Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503e.jpg" align="left" border="0" height="265" width="353">
Employment growth is helping to underpin the recovery in
factory sector activity. According to the Institute for Supply
Management, the level of activity grew last month at the fastest pace
since June of 2004. The April composite index rose to 60.4 and slightly
beat Consensus expectation for a rise to 60.0. It was up from the low
of 32.9 reached in December '08. (Any figure above the break-even point
of 50 suggests rising activity.) The ISM data is available in Haver's USECON
database.
The index for factory sector hiring activity posted its
strongest monthly gain since last November and, at 58.5, was at its
highest since June of 2004. The reading is up from the low of 25.9 last
February. Twenty-six percent of firms indicated a higher level of
payrolls versus 7% last April. Just 6% showed a lower level versus 35%
one year ago. During the last ten years there has been a 90%
correlation between the index level and the three-month change in
manufacturing payrolls.
Boding well for future hiring, it actually was the production
component which posted the strongest m/m increase during April with a
rise to 66.9. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures.
The new orders index also rose and, at 65.7, it showed
improvement similar to the hiring index. Fifty-two percent of
respondents reported higher orders versus 31% last April. Just 8%
reported order declines versus 29% last year. Finally, the export order
index slipped just slightly to 61.0 after its March surge to 61.5 which
was its highest since 1988. That was up from the low of 35.5 in
December '08. During the last ten years there has been a 53%
correlation between the index and the q/q change in real exports of
goods in the GDP accounts.
Offsetting these increases was a lower inventory component
which fell to 49.4 from 55.3 in March. Still, 20% of respondents
indicated that they were raising inventory levels versus 11% last April
while just 19% indicated lower inventories versus 42% one year ago.
Also down and despite improvement in orders and production, the pace of
supplier deliveries quickened. The supplier delivery index fell to 61.3
from its March high.
The separate index of prices paid rose to 78.0, a new high for
this recovery. That was up from the December '08 low of 18.0. Sixty
percent of respondents reported higher prices while only 4% indicated
lower prices. During the last twenty years there has been an 83%
correlation between the price index and the three-month change in the
PPI for intermediate goods.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>60.4</td>
<td>59.6</td>
<td>56.5</td>
<td>40.4</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>61.5</td>
<td>59.5</td>
<td>46.5</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>58.5</td>
<td>55.1</td>
<td>56.1</td>
<td>35.0</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.9</td>
<td>61.1</td>
<td>58.4</td>
<td>41.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.3</td>
<td>64.9</td>
<td>61.1</td>
<td>45.9</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>49.4</td>
<td>55.3</td>
<td>47.3</td>
<td>33.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>78.0</td>
<td>75.0</td>
<td>67.0</td>
<td>32.0</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
</body></html>

Employment growth is helping to underpin the recovery in factory sector activity. According to the Institute for Supply Management, the level of activity grew last month at the fastest pace since June of 2004. The April composite [...]

