Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Moderate economic improvement since the middle of last year
has done nothing to improve retail pricing power. The Consumer Price
Index for April fell 0.1% (+2.2% y/y) and reversed a modest 0.1% uptick
in March. The latest figure fell short of Consensus expectations for a
0.1% gain. Moreover, continuing weak was the 0.5% (AR) CPI increase so
far this year.
A 1.4% drop in energy prices was behind
much of last month's total decline, the third consecutive monthly slip.
A 4.4% drop (-2.9% y/y) in natural gas prices led the decline followed
by a 2.4% drop in gasoline prices (+38.3% y/y). Higher fuel oil prices
(28.0% y/y) offset much of these declines along with an uptick in
electricity costs (0.6% y/y).
Core consumer prices also were weak. They
were unchanged for the second consecutive month. A 0.1% increase had
been expected and prices have gained just 0.1% since October. Core
goods prices led the weakness with a 0.3% decline, the third
consecutive monthly shortfall. Lower apparel prices fell by a sharp
0.7% (-0.9% y/y) while prices of home furnishings &amp; operation
declined by 0.5% (-2.8% y/y). New &amp; used motor vehicles prices
rounded off the weakness and slipped 0.2% (+4.9% y/y). Tobacco prices
nudged up 0.1% (6.1% y/y).
Core services prices strengthened
marginally and rose 0.2% (0.9% y/y). That improvement was led by a
quickened 1.7% increase (8.4% y/y) in the cost of public
transportation. The 0.3% increase in recreation prices also was a bit
improved (-0.4% y/y). Elsewhere, weakness in the housing market left
shelter prices unchanged and down 0.6% y/y. Owners equivalent rent of
primary residences, a measure not equivalent to other house price
measures, slipped again m/m (-0.2% y/y). The slight y/y decline in this
measure was the weakest reading since the series' start in 1983.
Elsewhere in services, education costs rose 0.5% (5.0% y/y) and medical
care services prices again rose 0.3% (3.7% y/y).
Food &amp; beverage prices again firmed
a bit by 0.2% and the y/y gain of 0.5% was improved from late-last
year's low of -0.5%. Dairy prices firmed by 0.1% y/y versus the 10.4%
decline last summer. Also showing less deflation were prices for meats,
poultry, fish &amp; eggs (-0.2% y/y) but cereal &amp; bakery
product prices continued weak (-0.9% y/y). Fruit &amp; vegetable
prices slipped m/m but the 1.8% y/y increase is improved from a 6.5%
decline as of last summer. Finally, the cost of eating out rose just
1.1% y/y, a record low increase, while alcoholic beverage prices also
rose just 1.2% y/y, the least since 1995.
The chained CPI, which adjusts for shifts in consumption
patterns, eased last month and rose 2.3% year-to-year. Chained prices
less food &amp; energy gained just 0.6% y/y.
The consumer price data is available in Haver's USECON
database while detailed figures can be found in the CPIDATA
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519c.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/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> 
(%)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April 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&nbsp;</td>
<td>-0.1</td>
<td>0.1</td>
<td>0.0</td>
<td>2.2</td>
<td>-0.3</td>
<td>3.8</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.0</td>
<td>0.1</td>
<td>1.0</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.3</td>
<td>-0.1</td>
<td>-0.1</td>
<td>1.2</td>
<td>1.3</td>
<td>0.1</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.1</td>
<td>0.9</td>
<td>1.9</td>
<td>3.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>-1.4</td>
<td>-0.0</td>
<td>-0.5</td>
<td>18.0</td>
<td>-18.1</td>
<td>13.7</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.2</td>
<td>0.2</td>
<td>0.0</td>
<td>0.5</td>
<td>1.9</td>
<td>5.4</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.2</td>
<td>0.4</td>
<td>-0.0</td>
<td>2.3</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>0.6</td>
<td>1.5</td>
<td>2.0</td>
<td>1.9</td>
</tr>
</tbody>
</table>
Japan&#8217;s IP Growth Rates Level Out
And Decay 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 19, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Industrial output in Japan soared in March but could not stave
off an erosion in the Yr/Yr rate of growth. Output was up by 1.2% m/m
across the major sectors. But that followed a result in February that
was less than stellar, headlined by a 0.6% drop in IP.
The sequential growth rates in the table show growth at a
Yr/Yr pace of 29.9%, a six month annualized pace of 25.6% and a
three-month annualized pace of 20.9%. While the growth rates
progressively step lower they are still way too elevated to be
sustainable. While there is still a lot of slack in Japan&#8217;s economy
some deceleration in the growth rates is just what the economy needs to
keep its expansion on the &#8216;long track&#8217; which is better than the &#8216;fast
track.&#8217;
Yesterday Japan reported its service sector index took a large
