Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
No category of factory orders can influence the Commerce
Dept's monthly figures more than commercial aircraft. This has never
been more evident than in recent months. During April, overall durable
goods orders jumped 2.9%, while excluding the transportation sector
altogether, orders fell 1.0%. That follows a roughly unchanged level of
new durable orders during March and a 4.8% gain less transportation.
Nevertheless, the trend improvement in the new orders total has been
notable and part of the overall picture of factory sector improvement.
A 1.5% gain in April durable goods orders was the Consensus expectation.
An 81.2% rise (91.5% y/y) in orders for aircraft &amp;
parts was behind the gain in transportation sector orders. Economic
recovery and an aging fleet of planes caused orders for nondefense
aircraft to more-than-triple m/m and they've also tripled during the
last year. For the capital goods sector overall, April orders jumped
9.2% but less aircraft they fell 2.4%. Month-to-month volatility also
was notable for primary metals orders which fell 2.0%. (They've risen
55.0% during the last year.) Machinery orders also fell a sharp 5.9%
last month but they're up 24.2% y/y due to strength in four of the last
five months. April orders for electrical equipment were weak and fell
6.9% (+13.4% y/y) while computer orders fell 3.0% but they're up by
nearly one-half y/y.
Shipments of durable goods followed the gains in orders and
posted a 1.4% increase (8.8% y/y) after a 2.1% March rise. Shipments of
computers led the gain with an 8.0% increase (27.8% y/y) along with a
1.9% increase (5.5% y/y) in shipments of electrical equipment.
Machinery shipments fell 3.0% (+5.1% y/y) and primary metals shipments
slipped 0.2% m/m (+46.1% y/y).
Accumulation of inventories is bolstering the increase in
orders &amp; shipments. Durable goods inventories rose 0.7% (-5.4%
y/y) for the third month of firm increase. Nevertheless, inventories
remained well below past levels. Since December 2009 inventories have
risen 2.1% but levels remain lean after last year's 12.8% decline.
Finally, backlogs of durable goods orders gained 0.4% last month but
remained down 3.8% y/y.
The durable goods figures are available in Haver's USECON
database. The latest durable goods data reflected earlier
benchmark revisions.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526c.jpg" style="width: 312px; height: 265px;">
<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification
</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="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>2.9</td>
<td>-0.0</td>
<td>0.5</td>
<td>18.9</td>
<td>-20.7</td>
<td>-9.0</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.0</td>
<td>4.8</td>
<td>2.1</td>
<td>18.0</td>
<td>-18.4</td>
<td>-2.5</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>9.2</td>
<td>-6.8</td>
<td>9.0</td>
<td>36.8</td>
<td>-26.8</td>
<td>-12.6</td>
<td>17.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.4</td>
<td>6.5</td>
<td>3.0</td>
<td>21.4</td>
<td>-19.8</td>
<td>-4.2</td>
<td>5.3</td>
</tr>
</tbody>
</table>
</body></html>

No category of factory orders can influence the Commerce Dept's monthly figures more than commercial aircraft. This has never been more evident than in recent months. During April, overall durable goods orders jumped 2.9%, while [...]