Job Gains Help Lift ISM Factory Sector Index

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503b.jpg" style="width: 312px; height: 265px;">
U.S. consumers love to spend, even if they don't have the
money. Personal consumption expenditures increased
an expected 0.6% during March as spending grew faster than income for
the second month in a row. During the last six months spending
increases have been between 0.3% and 0.6% as consumers have dug into
their wallets to buy more costly gasoline. Though spending on gasoline
slipped during the last two months, it's up by one-third during the
last twelve. In constant dollars, spending on gasoline actually fell
1.3% y/y.
Leading the rise in March spending was a 9.2% increase (14.9%
y/y) in spending on motor vehicles. In real terms spending rose 8.9%.
Also strong was the 1.5% increase (4.9% y/y) in nominal apparel
spending which followed a similar February gain; both were led by
discount pricing. In real terms March spending rose 5.3% y/y. Also
strong was spending on home furnishings. The 1.1% gain followed an even
stronger February increase. A 4.4% y/y rise (8.9% in real terms)
follows the 6.2% decline during all of last year. Spending on services
continued firm at 2.9% y/y but that was bloated by a 4.6% y/y jump in
health care expenditures.
These spending gains outpaced personal income
which rose an expected 0.3% after a 0.1% February increase (3.0% y/y).
Help from lower taxes has now faded. March disposable income rose 0.3%
(3.4% y/y) after having been unchanged during the prior month. Higher
gasoline prices also cut into income growth such that the y/y gain in
real disposable income amounted to only 1.4%, barely improved from last
year's 0.9% increase. The combination of spending gains that outpaced
income growth lowered the personal savings rate to
2.7%, its lowest since late-2008. The rate still was up, however, from
the 1.0% low at the beginning of the last recession.
Moderate employment declines left wages &amp; salaries up
just 0.2% (1.1% y/y) after the 0.1% February uptick. Nevertheless the
modest y/y gain is improved from the sharp 4.0% decline last year.
Wages in the factory sector, however, were unchanged in March (-3.4%
y/y) but that still contrasted well to the 11.3% shortfall last year.
In the private service sector, wages increased 0.2% (2.3% y/y). Workers
in the government have seen better wage growth. A 0.2% March gain
pulled wages up 2.2% y/y though that was a deceleration from the 3.6%
rise last year.
Improvement in the housing market pulled proprietors' income
up 3.7% y/y, its strongest gain since late 2006. The stabilization of
interest rates left interest income up 1.1% y/y, its best since 2008.
Dividend income remained down 6.1% y/y but that compared favorably to
last year's 19.3% drop and the 10.3% 2007 decline. Finally,
unemployment insurance benefits rose 8.7% m/m though the one-third
increase versus last year was down from its doubling last year.
The PCE chain price index rose just 0.1%
with the 1.0% slip (+35.2% y/y) in gasoline prices. The core PCE price
deflator also rose just 0.1%, held back by a 0.6% decline (-0.4% y/y)
in apparel prices and a 0.1% slip (-4.1% y/y) in furniture prices
(-1.6% y/y). Services prices also ticked up just 0.1% (1.6% y/y) for
the second month. but health care prices rose 0.2% (2.5% y/y).
Offsetting some of this strength was an 11.0% y/y drop in personal
computer prices.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503d.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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>3.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.2</td>
<td>3.4</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.6</td>
<td>0.5</td>
<td>0.3</td>
<td>4.5</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.7</td>
<td>3.0</td>
<td>3.5</td>
<td>3.5 (Mar. '09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.0</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.1</td>
<td>0.0</td>
<td>0.0</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

U.S. consumers love to spend, even if they don't have the money. Personal consumption expenditures increased an expected 0.6% during March as spending grew faster than income for the second month in a row. During the last six months [...]

