Tom Moeller

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<p></p>
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<p>Several factors made the latest job report, from the Bureau of
Labor Statistics, an interesting read. The best news was an improvement
in the rate of hiring. But that wasn't as encouraging as at first
glance because it was accompanied by a rise in the jobless rate. The
rate increase, however, wasn't too troubling because it didn't reflect
job cuts. The bottom line is that earlier weakness in the labor market
is on the mend.</p>
<p>Let's begin with the figures from the establishment survey
which indicate a firm 290,000 rise in nonfarm payrolls. The gain
followed an upwardly revised 230,000 March increase. These increases
were inflated by a 66,000 increase in Census workers which followed a
48,000 March rise. Cutting out government hiring altogether left
private sector jobs up 231,000 (-1.2% y/y), the strongest of the five
increases in the last six months.</p>
<p>The payroll gain reflected a 116,000 increase in
private-services. It also was the best of five gains during the last
six months. Since December, jobs have risen 0.5%. Temporary jobs, which
have sometimes been a leading job market indicator, rose 26,200 (13.8%
y/y) for the seventh consecutive monthly increase. Professional
&amp; business services jobs rose 80,000 (0.1% y/y), leisure
&amp; hospitality employment increased 45,000 (0.1% y/y) and
education &amp; health services jobs rose 35,000 (2.0% y/y).
Factory sector employment followed the service sector with a 44,000
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507e.jpg" align="right" border="0" height="265" width="312">increase which was the fourth consecutive
monthly increase. Gains have
been notable in the metals &amp; machinery industries. Amongst
construction businesses, employment rose 14,000 but it was just the
second monthly gain of the economic recovery.</p>
<p>Most impressive was the rise in the breadth of hiring last
month. Sixty-four percent of 278 private industries increased hiring.
That's improved from the recession low when just 17% were increasing
payrolls. During the last three months 61% increased hiring. As
impressive was that a like 66% of manufacturing industries raised
hiring versus 5% at the low.</p>
<p>Not only are there more individuals being hired, they are
working longer. The total workweek of 34.1 hours was up from a low of
33.7 last autumn and was the longest in over a year. The factory sector
workweek showed an even greater expansion to its longest since early in
the recession.</p>
<p>Workers' pay is starting to improve as well. Last month's 0.3%
increase in average hourly earnings followed two months of having been
unchanged. Nevertheless the y/y gain of 2.3% remains close to its
weakest since early-2004.</p>
<p>Let's look at the unemployment rate's increase. The rise to
9.9% reversed three months of stability when the rate was at its lowest
since the recession's end. But here's where the figure gets most
interesting. The increase was the product of a 550,000 rise (-1.0% y/y)
in employment which roughly matched the strongest since before the
recession began. That gain was accompanied by a 805,000 jump (-0.0%
y/y) in the labor force which was the strongest since the recession's
end.</p>
<p>The unemployment rate hides, however, some added strains on
the labor market. First, the average duration of unemployment rose to a
record 33.0 weeks, roughly twice the level when the recession began. Of
those unemployed, 45.9% have been so for six months or longer. If those
who are unemployed are added to those individuals who either are
marginally attached or who are part-time for economic reasons, the rate
rose last month to 17.1%, just under the recession high.</p>
<p>The figures referenced above are available in Haver's <b>USECON</b>
database. Additional detail can be found in the <b>LABOR </b>and
in the <b>EMPL</b> databases.</p>
<p><strong>What is behind the rise in long-term
unemployment?</strong> from the Federal Reserve Bank of Chicago
is available <a href="http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2010/2qtr2010_part1_aaronson_mazumder_schechter.pdf">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507d.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"><b>Employment:
000s</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment &nbsp;</td>
<td>290</td>
<td>230</td>
<td>39</td>
<td>-1.0%</td>
<td>-4.3%</td>
<td>-0.6%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Previous</td>
<td>--</td>
<td>162</td>
<td>-14</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;Manufacturing</td>
<td>44</td>
<td>19</td>
<td>16</td>
<td>-3.5%</td>
<td>-11.3%</td>
<td>-3.4%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Construction</td>
<td>14</td>
<td>26</td>
<td>-51</td>
<td>-9.0%</td>
<td>-15.7%</td>
<td>-6.1%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;Private
Service Producing</td>
<td>166</td>
<td>119</td>
<td>90</td>
<td>-0.3%</td>
<td>-3.4%</td>
<td>-0.2%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Government</td>
<td>59</td>
<td>56</td>
<td>-23</td>
<td>-0.5%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.1</td>
<td>34.0</td>
<td>33.9</td>
<td>33.9(April '09)</td>
<td>33.1</td>
<td>33.6</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>9.9%</td>
<td>9.7%</td>
<td>9.7%</td>
<td>8.6%(April '09)</td>
<td>9.3%</td>
<td>5.8%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

Several factors made the latest job report, from the Bureau of Labor Statistics, an interesting read. The best news was an improvement in the rate of hiring. But that wasn't as encouraging as at first glance because it was accompanied [...]