step back from the previous month&#8217;s value. That sort of step back is
more worrisome. Japan, the US, and Europe need to drive their
respective service sectors to better results. That sector is where the
jobs are and that sector has been growing painfully slowly across
countries.
Manufacturing continues to do well in the global economy.
Japan is farther from making a full recovery that Europe or the US but
it is pushing hard on the recovery path. This month&#8217;s IP report is a
good one.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Japan
Industrial Production Trends </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">m/m
%</td>
<td style="font-weight: bold;" colspan="3">Saar
%</td>
<td style="font-weight: bold;">Yr/Yr</td>
<td style="font-weight: bold;" colspan="1" rowspan="2">Qtr-2 
Date %AR&nbsp;</td>
<td style="font-weight: bold;" colspan="1" rowspan="2"> % 0f 
Cycle 
&nbsp;Peak&nbsp;</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">seas
adjusted</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;">3-mo</td>
<td style="font-weight: bold;">6-mo</td>
<td style="font-weight: bold;">12-mo</td>
<td style="font-weight: bold;">Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Mining &amp;
MFG</td>
<td>1.2%</td>
<td style="color: red;">-0.6%</td>
<td>4.3%</td>
<td>20.9%</td>
<td>25.6%</td>
<td>29.9%</td>
<td style="color: red;">-32.8%</td>
<td>30.9%</td>
<td>86.1%</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>1.2%</td>
<td style="color: red;">-1.1%</td>
<td>4.6%</td>
<td>20.3%</td>
<td>24.9%</td>
<td>28.9%</td>
<td style="color: red;">-32.0%</td>
<td>30.5%</td>
<td>86.5%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>1.2%</td>
<td style="color: red;">-0.6%</td>
<td>4.3%</td>
<td>20.9%</td>
<td>25.6%</td>
<td>30.0%</td>
<td style="color: red;">-33.0%</td>
<td>30.9%</td>
<td>86.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Textiles</td>
<td>1.2%</td>
<td style="color: red;">-2.6%</td>
<td>3.8%</td>
<td>9.4%</td>
<td>4.9%</td>
<td>2.1%</td>
<td style="color: red;">-23.1%</td>
<td>8.1%</td>
<td>72.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; T-port</td>
<td>1.2%</td>
<td>0.8%</td>
<td>12.2%</td>
<td>71.5%</td>
<td>59.5%</td>
<td>87.0%</td>
<td style="color: red;">-53.9%</td>
<td>88.5%</td>
<td>83.1%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="10" class="firstcol">Product
Group</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Consumer Gds</td>
<td>3.0%</td>
<td style="color: red;">-3.4%</td>
<td>0.9%</td>
<td>1.6%</td>
<td>8.9%</td>
<td>20.1%</td>
<td style="color: red;">-24.6%</td>
<td>4.9%</td>
<td>87.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Intermediate Gds</td>
<td style="color: red;">-0.6%</td>
<td style="color: red;">-0.2%</td>
<td>6.5%</td>
<td>24.8%</td>
<td>32.0%</td>
<td>43.6%</td>
<td style="color: red;">-37.6%</td>
<td>45.9%</td>
<td>89.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Investment Gds</td>
<td>2.0%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>51.2%</td>
<td>34.6%</td>
<td>15.9%</td>
<td style="color: red;">-31.4%</td>
<td>47.6%</td>
<td>76.3%</td>
</tr>
<tr>
<td class="firstcol">Miining</td>
<td>0.1%</td>
<td>3.3%</td>
<td>1.1%</td>
<td>19.2%</td>
<td style="color: red;">-8.6%</td>
<td>1.4%</td>
<td style="color: red;">-9.1%</td>
<td>14.1%</td>
<td>87.9%</td>
</tr>
<tr>
<td class="firstcol">Electric&amp;Gas</td>
<td>-0.9%</td>
<td>2.0%</td>
<td>2.2%</td>
<td>14.3%</td>
<td>20.2%</td>
<td>7.8%</td>
<td style="color: red;">-7.5%</td>
<td>19.3%</td>
<td>94.5%</td>
</tr>
</tbody>
</table>
U.S. Mortgages Past Due Set
Another Record 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 19,2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Financial strains in the housing market just won't let up. The
Mortgage Bankers Association reported that as of last quarter, a record
10.1% of all mortgages were late. That's up from 9.5% at the end of
last year and nearly double the rate before the last recession began.
Including those loans in inventory the percentage is an even higher
14.0%.
The record number of delinquencies is quite notable for those
late by 90 days and over. The rise to 5.0% is up from 1.5% in 2007. For
those late by 90 days or less, the figure actually is down from the
peak in early 2009, though it's up since before the recession.
No category of mortgages has seen delinquencies rise more than
amongst subprime borrowers. Here, more than one-quarter of the loans
were past due last quarter versus 7.3% for prime loans. The largest
increase has occurred for those late by more than 90 days to 15.0% of
loans from 3% in 2004.
Despite the rise in delinquencies, lenders have found it more
promising to renegotiate loan terms than to foreclose. As a result, the
foreclosure rate has fallen to 1.2% from its high during the middle of
last year of 1.5%.
The Mortgage Bankers data is available in
Haver's MBAMTG database.
The minutes to the latest FOMC meeting can
be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20100428.pdf">here</a>. 
 