U.S. Personal Spending & Income Firm

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503b.jpg" style="width: 312px; height: 265px;">
U.S. consumers love to spend, even if they don't have the
money. Personal consumption expenditures increased
an expected 0.6% during March as spending grew faster than income for
the second month in a row. During the last six months spending
increases have been between 0.3% and 0.6% as consumers have dug into
their wallets to buy more costly gasoline. Though spending on gasoline
slipped during the last two months, it's up by one-third during the
last twelve. In constant dollars, spending on gasoline actually fell
1.3% y/y.
Leading the rise in March spending was a 9.2% increase (14.9%
y/y) in spending on motor vehicles. In real terms spending rose 8.9%.
Also strong was the 1.5% increase (4.9% y/y) in nominal apparel
spending which followed a similar February gain; both were led by
discount pricing. In real terms March spending rose 5.3% y/y. Also
strong was spending on home furnishings. The 1.1% gain followed an even
stronger February increase. A 4.4% y/y rise (8.9% in real terms)
follows the 6.2% decline during all of last year. Spending on services
continued firm at 2.9% y/y but that was bloated by a 4.6% y/y jump in
health care expenditures.
These spending gains outpaced personal income
which rose an expected 0.3% after a 0.1% February increase (3.0% y/y).
Help from lower taxes has now faded. March disposable income rose 0.3%
(3.4% y/y) after having been unchanged during the prior month. Higher
gasoline prices also cut into income growth such that the y/y gain in
real disposable income amounted to only 1.4%, barely improved from last
year's 0.9% increase. The combination of spending gains that outpaced
income growth lowered the personal savings rate to
2.7%, its lowest since late-2008. The rate still was up, however, from
the 1.0% low at the beginning of the last recession.
Moderate employment declines left wages &amp; salaries up
just 0.2% (1.1% y/y) after the 0.1% February uptick. Nevertheless the
modest y/y gain is improved from the sharp 4.0% decline last year.
Wages in the factory sector, however, were unchanged in March (-3.4%
y/y) but that still contrasted well to the 11.3% shortfall last year.
In the private service sector, wages increased 0.2% (2.3% y/y). Workers
in the government have seen better wage growth. A 0.2% March gain
pulled wages up 2.2% y/y though that was a deceleration from the 3.6%
rise last year.
Improvement in the housing market pulled proprietors' income
up 3.7% y/y, its strongest gain since late 2006. The stabilization of
interest rates left interest income up 1.1% y/y, its best since 2008.
Dividend income remained down 6.1% y/y but that compared favorably to
last year's 19.3% drop and the 10.3% 2007 decline. Finally,
unemployment insurance benefits rose 8.7% m/m though the one-third
increase versus last year was down from its doubling last year.
The PCE chain price index rose just 0.1%
with the 1.0% slip (+35.2% y/y) in gasoline prices. The core PCE price
deflator also rose just 0.1%, held back by a 0.6% decline (-0.4% y/y)
in apparel prices and a 0.1% slip (-4.1% y/y) in furniture prices
(-1.6% y/y). Services prices also ticked up just 0.1% (1.6% y/y) for
the second month. but health care prices rose 0.2% (2.5% y/y).
Offsetting some of this strength was an 11.0% y/y drop in personal
computer prices.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503d.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/@E7/@E711/@E71102/@E71102.HTM" style="color: black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>3.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.2</td>
<td>3.4</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.6</td>
<td>0.5</td>
<td>0.3</td>
<td>4.5</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.7</td>
<td>3.0</td>
<td>3.5</td>
<td>3.5 (Mar. '09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.0</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.1</td>
<td>0.0</td>
<td>0.0</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
Job Gains Help Lift ISM Factory
Sector Index 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 3, 2010 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503e.jpg" align="left" border="0" height="265" width="353">
Employment growth is helping to underpin the recovery in
factory sector activity. According to the Institute for Supply
Management, the level of activity grew last month at the fastest pace
since June of 2004. The April composite index rose to 60.4 and slightly
beat Consensus expectation for a rise to 60.0. It was up from the low
of 32.9 reached in December '08. (Any figure above the break-even point
of 50 suggests rising activity.) The ISM data is available in Haver's USECON
database.
The index for factory sector hiring activity posted its
strongest monthly gain since last November and, at 58.5, was at its
highest since June of 2004. The reading is up from the low of 25.9 last
February. Twenty-six percent of firms indicated a higher level of
payrolls versus 7% last April. Just 6% showed a lower level versus 35%
one year ago. During the last ten years there has been a 90%
correlation between the index level and the three-month change in
manufacturing payrolls.
Boding well for future hiring, it actually was the production
component which posted the strongest m/m increase during April with a
rise to 66.9. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures.
The new orders index also rose and, at 65.7, it showed
improvement similar to the hiring index. Fifty-two percent of
respondents reported higher orders versus 31% last April. Just 8%
reported order declines versus 29% last year. Finally, the export order
index slipped just slightly to 61.0 after its March surge to 61.5 which
was its highest since 1988. That was up from the low of 35.5 in
December '08. During the last ten years there has been a 53%
correlation between the index and the q/q change in real exports of
goods in the GDP accounts.
Offsetting these increases was a lower inventory component
which fell to 49.4 from 55.3 in March. Still, 20% of respondents
indicated that they were raising inventory levels versus 11% last April
while just 19% indicated lower inventories versus 42% one year ago.
Also down and despite improvement in orders and production, the pace of
supplier deliveries quickened. The supplier delivery index fell to 61.3