U.S. Job Market Emits Mixed Signals; Payrolls & Jobless Rate Firm

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507a.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507b.jpg" border="0" height="265" width="312"></p>
<p>Several factors made the latest job report, from the Bureau of
Labor Statistics, an interesting read. The best news was an improvement
in the rate of hiring. But that wasn't as encouraging as at first
glance because it was accompanied by a rise in the jobless rate. The
rate increase, however, wasn't too troubling because it didn't reflect
job cuts. The bottom line is that earlier weakness in the labor market
is on the mend.</p>
<p>Let's begin with the figures from the establishment survey
which indicate a firm 290,000 rise in nonfarm payrolls. The gain
followed an upwardly revised 230,000 March increase. These increases
were inflated by a 66,000 increase in Census workers which followed a
48,000 March rise. Cutting out government hiring altogether left
private sector jobs up 231,000 (-1.2% y/y), the strongest of the five
increases in the last six months.</p>
<p>The payroll gain reflected a 116,000 increase in
private-services. It also was the best of five gains during the last
six months. Since December, jobs have risen 0.5%. Temporary jobs, which
have sometimes been a leading job market indicator, rose 26,200 (13.8%
y/y) for the seventh consecutive monthly increase. Professional
&amp; business services jobs rose 80,000 (0.1% y/y), leisure
&amp; hospitality employment increased 45,000 (0.1% y/y) and
education &amp; health services jobs rose 35,000 (2.0% y/y).
Factory sector employment followed the service sector with a 44,000
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507e.jpg" align="right" border="0" height="265" width="312">increase which was the
fourth consecutive
monthly increase. Gains have
been notable in the metals &amp; machinery industries. Amongst
construction businesses, employment rose 14,000 but it was just the
second monthly gain of the economic recovery.</p>
<p>Most impressive was the rise in the breadth of hiring last
month. Sixty-four percent of 278 private industries increased hiring.
That's improved from the recession low when just 17% were increasing
payrolls. During the last three months 61% increased hiring. As
impressive was that a like 66% of manufacturing industries raised
hiring versus 5% at the low.</p>
<p>Not only are there more individuals being hired, they are
working longer. The total workweek of 34.1 hours was up from a low of
33.7 last autumn and was the longest in over a year. The factory sector
workweek showed an even greater expansion to its longest since early in
the recession.</p>
<p>Workers' pay is starting to improve as well. Last month's 0.3%
increase in average hourly earnings followed two months of having been
unchanged. Nevertheless the y/y gain of 2.3% remains close to its
weakest since early-2004.</p>
<p>Let's look at the unemployment rate's increase. The rise to
9.9% reversed three months of stability when the rate was at its lowest
since the recession's end. But here's where the figure gets most
interesting. The increase was the product of a 550,000 rise (-1.0% y/y)
in employment which roughly matched the strongest since before the
recession began. That gain was accompanied by a 805,000 jump (-0.0%
y/y) in the labor force which was the strongest since the recession's
end.</p>
<p>The unemployment rate hides, however, some added strains on
the labor market. First, the average duration of unemployment rose to a
record 33.0 weeks, roughly twice the level when the recession began. Of
those unemployed, 45.9% have been so for six months or longer. If those
who are unemployed are added to those individuals who either are
marginally attached or who are part-time for economic reasons, the rate
rose last month to 17.1%, just under the recession high.</p>
<p>The figures referenced above are available in Haver's <b>USECON</b>
database. Additional detail can be found in the <b>LABOR </b>and
in the <b>EMPL</b> databases.</p>
<p><strong>What is behind the rise in long-term
unemployment?</strong> from the Federal Reserve Bank of Chicago
is available <a href="http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2010/2qtr2010_part1_aaronson_mazumder_schechter.pdf">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507d.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"><b>Employment:
000s</b></th>
<th scope="col"><b>April</b></th>
<th scope="col"><b>March</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment &nbsp;</td>
<td>290</td>
<td>230</td>
<td>39</td>
<td>-1.0%</td>
<td>-4.3%</td>
<td>-0.6%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Previous</td>
<td>--</td>
<td>162</td>
<td>-14</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;Manufacturing</td>
<td>44</td>
<td>19</td>
<td>16</td>
<td>-3.5%</td>
<td>-11.3%</td>
<td>-3.4%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Construction</td>
<td>14</td>
<td>26</td>
<td>-51</td>
<td>-9.0%</td>
<td>-15.7%</td>
<td>-6.1%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;Private
Service Producing</td>
<td>166</td>
<td>119</td>
<td>90</td>
<td>-0.3%</td>
<td>-3.4%</td>
<td>-0.2%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Government</td>
<td>59</td>
<td>56</td>
<td>-23</td>
<td>-0.5%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.1</td>
<td>34.0</td>
<td>33.9</td>
<td>33.9(April '09)</td>
<td>33.1</td>
<td>33.6</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>9.9%</td>
<td>9.7%</td>
<td>9.7%</td>
<td>8.6%(April '09)</td>
<td>9.3%</td>
<td>5.8%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
<span id="articletitle">German IP Continues To Run Up</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 07, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100507f.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>In the midst of chaos in markets in the aftermath of the US
stock market snafu on Thursday and ongoing turmoil over Greece in
Europe despite the Greek bail-out being substantially approved by all
parties, Europe&#8217;s growth is looking better. German IP rose by a sharp
4% in March on the same day that the US was reporting nearly 300K in
job gains for April. Ironically, in the midst of such upbeat growth
reports markets are starting to get negative on global growth prospects
over Greece.</p>
<p>The German report on strong IP shows us building strength over
three-months compared to six- months. Both MFG and construction are
building momentum. Unfortunately the output of consumer goods continues
to not just lag but to decline and the pace of decline for consumer
goods output has accelerated. But for intermediate and capital goods,
output is advancing and accelerating strongly. Germany has a two-tier
economy. One tier seems to be strongly supported by capital goods
spending and orders linked to strong international demand. The other
tier is its consumer goods sector that is weak both in Germany and
abroad leading the output in that sector to falter. Still the message
overall is that IP is advancing and doing so with strength and good
solid underpinnings.</p>
<p>Our main point here, is that growth both in Europe and in the
US is looking better, not worse despite what markets are doing. As for
analysts, in an effort to look &#8216;smart&#8217; they are always looking for a
way to explain the &#8216;decline du-jour.&#8217; But the recent news has been
good, not bad. In recent days we have seen patches approved to stopper
those things that could have gotten out of control and hampered growth.
I&#8217;m not sure we want to throw a party for the March German IP report
and the April US employment report (and its revisions) but we do have
on balance net good news over the past two days. And that is not what
markets are trading to. In the end, that is a point to ponder. But it&#8217;s
not a reason to throw out the good news and go rummaging in the trash
bin of old news for an excuse to explain what appears to be an
irrational act by the markets, and one that could easily be reversed in
the coming weeks. Markets have seemingly irrational sharp sell offs
from time to time. Accept it. Think about it. But don&#8217;t let it cripple
you or lead you to shove a square peg through a round hole to get
closure.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Total German IP</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Saar
exept m/m</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>
<th>Quarter- <br>
to-Date
</th>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>4.0%</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>16.4%</td>
<td>3.9%</td>
<td>8.6%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>1.7%</td>
<td>-2.3%</td>
<td>-0.3%</td>
<td>-3.5%</td>
<td>-0.2%</td>
<td>2.9%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Capital</td>
<td>4.4%</td>
<td>1.2%</td>
<td>-1.7%</td>
<td>16.4%</td>
<td>1.3%</td>
<td>6.9%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Intermed</td>
<td>3.5%</td>
<td>-0.1%</td>
<td>3.4%</td>
<td>30.2%</td>
<td>9.2%</td>
<td>15.3%</td>
<td>8.5%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>26.7%</td>
<td>0.0%</td>
<td>-14.2%</td>
<td>39.8%</td>
<td>12.1%</td>
<td>1.6%</td>
<td>-27.3%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>3.4%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>17.4%</td>
<td>3.7%</td>
<td>9.7%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>5.0%</td>
<td>0.0%</td>
<td>0.1</td>
<td>49.1%</td>
<td>18.7%</td>
<td>26.0%</td>
<td>28.5%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Job Market Emits MixedSignals; Payrolls & Jobless Rate Firm