U.S. Durable Goods Orders Soar With Aircraft

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
No category of factory orders can influence the Commerce
Dept's monthly figures more than commercial aircraft. This has never
been more evident than in recent months. During April, overall durable
goods orders jumped 2.9%, while excluding the transportation sector
altogether, orders fell 1.0%. That follows a roughly unchanged level of
new durable orders during March and a 4.8% gain less transportation.
Nevertheless, the trend improvement in the new orders total has been
notable and part of the overall picture of factory sector improvement.
A 1.5% gain in April durable goods orders was the Consensus expectation.
An 81.2% rise (91.5% y/y) in orders for aircraft &amp;
parts was behind the gain in transportation sector orders. Economic
recovery and an aging fleet of planes caused orders for nondefense
aircraft to more-than-triple m/m and they've also tripled during the
last year. For the capital goods sector overall, April orders jumped
9.2% but less aircraft they fell 2.4%. Month-to-month volatility also
was notable for primary metals orders which fell 2.0%. (They've risen
55.0% during the last year.) Machinery orders also fell a sharp 5.9%
last month but they're up 24.2% y/y due to strength in four of the last
five months. April orders for electrical equipment were weak and fell
6.9% (+13.4% y/y) while computer orders fell 3.0% but they're up by
nearly one-half y/y.
Shipments of durable goods followed the gains in orders and
posted a 1.4% increase (8.8% y/y) after a 2.1% March rise. Shipments of
computers led the gain with an 8.0% increase (27.8% y/y) along with a
1.9% increase (5.5% y/y) in shipments of electrical equipment.
Machinery shipments fell 3.0% (+5.1% y/y) and primary metals shipments
slipped 0.2% m/m (+46.1% y/y).
Accumulation of inventories is bolstering the increase in
orders &amp; shipments. Durable goods inventories rose 0.7% (-5.4%
y/y) for the third month of firm increase. Nevertheless, inventories
remained well below past levels. Since December 2009 inventories have
risen 2.1% but levels remain lean after last year's 12.8% decline.
Finally, backlogs of durable goods orders gained 0.4% last month but
remained down 3.8% y/y.
The durable goods figures are available in Haver's USECON
database. The latest durable goods data reflected earlier
benchmark revisions.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526c.jpg" style="width: 312px; height: 265px;">
<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification
</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="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>2.9</td>
<td>-0.0</td>
<td>0.5</td>
<td>18.9</td>
<td>-20.7</td>
<td>-9.0</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.0</td>
<td>4.8</td>
<td>2.1</td>
<td>18.0</td>
<td>-18.4</td>
<td>-2.5</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>9.2</td>
<td>-6.8</td>
<td>9.0</td>
<td>36.8</td>
<td>-26.8</td>
<td>-12.6</td>
<td>17.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.4</td>
<td>6.5</td>
<td>3.0</td>
<td>21.4</td>
<td>-19.8</td>
<td>-4.2</td>
<td>5.3</td>
</tr>
</tbody>
</table>
German Confidence Is Set Back Very
Little By Greek Tragedy 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 26, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
GFK&#8217;s confidence measure for Germany edged lower in June as
the ongoing Greek situation took a small toll on German optimism. Gfk&#8217;s
consumer confidence figure for June slipped to 3.5, a decrease on May's
revised 3.7, marking the end of the index's short 2-month up-streak.
According to the report, the key concern among German consumers is that
Greek rescue packages and the weakening euro could hamper the German
economy in its recovery.
The survey details recorded GFK&#8217;s fourth consecutive decline
in the propensity to buy index, and reversed half of prior month's
gains in the future salary expectations index. That index had recorded
the highest value since 2001 just last month.
Despite consumer concerns, German companies have not been
affected nor have they changed their business plans because of the
possibility of government debt increases resulting from Germany's
leadership of bailouts. Instead, German firms have actually benefited
in export competitiveness from a declining Euro; the macroeconomic
impact on the German budget has not been an issue.
Ironically the index and its supporting survey information
suggests that the net impact of Germany&#8217;s participation in the bailout
could be to get fiscally worried conservative German consumers to
cutback more on spending that already is weak while German firms pursue
a bonanza of opportunity abroad due to the euro&#8217;s weakening and their
improved competitiveness.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">Germany
Consumer Climate Survey GFK </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Climate</td>
<td colspan="2">Expecations</td>
<td>Propensity to Buy</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Economic</td>
<td>Income</td>
<td></td>
</tr>
<tr>
<td class="firstcol">Jun-10</td>
<td>3.5</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">May-10</td>
<td>3.7</td>
<td>3.9</td>
<td>23.7</td>
<td>18.1</td>
</tr>
<tr>
<td class="firstcol">Apr-10</td>
<td>3.4</td>
<td>22.5</td>
<td>35.2</td>
<td>21.6</td>
</tr>
<tr>
<td class="firstcol">Mar-10</td>
<td>3.2</td>
<td>4.5</td>
<td>13.5</td>
<td>23.4</td>
</tr>
<tr>
<td class="firstcol">Feb-10</td>
<td>3.3</td>
<td>-5.6</td>
<td>12.0</td>
<td>24.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Current</td>
<td style="font-weight: bold;" colspan="3">Lagged
one month</td>
</tr>
<tr>
<td class="firstcol">Average</td>
<td>3.6</td>
<td>1.4</td>
<td>-2.8</td>
<td>-4.8</td>
</tr>
<tr>
<td class="firstcol">Max</td>
<td>9.1</td>
<td>69.5</td>
<td>35.2</td>
<td>64.4</td>
</tr>
<tr>
<td class="firstcol">Min</td>
<td>-3.5</td>
<td>-32.9</td>
<td>-24.5</td>
<td>-55.4</td>
</tr>
<tr>
<td class="firstcol">% range</td>
<td>55.6%</td>
<td>35.9%</td>
<td>80.7%</td>
<td>61.4%</td>
</tr>
<tr>
<td class="firstcol">Count%</td>
<td>44.7%</td>
<td>60.6%</td>
<td>93.6%</td>
<td>76.6%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">% range is
current
reading as a percentile of Hi/Low range</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Count 0s
current
reading ranked as a %-tile among all readings</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Soar With
Pending Tax Credit Expiration 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 26, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The April end to the Federal government's $8,000 home-buyer
tax credit, like in March, caused new home sales to surge. New
home sales jumped 14.8% m/m to 504,000 following the upwardly
revised 29.9% advance during March. The latest level was the highest
since May 2008. The latest sales level greatly exceeded Consensus
expectations for 425,000 sales.
Price discounts likely helped sales during April. The median
home price fell nearly 10% m/m for a 9.5% y/y decline. Firmer sales
&amp; lower prices have been quite successful in lowering the
number of homes on the market to the lowest level in forty years.
At the current sales rate, the months' supply of unsold homes
dropped to 5.0 from its 2009 high of 12.1 months. However, despite all
this improvement, it still took a near-record median 14.3
months to sell a new home in April.
Central Bank Independence, Transparency, and
Accountability is today's speech by Fed Chairman Ben S.
Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100525a.htm">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</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">Total Sales
(SAAR, 000s)</td>
<td>504</td>
<td>439</td>
<td>338</td>
<td>47.8%</td>
<td>372</td>
<td>481</td>
<td>769</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>39</td>
<td>39</td>
<td>31</td>
<td>85.7</td>
<td>31</td>
<td>35</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>75</td>
<td>57</td>
<td>49</td>
<td>87.5</td>
<td>54</td>
<td>69</td>
<td>118</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>278</td>
<td>251</td>
<td>170</td>
<td>38.3</td>
<td>201</td>
<td>264</td>
<td>409</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>112</td>
<td>92</td>
<td>88</td>
<td>41.8</td>
<td>87</td>
<td>113</td>
<td>178</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>$198,400</td>
<td>$219,600</td>
<td>$219,700</td>
<td>-9.5</td>
<td>214,500</td>
<td>230,408</td>
<td>243,742</td>
</tr>
</tbody>
</table>
U.S. Mortgage Refinance
Applications Surge With Lower Rates 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 26, 2010 