from its March high.
The separate index of prices paid rose to 78.0, a new high for
this recovery. That was up from the December '08 low of 18.0. Sixty
percent of respondents reported higher prices while only 4% indicated
lower prices. During the last twenty years there has been an 83%
correlation between the price index and the three-month change in the
PPI for intermediate goods.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>60.4</td>
<td>59.6</td>
<td>56.5</td>
<td>40.4</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>61.5</td>
<td>59.5</td>
<td>46.5</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>58.5</td>
<td>55.1</td>
<td>56.1</td>
<td>35.0</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.9</td>
<td>61.1</td>
<td>58.4</td>
<td>41.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.3</td>
<td>64.9</td>
<td>61.1</td>
<td>45.9</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>49.4</td>
<td>55.3</td>
<td>47.3</td>
<td>33.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>78.0</td>
<td>75.0</td>
<td>67.0</td>
<td>32.0</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
U.S. Construction Activity Remains
Near 2003 Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 3, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503i.jpg" style="width: 312px; height: 265px;">
Construction activity remains depressed. The negligible 0.2%
uptick in March after the 2.1% February collapse left it near the
lowest level since 2003. The latest rise barely beat Consensus
expectations for a 0.3% dip.
Total private construction activity continued lower in March,
led down by a 1.1% drop in residential building activity. The decline
reflected a 6.3% drop (-58.1% y/y) in multi-family building activity
and a 3.0% decline (+6.8% y/y) in improvements. Conversely,
single-family construction activity rose 1.6% (17.2% y/y). It has risen
consecutively m/m since last June.
Nonresidential building activity fell another 0.7% during
March and was off by one-quarter during the last twelve months.
Spending on lodging fell by nearly two-thirds during the last year
while office construction dropped 42%. Retail shopping centers also
have developed a hard downward trend (-39.8% y/y) in addition to school
construction (-12.6% y/y). Health care construction also has suffered
(-16.3% y/y).
In the public sector, building activity bucked the negative
trend and rose 2.3% in March. The gain was led by a 23.7% rise (-14.9%
y/y) in power-plant construction. Spending on health-care facilities
added to the gain with a 4.9% increase (0.0% y/y) while spending on
highways &amp; streets rose 1.5% (-1.4% y/y). Building in the
education sector fell 2.2% for the month and was down 16.9% y/y.
The construction put-in-place figures are available in Haver's
USECON database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503j.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503k.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">Construction
Put In Place (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total</td>
<td>0.2</td>
<td>-2.1</td>
<td>-0.7</td>
<td>-12.3</td>
<td>-12.5</td>
<td>-6.9</td>
<td>-1.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Private</td>
<td>-0.9</td>
<td>-2.4</td>
<td>-0.1</td>
<td>-15.3</td>
<td>-18.8</td>
<td>-11.1</td>
<td>-5.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>-1.1</td>
<td>-3.4</td>
<td>3.8</td>
<td>1.2</td>
<td>-28.0</td>
<td>-29.1</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.7</td>
<td>-1.5</td>
<td>-3.3</td>
<td>-25.5</td>
<td>-11.1</td>
<td>13.2</td>
<td>23.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>2.3</td>
<td>-1.6</td>
<td>-1.9</td>
<td>-6.3</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
</tr>
</tbody>
</table>
World Wide, Purchasing Managers In
Manufacturing Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> May 3, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503l.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
World wide, purchasing managers in the manufacturing industry
have become increasingly optimistic. The Markit Economic Survey
expresses the responses of the purchasing managers in the form of
diffusion indexes that are based on percent balances between those
expecting improvement and those expecting deterioration. Values of the
index above 50 represent expansion and those below, contraction.
Data for April, 2010 are currently being reported and most of
the data show indexes that are now above the 50 level. The first to
show expansion were the purchasing manages in the Far East. The first
chart shows the diffusion indexes for the purchasing managers of
Taiwan, Korea and India, three countries in the Far East for which
April data are available. In these countries the indexes began to rise
above 50 in early 2009. The second chart shows the indexes for Italy,
France and Germany. Purchasing manager in these countries only became
optimistic in late 2009. And in the troubled countries of the Euro Area
that have reported--Greece, Ireland and Spain--the purchasing managers
in Greece have yet to predict expansion while those in Ireland and
Spain have only begun to predict expansion in March and April of this
year, as can be seen in the third chart.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503m.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503n.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;
&nbsp; PMI Diffusion
Indexes Manufacturing</th>
<th scope="col">April 10&nbsp;</th>
<th scope="col">Mar 10&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Italy</td>
<td>54.29</td>
<td>53.73</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; France</td>
<td>56.55</td>
<td>56.47</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
Germany</td>
<td>61.51</td>
<td>60.23</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Taiwan</td>
<td>60.72</td>
<td>62.74</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Korea</td>
<td>57.06</td>
<td>55.62</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; India</td>
<td>57.24</td>
<td>57.73</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Greece</td>
<td>43.64</td>
<td>42.94</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
Ireland</td>
<td>53.41</td>
<td>52.99</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Spain</td>
<td>53.31</td>
<td>51.85</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Personal Spending &Income Firm