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Bureau of Labor Statistics reported that initial claims
for jobless insurance fell 7,000 to 444,000 after the prior week's
lessened 8,000 drop. The latest level was near this cycle's lowest but
fell slightly short of Consensus expectations for a decline to 440,000
claims. 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 increased to 458,500.</p>
<p>A 59,000 decline in continuing claims for unemployment
insurance during the latest week followed a little-revised 10,000 drop
during the prior week. They were 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 4.649M
remained near the cycle low. This series dates back to 1966.</p>
<p>Extended benefits for unemployment insurance slipped w/w to
201,487. However, they were down by three-quarters from a peak of
597,688 reached in November.</p>
<p>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.
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.</p>
<p>The highest insured unemployment rates in the week ending
April 17 were in Alaska (6.6 percent), Puerto Rico (6.0), Oregon (5.8),
Nevada (5.1), Wisconsin (5.1), California (5.0), Michigan (4.9),
Montana (4.9), Pennsylvania (4.9), Idaho (4.7), and North Carolina
(4.7). The lowest insured unemployment rates were in Virginia (1.9),
Texas (2.3), Georgia (2.8), Maryland (3.0), Florida (3.2), Wyoming
(3.4), Ohio (3.4), New York (3.5) and Maine (3.7). These data are not
seasonally adjusted but the overall insured unemployment rate is.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506g.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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>05/01/10</b></th>
<th scope="col"><b>04/24/10</b></th>
<th scope="col"><b>04/17/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>444</td>
<td>451</td>
<td>459</td>
<td>-26.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,594</td>
<td>4,653</td>
<td>-26.2%</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 Bureau of Labor Statistics reported that initial claims for jobless insurance fell 7,000 to 444,000 after the prior week's lessened 8,000 drop. The latest level was near this cycle's lowest but fell slightly short of Consensus [...]