Lower interest rates are encouraging mortgage refinancings,
but not so much new home purchases. The Mortgage Bankers Association
reported that mortgage applications jumped last week and for May
they've risen 11.5% from April. The May increase, however, just made up
an April decline.
Mortgage refinancings jumped for the third
consecutive week to the highest level since last October. Conversely,
applications to purchase a home dropped sharply
with the expiration of the Federal tax credit for home purchase. During
the last ten years there has been a 51% correlation between the y/y
change in purchase applications and the change in new plus existing
single family home sales. The correlation has lessened recently.
The effective fixed interest rate on conventional 15-year
mortgages averaged 4.50% during the latest week, the cycle low. For
30-year mortgages the rate also fell to an average 5.02%. Interest
rates on fixed 15-year and 30-year mortgages are closely correlated
(near-90%) with the rate on 10-year Treasury securities. Rates on
adjustable one-year mortgages rose during the month to 6.93%, its
highest since mid-2008.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100526i.jpg" style="width: 312px; height: 265px;">
<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/SURVEYW/@S5/@S5.HTM%22" style="color: black;">BA Mortgage Applications (SA,
3/16/90=100)</a></th>
<th scope="col">05/21/10</th>
<th scope="col">05/14/10</th>
<th scope="col">05/07/10</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">Total Market Index</td>
<td>633.5</td>
<td>569.2</td>
<td>578.1</td>
<td>-19.4%</td>
<td>736.4</td>
<td>642.9</td>
<td>652.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>185.7</td>
<td>192.1</td>
<td>263.6</td>
<td>-27.6</td>
<td>263.5</td>
<td>345.4</td>
<td>424.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,257.4</td>
<td>2,783.0</td>
<td>2,430.8</td>
<td>-16.3</td>
<td>3,509.2</td>
<td>2,394.1</td>
<td>1,997.9</td>
</tr>
<tr>
<td class="firstcol">15-Year Mortgage Effective
Interest Rate (%)</td>
<td>4.50</td>
<td>4.53</td>
<td>4.52</td>
<td>4.82 (05/09)</td>
<td>4.85</td>
<td>5.9</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders SoarWith Aircraft