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
European unemployment continues to rise in March and the
figure reported for 2010 in-Q1 in Spain reached 20%; We report monthly
data in the table above. Only Germany shows any hint of a turn to lower
rates of unemployment. Of course we know that the unemployment rate
lags the cycle, but we are now pretty well into this cycle and the
ongoing unemployment difficulties are beyond what has been cyclical
normalcy.
The chart at the top juxtaposes the EMU trend to the US trend
for employment. Two things stand out. One is that the US series is more
volatile than the European series with generally higher highs and lower
lows. The other is that the low in this recent recession was much worse
in the US than it was for Europe where the social safety net is much
cushier. Still the turn after the fall has been much sharper in the US
where Yr/Yr job losses are now occurring at a slower pace than they are
in Europe.
One price that Europe pays for more government intervention in
its economy is less economic vitality. The US economy is mending faster
from what was admittedly a harder fall. But the US appears to be on the
road to repair as jobs and GDP are showing sharper turnarounds even if
they are still struggling
In Europe unemployment is very slow to repair and unemployment
rates are generally still rising. Spain&#8217;s 20% rate of unemployment in
2010 Q1 is a huge burden to that economy. Also it socks a wicked punch
to the rate for all of EMU that will give even the
inflation-angst-ridden ECB pause on how it views inflation risks.
One of the biggest problems for the ECB is making policy in a
one currency zone that has multiple fiscal policies. The regional
unemployment rates in Europe have a different meaning than the regional
and state-level reports in the United States where the country,
currency and fiscal situation all are under one umbrella (except for
state and local budgets, of course).
The recent problems in Greece and credit down grades meted out
to Spain and to Portugal simply underline the sort minefield though
which the ECB must pick its way. Even the tough-minded Germans did a
sharp about face yesterday when the situation in Greece turned sharply
for the worse. True, Germany&#8217;s stance is complicated by its being in
the middle of elections. But such is the risk in such a community. With
such a disparate flock of counties; there are always going to be
elections somewhere in Europe. The game of musical chairs played in
economics and by financial markets does not agree to let the music keep
going just because one key country has an election. Contrarily, chances
are that such an event brings more attention to bear on a tough call
that is in the middle of deciding.
Having separate fiscal policies has just revealed what its
risks are. Germans are hot that Greeks &#8216;lied&#8217; bout their fiscal
position and did it for the second time. But I really don&#8217;t see any
reason for surprise. These countries want to have separate fiscal
polices and separate political relations. Still they do want to become
a single economic zone but not a country called &#8216;Europe.&#8217; Their
tendency to call themselves European breaks down into a laughable faced
of falsity when things go wrong. Then they return to being German, or
Dutch, or Greek, or whatever.
As to their relations, nations have always lied to one
another. It is known as diplomacy. Diplomats are among the best trained
in their respective countries and they are taught to meet you face to
face and to mis-represent their country&#8217;s views from time to time for
their own advantage speaking to you in your language and doing it with
eloquence. I don&#8217;t see why Germans are so upset that Greeks fudged
their fiscal position because to the Greeks it may have seemed &#8216;fair
game.&#8217; Clearly the Mass-Trick laws do not punish a county enough for
cheating yet its restrictions are burdensome enough to make nations
want to avoid them and cheat. Are the Mass-trick restrictions too
severe to be obeyed?
Europe must take a good hard look at itself and decide what
relations it wants to reserve for its member countries and which it
wants to assign to an amalgamated European zone ( it already has done
this is the treaty that was &#8216;approved across member countries. But it
may need to do some fine tuning on what the &#8216;state&#8217;s&#8217; rights and
responsibilities really are). We need to know in what sense EMU is
Europe and what sense is it not. And Europeans need to figure out when
they draw that line exactly what it means.
If they are going to continue to have the usual diplomatic
relations, and if they do not want those standards to percolate to
their economic relations, then they are in need of requiring an
independent AUDIT for each country just as there is such a requirement
for a bank. Because either you can believe the numbers or you can&#8217;t.
Europe needs to adopt one common set of budget accounting rules and to
stick to them, to monitor them (audit compliance to them) and to
enforce them. Then it may have a chance to succeed under its separate
country/budget model should it choose to stick with it.
Even if it does this it will find its economic results will
remain disparate because Europe is not uniform.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Unemployment rate and changes
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Rate</td>
<td style="font-weight: bold;" colspan="3">&nbsp;Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EU-Urate</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>0.2</td>
<td>0.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EMU-Urate</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Unemployment rate and changes</td>
<td style="font-weight: bold;" colspan="3">m/m%</td>
<td style="font-weight: bold;" colspan="3">Changes (ar)</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EU-U 000s</td>
<td>0.6%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>4.3%</td>
<td>15.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EMU-U 000s</td>
<td>0.4%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.4%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;U-Rates</td>
<td style="font-weight: bold;" colspan="3">&nbsp;Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Germany</td>
<td>7.5</td>
<td>7.5</td>
<td>7.5</td>
<td>0</td>
<td>-0.1</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;France</td>
<td>10.1</td>
<td>10</td>
<td>10</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Spain</td>
<td>19</td>
<td>18.9</td>
<td>18.9</td>
<td>0</td>
<td>0.3</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;USA</td>
<td>9.7</td>
<td>9.7</td>
<td>10</td>
<td>-0.3</td>
<td>0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Japan</td>
<td>4.9</td>
<td>4.9</td>
<td>5.2</td>
<td>-0.4</td>
<td>-0.5</td>
<td>0.5</td>
</tr>
</tbody>
</table>
</body></html>