U.S. Initial Unemployment Insurance Claims Decline

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>In March German orders spurted beyond expectations rising by
5% after being flat in February. Foreign orders built on a 1.7% gain in
February rising by 4.7% in March. Domestic orders spurted by 5.4%
coming off a 1.7% decline in February. Over three months domestic and
foreign orders are growing at almost identical 48% compounded growth
rates; over six month their growth is clearly identical as well. Yr/Yr
foreign orders are stronger, rising by 29% compared to nearly 23% for
domestic orders. German orders are strong no matter how you slice them.
But not all sectors are strong.</p>
<p>Consumer orders remain mixed in Germany. Consumer durables
goods orders did better in March by reducing the pace at which they
declined to -0.7% from -2.4% in February. Consumer durable goods orders
are rising over three months, however, at a compounded annual rate pace
of just 3.7%, up from 1.8% over six months. Consumer nondurables orders
spiked by 5.4% in March, after dropping by 2.2% in February. They are
still declining at an 8.2% annual rate over three months, however.</p>
<p>Capital goods are the backbone of the German recovery. Those
orders rose by 2.4% in March after rising by 0.5% in February. Over
three months capital goods orders are rising at a 24.7% pace up from an
11.7% pace over six months and from 6.7% Yr/Yr.</p>
<p>Intermediate goods orders also rose in March making gains of
2.8% after edging lower by 0.3% in February. Intermediate goods orders
spurted at a 21% annual rate over three months compared to rising at a
10% over three months.</p>
<p>Manufacturing sales also were strong in March and their
sequential growth rates show persisting strength.</p>
<p>On balance German orders were an upside surprise. The strength
remains in the industrial sector with consumer goods starting to break
out of their declining ways but still not clearly shaking off the
lethargy. Orders grew at a 28% annualized rate in the quarter while
sales grew at a 5% pace.</p>
<p>The weakening euro is going to help cement these trends as
long as the financial problems in Greece do not spread too much and
damp growth in the e-Zone and the surrounding environs. Right now
tensions are running high as Moody&#8217;s warned on potential banking sector
problems as banks hold a lot of government bonds and it is some of the
debt-ridden European government&#8216;s that issued those bonds that are
under ratings pressure. If debt reschedulings were to occur there could
be losses pushed onto bond holders and slapped onto bank balance
sheets. In its meeting today the ECB held rates steady but that was all
it held steady. So far it is not willing to do nay more, much to the
markets consternation. Nervousness in the European markets is clear.
The potential for knock-on effects even to an economy like Germany that
seems to be doing so well is a real risk.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="9">German Orders and Sales
By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="grey2">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>5.0%</td>
<td>0.0%</td>
<td>5.2%</td>
<td>49.1%</td>
<td>22.1%</td>
<td>26.0%</td>
<td>-32.8%</td>
<td>28.5%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.7%</td>
<td>1.7%</td>
<td>3.8%</td>
<td>48.7%</td>
<td>21.9%</td>
<td>29.0%</td>
<td>-36.2%</td>
<td>28.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>5.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>48.9%</td>
<td>22.0%</td>
<td>22.8%</td>
<td>-28.6%</td>
<td>28.2%</td>
</tr>
<tr class="grey2">
<td colspan="9" class="firstcol">Real Sector Sales</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG/Mining</td>
<td>2.9%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>16.3%</td>
<td>7.8%</td>
<td>8.5%</td>
<td>-21.8%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>4.6%</td>
<td>-2.1%</td>
<td>-4.0%</td>
<td>-6.8%</td>
<td>-3.5%</td>
<td>2.5%</td>
<td>-11.3%</td>
<td>-6.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Cons
Durables</td>
<td>-0.7%</td>
<td>-2.4%</td>
<td>4.1%</td>
<td>3.7%</td>
<td>1.8%</td>
<td>5.4%</td>
<td>-22.7%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Non-Durable</td>
<td>5.4%</td>
<td>-2.2%</td>
<td>-5.0%</td>
<td>-8.2%</td>
<td>-4.2%</td>
<td>2.1%</td>
<td>-9.4%</td>
<td>-8.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Captial Gds</td>
<td>2.4%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>24.7%</td>
<td>11.7%</td>
<td>6.7%</td>
<td>-24.5%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>2.8%</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>21.0%</td>
<td>10.0%</td>
<td>15.2%</td>
<td>-24.4%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">All MFG-Sales</td>
<td>2.7%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>15.7%</td>
<td>7.6%</td>
<td>8.3%</td>
<td>-21.7%</td>
<td>5.3%</td>
</tr>
</tbody>
</table>
</body></html>

In March German orders spurted beyond expectations rising by 5% after being flat in February. Foreign orders built on a 1.7% gain in February rising by 4.7% in March. Domestic orders spurted by 5.4% coming off a 1.7% decline in [...]