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100519g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Mortgage
Loan Delinquency
Rate (%)</a></th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09</th>
<th scope="col">3Q '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">All Mortgages Past Due</td>
<td>10.1</td>
<td>9.5</td>
<td>9.6</td>
<td>9.5</td>
<td>7.9</td>
<td>5.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
30-59 Days</td>
<td>3.5</td>
<td>3.3</td>
<td>3.6</td>
<td>3.3</td>
<td>3.5</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
60-89 Days</td>
<td>1.6</td>
<td>1.5</td>
<td>1.7</td>
<td>1.5</td>
<td>1.6</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
90 Days &amp; Over</td>
<td>5.0</td>
<td>4.6</td>
<td>4.4</td>
<td>4.6</td>
<td>2.8</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Conventional Prime</td>
<td>7.3</td>
<td>6.7</td>
<td>6.8</td>
<td>6.7</td>
<td>5.1</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Conventional Subprime</td>
<td>27.2</td>
<td>25.3</td>
<td>26.4</td>
<td>25.3</td>
<td>21.9</td>
<td>17.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Mortgages in Foreclosure</td>
<td>1.2</td>
<td>1.1</td>
<td>1.4</td>
<td>5.4</td>
<td>4.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>

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Moderate economic improvement since the middle of last year has done nothing to improve retail pricing power. The Consumer Price Index for April fell 0.1% (+2.2% y/y) and reversed a modest 0.1% uptick in March. The latest figure fell [...]

U.S. CPI: Broad-Based Weakness IsBehind Slight M/M Decline

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The financial crisis in the Euro Area cast a wet blanket on
the optimism of German institutional investors and analysts. The survey
of 275 participants was taken during the period from May 3 to May 17.
The May balance of opinion of those expecting improved conditions over
the next six months over those expecting worsening conditions dropped
7.2 points from 53.0% in April to 45.8% in May. The balance has fallen
from the peak of 57.7% in September of last year, but it is still well
above its average value of 27.4, as can be seen in the first chart.
The balance of opinion on current conditions, however,
improved by 17.6 points from -39.2% to 21.6% over the same period. The
excess of pessimists is down substantially from the -92.8% balance in
May 2009. The German financial community tends to view current
conditions pessimistically. Over the life of the survey, the average
view of current conditions has been a balance of pessimist over
optimists of 32.4% as can be seen in the second chart. The May figure
is slightly above the average.
In spite of downgrade in expectations for the economy over the
next six months, the financial community expects increased profits for
each of the industries polled except for Services, Banking, and
Insurance, industries most likely to be affected by financial turmoil.
Small increases in profits are expected in the Utilities,
Telecommunication, Information Technology, Construction and
Consumption/Trade industries. More substantial increases in profits are
expected in the Vehicle/Automotive, Chemical/Pharmaceutical, Machinery,
Steel/Metal and Electronic industries. Profit expectations in the first
four of these industries are shown in the third chart.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518k.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518l.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
Indicator (% Balance)</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">Current Conditions</td>
<td>-21.6</td>
<td>-39.2</td>
<td>-56.9</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-42.2</td>
</tr>
<tr>
<td class="firstcol">Expectation Next
Six Months</td>
<td>45.8</td>
<td>53.0</td>
<td>44.5</td>
<td>45.1</td>
<td>47.2</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
</tr>
</tbody>
</table>
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The financial crisis in the Euro Area cast a wet blanket on the optimism of German institutional investors and analysts. The survey of 275 participants was taken during the period from May 3 to May 17. The May balance of opinion of [...]

