most since July 2008 as the
election due within weeks fueled Britons&#8217; doubts about the economy.
Small surprise that is: so much for politicians shoring up a feeling of
hope and security. Increasingly elections are about making the opponent
seem worse than you are. The consumer confidence polls seem to have
picked up on this, with the obvious consequences. The index of
sentiment fell 9 points from February to 72, erasing the gains in
confidence seen so far this year. A gauge measuring expectations for
the economy in the next six months fell 11 points to 105.This fall
disappointed as the market consensus level was a reading of 81.
We contrast this result with the GfK survey above. It seems to
show less of hit from the electioneering effect but it does demonstrate
some backsliding in the assessment of the economy; plenty of raw nerves
here for the politicians to tap into. The household financial situation
eroded in March as did people&#8217;s assessment of their savings. Both lower
and higher income respondents saw a worsening.
Looking ahead, fears of unemployment have been rising. The
general economic situation is seen as poorer and households expect
their financial situation to deteriorate further. There are increased
concerns about savings adequacy and growing concerns about inflation.
With this as a back-drop there is plenty of fodder for
election politicking to push all the consumers&#8217; buttons. This appears
to be in train. Still consumer confidence in the GfK measure is in the
92nd percentile of its two-year range showing considerable progress has
been made, but that compares to a standing of just 60% in its 10_year
range which emphasizes a bit more how far there is to go. Clearly the
UK consumer remains challenged and will find his and her senses
assaulted in this election season. May the least worse man win.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="7" scope="col"> GFK Consumer Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Of 2Yr</td>
<td>Of 10Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>May-10</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Range</td>
<td>Range</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-18</td>
<td>-16</td>
<td>-15</td>
<td>-14</td>
<td>80.8%</td>
<td>55.3%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Current</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>16</td>
<td>17</td>
<td>18</td>
<td>18</td>
<td>25.0%</td>
<td>18.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Purchases</td>
<td>-21</td>
<td>-20</td>
<td>-17</td>
<td>-16</td>
<td>71.0%</td>
<td>36.7%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Last 12
Months</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>-13</td>
<td>-14</td>
<td>-15</td>
<td>-13</td>
<td>43.8%</td>
<td>29.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">General Econ Sit</td>
<td>-45</td>
<td>-47</td>
<td>-49</td>
<td>-50</td>
<td>94.9%</td>
<td>53.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI</td>
<td>72</td>
<td>79</td>
<td>72</td>
<td>63</td>
<td>26.9%</td>
<td>40.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings</td>
<td>-5</td>
<td>-7</td>
<td>-13</td>
<td>-6</td>
<td>37.7%</td>
<td>29.9%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Next
12-Months</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Fin Sit</td>
<td>-3</td>
<td>2</td>
<td>4</td>
<td>6</td>
<td>62.5%</td>
<td>46.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">General Econ Sit</td>
<td>-9</td>
<td>-1</td>
<td>0</td>
<td>4</td>
<td>76.8%</td>
<td>76.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment</td>
<td>36</td>
<td>33</td>
<td>36</td>
<td>31</td>
<td>11.1%</td>
<td>27.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Purchases</td>
<td>-26</td>
<td>-27</td>
<td>-28</td>
<td>-31</td>
<td>82.4%</td>
<td>56.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings</td>
<td>2</td>
<td>1</td>
<td>5</td>
<td>7</td>
<td>29.4%</td>
<td>19.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI</td>
<td>71</td>
<td>67</td>
<td>63</td>
<td>60</td>
<td>60.8%</td>
<td>60.8%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">By Income</td>
</tr>
<tr class="odd">
<td class="firstcol">Lower</td>
<td>-24</td>
<td>-22</td>
<td>-21</td>
<td>-18</td>
<td>77.8%</td>
<td>50.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Upper</td>
<td>-11</td>
<td>-8</td>
<td>-5</td>
<td>-3</td>
<td>72.4%</td>
<td>55.3%</td>
</tr>
</tbody>
</table>
</body></html>

According to the Nationwide Building Society’s measure, U.K. consumer confidence fell in March by the most since July 2008 as the election due within weeks fueled Britons’ doubts about the economy. Small surprise that is: so much for [...]