German Orders Take A Strong Hold On Growth

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506a.jpg" align="left" border="0" height="265" width="353"></p>
<p>Growth in worker productivity in the nonfarm business sector
slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of
output growth did not prompt as much of a cutback in aggregate
hours-worked (employment times hours worked). Nevertheless, the 6.3%
surge in U.S. worker productivity growth during the last four quarters
was the strongest since early-1962 (no typo). New technologies,
improved work techniques and an improved labor skill-sets have paid
off. Productivity last quarter exceeded Consensus expectations for a
2.5% rise.</p>
<p>The slowdown in 1Q productivity occurred as real output growth
slowed to 4.4% (3.1% y/y) from 7.0% during 4Q. That was met by a slight
acceleration in hours worked to 0.8% (-3.0% y/y) from 0.7%.Growth in
compensation costs also accelerated to 1.9% (2.3% y/y). Four-quarter
growth in compensation was nearly the slowest since 1995.</p>
<p>The rate of decline in unit labor costs eased during 4Q '09 as
compensation picked up slightly. Regardless, the four-quarter decline
in costs of 3.7% was the largest on record. That enabled corporate
profits to jump by nearly one-third last year.</p>
<p>In the factory sector alone, worker productivity growth also
slowed sharply to 2.5% (7.5% y/y) from 6.5% during 4Q '09. The slowdown
occurred as output rose an accelerated 7.5% (3.3% y/y) compared to the
pickup in hours-worked to 4.9% (-3.9% y/y) following a slight 4Q
decline. Compensation fell 1.2% but the y/y change of 0.9% was the
weakest since 2006. The combination of lower compensation and the rise
in productivity dropped unit labor costs by 3.7%.</p>
<p>The productivity &amp; cost figures are available in
Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506c.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/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a>(SAAR,%)</th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09</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">&nbsp; Output per Hour
(Productivity)</td>
<td>3.6</td>
<td>6.3</td>
<td>7.8</td>
<td>6.3</td>
<td>3.7</td>
<td>2.1</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>1.9</td>
<td>0.4</td>
<td>-0.4</td>
<td>2.3</td>
<td>1.9</td>
<td>3.1</td>
<td>4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-1.6</td>
<td>-5.6</td>
<td>-7.6</td>
<td>-3.7</td>
<td>-1.7</td>
<td>1.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol" colspan="8"><b>Manufacturing
Sector</b></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>2.5</td>
<td>6.5</td>
<td>14.8</td>
<td>7.5</td>
<td>1.8</td>
<td>1.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>-1.2</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.9</td>
<td>4.4</td>
<td>3.2</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-3.7</td>
<td>-6.4</td>
<td>-13.7</td>
<td>-6.1</td>
<td>2.5</td>
<td>2.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body></html>

Growth in worker productivity in the nonfarm business sector slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of output growth did not prompt as much of a cutback in aggregate hours-worked (employment times hours [...]