The May ZEW Survey Of The German Financial Community Sends A Mixed Message

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Thanks to lower food &amp; energy prices, the overall
producer price index fell 0.1% last month (+5.4% y/y) following a 0.7%
March increase. Consensus expectations had been for a 0.1% uptick.
Nevertheless, the y/y gain in prices of 5.4% remained near the
higlyhest since late-2008.
Finished energy prices fell 0.8% (+20.6% y/y) and reversed all
of the March gain. A moderate gain in not seasonally adjusted monthly
gasoline prices (52.7% y/y) was the third this year and home heating
oil prices rose about as they did in March (48.5% y/y). Finally,
natural gas prices continued lower (-2.5% y/y) but electricity prices
rose (1.6% y/y).
A 0.2% slip (+4.9% y/y) in finished food prices last month
followed the 2.4% March jump. The decline was greatest amongst fresh
fruit (+17.3% y/y), vegetable (33.3% y/y) and egg prices (-20.8% y/y).
Beef prices (16.0% y/y) were strong for the third straight month.
The 0.2% increase in finished producer prices less food
&amp; energy prices was the firmest since January and beat
Consensus expectations for a 0.1% uptick. Nevertheless, the 1.0% y/y
increase remained nearly the weakest since early-2004. Continuing to
lose steam was the PPI for finished consumer goods less food &amp;
energy. It rose 0.2% and left the 1.5% y/y increase half the annual
gains during the last two years. Finished durables prices ticked up
0.1% (0.4% y/y) while core finished consumer nondurable goods prices
gained a modest 0.2% (2.4% y/y), nearly the weakest rise since early
2007. Capital equipment prices rose 0.2% (0.3% y/y) versus annual gains
between 1.0% and 3.0% back to 2004.
Future pressure on finished goods prices may possibly stem
from higher prices for intermediate goods. Their 0.8% increase raised
the y/y gain to 8.5%. Core prices jumped 1.1% and the 5.6% y/y gain was
the strongest since late-2008. The strength reflected increases in the
price of copper &amp; mill shapes, steel &amp; aluminum.
Additional price pressure to come also may be evident in the
4.0% increase (49.7 y/y) in core crude materials producer prices. The
jump was led by higher scrap copper prices which have nearly doubled
and iron &amp; steel scrap prices which have more than doubled.
The producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.
 


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518f.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/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</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">Finished Goods</td>
<td>-0.1</td>
<td>0.7</td>
<td>-0.6</td>
<td>5.4</td>
<td>-2.5</td>
<td>6.4</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.1</td>
<td>1.0</td>
<td>2.6</td>
<td>3.4</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8</td>
<td>0.6</td>
<td>0.1</td>
<td>8.5</td>
<td>-8.4</td>
<td>10.3</td>
<td>4.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>1.1</td>
<td>0.7</td>
<td>0.9</td>
<td>5.6</td>
<td>-4.2</td>
<td>7.4</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-1.2</td>
<td>3.2</td>
<td>-3.5</td>
<td>28.9</td>
<td>-30.4</td>
<td>21.4</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>4.0</td>
<td>6.0</td>
<td>-0.6</td>
<td>49.7</td>
<td>-23.5</td>
<td>14.8</td>
<td>15.6</td>
</tr>
</tbody>
</table>
</body></html>

Thanks to lower food & energy prices, the overall producer price index fell 0.1% last month (+5.4% y/y) following a 0.7% March increase. Consensus expectations had been for a 0.1% uptick. Nevertheless, the y/y gain in prices of 5.4% [...]

U.S. PPI Slips With Lower Food & Energy Prices

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518a.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left">
Forward momentum behind the recovery in the housing market
continued to develop last month. Housing starts rose 5.8% to 672,000
(AR) units from an upwardly revised 635,000 during March. The monthly
gain powered starts up by 40.9% y/y. That annual comparison is biased
since its base is the lowest level reached during the recession.
Nevertheless, starts were at their highest in eighteen months. The
figure also beat Consensus expectations for 650,000 starts.
Starts of single-family homes showed the greatest improvement
versus a weather-depressed March level. The 10.2% m/m gain to 593,000
(53.6% y/y) was the fourth consecutive monthly rise. Single-family
starts have now risen nearly two-thirds from the recession low. In the
Midwest, single-family starts jumped 17.7% (40.9% y/y) and recovered
all of the sharp March decline. Nevertheless, starts still were off
nearly three-quarters from the 2006 high. Starts in the South rose
14.8% (69.0% y/y) and rose 5.3% (50.0% y/y) in the Northeast where
starts were roughly double the January '09 low. To the downside, starts
in the West fell 4.5% (28.9% y/y).
Weakness in starts of multi-family housing units continued. An
18.6% m/m decline to 79,000 reversed all of the March gain and left
them 82.4% below the 2006 high. As a result, starts of apartments,
condominiums &amp; town houses remained near their record low.
Building permits during April fell 11.5% to the lowest level
since October. Permits to build a single-family home fell 10.7% (+22.5%
y/y). Permits to build multi-family homes fell 14.7% but
were 13.0% higher than their low last July.
The housing starts figures can be found in Haver's USECON
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518c.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">Housing
Starts (000s, SAAR)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April 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</td>
<td>672</td>
<td>635</td>
<td>612</td>
<td>40.9%</td>
<td>554</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>593</td>
<td>538</td>
<td>527</td>
<td>53.6</td>
<td>442</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>79</td>
<td>97</td>
<td>78</td>
<td>-13.2</td>
<td>112</td>
<td>284</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>606</td>
<td>685</td>
<td>650</td>
<td>15.9</td>
<td>583</td>
<td>896</td>
<td>1,392</td>
</tr>
</tbody>
</table>
</body></html>