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525k.jpg" height="265" width="314"> <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525l.jpg" height="265" width="314">
Just how the
European consumers and producers are reacting to the on going financial
problems of the Euro Area can be inferred, to some degree, from
measures of confidence. Two of these were published today--Consumer
Confidence in Italy and Producer Confidence in the Netherlands.
 In
Italy, the ISAE (Instituto di Studi e Analisi Economica) index
(1980=100) of consumer confidence fell in May to 105.4 from 107.9 in
April.&nbsp; The index is now down 7.2% from the recent peak of
113.6 in December, 2009.&nbsp; The overall indicator is based on
the consumers' appraisals of the general economic situation, one's
personal economic situation, the current situation and the future
situation.&nbsp; Clearly confidence of the Italian consumers has
been shaken by current events.&nbsp; The index for the general
economic situation was reduced by 5.8% in May and the index for the
future situation by 3.8%.&nbsp; The appraisal of the future
situation is now close to the all time low reached in December
2008.&nbsp; The indexes for one's personal economic situation and
the current situation were reduced by only 0.3% and 0.5% respectively.
The four underlying appraisals are shown in the first chart.
In
contrast to the Italian consumer, the Dutch producer has become less
pessimistic in May than he was in April as can be seen in the second
chart.&nbsp; The measure of producer confidence published by the
Central Bureau of Statistics in the Netherlands is in the form of a
percent balance between optimists and pessimists.&nbsp; Producer
confidence in the Netherlands has not been strong.&nbsp; Ever since
August 2008, the pessimists have outweighed the optimists.&nbsp; A
peak excess of pessimists, 23.5%, was reached in February,
2009.&nbsp; Since then there has been a fairly steady decline in
the pessimists but it was only in May of this year that there was an
excess, though a small one, 0.4%, of optimists over pessimists. One
factor that may account for some of the difference in the reactions of
consumers and producers to the current financial turmoil is the
declinein the euro.&nbsp; A lower euro is good for exports and
hence for producers, while a lower euro makes imports more expensive
and hence is bad for consumers.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">May 10&nbsp;</th>
<th scope="col">Apr 10&nbsp;</th>
<th scope="col">Mar 10</th>
<th scope="col">Feb 10</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Italy: Consumer
Confidence (1980=100)</td>
<td>105.4</td>
<td>107.9</td>
<td>106.3</td>
<td>107.6</td>
<td>111.6</td>
<td>113.6</td>
<td>112.7</td>
<td>111.7</td>
</tr>
<tr>
<td class="firstcol">Neth: Producer
Confidence (% Balance)</td>
<td>0.4</td>
<td>-1.4</td>
<td>-3.5</td>
<td>-5.0</td>
<td>-6.5</td>
<td>-8.1</td>
<td>-5.0</td>
<td>-7.2</td>
</tr>
</tbody>
</table>

</body></html>

Just how the European consumers and producers are reacting to the on going financial problems of the Euro Area can be inferred, to some degree, from measures of confidence. Two of these were published today--Consumer Confidence in [...]