U.S. Worker 1Q Productivity Growth Moderates, But Still Looks Strong Y/Y

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506a.jpg" align="left" border="0" height="265" width="353"></p>
<p>Growth in worker productivity in the nonfarm business sector
slowed last quarter to 3.6% from 6.3% during 4Q. A near-halving of
output growth did not prompt as much of a cutback in aggregate
hours-worked (employment times hours worked). Nevertheless, the 6.3%
surge in U.S. worker productivity growth during the last four quarters
was the strongest since early-1962 (no typo). New technologies,
improved work techniques and an improved labor skill-sets have paid
off. Productivity last quarter exceeded Consensus expectations for a
2.5% rise.</p>
<p>The slowdown in 1Q productivity occurred as real output growth
slowed to 4.4% (3.1% y/y) from 7.0% during 4Q. That was met by a slight
acceleration in hours worked to 0.8% (-3.0% y/y) from 0.7%.Growth in
compensation costs also accelerated to 1.9% (2.3% y/y). Four-quarter
growth in compensation was nearly the slowest since 1995.</p>
<p>The rate of decline in unit labor costs eased during 4Q '09 as
compensation picked up slightly. Regardless, the four-quarter decline
in costs of 3.7% was the largest on record. That enabled corporate
profits to jump by nearly one-third last year.</p>
<p>In the factory sector alone, worker productivity growth also
slowed sharply to 2.5% (7.5% y/y) from 6.5% during 4Q '09. The slowdown
occurred as output rose an accelerated 7.5% (3.3% y/y) compared to the
pickup in hours-worked to 4.9% (-3.9% y/y) following a slight 4Q
decline. Compensation fell 1.2% but the y/y change of 0.9% was the
weakest since 2006. The combination of lower compensation and the rise
in productivity dropped unit labor costs by 3.7%.</p>
<p>The productivity &amp; cost figures are available in
Haver's <b>USECON</b> database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506c.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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a>(SAAR,%)</th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09</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">&nbsp; Output per Hour
(Productivity)</td>
<td>3.6</td>
<td>6.3</td>
<td>7.8</td>
<td>6.3</td>
<td>3.7</td>
<td>2.1</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>1.9</td>
<td>0.4</td>
<td>-0.4</td>
<td>2.3</td>
<td>1.9</td>
<td>3.1</td>
<td>4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-1.6</td>
<td>-5.6</td>
<td>-7.6</td>
<td>-3.7</td>
<td>-1.7</td>
<td>1.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol" colspan="8"><b>Manufacturing
Sector</b></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>2.5</td>
<td>6.5</td>
<td>14.8</td>
<td>7.5</td>
<td>1.8</td>
<td>1.1</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>-1.2</td>
<td>-0.3</td>
<td>-1.0</td>
<td>0.9</td>
<td>4.4</td>
<td>3.2</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-3.7</td>
<td>-6.4</td>
<td>-13.7</td>
<td>-6.1</td>
<td>2.5</td>
<td>2.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
<span id="articletitle">German Orders Take A Strong Hold
On Growth</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> May 06, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>In March German orders spurted beyond expectations rising by
5% after being flat in February. Foreign orders built on a 1.7% gain in
February rising by 4.7% in March. Domestic orders spurted by 5.4%
coming off a 1.7% decline in February. Over three months domestic and
foreign orders are growing at almost identical 48% compounded growth
rates; over six month their growth is clearly identical as well. Yr/Yr
foreign orders are stronger, rising by 29% compared to nearly 23% for
domestic orders. German orders are strong no matter how you slice them.
But not all sectors are strong.</p>
<p>Consumer orders remain mixed in Germany. Consumer durables
goods orders did better in March by reducing the pace at which they
declined to -0.7% from -2.4% in February. Consumer durable goods orders
are rising over three months, however, at a compounded annual rate pace
of just 3.7%, up from 1.8% over six months. Consumer nondurables orders
spiked by 5.4% in March, after dropping by 2.2% in February. They are
still declining at an 8.2% annual rate over three months, however.</p>
<p>Capital goods are the backbone of the German recovery. Those
orders rose by 2.4% in March after rising by 0.5% in February. Over
three months capital goods orders are rising at a 24.7% pace up from an
11.7% pace over six months and from 6.7% Yr/Yr.</p>
<p>Intermediate goods orders also rose in March making gains of
2.8% after edging lower by 0.3% in February. Intermediate goods orders
spurted at a 21% annual rate over three months compared to rising at a
10% over three months.</p>
<p>Manufacturing sales also were strong in March and their
sequential growth rates show persisting strength.</p>
<p>On balance German orders were an upside surprise. The strength
remains in the industrial sector with consumer goods starting to break
out of their declining ways but still not clearly shaking off the
lethargy. Orders grew at a 28% annualized rate in the quarter while
sales grew at a 5% pace.</p>
<p>The weakening euro is going to help cement these trends as
long as the financial problems in Greece do not spread too much and
damp growth in the e-Zone and the surrounding environs. Right now
tensions are running high as Moody&#8217;s warned on potential banking sector
problems as banks hold a lot of government bonds and it is some of the
debt-ridden European government&#8216;s that issued those bonds that are
under ratings pressure. If debt reschedulings were to occur there could
be losses pushed onto bond holders and slapped onto bank balance
sheets. In its meeting today the ECB held rates steady but that was all
it held steady. So far it is not willing to do nay more, much to the
markets consternation. Nervousness in the European markets is clear.
The potential for knock-on effects even to an economy like Germany that
seems to be doing so well is a real risk.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="9">German Orders and Sales
By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="grey2">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>5.0%</td>
<td>0.0%</td>
<td>5.2%</td>
<td>49.1%</td>
<td>22.1%</td>
<td>26.0%</td>
<td>-32.8%</td>
<td>28.5%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.7%</td>
<td>1.7%</td>
<td>3.8%</td>
<td>48.7%</td>
<td>21.9%</td>
<td>29.0%</td>
<td>-36.2%</td>
<td>28.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>5.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>48.9%</td>
<td>22.0%</td>
<td>22.8%</td>
<td>-28.6%</td>
<td>28.2%</td>
</tr>
<tr class="grey2">
<td colspan="9" class="firstcol">Real Sector
Sales</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG/Mining</td>
<td>2.9%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>16.3%</td>
<td>7.8%</td>
<td>8.5%</td>
<td>-21.8%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>4.6%</td>
<td>-2.1%</td>
<td>-4.0%</td>
<td>-6.8%</td>
<td>-3.5%</td>
<td>2.5%</td>
<td>-11.3%</td>
<td>-6.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Cons
Durables</td>
<td>-0.7%</td>
<td>-2.4%</td>
<td>4.1%</td>
<td>3.7%</td>
<td>1.8%</td>
<td>5.4%</td>
<td>-22.7%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Non-Durable</td>
<td>5.4%</td>
<td>-2.2%</td>
<td>-5.0%</td>
<td>-8.2%</td>
<td>-4.2%</td>
<td>2.1%</td>
<td>-9.4%</td>
<td>-8.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Captial Gds</td>
<td>2.4%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>24.7%</td>
<td>11.7%</td>
<td>6.7%</td>
<td>-24.5%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>2.8%</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>21.0%</td>
<td>10.0%</td>
<td>15.2%</td>
<td>-24.4%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">All MFG-Sales</td>
<td>2.7%</td>
<td>-0.2%</td>
<td>1.2%</td>
<td>15.7%</td>
<td>7.6%</td>
<td>8.3%</td>
<td>-21.7%</td>
<td>5.3%</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Initial Unemployment
Insurance Claims Decline </span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> May 6, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Bureau of Labor Statistics reported that initial claims
for jobless insurance fell 7,000 to 444,000 after the prior week's
lessened 8,000 drop. The latest level was near this cycle's lowest but
fell slightly short of Consensus expectations for a decline to 440,000
claims. 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 increased to 458,500.</p>
<p>A 59,000 decline in continuing claims for unemployment
insurance during the latest week followed a little-revised 10,000 drop
during the prior week. They were 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 4.649M
remained near the cycle low. This series dates back to 1966.</p>
<p>Extended benefits for unemployment insurance slipped w/w to
201,487. However, they were down by three-quarters from a peak of
597,688 reached in November.</p>
<p>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.
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.</p>
<p>The highest insured unemployment rates in the week ending
April 17 were in Alaska (6.6 percent), Puerto Rico (6.0), Oregon (5.8),
Nevada (5.1), Wisconsin (5.1), California (5.0), Michigan (4.9),
Montana (4.9), Pennsylvania (4.9), Idaho (4.7), and North Carolina
(4.7). The lowest insured unemployment rates were in Virginia (1.9),
Texas (2.3), Georgia (2.8), Maryland (3.0), Florida (3.2), Wyoming
(3.4), Ohio (3.4), New York (3.5) and Maine (3.7). These data are not
seasonally adjusted but the overall insured unemployment rate is.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100506g.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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>05/01/10</b></th>
<th scope="col"><b>04/24/10</b></th>
<th scope="col"><b>04/17/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>444</td>
<td>451</td>
<td>459</td>
<td>-26.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,594</td>
<td>4,653</td>
<td>-26.2%</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>

