Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The labor market's improvement continues. That's the message
from the Bureau of Labor Statistics report that initial claims for
jobless insurance slipped 14,000 to 460,000 following last week's
upwardly revised 28,000 increase. The latest disappointed Consensus
expectations for a decline to 455,000 claims but claims remained near
this cycle's lowest. Last week's figure was down from the recession
peak of 651,000 reached in March of 2009. The four-week moving average
of initial claims ticked up to 456,500.
A 49,000 decline in continuing claims for unemployment
insurance during the latest week followed the prior week's 3,000
decline, which was less than reported initially. Claims were near the
cycle low and down by one-third from the June '09 peak. The overall
decline is a function of the improved job market but also reflects the
exhaustion of 26 weeks of unemployment benefits. Continuing claims
provide an indication of workers' ability to find employment. The
four-week average of continuing claims at 4.637M remained near the
cycle low. This series dates back to 1966.
Extended benefits for unemployment insurance rose further w/w
to 278,953. However, they were down by roughly one-half from a peak of
597,688 reached in November.
The insured unemployment rate remained at 3.6% where it has
been since mid-February. The rate reached a high of 4.9% during May of
2009. During the last ten years, there has been a 96% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.
The highest insured unemployment rates in the week ending May
8 were in Puerto Rico (6.2 percent), Alaska (5.9), Oregon (5.4), Nevada
(4.9), California (4.8), Pennsylvania (4.7), Wisconsin (4.5), North
Carolina (4.4), Montana (4.3), and Connecticut (4.2). The lowest
insured unemployment rates were in Virginia (1.8), Texas (2.1),
Tennessee (2.6), Wyoming (2.7), Georgia (2.8), Maryland (2.9), Florida
(3.0), Ohio (3.0), New York (3.3) and Maine (3.2). These data are not
seasonally adjusted but the overall insured unemployment rate is.
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.
Distortionary Fiscal Policy and Monetary Policy Goals
from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-10.pdf">here</a>.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527f.jpg" style="width: 312px; height: 265px;"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527g.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/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></th>
<th scope="col">05/22/10</th>
<th scope="col">05/15/10</th>
<th scope="col">05/08/10</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">Initial Claims</td>
<td>460</td>
<td>472</td>
<td>446</td>
<td>-24.7%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,607</td>
<td>4,656</td>
<td>-29.1</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.6</td>
<td>3.6</td>
<td>4.9 (5/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The labor market's improvement continues. That's the message from the Bureau of Labor Statistics report that initial claims for jobless insurance slipped 14,000 to 460,000 following last week's upwardly revised 28,000 increase. The [...]

U.S. Initial Jobless Insurance Claims Slip

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527a.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527b.jpg" style="width: 312px; height: 265px;">
Growth in real GDP last quarter was revised slightly lower
last quarter to 3.0% from 3.2% estimated in the advance report. A
slowdown in the rate of inventory replenishment remained, however, the
dominant piece of news, slowing the economy's growth from 5.6% during
4Q '09. Consensus expectations had been for a revision upward to 3.4%
growth. Regardless, 1Q remained the third consecutive quarter of
positive growth after the recession when GDP fell a postwar-record 3.7%
peak-to-trough.
The largest piece of the downward revision was a reduced rate
of growth in business fixed investment to a still-firm 3.1%. Growth in
personal consumption and government spending also was reduced slightly.
Finally, the contribution to growth from foreign trade was deepened
somewhat. These revisions were mostly offset by slight upward revisions
to inventory accumulation and residential investment.
Price inflation was nudged up to a still-low 1.0% as measured
by the chained GDP price index. The y/y gain of just 0.5% remained the
lowest since the early-1950s. The personal consumption chain price
index rose a reduced 1.5% but year-to-year prices increased an improved
2.0%, the quickest since 2008. The price index for fixed business
investment fell 1.7% (-3.0% y/y), the fifth consecutive quarterly
decline, but the residential investment price index rose for the second
consecutive quarter (-1.0% y/y).
Released for the first time was the estimate of 1Q corporate
profits. The 5.5% gain (31.0% y/y) was the sixth increase in the last
seven quarters, a testimony to improved growth in the productivity of
human capital and plant &amp; equipment. Profits of U.S.
nonfinancial companies grew 6.0% (25.7% y/y). The annual increase was
the strongest since 2006. Financial sector profits grew a much-reduced
1.8% (77.2% y/y) while profits from abroad grew 9.6% (6.6% y/y).