Italian Consumers More Pessimistic But Dutch Producers A Little Less Pessimistic

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525m.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
EMU order surged in March climbing at a 5.2% month to month
after rising by 1.9% M-o-M in February. The three months growth rate is
at 24.5% up from 17.3% over six months and 19.2% over 12-months. Orders
strength is being lead by &#8216;foreign orders&#8217; as that series is up a 33%
annualized rate over three months compared to a 9.5% pace for domestic
orders. But IN March domestic orders pulled ahead rising by 9.4% in the
month compared to again of 6.2% for foreign orders.
German and French orders were up very strongly in March as
Italian orders rose but not as briskly. German orders are building to a
hectic pace rising at a three-month pace of just under 60% at an annual
rate while in France the three-month pace is -22%. Italian orders are
off at a three month annualized rate of -8.7%.
Manufacturing in the zone is seeing all sorts of divergences
across countries right now. It is curious that concerns about Europe
are sweeping across the continent as some excellent economic activity
statistics are being posted. As of March the evidence is that the
Euro-economy was still building a head of steam although there are
differences across EMU member countries to be sure. Once again we get
evidence that as financial sector worries have mounted the euro-economy
is being underpinned by an event stronger economic recovery than had
been appreciated.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro-Area-16
and UK Industrial Orders </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Saar except m/m</td>
<td style="font-weight: bold;" colspan="3">Mo/Mo</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
</tr>
<tr class="grey3">
<td style="font-weight: bold;" class="firstcol">Euro-Area Overview</td>
<td style="font-weight: bold;">Mar 10</td>
<td style="font-weight: bold;">Feb 10</td>
<td style="font-weight: bold;">Jan 10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">12mo</td>
<td style="font-weight: bold;">12mo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>5.2%</td>
<td>1.9%</td>
<td>-1.5%</td>
<td>24.5%</td>
<td>7.0%</td>
<td>17.3%</td>
<td>10.2%</td>
<td>19.2%</td>
<td>12.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;E-16
Domestic MFG orders</td>
<td>9.4%</td>
<td>1.7%</td>
<td>-8.1%</td>
<td>9.5%</td>
<td>-5.2%</td>
<td>5.4%</td>
<td>2.2%</td>
<td>11.7%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;E-16
Foreign MFG orders</td>
<td>6.2%</td>
<td>6.8%</td>
<td>-5.1%</td>
<td>33.9%</td>
<td>20.3%</td>
<td>25.7%</td>
<td>29.1%</td>
<td>26.5%</td>
<td>20.9%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Countries:</td>
<td style="font-weight: bold;">Mar 10</td>
<td style="font-weight: bold;">Feb 10</td>
<td style="font-weight: bold;">Jan 10</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">3Mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">6mo</td>
<td style="font-weight: bold;">12mo</td>
<td style="font-weight: bold;">12mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Germany
(MFG):</td>
<td>5.7%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>57.7%</td>
<td>17.5%</td>
<td>23.4%</td>
<td>16.1%</td>
<td>27.0%</td>
<td>24.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;France(Ind):</td>
<td>6.5%</td>
<td>-1.0%</td>
<td>-10.9%</td>
<td>-22.4%</td>
<td>12.5%</td>
<td>2.2%</td>
<td>3.1%</td>
<td>10.6%</td>
<td>-5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Italy
(Ind):</td>
<td>1.0%</td>
<td>-0.4%</td>
<td>-2.8%</td>
<td>-8.7%</td>
<td>6.2%</td>
<td>12.7%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body></html>

EMU order surged in March climbing at a 5.2% month to month after rising by 1.9% M-o-M in February. The three months growth rate is at 24.5% up from 17.3% over six months and 19.2% over 12-months. Orders strength is being lead by [...]