Forward momentum behind the recovery in the housing market continued to develop last month. Housing starts rose 5.8% to 672,000 (AR) units from an upwardly revised 635,000 during March. The monthly gain powered starts up by 40.9% y/y. [...]

U.S. Housing Starts Reach Eighteen Month High

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518a.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left">
Forward momentum behind the recovery in the housing market
continued to develop last month. Housing starts rose 5.8% to 672,000
(AR) units from an upwardly revised 635,000 during March. The monthly
gain powered starts up by 40.9% y/y. That annual comparison is biased
since its base is the lowest level reached during the recession.
Nevertheless, starts were at their highest in eighteen months. The
figure also beat Consensus expectations for 650,000 starts.
Starts of single-family homes showed the greatest improvement
versus a weather-depressed March level. The 10.2% m/m gain to 593,000
(53.6% y/y) was the fourth consecutive monthly rise. Single-family
starts have now risen nearly two-thirds from the recession low. In the
Midwest, single-family starts jumped 17.7% (40.9% y/y) and recovered
all of the sharp March decline. Nevertheless, starts still were off
nearly three-quarters from the 2006 high. Starts in the South rose
14.8% (69.0% y/y) and rose 5.3% (50.0% y/y) in the Northeast where
starts were roughly double the January '09 low. To the downside, starts
in the West fell 4.5% (28.9% y/y).
Weakness in starts of multi-family housing units continued. An
18.6% m/m decline to 79,000 reversed all of the March gain and left
them 82.4% below the 2006 high. As a result, starts of apartments,
condominiums &amp; town houses remained near their record low.
Building permits during April fell 11.5% to the lowest level
since October. Permits to build a single-family home fell 10.7% (+22.5%
y/y). Permits to build multi-family homes fell 14.7% but
were 13.0% higher than their low last July.
The housing starts figures can be found in Haver's USECON
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518c.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">Housing
Starts (000s, SAAR)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April 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</td>
<td>672</td>
<td>635</td>
<td>612</td>
<td>40.9%</td>
<td>554</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>593</td>
<td>538</td>
<td>527</td>
<td>53.6</td>
<td>442</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>79</td>
<td>97</td>
<td>78</td>
<td>-13.2</td>
<td>112</td>
<td>284</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>606</td>
<td>685</td>
<td>650</td>
<td>15.9</td>
<td>583</td>
<td>896</td>
<td>1,392</td>
</tr>
</tbody>
</table>
U.S. PPI Slips With Lower Food
&amp; Energy Prices 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 18, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Thanks to lower food &amp; energy prices, the overall
producer price index fell 0.1% last month (+5.4% y/y) following a 0.7%
March increase. Consensus expectations had been for a 0.1% uptick.
Nevertheless, the y/y gain in prices of 5.4% remained near the
higlyhest since late-2008.
Finished energy prices fell 0.8% (+20.6% y/y) and reversed all
of the March gain. A moderate gain in not seasonally adjusted monthly
gasoline prices (52.7% y/y) was the third this year and home heating
oil prices rose about as they did in March (48.5% y/y). Finally,
natural gas prices continued lower (-2.5% y/y) but electricity prices
rose (1.6% y/y).
A 0.2% slip (+4.9% y/y) in finished food prices last month
followed the 2.4% March jump. The decline was greatest amongst fresh
fruit (+17.3% y/y), vegetable (33.3% y/y) and egg prices (-20.8% y/y).
Beef prices (16.0% y/y) were strong for the third straight month.
The 0.2% increase in finished producer prices less food
&amp; energy prices was the firmest since January and beat
Consensus expectations for a 0.1% uptick. Nevertheless, the 1.0% y/y
increase remained nearly the weakest since early-2004. Continuing to
lose steam was the PPI for finished consumer goods less food &amp;
energy. It rose 0.2% and left the 1.5% y/y increase half the annual
gains during the last two years. Finished durables prices ticked up
0.1% (0.4% y/y) while core finished consumer nondurable goods prices
gained a modest 0.2% (2.4% y/y), nearly the weakest rise since early
2007. Capital equipment prices rose 0.2% (0.3% y/y) versus annual gains
between 1.0% and 3.0% back to 2004.
Future pressure on finished goods prices may possibly stem
from higher prices for intermediate goods. Their 0.8% increase raised
the y/y gain to 8.5%. Core prices jumped 1.1% and the 5.6% y/y gain was
the strongest since late-2008. The strength reflected increases in the
price of copper &amp; mill shapes, steel &amp; aluminum.
Additional price pressure to come also may be evident in the
4.0% increase (49.7 y/y) in core crude materials producer prices. The
jump was led by higher scrap copper prices which have nearly doubled
and iron &amp; steel scrap prices which have more than doubled.
The producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.
 