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527d.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"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2005$, % AR</a></th>
<th scope="col">1Q '10 (Preliminary)</th>
<th scope="col">1Q '10 (Advance)</th>
<th scope="col">4Q '09&nbsp;</th>
<th scope="col">3Q '09</th>
<th scope="col">1Q 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">GDP</td>
<td>3.0</td>
<td>3.2</td>
<td>5.6</td>
<td>2.2</td>
<td>2.5</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventory
Effect</td>
<td>1.7</td>
<td>1.6</td>
<td>3.8</td>
<td>0.7</td>
<td>1.1</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.3</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Foreign
Trade Effect</td>
<td>-0.7</td>
<td>-0.6</td>
<td>0.3</td>
<td>-0.8</td>
<td>0.2</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.0</td>
<td>2.2</td>
<td>1.4</td>
<td>2.3</td>
<td>1.2</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Personal
Consumption</td>
<td>3.5</td>
<td>3.6</td>
<td>1.6</td>
<td>2.8</td>
<td>1.7</td>
<td>-0.6</td>
<td>-0.2</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Business
Fixed Investment</td>
<td>3.1</td>
<td>4.0</td>
<td>5.3</td>
<td>-5.9</td>
<td>-2.0</td>
<td>-17.8</td>
<td>1.6</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Residential Investment</td>
<td>-10.7</td>
<td>-10.9</td>
<td>3.7</td>
<td>18.9</td>
<td>-4.1</td>
<td>-20.5</td>
<td>-22.9</td>
<td>-18.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Government
Spending</td>
<td>-1.9</td>
<td>-1.8</td>
<td>-1.3</td>
<td>2.7</td>
<td>1.5</td>
<td>1.8</td>
<td>3.1</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>1.0</td>
<td>0.9</td>
<td>0.5</td>
<td>0.4</td>
<td>0.5</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Growth in real GDP last quarter was revised slightly lower last quarter to 3.0% from 3.2% estimated in the advance report. A slowdown in the rate of inventory replenishment remained, however, the dominant piece of news, slowing the [...]

U.S. GDP Growth Is Revised Slightly Lower But Corporate Profits Jump, Again

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527a.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527b.jpg" style="width: 312px; height: 265px;">
Growth in real GDP last quarter was revised slightly lower
last quarter to 3.0% from 3.2% estimated in the advance report. A
slowdown in the rate of inventory replenishment remained, however, the
dominant piece of news, slowing the economy's growth from 5.6% during
4Q '09. Consensus expectations had been for a revision upward to 3.4%
growth. Regardless, 1Q remained the third consecutive quarter of
positive growth after the recession when GDP fell a postwar-record 3.7%
peak-to-trough.
The largest piece of the downward revision was a reduced rate
of growth in business fixed investment to a still-firm 3.1%. Growth in
personal consumption and government spending also was reduced slightly.
Finally, the contribution to growth from foreign trade was deepened
somewhat. These revisions were mostly offset by slight upward revisions
to inventory accumulation and residential investment.
Price inflation was nudged up to a still-low 1.0% as measured
by the chained GDP price index. The y/y gain of just 0.5% remained the
lowest since the early-1950s. The personal consumption chain price
index rose a reduced 1.5% but year-to-year prices increased an improved
2.0%, the quickest since 2008. The price index for fixed business
investment fell 1.7% (-3.0% y/y), the fifth consecutive quarterly
decline, but the residential investment price index rose for the second
consecutive quarter (-1.0% y/y).
Released for the first time was the estimate of 1Q corporate
profits. The 5.5% gain (31.0% y/y) was the sixth increase in the last
seven quarters, a testimony to improved growth in the productivity of
human capital and plant &amp; equipment. Profits of U.S.
nonfinancial companies grew 6.0% (25.7% y/y). The annual increase was
the strongest since 2006. Financial sector profits grew a much-reduced
1.8% (77.2% y/y) while profits from abroad grew 9.6% (6.6% y/y).