European unemployment continues to rise in March and the figure reported for 2010 in-Q1 in Spain reached 20%; We report monthly data in the table above. Only Germany shows any hint of a turn to lower rates of unemployment. Of course [...]

Euro Unemployment Bucks Image Of Recovering Region

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430b.jpg" style="width: 312px; height: 265px;">
A slower rate of inventory replenishment was warranted because
products weren't leaving the shelves quickly. As a result, real GDP
growth eased last quarter to 3.2% after the 5.6% jump during 4Q '09.
The latest roughly matched Consensus expectations for 3.4% growth.
Regardless, it was the third consecutive quarter of positive growth
after the recession when GDP fell 3.7% peak-to-trough, a postwar record.
The addition to growth from inventories fell to 1.6 percentage
points which was roughly half the 4Q add. Inventories also helped the
economy initially emerge from recession with a moderate 0.7
contribution to 3Q '09 GDP growth. Prior to these additions, inventory
liquidation had subtracted from GDP growth since 2005, a length of time
unprecedented in postwar history.
Growth in domestic final demand picked up last quarter to a
still-modest 2.2% after 1.4% 4Q growth. These rates compare to up to
9.0% in the early stages of earlier economic recoveries. Last quarter's
improvement was due to consumer spending growth of 3.6% after 1.6% 4Q
growth. Motor vehicle purchases fell for the second straight quarter
(+1.4% y/y) but spending on other consumer durables and clothing (2.1%
y/y) jumped. Spending on services also improved (1.1% y/y). Fixed
business investment growth remained moderate at 4.0% compared to
double-digit growth early in past recoveries. Equipment spending surged
13.4% (6.9% y/y) offset by a 14.0% decline (-17.0% y/y) in structures.
With an on again-off again pattern, residential investment fell 10.9%
after just two quarters of positive growth. Finally, government
spending fell at a 1.8% rate as budget cutbacks caused state &amp;
local spending to fall (-0.7% y/y) for the fifth time in the last six
quarters.
Deterioration in the foreign trade deficit subtracted 0.6
percentage points from last quarter's gain in GDP. It was the second
negative effect in the last three quarters. Growth in exports of 5.8%
(10.1% y/y) was much lower than during prior two quarters. In addition
import growth of 8.9% (6.9% y/y) was reduced from double-digit rates in
3Q &amp; 4Q '09.
Price inflation remained low at 0.9% as measured by the
chained GDP price index. The y/y gain of just 0.4% was 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).

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430d.jpg" style="width: 312px; height: 265px;">
<table>
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2005$, % AR</a></th>
<th scope="col">1Q '10</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>3.2</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>1.6</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>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.4</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>-0.6</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>2.2</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>3.6</td>
<td>1.6</td>
<td>2.8</td>
<td>1.8</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>4.0</td>
<td>5.3</td>
<td>-5.9</td>
<td>-1.7</td>
<td>-17.8</td>
<td>1.6</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Residential Investment</td>
<td>-10.9</td>
<td>3.7</td>
<td>18.9</td>
<td>4.2</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>-1.8</td>
<td>-1.3</td>
<td>2.7</td>
<td>2.5</td>
<td>1.8</td>
<td>3.1</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.9</td>
<td>0.5</td>
<td>0.4</td>
<td>0.4</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

A slower rate of inventory replenishment was warranted because products weren't leaving the shelves quickly. As a result, real GDP growth eased last quarter to 3.2% after the 5.6% jump during 4Q '09. The latest roughly matched [...]