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518f.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/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</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">Finished Goods</td>
<td>-0.1</td>
<td>0.7</td>
<td>-0.6</td>
<td>5.4</td>
<td>-2.5</td>
<td>6.4</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.1</td>
<td>1.0</td>
<td>2.6</td>
<td>3.4</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8</td>
<td>0.6</td>
<td>0.1</td>
<td>8.5</td>
<td>-8.4</td>
<td>10.3</td>
<td>4.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>1.1</td>
<td>0.7</td>
<td>0.9</td>
<td>5.6</td>
<td>-4.2</td>
<td>7.4</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-1.2</td>
<td>3.2</td>
<td>-3.5</td>
<td>28.9</td>
<td>-30.4</td>
<td>21.4</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp;
Energy</td>
<td>4.0</td>
<td>6.0</td>
<td>-0.6</td>
<td>49.7</td>
<td>-23.5</td>
<td>14.8</td>
<td>15.6</td>
</tr>
</tbody>
</table>
U.S. Petroleum Prices Lower With
Economic Recovery Concerns 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 18,2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
U.S. petroleum prices have come under pressure with worries
about the strength of the global economic recovery. Those worries
spilled through to a slightly lower pump price of regular
gasoline to $2.86 last week, but that remained up more than
three-quarters since December of 2008. Yesterday the spot market price
for a gallon of regular gasoline was thirty cents (14%) below the high
averaged during the last week of April. The figures are reported by the
U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Crude oil costs continued lower as concerns rose regarding the
shape of the global financial market and the worldwide economic
recovery. The average price for a barrel of light sweet crude (WTI)
fell last week to $74.97 versus $84.23 averaged during April.
Yesterday, crude prices fell further to $70.08.
Demand for gasoline rose 2.1% last week versus one year ago
and that compares with a 3.0% decline in early-February. The demand for
residual fuel oil rose an easier 4.6% and distillate demand recovered
6.3% 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 down moderately from one year ago.
U.S. natural gas prices increased modestly last week to an
average $4.20 per mmbtu (-0.7% 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/100518h.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518i.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">05/17/10</th>
<th scope="col">05/10/10</th>
<th scope="col">05/03/10</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>2.86</td>
<td>2.91</td>
<td>2.90</td>
<td>24.0%</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>74.97</td>
<td>80.22</td>
<td>84.24</td>
<td>29.1%</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>4.20</td>
<td>3.96</td>
<td>4.13</td>
<td>-0.7%</td>
<td>3.95</td>
<td>8.88</td>
<td>6.97</td>
</tr>
</tbody>
</table>
The May ZEW Survey Of The German
Financial Community Sends A Mixed Message 
by <a href="/comment/Curley.html">Louise
Curley</a> May 18, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The financial crisis in the Euro Area cast a wet blanket on
the optimism of German institutional investors and analysts. The survey
of 275 participants was taken during the period from May 3 to May 17.
The May balance of opinion of those expecting improved conditions over
the next six months over those expecting worsening conditions dropped
7.2 points from 53.0% in April to 45.8% in May. The balance has fallen
from the peak of 57.7% in September of last year, but it is still well
above its average value of 27.4, as can be seen in the first chart.
The balance of opinion on current conditions, however,
improved by 17.6 points from -39.2% to 21.6% over the same period. The
excess of pessimists is down substantially from the -92.8% balance in
May 2009. The German financial community tends to view current
conditions pessimistically. Over the life of the survey, the average
view of current conditions has been a balance of pessimist over
optimists of 32.4% as can be seen in the second chart. The May figure
is slightly above the average.
In spite of downgrade in expectations for the economy over the
next six months, the financial community expects increased profits for
each of the industries polled except for Services, Banking, and
Insurance, industries most likely to be affected by financial turmoil.
Small increases in profits are expected in the Utilities,
Telecommunication, Information Technology, Construction and
Consumption/Trade industries. More substantial increases in profits are
expected in the Vehicle/Automotive, Chemical/Pharmaceutical, Machinery,
Steel/Metal and Electronic industries. Profit expectations in the first
four of these industries are shown in the third chart.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518k.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100518l.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
Indicator (% Balance)</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">Current Conditions</td>
<td>-21.6</td>
<td>-39.2</td>
<td>-56.9</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-42.2</td>
</tr>
<tr>
<td class="firstcol">Expectation Next
Six Months</td>
<td>45.8</td>
<td>53.0</td>
<td>44.5</td>
<td>45.1</td>
<td>47.2</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Housing Starts Reach EighteenMonth High