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527d.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"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">1Q '10 (Preliminary)</th>
<th scope="col">1Q '10 (Advance)</th>
<th scope="col">4Q '09&nbsp;</th>
<th scope="col">3Q '09</th>
<th scope="col">1Q 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">GDP</td>
<td>3.0</td>
<td>3.2</td>
<td>5.6</td>
<td>2.2</td>
<td>2.5</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventory
Effect</td>
<td>1.7</td>
<td>1.6</td>
<td>3.8</td>
<td>0.7</td>
<td>1.1</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.4</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.3</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Foreign
Trade Effect</td>
<td>-0.7</td>
<td>-0.6</td>
<td>0.3</td>
<td>-0.8</td>
<td>0.2</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.0</td>
<td>2.2</td>
<td>1.4</td>
<td>2.3</td>
<td>1.2</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Personal
Consumption</td>
<td>3.5</td>
<td>3.6</td>
<td>1.6</td>
<td>2.8</td>
<td>1.7</td>
<td>-0.6</td>
<td>-0.2</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Business
Fixed Investment</td>
<td>3.1</td>
<td>4.0</td>
<td>5.3</td>
<td>-5.9</td>
<td>-2.0</td>
<td>-17.8</td>
<td>1.6</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Residential Investment</td>
<td>-10.7</td>
<td>-10.9</td>
<td>3.7</td>
<td>18.9</td>
<td>-4.1</td>
<td>-20.5</td>
<td>-22.9</td>
<td>-18.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Government
Spending</td>
<td>-1.9</td>
<td>-1.8</td>
<td>-1.3</td>
<td>2.7</td>
<td>1.5</td>
<td>1.8</td>
<td>3.1</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>1.0</td>
<td>0.9</td>
<td>0.5</td>
<td>0.4</td>
<td>0.5</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
U.S. Initial Jobless Insurance
Claims Slip 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 27, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The labor market's improvement continues. That's the message
from the Bureau of Labor Statistics report that initial claims for
jobless insurance slipped 14,000 to 460,000 following last week's
upwardly revised 28,000 increase. The latest disappointed Consensus
expectations for a decline to 455,000 claims but claims remained near
this cycle's lowest. Last week's figure was down from the recession
peak of 651,000 reached in March of 2009. The four-week moving average
of initial claims ticked up to 456,500.
A 49,000 decline in continuing claims for unemployment
insurance during the latest week followed the prior week's 3,000
decline, which was less than reported initially. Claims were near the
cycle low and down by one-third from the June '09 peak. The overall
decline is a function of the improved job market but also reflects the
exhaustion of 26 weeks of unemployment benefits. Continuing claims
provide an indication of workers' ability to find employment. The
four-week average of continuing claims at 4.637M remained near the
cycle low. This series dates back to 1966.
Extended benefits for unemployment insurance rose further w/w
to 278,953. However, they were down by roughly one-half from a peak of
597,688 reached in November.
The insured unemployment rate remained at 3.6% where it has
been since mid-February. The rate reached a high of 4.9% during May of
2009. During the last ten years, there has been a 96% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.
The highest insured unemployment rates in the week ending May
8 were in Puerto Rico (6.2 percent), Alaska (5.9), Oregon (5.4), Nevada
(4.9), California (4.8), Pennsylvania (4.7), Wisconsin (4.5), North
Carolina (4.4), Montana (4.3), and Connecticut (4.2). The lowest
insured unemployment rates were in Virginia (1.8), Texas (2.1),
Tennessee (2.6), Wyoming (2.7), Georgia (2.8), Maryland (2.9), Florida
(3.0), Ohio (3.0), New York (3.3) and Maine (3.2). These data are not
seasonally adjusted but the overall insured unemployment rate is.
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.
Distortionary Fiscal Policy and Monetary Policy Goals
from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-10.pdf">here</a>.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527f.jpg" style="width: 312px; height: 265px;"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527g.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/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></th>
<th scope="col">05/22/10</th>
<th scope="col">05/15/10</th>
<th scope="col">05/08/10</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">Initial Claims</td>
<td>460</td>
<td>472</td>
<td>446</td>
<td>-24.7%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,607</td>
<td>4,656</td>
<td>-29.1</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.6</td>
<td>3.6</td>
<td>4.9 (5/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
Some Bad News From Europe&#8230; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 27, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100527h.jpg" align="left" height="265" width="353">
The Insee index of household confidence has dropped again marking the
fourth straight month of decline. This is not some garden variety
slippage in confidence from France. The four month drop marks a
cumulative drop of eight points in the index which is the 12th largest
four month decline in the series history. That makes the drop a top 5%
event. This not exactly what Europe is looking for in May. 

Until quite recently most European reports had
been upbeat. But now there are some signs of erosion. The GFK German
confidence index for June edged slightly lower on expectations decay.
The UK CBI distributive trades index also reported today plunged
sharply in May. Now in France the household confidence index that has
been slipping has continued on that path. 

Until now we had seen a fairly steady and strong
recovery of economic data in the wake of the financial crisis. The MFG
sector has been rebounding in Europe particularly strongly. The service
sector has lagged. And the household sector has lagged even further.
But in France it&#8217;s not a case of lagging but of the sector declining,
backtracking. 