UK Consumer Confidence Is Challenged By Electioneering

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100528a.jpg" align="left" height="265" width="353">
Lower gasoline prices and a pause in auto purchases braked
consumer spending last month. Personal consumption
expenditures were unchanged during April after an unrevised
0.6% March gain. A 0.3% increase had been expected. Spending on
gasoline slipped for the third straight month due to price declines.
The price influence is clear when observing that during the last year
nominal spending rose 35.9%; but in constant dollars, spending was
roughly unchanged. A large contribution from spending on autos also is
clear, but the trend is improved. Real spending fell 1.3% in April
after an 8.9% gain in March; but versus last year, spending on motor
vehicles has increased 11.3%. 

Elsewhere, spending looked firm. April spending on home
furnishings rose 1.4% (7.4% y/y) for the third such monthly increase.
Even after allowing for higher prices, real spending was up 1.8% y/y
following the 5.9% decline during 2009. Apparel spending took a
breather, falling 0.8% last month after gains between 1.7% and 2.1%
during March &amp; February. More impressive was that spending rose
5.7% y/y after the 3.5% decline last year. Adjusting for lower prices
spending jumped 6.8% y/y after falling 4.3% in 2009. Spending on
services continued firm at 2.8% y/y following last year's 1.6%
increase. The gain still was bloated by the 4.3% y/y jump in health
care expenditures but spending on financial services (4.3% y/y),
restaurants &amp; accommodations (2.8% y/y) and recreation (0.8%
y/y) each was greatly improved.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100528b.jpg" align="right" height="265" width="353">
Last month an expected 0.4% gain in personal income
accompanied the spending numbers. April disposable income rose an even
firmer 0.5% (2.8% y/y). Year-to-year, both are much improved versus
2009 but tax cuts have fueled take-home pay more. Higher gasoline
prices also cut into income growth. The 0.9% y/y gain in real
disposable income just equaled last year's increase. The outgrowth of
spending gains that exceeded income growth during the last twelve
months lowered the personal savings rate to 3.6%
from its high of 6.4% when the tax cuts were enacted. The latest rate
still was up, however, from the 1.0% low at the beginning of the last
recession. 

Employment declines left wages &amp; salaries up just 0.3%
y/y, though that followed a sharp 4.1% decline last year. Wages in the
factory sector, however, rose a firmer 0.7% in April (-3.4% y/y) and
compared to last year's 11.3% shortfall. In the private service sector,
wages increased 0.8% y/y after last year's 4.0% decline. Improvement in
the housing market pulled proprietors' income up 5.4% y/y, its
strongest gain since early 2006 while the stabilization of interest
rates left interest income up 0.3% y/y following last year's 5.3%
decline. Dividend income remained down 1.6% y/y but that compared
favorably to last year's 19.3% drop and the 10.3% 2008 decline.
Finally, gains in unemployment insurance benefits (13.1% y/y) have
tapered off with the improved labor market. 

The PCE chain price index was unchanged
with the 2.3% slip (+38.1% y/y) in gasoline prices. The core PCE price
deflator ticked up 0.1%, held back by a 0.9% decline (-1.0% y/y) in
apparel prices and a 0.4% decline (-4.3% y/y) in furniture &amp;
appliance prices. Services prices also gained 0.2% (1.7% y/y), while
health care prices rose 0.3% (2.6% y/y). 

The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100528c.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100528d.jpg" height="265" width="314">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4</td>
<td>0.4</td>
<td>0.0</td>
<td>2.5</td>
<td>-1.8</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.5</td>
<td>0.4</td>
<td>0.0</td>
<td>2.8</td>
<td>1.0</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.0</td>
<td>0.6</td>
<td>0.5</td>
<td>4.6</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.6</td>
<td>3.1</td>
<td>3.3</td>
<td>4.9 (April '09)</td>
<td>4.2</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.0</td>
<td>0.1</td>
<td>0.0</td>
<td>2.0</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.1</td>
<td>0.1</td>
<td>0.0</td>
<td>1.2</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

Lower gasoline prices and a pause in auto purchases braked consumer spending last month. Personal consumption expenditures were unchanged during April after an unrevised 0.6% March gain. A 0.3% increase had been expected. Spending on [...]