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Japan's Domestic Corporate Goods Price index has been inching
up in each month since November of last year. By April the index,
published today, was 0.9% above November. On a year over year basis,
the index in April was only 0.2% below April, 2009.
The Domestic Corporate Goods Price Index is analogous to a
Wholesale or Producer Price Index. In fact, until 2002, the index was
called the Wholesale Price Index. At that time, substantial revisions
were made in the index, the base was changed from 1995 to 2000 and the
name was changed. The base of the index is now 2005.
The rise in prices at the wholesale level, though small, gives
some reason to hope that the deflation in consumer prices will also be
lessening. There is a good correlation between the Domestic Corporate
Goods Price Index and the Consumer Price Index as shown in the first
Chart which compares the year to year changes in the two series. The
year to year change in the Consumer Price Index was -1.09% in March,
the latest month available. This compares with a -2.53% year to year
decline in October, 2009.
Data for machinery orders were also released today. Total
orders were up 3.6% in March from February, and those for the headline
series, Private machinery orders excluding volatile orders (ships and
electric power) were up 5.4%. Even excluding the volatile factors,
monthly orders are still erratic. As a result we have aggregated the
total and the headline series to quarterly totals which are shown in
the second chart. Increased activity in new orders bodes well for
future sales and may have a small but positive effect on total GDP for
the first quarter, which is to be published this Thursday.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Year
to Year Changes (%)</th>
<th scope="col">Apr 10</th>
<th scope="col">Mar 10&nbsp;</th>
<th scope="col">Feb 10&nbsp;</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>
<th scope="col">Sep&nbsp; 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Domestic Corporate
Goods Price Index</td>
<td>-0.19</td>
<td>-1.25</td>
<td>-1.63</td>
<td>-2.20</td>
<td>-3.77</td>
<td>-5.02</td>
<td>-6.76</td>
<td>-7.88</td>
</tr>
<tr>
<td class="firstcol">Consumer Price
Index</td>
<td>--&nbsp;</td>
<td>-1.09</td>
<td>-1.10</td>
<td>-1.29</td>
<td>-1.68</td>
<td>-1.87</td>
<td>-2.53</td>
<td>-2.24</td>
</tr>
<tr class="grey3">
<td style="font-weight: bold;" class="firstcol">Quarter to Quarter
Changes (%)</td>
<td>Q1 10</td>
<td>Q4 09&nbsp;</td>
<td>Q3 09&nbsp;</td>
<td>Q2 09</td>
<td>Q1 09</td>
<td>Q4 08</td>
<td>Q3 08</td>
<td>Q2 08</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Machinery
Orders</td>
<td>9.02</td>
<td>8.03</td>
<td>8.99</td>
<td>-7.32</td>
<td>-14.47</td>
<td>-19.91</td>
<td>-10.12</td>
<td>-5.90</td>
</tr>
<tr>
<td class="firstcol">Private ex
Volatile Orders (Head line)</td>
<td>2.92</td>
<td>1.13</td>
<td>-0.70</td>
<td>-5.64</td>
<td>-9.64</td>
<td>-14.69</td>
<td>-8.72</td>
<td>-2.05</td>
</tr>
</tbody>
</table>
</body></html>

Japan's Domestic Corporate Goods Price index has been inching up in each month since November of last year. By April the index, published today, was 0.9% above November. On a year over year basis, the index in April was only 0.2% [...]