EMU Order Growth Rates Stay Strong In Manufacturing

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The Conference Board indicated that consumer confidence was
unshaken in early May by U.S. stock market declines nor by European
market turmoil. Their consumer confidence index rose 9.7% m/m to 63.3,
its highest level since March 2008. The gain outpaced the Consensus
expectation for a rise to 59.0. During the last ten years there has
been an 82% correlation between the level of consumer confidence and
the y/y change in real consumer spending. The Conference Board data can
be found in Haver's CBDB database.
The expectations component of confidence improved the most m/m
to its highest level since August 2007. Improved expectations for
business conditions led the gain while expectations for employment and
income rose to lesser extents. Consumers expect the inflation rate in
twelve months to be 5.3% as they did last month and that remained down
from last year's high of 7.7%. Interest rates in twelve months were
expected to be higher by a lesser 54.1% of respondents but a slightly
increased 12.5% expected rates to fall. A lessened 31.7% of respondents
expected stock prices to rise.
Consumers' assessment of the present situation increased 7.1%
m/m and May was improved by one-half from December's low. Jobs were
seen as hard to get by a reduced 43.6% of respondents but jobs were
seen as plentiful by only 4.6%. That was up just slightly from the
series' historic low reached in November. Also improved was the
percentage of respondents who saw business conditions as good. The
percentage of consumers who thought business conditions were bad fell
to 39.3%, off more-than ten points from its peak during the recession.
A reduced 1.9% of those surveyed plan to buy a home during the
next six months. Also down slightly m/m to 26.2% were those who plan to
buy a major appliance, versus 30.9% who planned to buy one back in
2007. An improved 6.0% plan to buy an automobile versus 6.0% in 2007
and a greater 2.8% plan to buy a new one, just off the series' historic
low.
The Shape of Things to Come from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-15.html">here</a>.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525i.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525j.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board&nbsp;(SA, 1985=100)</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 class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>63.3</td>
<td>57.7</td>
<td>52.3</td>
<td>15.5</td>
<td>45.2</td>
<td>57.9</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>30.2</td>
<td>28.2</td>
<td>25.2</td>
<td>1.7</td>
<td>24.0</td>
<td>69.9</td>
<td>128.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>85.3</td>
<td>77.4</td>
<td>70.4</td>
<td>19.3</td>
<td>59.3</td>
<td>50.0</td>
<td>86.4</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board indicated that consumer confidence was unshaken in early May by U.S. stock market declines nor by European market turmoil. Their consumer confidence index rose 9.7% m/m to 63.3, its highest level since March 2008. [...]

U.S. Consumer Confidence Improves To Highest Since 2008

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The coming summer driving season hasn't helped U.S. gasoline
prices as they've dipped from recent highs. Petroleum prices generally
weakened with evidence that forward economic momentum, globally, has
lost steam. Those worries lowered the pump price of regular
gasoline to $2.79 last week yet prices remained up more than
three-quarters since the December 2008 low. Yesterday the spot market
price for a gallon of regular gasoline fell further from last week's
average. The figures are reported by the U.S. Department of Energy and
can be found in Haver's WEEKLY &amp; DAILY databases.
Lower crude oil costs have very much reflected these concerns
over the worldwide economic recovery. The average price for a barrel of
light sweet crude (WTI) fell last week to $69.02 versus the recent high
of $84.23 averaged during April. Yesterday, crude prices fell further
to $66.88 per barrel.
Demand for gasoline hasn't yet much reflected the prospects
for economic weakness. It rose 1.6% last week versus one year ago. That
compares to a 3.0% decline in early-February. The demand for residual
fuel oil rose a lesser 7.7% and distillate demand surged 9.3% y/y.
That's improved from a 12.3% decline during February. Inventories of
crude oil and petroleum products improved into May but still were up
just a modest 0.2% from one year ago.
U.S. natural gas prices strengthened last week to an average
$4.25 per mmbtu (2.9% y/y). Prices reached a high of $6.50 early in
January. Nevertheless, prices remained nearly double the September low.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525g.jpg" style="width: 312px; height: 265px;">
<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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">05/24/10</th>
<th scope="col">05/17/10</th>
<th scope="col">05/10/10</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">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.79</td>
<td>2.86</td>
<td>2.91</td>
<td>14.4%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>69.02</td>
<td>74.97</td>
<td>80.22</td>
<td>14.1%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
<tr class="odd">
<td class="firstcol">Natural Gas Price ($/mmbtu)</td>
<td>4.25</td>
<td>4.20</td>
<td>3.96</td>
<td>12.9%</td>
<td>3.95</td>
<td>8.88</td>
<td>6.97</td>
</tr>
</tbody>
</table>
</body></html>

The coming summer driving season hasn't helped U.S. gasoline prices as they've dipped from recent highs. Petroleum prices generally weakened with evidence that forward economic momentum, globally, has lost steam. Those worries lowered [...]