U.S. Personal Spending Mixed & Income Firm

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

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

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Andrew Cates

**The growth consensus for 2026** 
Consensus growth forecasts for 2026 have continued to firm over the past six months, with upward revisions most pronounced in economies that are more directly exposed to the global AI investment cycle. Taiwan stands out, reflecting its central role in advanced semiconductor manufacturing and the spillovers from sustained AI-related capex across the global tech supply chain. The US has also seen a sizeable upgrade, consistent with strong domestic investment in AI infrastructure and data-centre capacity, alongside resilient demand for high-value tech services. Elsewhere in Asia, upgrades to South Korea and, to a lesser extent, China and India point to a broader regional benefit from the AI-driven electronics and capital-goods cycle, even as underlying macro conditions remain mixed. Canada has also seen modest upward revisions, likely reflecting its close integration with US investment trends. By contrast, revisions across much of Europe and Japan have been more muted, while forecasts for Russia remain under downward pressure.

260115Z1.jpg

**The next steps for central bank policy** 
Based on responses to the special questions in the latest Blue Chip survey, the chart highlights how uncertain panelists remain about the precise timing of the next policy move, even where there is broad agreement on direction. Expectations for both the Fed and the Bank of England are now loosely centred on March 2026 as the most likely window for the next easing step, but the spread of responses points to limited conviction and a high sensitivity to incoming data. By contrast, panelists continue to see the ECB as largely through its easing cycle, with a clear majority expecting any further move only later, if at all. The Bank of Japan remains the clear outlier: while further tightening is still the central expectation, views are split on timing, with panelists divided between a March move and a hike pushed beyond April 2026—highlighting ongoing uncertainty over the durability of domestic inflation and wage dynamics.

260115Z2.jpg

**The UK economy and BoE policy** 
While Blue Chip panelists remain divided on the precise timing of the Bank of England’s next policy cut, the latest run of UK data is tilting market expectations toward an earlier move. Economic releases have increasingly fallen short of expectations, a pattern that has coincided with a steady decline in short-dated gilt yields. The negative surprise profile reflects a combination of weak household demand and softer labour-market indicators. This has generated downside momentum in the data, reinforcing the case—at least from a market perspective—for earlier or deeper policy easing.

260115Z3.jpg

**The impact of Artificial Intelligence**
Responses to the special questions in the latest Blue Chip survey also suggest that panelists are divided over the timing of AI’s macroeconomic impact in the US. A sizeable share already reports seeing noticeable effects, consistent with the rapid pace of AI-related investment and adoption over the past year. At the same time, a similarly large group expects AI’s impact to become more evident only over the next one to three years, implying a belief that productivity and growth effects will materialise with a lag. These views are notable given that a majority of panelists continue to judge anticipated AI-related gains as being overstated in financial markets, underscoring the risk of disappointment—and potential equity market volatility—if realised outcomes fail to match elevated expectations.

260115Z4.jpg

**US business formation and productivity growth**
The chart points to a renewed pick-up in US productivity growth alongside a marked step-up in business applications, a combination that has naturally fuelled interest in the role of AI. The acceleration in output per hour over the past year coincides with a surge in corporate formations, potentially reflecting both heightened investment in new technologies and the emergence of new, AI-enabled business models. That said, productivity growth has historically been highly cyclical, often strengthening late in the cycle or during periods of labour hoarding and cost discipline, before fading again. As such, while AI may be contributing at the margin, it remains too early to conclude that the recent improvement marks a durable, technology-driven shift rather than another cyclical upswing.

260115Z5.jpg

**China’s export growth**
This week’s China trade data revealed that its export growth has continued to rotate away from the US and toward Europe and ASEAN, a pattern that has become more pronounced over the past year. While exports to the US have fallen sharply on a year-on-year basis, shipments to both Europe and ASEAN have held up markedly better, and in recent months have returned to positive growth. This divergence is consistent with the tightening of US trade policy toward China, including higher tariffs, expanded export controls and broader efforts to “de-risk” supply chains. By contrast, trade with Europe and ASEAN appears to be benefiting from trade diversion and re-routing, as Chinese firms redirect exports toward markets where barriers remain lower and supply-chain integration is deeper.