Japanese Corporate Prices And Machinery Orders

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The UK CBI index improved sharply and much more sharply than
expected in May. The orders index jumped from a -36 reading to -18,
remaining negative but halving its negative reading. The result was
completely unexpected. Export orders have improved to the point where
their reading is positive for the first time since early 2008. The
overall all orders index has just made the largest jump month to month
since at least 1989.
The 3-month-ahead volume outlook index improved this month to
a net balance reading of +17 from +14 in April. April has seen a big
boost to +14 from +5 in March. The outlook volume index stands in the
77th percentile of its range which is a pretty strong standing. The
export reading has tied its high since 1996 and has seen no higher
reading since August of 1995.
This sort of industrial turnaround could put the BOE on the
defensive. UK inflation data have not been good. But if the economy
shows signs of strength the inflation data could come to have a more
pejorative interpretation.
For now the rise in the industrial in orders index is sharp
but only brings it to a reading of -18. Still that is a 58th percentile
reading and, by itself, that is not as weak-sounding to me as a minus
eighteen scoring sounds. So the BOE has balance for now. The industrial
sector seems to be making a push but it is still showing a lot of
weakness. Still, the main point stands. The stronger that the
industrial sector and the rest of the economy gets, the more that any
inflation overshoot will begin to worry the BOE.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>May 
10</td>
<td>Apr 
10</td>
<td>Mar 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-18</td>
<td>-36</td>
<td>-37</td>
<td>-36</td>
<td>-39</td>
<td>-47</td>
<td>58%</td>
<td>13</td>
<td>-61</td>
<td>74</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Export
Orders</td>
<td>3</td>
<td>-16</td>
<td>-18</td>
<td>-23</td>
<td>-33</td>
<td>-40</td>
<td>77%</td>
<td>20</td>
<td>-55</td>
<td>75</td>
</tr>
<tr>
<td class="firstcol">Stocks:FinGds</td>
<td>10</td>
<td>10</td>
<td>5</td>
<td>12</td>
<td>13</td>
<td>16</td>
<td>36%</td>
<td>31</td>
<td>-2</td>
<td>33</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="11" class="firstcol">Looking
ahead</td>
</tr>
<tr>
<td class="firstcol">Output Volume:Nxt
3M</td>
<td>17</td>
<td>14</td>
<td>5</td>
<td>7</td>
<td>4</td>
<td>-3</td>
<td>77%</td>
<td>36</td>
<td>-48</td>
<td>84</td>
</tr>
<tr>
<td class="firstcol">Avg Prices 4Nxt 3m
</td>
<td>16</td>
<td>17</td>
<td>8</td>
<td>8</td>
<td>-6</td>
<td>-3</td>
<td>69%</td>
<td>37</td>
<td>-30</td>
<td>67</td>
</tr>
<tr class="odd">
<td colspan="11" class="firstcol">From early 1989 </td>
</tr>
</tbody>
</table>
</body></html>

The UK CBI index improved sharply and much more sharply than expected in May. The orders index jumped from a -36 reading to -18, remaining negative but halving its negative reading. The result was completely unexpected. Export orders [...]

UK CBI Trends Are Up

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Recent improvement in business conditions in the Northeast
region of the country lost momentum this month. The Federal Reserve
Bank of New York reported that its May Empire State Factory
Index of General Business Conditions fell to 19.11, its
lowest level this year. Nevertheless, the May level suggests positive
growth in factory sector activity but it fell short of Consensus
expectations for a reading of 30.0.
The figure is a diffusion index. Since the series' inception
in 2001, there has been a 75% correlation between its level and the
three-month change in U.S. factory sector production. Like the
Philadelphia Fed Index of General Business Conditions, the Empire State
Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.
Deterioration amongst the separate survey questions was
widespread this month including new orders, shipments and inventories.
The employment index, however, improved to 22.37 which was the series'
highest level. Since inception there has been an 87% correlation
between the employment index and the three-month growth in factory
sector employment as reported by the Labor Department.
Continuing it earlier upward momentum, the prices paid index
rose to 44.74, its highest since September 2008. Since inception there
has been a 76% correlation between the index of prices paid and the
three-month change in the core intermediate materials PPI.
The Empire State index of expected business
conditions in six months fell m/m to its lowest level since
August. Virtually all of the component series fell with the exceptions
of capital expenditures and technology spending. They both remained
near the highest levels since before the recession began.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State. Participants from across the state in
a variety of industries respond to a questionnaire and report the
change in indicators from the previous month. Each index is seasonally
adjusted. Respondents also state the likely direction of these same
indicators six months ahead. For more on the Empire State
Manufacturing Survey, including methodologies and the latest report,
click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The Empire State data is available in Haver's SURVEYS
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100517c.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/SURVEYS/@S5/@S511/@S511.HTM">Empire
State
Manufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May '09&nbsp;</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">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>19.11</td>
<td>31.86</td>
<td>22.86</td>
<td>-5.64</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>14.30</td>
<td>29.49</td>
<td>25.43</td>
<td>-8.63</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>1.32</td>
<td>11.39</td>
<td>4.94</td>
<td>-35.96</td>
<td>-21.59</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>22.37</td>
<td>20.25</td>
<td>12.35</td>
<td>-23.86</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>44.74</td>
<td>41.77</td>
<td>29.63</td>
<td>-11.36</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>
</body></html>

Recent improvement in business conditions in the Northeast region of the country lost momentum this month. The Federal Reserve Bank of New York reported that its May Empire State Factory Index of General Business Conditions fell to [...]

Empire State Business Conditions Deteriorate Except Jobs & Pricing

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.

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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.