U.S. GDP Growth Moderates As Lift From Inventories Fades

U.S. GDP Growth Moderates As LiftFrom Inventories Fades

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100429g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Money growth rates in Europe are starting to edge higher, but
ever so slowly. At a 2.2% annual rate pace over three months compared
to a 1.5% pace Yr/Yr is not much of an acceleration. Credit growth is
however weaker over three months than over 12-months. In the US money
growth is decelerating. In Japan it&#8217;s decelerating. In the UK, where
inflation has started to flash some less than comfortable numbers,
there is an issue. Money growth is in a major acceleration in the UK
for M4 which is up at nearly a 40% annual rate pace over three months.
While the growth rates are different, the main themes remain
in tact when we look at the growth rates of real money balances - money
growth deflated by inflation.
Basically money is not much of a stimulant anywhere except in
the UK.
Still we have great concerns among some economists that the
fiscal spending and coming monetary excesses (paradoxically, fiscal
issues already are taking what must be regarded as a deflationary toll
in Europe) will result in a bout of inflation. For the most part,
market pricing does not see that risk. Some of the hardest-money
economists still are very worried. Some worry that the economy will
recover and banks will begin to loan and this excess of reserves at the
Fed will be unleashed into something that can become a torrent of
inflation.
Then, others among us worry about getting hit by meteors from
outer space.
While a cyclical pick up in lending is something we do expect
in every business cycle, right now bankers are hunkered down. It is
very hard to see how they are going to turn the lending spigot from a
slow drip to full throttle in some quick fashion. Bank lending
committees are notoriously slow in shifting their policy stance. The US
economy and the European economies have a huge amount of slack.
Conservative hard-money economists also point out that a lot of
capacity was destroyed in the economic downturn. They warn that capital
may appear to be less utilized than it really is. While that is a good
point it is largely academic. The amount of slack in the economy is so
great it&#8217;s like warning that the other rim of the Grand Canyon might be
five feet closer than we thought so be careful about what might want to
&#8216;fit inside of it.&#8217;
There will come a time to worry about these things. But
unemployment in Europe is high. In the US 8.5 million people net were
taken off the job rolls. In addition, many first-time job seekers were
not able to find work. There is a great deal of slack. Money supply
growth is slow. Europe&#8217;s fiscal situation has deteriorated making it a
drag on the outlook despite some recent upbeat reports on growth. The
question of the role of the deterioration in confidence in the e-Zone
will play out over months not over hours. The US has its own fiscal
challenge which will make public policy more contractionary ahead. Why
all the worry about excess stimulus and inflation?
For the time being, despite high oil prices and some pressures
on commodity prices, we have to signal the &#8216;all clear&#8217; on the inflation
front. Not enough growth remains as the near term clear and present
danger. Inflation always lurks but it is, for the moment, unarmed and
not very dangerous. Inflation is more lost in the woods and confused
than it is dangerously lurking in some dark alley-way to mug an
unsuspecting policymaker.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> Look at Global and Euro Liquidity Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Saar-all</td>
<td colspan="3">Euro Measures (E13):
Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets:
Money</td>
<td>Memo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&#8364;-Supply M2</td>
<td>Credit:Resid</td>
<td>Loans</td>
<td>$US M2</td>
<td>&#163;UK M4</td>
<td>&#165;Jpn M2+Cds</td>
<td>OIL:WTI</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3-MO</td>
<td>2.2%</td>
<td>-0.6%</td>
<td>0.8%</td>
<td>-1.5%</td>
<td>39.5%</td>
<td>1.8%</td>
<td>38.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 6-MO</td>
<td>0.9%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>19.5%</td>
<td>2.1%</td>
<td>35.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 12-MO</td>
<td>1.6%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>1.5%</td>
<td>10.6%</td>
<td>2.6%</td>
<td>70.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 2Yr</td>
<td>4.5%</td>
<td>2.5%</td>
<td>1.5%</td>
<td>5.3%</td>
<td>13.7%</td>
<td>2.4%</td>
<td>-12.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3Yr</td>
<td>6.4%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>5.9%</td>
<td>13.0%</td>
<td>2.4%</td>
<td>10.1%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Real Balances: deflated
by Own CPI. Oil deflated by US CPI</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3-MO</td>
<td>0.3%</td>
<td>-2.5%</td>
<td>-1.1%</td>
<td>-2.4%</td>
<td>32.8%</td>
<td>0.6%</td>
<td>37.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 6-MO</td>
<td>-1.4%</td>
<td>-2.9%</td>
<td>-2.1%</td>
<td>-0.3%</td>
<td>14.7%</td>
<td>1.9%</td>
<td>33.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 12-MO</td>
<td>0.2%</td>
<td>-1.6%</td>
<td>-1.9%</td>
<td>-0.9%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>66.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 2Yr</td>
<td>3.4%</td>
<td>1.5%</td>
<td>0.5%</td>
<td>4.2%</td>
<td>10.2%</td>
<td>3.1%</td>
<td>-13.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3Yr</td>
<td>4.5%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>3.9%</td>
<td>9.8%</td>
<td>2.4%</td>
<td>8.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Japan's March CPI is
estimated to complete this table; The February value is used</td>
</tr>
</tbody>
</table>
</body></html>

Money growth rates in Europe are starting to edge higher, but ever so slowly. At a 2.2% annual rate pace over three months compared to a 1.5% pace Yr/Yr is not much of an acceleration. Credit growth is however weaker over three months [...]

Globally Money Growth Is Just Not Getting Into Gear. So Where’s The Real Risk?