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505i.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The outplacement firm Challenger, Grey &amp; Christmas
reported that the level of layoffs fell last month to 38,326. It was
the lowest level since mid-2006 and remained well under the cycle-high
of 241,748 in January of last year. The decline was led by sharply
lower layoffs in the government, computer, energy, entertainment, and
retail industries. An increased level of layoffs occurred in the
construction, financial, health care and utility industries.</p>
<p>Challenger also samples firms' hiring plans. April plans
increased for the second month consecutive month to the highest level
since 2005. They rose in the transportation, consumer goods, health
care and financial industries though most elsewhere they fell.</p>
<p>During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment<em>.</em>
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.</p>
<p>The Challenger figures are available in Haver's <b>SURVEYS</b>
database.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM" style="color: black;"><b>Challenger, Gray &amp;
Christmas</b></a></th>
<th scope="col"><strong>April</strong></th>
<th scope="col"><strong>March</strong></th>
<th scope="col"><strong>February</strong></th>
<th scope="col"><strong>Y/Y</strong></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Announced Job Cuts</td>
<td>38,326</td>
<td>67,611</td>
<td>42,090</td>
<td>-71.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>15,654</td>
<td>13,994</td>
<td>8,300</td>
<td>-42.2%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
</body></html>

The outplacement firm Challenger, Grey & Christmas reported that the level of layoffs fell last month to 38,326. It was the lowest level since mid-2006 and remained well under the cycle-high of 241,748 in January of last year. The [...]