260115Z6.jpg

The global backdrop remains unsettled, reflected in rising gold prices amid geopolitical tensions—most recently around Venezuela—and renewed political noise, including questions over Federal Reserve independence. At the same time, however, many major equity indices remain at or close to all-time highs, buoyed by optimism around AI and reinforced by a run of relatively benign US inflation readings. Against this mixed backdrop, the charts this week point to a global outlook that is becoming more differentiated rather than uniformly weaker. Blue Chip forecasts for 2026 growth have edged higher over the past six months, with upgrades concentrated in economies most exposed to the AI investment cycle, notably the US and parts of Asia (chart 1). Central bank expectations remain fluid: while panelists broadly anticipate easing by the Fed and Bank of England, conviction around timing is limited, and the Bank of Japan remains an outlier with further tightening still expected (chart 2). In the UK, that uncertainty sits alongside a deteriorating data flow, with negative economic surprises increasingly tilting market expectations toward an earlier BoE rate cut (chart 3). Turning to the US, special questions highlight a divide over whether AI is already having a noticeable macro impact or whether its effects will emerge more gradually, a tension that mirrors concerns about over-optimism in financial markets (chart4). That debate is echoed in the recent pick-up in US productivity growth and the step-change in business formation—developments that may reflect AI-related dynamics but which also warrant caution given the historically cyclical nature of productivity (chart 5). Finally, China’s trade data point to a continued re-orientation of export growth away from the US and toward Europe and ASEAN, consistent with evolving US trade policy and broader supply-chain realignment (chart 6).

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Charts of the Week: Between Optimism and Uncertainty

Michael J. Moran

260115J.jpg

260115K.jpg

The Bureau of Labor Statistics did not publish a report on export and import prices for October because of the government shutdown, and BLS was unable to construct statistics for October to include with the November report. The charts above have a gap in October, and the November figures are represented by a small dot.

Import prices have been remarkably stable in the past three years, as shown by the sideways movement in the level of the import price index (left chart). Focusing on percent changes (i.e. inflation rates) rather than the level of the index shows deflation in 2023 and early 2024 followed by higher prices more recently (right chart). Still, the net change in the past 12 months has totaled only 0.1% and the cumulative change in the past three years amounted to a decline of 0.4%.

A calm environment in the energy sector has helped to restrain import prices, as the price of crude oil showed little change in 2023 and 2024 and declined in 2025. Import prices excluding petroleum products have increased in recent years, but the changes have been modest: 0.9 in the past 12 months and 1.3% in the past three years.

The non-oil components of import prices have traced various patterns in recent years, but shifts have been largely offsetting. Prices of food and autos increased noticeably in 2023 and 2024, but they gave back much of those increases in 2025. Prices of capital goods were stable in 2023 and 2024, but they started to increase in 2025. Prices of consumer goods have been volatile, showing bursts of higher prices followed by discounting, leaving a modest net increase in the past three years.

The calm energy environment also seemed to play a role on the export side, as the industrial supply category showed little net change in prices over 2023 and 2024 before jumping in early 2025. Food prices followed a similar pattern, showing two years of restraint before moving higher in 2025. These two categories account for much of the upward movement in overall export prices in 2025. Prices of consumer goods also started to move higher in 2025 after little net change in the prior two years. Prices of capital goods and automobiles have traced reasonably steady upward paths.

Many observers might try to use the import component of this report to gain insight into the effect of tariffs on prices. That will be difficult because the figures from this report are pre-tariff; there will be no independent upward pressure on prices in this report because of tariffs. In fact, one should look for lower import prices in searching for a tariff effect. That is, if a foreign exporter were to absorb the tariff burden, that would be accomplished by reducing the pre-tariff price in order to keep the after-tariff price steady.

260115L.jpg

Some exporters to the US may have made such efforts. The nearby chart shows the month-to-month change in import prices in 2025, and May and June both showed lower prices. These months were especially important because they followed the announcement by President Trump of marked increases in tariffs in April. Also, some of the downward pressure occurred in components that would be sensitive to price (autos and consumer goods). Of course, May and June might be too soon after the announcement of draconian tariffs for foreign exporters to assess and change their pricing strategy.

The chart on monthly changes ends in September because the absence of an October reading prevents the calculation of the month-to-month changes for October and November. However, the two-month change from September to November is easily calculated, and the increase of 0.4% suggests little or no effort to absorb the burden of tariffs.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

- Import prices have changed little in the past three years.
- Export prices were stable in 2023-24, but moved higher in 2025.