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100429d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The job market is on the mend. The Bureau of Labor Statistics
reported that initial claims for jobless insurance fell 11,000 to
448,000 after the prior week's revised 21,000 drop. The latest level
equaled the March average and roughly matched Consensus expectations
for a decline to 445,000 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 nudged up to 462,500.
A 18,000 decline in continuing claims for unemployment
insurance during the latest week added to a revised 23,000 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 also fell to a
cycle low of 4.639 mil. This series dates back to 1966.
Extended benefits for unemployment insurance increased to
202,215. However, they were down by three-quarters from a peak of
597,688 reached in November.
The insured unemployment rate held steady at 3.6%. 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.
The highest insured unemployment rates in the week ending
April 10 were in Alaska (6.6 percent), Puerto Rico (6.4), Oregon (5.9),
Wisconsin (5.6), Pennsylvania (5.4), Nevada (5.2), California (5.0),
Idaho (5.0), Montana (5.0), Michigan (4.9), and North Carolina (4.9).
The lowest insured unemployment rates were in Virginia (1.8), Texas
(2.2), Georgia (2.9), Florida (3.1), Maryland (3.2), Wyoming (3.2),
Ohio (3.5), New York (3.7) and Maine (3.9). 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.
Employment Survey Delivers JOLTS from the
Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/documents/pubs/econsouth/q110econsouth.pdf#page=8">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100429e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100429f.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">04/24/10</th>
<th scope="col">04/17/10</th>
<th scope="col">04/10/10</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>448</td>
<td>459</td>
<td>480</td>
<td>-28.1%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,645</td>
<td>4,663</td>
<td>-25.2%</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>4.6(4/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The job market is on the mend. The Bureau of Labor Statistics reported that initial claims for jobless insurance fell 11,000 to 448,000 after the prior week's revised 21,000 drop. The latest level equaled the March average and roughly [...]

U.S. Unemployment Insurance Claims Fall To Last Month's Low

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

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Andrew Cates

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

260115Z1.jpg

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

260115Z2.jpg

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

260115Z3.jpg

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

260115Z4.jpg

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

260115Z5.jpg

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

260115Z6.jpg

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

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/2mhM227WWeJJ6kRv7sJMiE?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Between Optimism and Uncertainty

Sandy Batten

260115N2.jpg

260115O2.jpg

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**.

260115P2.jpg

260115Q2.jpg

- 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

260115A5.jpg

260115B5.jpg

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.

U.S. Existing Home Sales Jumped 5.1% in December

Michael J. Moran

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The Bureau of Labor Statistics did not publish a report on producer prices for October because of the government shutdown, but it was able to collect sufficient data retroactively to construct all the usual statistics. Those results were included in the November report, which was published on January 14.

The producer price index for final demand rose 0.2% In November after an increase of 0.1 percent in October. These modest changes followed firmer increases in the prior three months (0.4% on average), leaving little change in the year-over-year increase. The Producer Price Index can fluctuate sharply from month-to-month, but the ups and downs recently have traced a sideways trend, with inflation remaining in a range of approximately 2.0% to 4.0% since early 2024. Inflation in the past several months has been in the middle of that range.

The goods and service components of final demand both posted annual inflation near 3.0% in November (goods at 3.2% and services at 2.9%), but they were moving along different trajectories. Good inflation was drifting upward, while service inflation was easing slightly. Casual observation suggests that tariffs might be playing a role in the pickup in goods inflation. Tariffs could be leading to higher prices of inputs for domestic producers, which might be passed on to final prices. The year-over-year increase in final goods inflation totaled only 0.4% in April, when President Trump announced draconian tariffs, but it has since climbed to 3.2%.

The final demand PPI, in addition to goods and service components, also has a construction component, although it has a small weight in the overall index (2.6%). This component was unchanged in November after an increase of 1.6% in October; the year-over-year change totaled 2.7%. The BLS claims that monthly changes in the construction component are seasonally adjusted, but the published figures seem to have residual seasonality. Specifically, the first month of many quarters often shows an outsized change. In the chart below, the spikes upward and downward are nearly always in the first month of a quarter.

In addition to final demand measures, the Bureau of Labor Statistics also publishes price indexes for intermediate goods and services produced by US firms. The intermediate service measure had been showing a downward drift in inflation, although it has taken a slight turn upward in recent months. Among producers of processed goods, inflation at the intermediate level has taken a sharp turn since mid-2024, moving from deflation to essentially no inflation one year later. Inflation remained close to zero for a time, but a renewed upward trend began in the spring of last year (after April – one wonders about the effect of tariffs).

The BLS publishes an index for unprocessed goods at the intermediate level, but this measure is wild. Month-to-month changes are often pronounced, and the year-over-year change swings sharply as well. Since mid-2024, year-over-year inflation has ranged from -32.1% to 9.3%.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Offsetting drifts in final demand for goods and services leave inflation steady at 3%.
- Inflation quickens for producers of intermediate goods and services.