Challenger Layoffs Reach Cycle Low

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100505d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The services sector continues to improve in EMU with the EMU
and German indices rising in April to their strongest levels since late
in 2007 (France was last stronger in Nov of 2009; Italy&#8217;s index slipped
in April).</p>
<p>While Germany and the overall EMU measures continue to rise
strongly some countries in the Zone are slowing their progress, as the
French and Italian comparisons show. The services sector is still where
the jobs are and this sector is not as vibrant as the manufacturing
sector.</p>
<p>The Euro-Area retail sales for April were flat in volume terms
and barley higher Yr/Yr. The consumer sector has just not come alive in
Europe and that is a key part of the services sector.</p>
<p>Looking ahead there will be challenges to Europe&#8217;s service
sector. The ash cloud that shut down air transportation has just shut
down a few more airports in Scotland. Those interruptions will probably
affect services, especially tourism. Greece which is a hot tourism
destination will have been off limits to most tourists during the time
of its upheaval. And, since Greece is in the Zone there is no such
thing as a post crisis &#8216;drachma discount.&#8217; Indeed, with strikes still
in progress in Greece there is no telling how much the tourists season
will harmed as we head into summer.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="8">Markit Services Indices for EU/EMU</th>
</tr>
<tr>
<th class="firstcol">&nbsp;
</th>
<th>Apr-10</th>
<th>Mar-10</th>
<th>Feb-10</th>
<th>3Mo</th>
<th>6Mo</th>
<th>12Mo</th>
<th>Percentile</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>55.60</td>
<td>54.08</td>
<td>51.81</td>
<td>53.83</td>
<td>53.44</td>
<td>50.77</td>
<td>76.4%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>55.22</td>
<td>54.86</td>
<td>51.89</td>
<td>53.99</td>
<td>53.04</td>
<td>51.11</td>
<td>70.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>59.17</td>
<td>53.80</td>
<td>54.60</td>
<td>55.86</td>
<td>57.23</td>
<td>53.72</td>
<td>85.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>54.47</td>
<td>55.34</td>
<td>50.76</td>
<td>53.52</td>
<td>52.53</td>
<td>49.35</td>
<td>69.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>50.93</td>
<td>51.27</td>
<td>47.12</td>
<td>49.77</td>
<td>48.21</td>
<td>45.82</td>
<td>70.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>51.02</td>
<td>49.61</td>
<td>48.84</td>
<td>49.82</td>
<td>48.15</td>
<td>46.05</td>
<td>56.0%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU only</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (CIPs)</td>
<td>#N/A</td>
<td>56.46</td>
<td>58.41</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">EU Commission Indices
for EU and EMU</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EU Index</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;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">EU Services</td>
<td>4</td>
<td>1</td>
<td>0</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-19.42</td>
<td>54.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">EMU </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;">3Mo</td>
<td style="font-weight: bold;">6Mo</td>
<td style="font-weight: bold;">12Mo</td>
<td style="font-weight: bold;">Percentile</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>5</td>
<td>1</td>
<td>1</td>
<td>2.33</td>
<td>-0.17</td>
<td>-8.21</td>
<td>55.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-17</td>
<td>-16.33</td>
<td>-16.33</td>
<td>-11.94</td>
<td>54.3%</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Ccon</td>
<td>-7</td>
<td>-13</td>
<td>-17</td>
<td>-12.33</td>
<td>-15.00</td>
<td>-19.58</td>
<td>60.5%</td>
</tr>
<tr>
<td class="firstcol">France-Ccon</td>
<td>-20</td>
<td>-19</td>
<td>-17</td>
<td>-18.67</td>
<td>-18.00</td>
<td>-22.75</td>
<td>42.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Ccon</td>
<td>-21</td>
<td>-22</td>
<td>-22</td>
<td>-21.67</td>
<td>-19.17</td>
<td>-18.75</td>
<td>31.4%</td>
</tr>
<tr>
<td class="firstcol">UK-Ccon</td>
<td>-6</td>
<td>-5</td>
<td>-2</td>
<td>-4.33</td>
<td>-6.00</td>
<td>-10.42</td>
<td>76.3%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile is over
range since May 2000</td>
</tr>
</tbody>
</table>
</body></html>

The services sector continues to improve in EMU with the EMU and German indices rising in April to their strongest levels since late in 2007 (France was last stronger in Nov of 2009; Italy’s index slipped in April). While Germany and [...]

EMU Service Sector Continues To Improve

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.

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

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

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

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

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Charts of the Week: Between Optimism and Uncertainty

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.

U.S. Initial Claims for Unemployment Insurance Declined in Latest Week

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Existing home sales jumped 5.1% m/m (+1.4% y/y) in December to 4.35 million units (SAAR). This was the fourth consecutive monthly gain and was well above the 1.7% m/m increase expected by the Action Economics Forecast Survey. December sales were the highest since February 2023. For all of 2025, sales remained anemic, totaling just 4.084 million and only up slightly from 4.067 million in 2024, which was the lowest annual total in the history of the series dating back to 1999. The average effective 30-year mortgage interest rate fell to 6.51% in December from 6.54% in November. This is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 5.1% m/m (+1.8% y/y) in December to 3.95 million. This was the fourth consecutive monthly increase and highest level of single-family sales since February 2023. Sales of condos and co-ops surged 5.3% m/m (-2.4% y/y) in December to 400,000, more than reversing a 2.6% monthly drop in November. For all of 2025, sales of single-family homes edged up to 3.706 million from 3.673 million in 2024. By contrast, sales of condos and co-ops declined to 378,333 from 393,333 in 2024.

Compared to a month ago, sales rose 2.0% m/m in the Northeast, increased 2.0% m/m in the Midwest, jumped 6.9% m/m in the South (the largest monthly gain since February 2024), and surged 6.6% m/m in the West (the largest monthly gains since February). Year-over-year comparisons were less flattering. Compared to a year ago, sales were unchanged in both the Midwest and the West and fell 1.9% y/y in the Northeast. By contrast, sales rose 3.6% y/y in the South.

The median price of all existing homes (NSA) declined 1.1% m/m (+0.4% y/y) to $405,400 in December. The median price of an existing single-family home fell 1.3% m/m (+0.2% y/y) to $409,500 in December. Prices of single-family homes in the Northeast were essentially unchanged in December from November. However, prices in the other three regions fell: -3.6% m/m in the Midwest, -0.3% m/m in the South, -1.9% m/m in the West.

Inventories of homes for sale continued to weaken in December. The number of existing homes for sale (NSA) plummeted 18.1% m/m (+3.5% y/y) to 1.18 million units, the lowest level since January. The supply of homes on the market at the current selling rate (NSA) fell to 3.3 months, its lowest reading since last December.

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

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- Existing home sales jumped a much larger-than-expected 5.1% m/m in December, the fourth consecutive monthly gain.
- Month-over-month sales increased in each of the four major areas.
- But year-over-year sales rose only in the South.
- For all of 2025, sales totaled 4.084 million, up slightly from 4.067 million in 2024.

Economy in Brief

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