Import & Export Prices: Generally Modest Changes

Winnie Tapasanun

260115J39.jpg

260115JK9.jpg

The Empire State Manufacturing Index of General Business Conditions rose to a higher-than-expected 7.7 in January following a 17.2-drop to -3.7 in December, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 1.0 for January had been expected in the Action Economics Forecast Survey. The positive January figure indicated that the business activity in New York State expanded for the third time in four months; it was an improvement from -7.4 in January 2025 and a low of -29.7 in January 2024, though still below a high of 16.8 in November 2024. The percentage of respondents reporting an increase in general business conditions was 34.2% in January, up from 31.7% in December; the percentage reporting a decrease was 26.5%, down from December’s 35.4%. The latest survey was conducted between January 2 and January 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 51.2 in January following a 4.2-point decline to the neutral-level 50.0 in December (the lowest level since September); it was slightly up from 50.7 in January 2025 and well above a low of 43.0 in January 2024. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index rose to 6.6 in January after a 10.6-point drop to -1.0 in December, marking the third m/m gain in orders in four months and a sharp improvement from a low of -30.7 in January 2024. The shipments index jumped to 16.3 in January, the highest level since November 2024, following a 16.5-point fall to -5.0 in December; it was well above a low of -21.7 in April 2024. The unfilled orders index improved to -8.2 in January after a 9.1-point decrease to -14.9 in December, indicating that unfilled orders contracted for the eighth straight month but at a less severe pace; the index reached a low of -24.2 in January 2024. The inventories index fell to -2.1 in January, the lowest level since September, after a 2.7-point decline to 4.0 in December, signaling the first inventory contraction since October. Meanwhile, the delivery times index increased to 0.0 in January from -5.9 in December, with 12.4% of respondents reporting longer delivery times and an identical 12.4% reporting shorter times, indicating that delivery times were unchanged.

On the labor front, the number of employees index fell to -9.0 in January after a 1.0-point increase to 7.5 in December, indicating that employment contracted for the first time since September and reached its lowest level since January 2024. The index remained well below a peak of 24.9 in February 2022. In January, only 7.9% of respondents reported an increase in employment while a higher 16.8% reported a decline. The average workweek index dropped to -5.4 in January from 2.5 in December, turning negative for the first time since October and hitting the lowest level since April 2025.

Inflation pressures eased in January but remained high. The prices paid index fell to 42.8 in January, the lowest level since March 2025, after a 5.9-point decrease to 44.2 in December. Although still well below a peak of 84.9 in April 2022, the index remained above a low of 25.9 in December 2024 and a low of 20.8 in December 2023. In January, 44.5% of respondents reported higher prices paid while only 1.7% reported lower prices paid. The prices received index fell to 14.4 in January, the lowest reading since January 2025, from 25.4 in December. The index was up from a low of 7.5 in December 2024 and a low of 7.7 in July 2023 but far below a high of 51.9 in March 2022. In January, 18.9% of respondents reported higher prices received while 4.4% reported lower prices received.

Firms remained fairly optimistic about the future business outlook in the latest survey. The index for future business conditions eased to 30.3 in January after rising to 33.5 in December, with 50.6% of respondents expecting business conditions to improve over the next six months. Future new orders edged down to 33.3 in January from 34.5 in December, while future shipments rose to 34.9—the highest level since March 2022—from December’s 30.7. Growth in future employment strengthened to 14.9, the highest reading since November 2024, from December’s 7.8. Capital spending plans remained positive for the third consecutive month in January, with the future capital expenditures index rising to 10.3 from December’s 6.9. Expected prices paid fell to 52.6 in January from 55.4 in December and expected prices received fell to 36.5 from 41.6, with both measures at their lowest levels since December 2024.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- General Business Conditions Index up 11.4 pts. to 7.7 in January.
- Positive: Shipments (16.3, highest since Nov. ’24) and new orders (6.6).
- Negative: Employment (-9.0, lowest since Jan. ’24), unfilled orders (-8.2), and inventories (-2.1, a four-month low).
- Prices paid at a 10-month-low 42.8 and prices received at a one-year-low 14.4.
- Firms fairly optimistic: Future Business Conditions Index down to a still-positive 30.3; future prices paid at a one-year-low 52.6.

U.S. Empire State Manufacturing Index Returns to Positive Territory in January

Sandy Batten

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The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia rose to 12.6 in January from -8.8 in December. The survey covers the third Federal Reserve District. A reading of -4.5 for January was expected by the Action Economics Forecast Survey. Over 23% of respondents reported increases in activity in January (up from 21% last month), exceeding the 11% reporting decreases (down from 30%); 63% of the firms reported no change in current activity (up from 50%). Survey responses were collected from January 5 to January 12.