The European economy is fighting off the remnants
of recession and financial crisis with a new layering of financial
crisis stemming from Greece&#8217;s problems, the knock effects to banks that
hold European debt (substantially French and German banks) and the
adverse market sentiment stemming from the need for fiscal austerity in
Europe including France. It looks like the French consumer has figured
out that the recovery will not be a bed of roses and maybe even that
sector wide strikes that make such great theater in France will serve
no purpose this time. The French consumer appears to be going down
without a fight. 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="8" scope="col">INSEE
Household Monthly
Survey
</th>
</tr>
</thead><tbody>
<tr class="even">
<td style="font-weight: bold;">&nbsp;</td>
<td style="font-weight: bold;">&nbsp;</td>
<td style="font-weight: bold;">&nbsp;</td>
<td style="font-weight: bold;">&nbsp;</td>
<td style="font-weight: bold;">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">Since
Jan 1990</td>
</tr>
<tr class="grey3">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">May-10</td>
<td style="font-weight: bold;">Apr-10</td>
<td style="font-weight: bold;">Mar-10</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Percentile</td>
<td style="font-weight: bold;">Rank
%</td>
<td style="font-weight: bold;">Mean</td>
</tr>
<tr>
<td class="firstcol">Household
Confidence</td>
<td>-38</td>
<td>-37</td>
<td>-34</td>
<td>-33</td>
<td>15.8</td>
<td>5.7</td>
<td>-19</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Living
Standards</td>
</tr>
<tr>
<td class="firstcol">past
12 Mos</td>
<td>-67</td>
<td>-68</td>
<td>-68</td>
<td>-67</td>
<td>13.3</td>
<td>10.2</td>
<td>-41</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Next
12-Mos</td>
<td>-53</td>
<td>-48</td>
<td>-43</td>
<td>-37</td>
<td>9.2</td>
<td>4.1</td>
<td>-22</td>
</tr>
<tr>
<td class="firstcol">Unemployment:
Next 12</td>
<td>62</td>
<td>63</td>
<td>63</td>
<td>58</td>
<td>77.3</td>
<td>83.7</td>
<td>33</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Price
Developments</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Past 12Mo</td>
<td>-20</td>
<td l="">-18</td>
<td>-25</td>
<td>-26</td>
<td>30.8</td>
<td>56.7</td>
<td l="">-16</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Next 12-Mos</td>
<td>-26</td>
<td>-31</td>
<td>-34</td>
<td>-37</td>
<td>37.0</td>
<td>82.4</td>
<td>-35</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Savings</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Favorable to save</td>
<td>14</td>
<td>17</td>
<td>18</td>
<td>20</td>
<td>43.2</td>
<td>19.2</td>
<td l="">22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Ability to save Next 12</td>
<td>-10</td>
<td>-10</td>
<td>-8</td>
<td>-10</td>
<td>44.8</td>
<td>49.8</td>
<td>-9</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Spending</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Favorable
for major purchase</td>
<td>-24</td>
<td>-26</td>
<td>-23</td>
<td>-24</td>
<td>31.0</td>
<td>25.3</td>
<td>-14</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Financial
Situation</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Current</td>
<td>16</td>
<td>16</td>
<td>16</td>
<td>16</td>
<td>61.9</td>
<td>82.9</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Past 12 MOs</td>
<td>-25</td>
<td>-25</td>
<td>-24</td>
<td>-25</td>
<td>
35.5</td>
<td>13.9</td>
<td>-17</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Next 12-Mos</td>
<td>-19</td>
<td>-16</td>
<td>-13</td>
<td>-12</td>
<td>11.8</td>
<td>3.7</td>
<td>-2</td>
</tr>
<tr class="grey1">
<td>&nbsp;</td>
<td colspan="5">Number of observations
in the period</td>
<td colspan="2">245</td>
</tr>
</tbody>
</table>

</body></html>

U.S. GDP Growth Is RevisedSlightly Lower But Corporate Profits Jump, Again

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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>

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 [...]

U.S. Mortgage Refinance Applications Surge With Lower Rates

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<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>
</body></html>

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 [...]

U.S. New Home Sales Soar With Pending Tax Credit Expiration

Robert Brusca

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<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>
</body></html>

GFK’s confidence measure for Germany edged lower in June as the ongoing Greek situation took a small toll on German optimism. Gfk’s consumer confidence figure for June slipped to 3.5, a decrease on May's revised 3.7, marking the end [...]

German Confidence Is Set Back Very Little By Greek Tragedy

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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>
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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

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

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

260205Z1.jpg

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

260205Z2.jpg

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

260205Z3.jpg

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

260205Z4.jpg

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

260205Z5.jpg

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

260205Z6.jpg

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

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

260206E.jpg

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

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

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

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

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

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

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.