U.S. Gasoline Prices Fall To Lowest Since March

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525b.jpg" style="width: 312px; height: 265px;">

The recent improvement in home sales has not enhanced pricing
power by much, but at least it's ended earlier declines. Seasonally
adjusted, the Case-Shiller Home Price Index slipped just marginally
from February. That capped a 3.7% rise in prices since last May's low
following double-digit, y/y price declines dating back to early-2008.
Overall, home prices have fallen 29.8% since the April 2006 peak.
The narrower 10 City Composite Index rose a seasonally
adjusted 0.2%. Over the last year prices rose 1.5% and they're up 4.6%
since the low during May of last year.
The performance of home prices continued to vary around the
country. During March the 12-month gain in prices was strongest in the
West where in San Francisco they rose 16.3% and in San Diego by 10.8%.
Lesser price gains were logged in Los Angeles (6.1%) and Denver (4.1%).
Prices also rose in Cleveland (6.7%) Minneapolis (6.6%), Washington
D.C. (5.7%), Boston (3.9%), Dallas (3.1%) and Phoenix (2.5%).
Widespread, though lessened, price declines continued in Detroit
(-4.5%), Charlotte (-3.9%), Seattle (-3.5%), Portland (-2.7%), New York
(-2.4%) and Atlanta (-1.2%).
The Case-Shiller home price series are value-weighted, i.e., a
greater index weight is assigned to more expensive homes. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100525d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA)</th>
<th scope="col">March m/m</th>
<th scope="col">February m/m</th>
<th scope="col">January m/m</th>
<th scope="col">March 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">20 City Composite Index</td>
<td>-0.0</td>
<td>-0.1</td>
<td>0.3</td>
<td>2.4</td>
<td>-13.3</td>
<td>-15.7</td>
<td>-3.8</td>
</tr>
<tr>
<td colspan="8" class="firstcol">&nbsp; Regional
Indicators</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Atlanta</td>
<td>-1.3</td>
<td>-0.7</td>
<td>-0.6</td>
<td>-1.2</td>
<td>-11.6</td>
<td>-8.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Boston</td>
<td>0.3</td>
<td>-0.4</td>
<td>0.3</td>
<td>3.9</td>
<td>-4.9</td>
<td>-5.7</td>
<td>-4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Chicago</td>
<td>-2.0</td>
<td>-1.1</td>
<td>-0.5</td>
<td>-2.2</td>
<td>-14.2</td>
<td>-10.0</td>
<td>-1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Dallas</td>
<td>0.3</td>
<td>-1.3</td>
<td>-0.3</td>
<td>3.1</td>
<td>-2.3</td>
<td>-3.3</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Denver</td>
<td>0.5</td>
<td>-0.0</td>
<td>-0.1</td>
<td>4.1</td>
<td>-2.8</td>
<td>-4.9</td>
<td>-1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Los Angeles</td>
<td>-0.3</td>
<td>0.1</td>
<td>1.9</td>
<td>6.1</td>
<td>-15.4</td>
<td>-24.2</td>
<td>-5.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
New York</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-2.4</td>
<td>-9.8</td>
<td>-7.4</td>
<td>-2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco</td>
<td>0.9</td>
<td>0.4</td>
<td>0.6</td>
<td>16.3</td>
<td>-18.4</td>
<td>-24.3</td>
<td>-4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Tampa&nbsp;&nbsp;&nbsp; </td>
<td>-0.0</td>
<td>-0.3</td>
<td>0.3</td>
<td>-3.5</td>
<td>-18.8</td>
<td>-19.2</td>
<td>-7.6</td>
</tr>
</tbody>
</table>
</body></html>

The recent improvement in home sales has not enhanced pricing power by much, but at least it's ended earlier declines. Seasonally adjusted, the Case-Shiller Home Price Index slipped just marginally from February. That capped a 3.7% [...]

Case-Shiller Home Price Index Improves Y/Y But Momentum Eases

Case-Shiller Home Price IndexImproves Y/Y But Momentum Eases

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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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

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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.

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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

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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.