The headline index is the answer to just one question: whether activity increased, decreased or was unchanged from the previous month. Haver Analytics calculates an ISM-adjusted current activity diffusion index from the five key components using the methodology employed to construct the national ISM index. This figure rose to 52.9 in January from 52.5 in December, inching further above the critical 50 value that separates contraction from expansion.

For the component indexes, the new orders index rose to 14.4 from 5.7 in December. The percentage of respondents reporting an increase in orders edged up to 28.3% in January from 27.4% in the prior month while 13.9% reported a decrease, down markedly from 21.7% in December. The shipments index increased to 9.5 in January from 3.2 in December. The percentage of respondents reporting an increase in shipments rose slightly to 27.3% from 26.2% while the percentage reporting a decrease fell to 17.8% from 23.0%. Delivery times lengthened marginally to 7.3 in January from 5.2 in December. The inventories index fell 17 points to -8.4 in January, its lowest level since July 2024.

Respondents continued to report overall increases in employment with the employment index remaining in positive territory. However, the index fell to 9.7 in January from 13.0 in December, indicating that gains in employment slowed in the latest month. The percentage of respondents reporting an increase in employment rose to 19.8% from 13.6% in December but the percentage reporting a decline jumped to 10.1% in January from 0.6% in December. The average workweek index fell from 12.5 in December to 9.1 in January.

On balance, the firms continued to report overall increases in prices. The prices paid index edged down 2 points to 46.9 in January, its second consecutive decrease and its lowest level since June. Nearly 47% of respondents reported increases in input prices, while none reported decreases; 53% reported no change. The current prices received index ticked up 2 points to 27.8. More than 31% of respondents reported increases in the prices of their own goods, 3% reported decreases, and 66% reported no change.

The diffusion index for future general activity declined from a revised reading of 38.1 in December to 25.5 in January, its lowest reading since July. Nearly 35% of respondents expect an increase in activity over the next six months (down from 53% last month), exceeding the 9% that expect a decrease. The future new orders index fell 6 points to 32.9, while the future shipments index ticked up 1 point to 40.8. On balance, the firms continue to expect increases in employment over the next six months with the future employment index rising 4 points to 28.8. Both future price indexes were well above their long-run averages: The future prices paid index rose 2 points to 66.6; the future prices received index moved up 5 points to 61.8. The index for future capital expenditures edged up 1 point to 30.3.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The indexes range from -100 to +100 with positive values indicating an increase in activity. The series from the survey dating back to May 1968 can be found in Haver’s **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- The headline index increased to 12.6 in January, the highest reading since September, from -8.8 in December.
- Both new orders and shipments increased in January.
- Delivery times lengthened while the pace of input price increases slowed.
- Employment decreased but remained in positive territory, indicating further gains in employment though at a slower pace.

Philly Fed Manufacturing Activity Rebounds in January

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 9,000 to 198,000 in the week ending January 10, from 207,000 in the week ending January 3, revised from 208,000. The four-week moving average of initial claims was 205,000 in the January 10 week, a decline of 6,500 from 211,500 in the January 3 week, revised from 211,750, and reaching is the lowest level for this average since January 20, 2024, when it was 203,250.

Federal government employees initially filed 646 (NSA) jobless insurance claims in the week ended January 3, after filing 476 claims in the week ended December 27.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 19,000 to 1.884 million in the week ended January 3 from 1.903 million in the December 27 week, revised from 1.914 million. The four-week moving average was 1.889 million in the week ending January 3, a decrease of 250 from the prior week, revised from 1.893 million. The insured unemployment rate stood at 1.2% in the week of January 3, unchanged from previous 5 weeks.

Federal government employees’ continuing benefits claims were 12,803 (NSA) in the week of December 27, 12,161 (NSA) from 12,129 (NSA) in the week of December 20. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 27, the highest unemployment rates were in Rhode Island (2.86%), New Jersey (2.85%), Washington (2.81%), Minnesota (2.74%), Massachusetts (2.59%), Oregon (2.28%), Montana (2.16%), California and Connecticut (both 2.12%) and Alaska (2.06%). The lowest rates were in Florida (0.31%), North Carolina (0.41%), Louisiana (0.43%), Alabama and Virginia (both 0.49%). Rates in other notable states include Illinois (2.18%), New York (2.10%), Pennsylvania (2.02%), and Texas (1.20%). 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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- Initial claims declined from the prior week.
- Continuing claims declined from the prior week.
- The insured unemployment rate was unchanged.

Economy in Brief

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