Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930a.jpg" width="353">
The sharp decline in payroll employment continued this month, but the rate of decline recently has stabilized. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payrolls fell 254,000 during September. That followed a revised 277,000 August decline which was slightly shallower than reported initially. The latest reading was the twentieth consecutive monthly decline. The monthly change was, however, the smallest since July of last year and two-thirds the size of the worst reading last March. The three-month annualized rate of decline in payrolls also eased to 3.2% from its March record of 7.1%.
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The U.S. Bureau of Labor Statistics will report September payroll employment this Friday. For comparison, the August decline of 277,000 in ADP&#39;s measure of private nonfarm payrolls was accompanied by a loss of 198,000 jobs in the BLS measure of private sector payrolls. According to ADP and Macro-Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930b.jpg" width="353">
ADP reported that small-sized payrolls again fell the most this month and posted a 100,000 decline (-4.4%). That was similar to the 93,000 (-5.7% y/y) decline in medium-sized payrolls. Large payrolls fell by 61,000 (-5.7% y/y). The steady decline in service-producing industry employment continued. The September drop, which measured 103,000 (-3.2% y/y), was the eighteenth consecutive monthly decline but in percentage terms the three-month rate of change moderated to -1.8%. The recent declines are less than two-thirds the worst from December through March. Medium-sized service payrolls fell 38,000 (-3.6% y/y) and small-sized payrolls declined 38,000 (-2.9% y/y). Large service producing payrolls dropped by 27,000 (-3.5% y/y).
In the goods producing sector there were 151,000 fewer jobs in September (-13.4% y/y). Here, the three-month rate of change eased again but only to -9.6% versus -17.3% at its worst. Small-sized payrolls fell 62,000 (-13.1% y/y) followed by a 55,000 (-13.7% y/y) drop in medium-sized payrolls. Large payrolls fell 34,000 (-13.4% y/y). In the manufacturing sector alone, payrolls fell a steady 74,000 (-12.8% y/y).
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_September_09.pdf">here</a> and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll Employment (m/m Chg., 000s)</td>
<td>-254</td>
<td>-277</td>
<td>-5.1%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small Payroll (1-49)</td>
<td>-100</td>
<td>-114</td>
<td>-4.4</td>
<td>-0.0</td>
<td>1.6</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium Payroll (50-499)</td>
<td>-93</td>
<td>-106</td>
<td>-5.7</td>
<td>-0.5</td>
<td>1.2</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large Payroll (&gt;500)</td>
<td>-61</td>
<td>-57</td>
<td>-5.7</td>
<td>-1.6</td>
<td>-0.1</td>
<td>0.4</td>
</tr>
</tbody>
</table>


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The sharp decline in payroll employment continued this month, but the rate of decline recently has stabilized. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm [...]

ADP Report: Sharp Decline In Nonfarm Payroll Employment Continues

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930a.jpg" align="left" border="0" height="265" width="353">
The sharp decline in payroll employment continued this month,
but the rate of decline recently has stabilized. The latest report from
the payroll processor ADP, in their National Employment Report,
indicated that private nonfarm payrolls fell 254,000 during September.
That followed a revised 277,000 August decline which was slightly
shallower than reported initially. The latest reading was the twentieth
consecutive monthly decline. The monthly change was, however, the
smallest since July of last year and two-thirds the size of the worst
reading last March. The three-month annualized rate of decline in
payrolls also eased to 3.2% from its March record of 7.1%.
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.



The U.S. Bureau of Labor Statistics will report September
payroll employment this Friday. For
comparison, the August decline of 277,000 in ADP's measure of private
nonfarm payrolls was accompanied by a loss of 198,000 jobs in the BLS
measure of private sector payrolls.
According to ADP and Macro-Advisers, the correlation between the
monthly percentage change in the ADP estimate and that in the BLS data
is 0.90.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930b.jpg" align="right" border="0" height="265" width="353">

ADP reported that small-sized payrolls again fell the most
this month and posted a 100,000 decline (-4.4%). That was similar to
the 93,000 (-5.7% y/y) decline in medium-sized payrolls. Large payrolls
fell by 61,000 (-5.7% y/y). The steady decline in service-producing
industry employment continued. The September drop, which measured
103,000 (-3.2% y/y), was the eighteenth consecutive monthly decline but
in percentage terms the three-month rate of change moderated to -1.8%.
The recent declines are less than two-thirds the worst from December
through March. Medium-sized service payrolls fell 38,000 (-3.6% y/y)
and small-sized payrolls declined 38,000 (-2.9% y/y). Large service
producing payrolls dropped by 27,000 (-3.5% y/y).


In the goods producing sector there were 151,000 fewer jobs in
September (-13.4% y/y). Here, the three-month rate of change eased
again but only to -9.6% versus -17.3% at its worst. Small-sized
payrolls fell 62,000 (-13.1% y/y) followed by a 55,000 (-13.7% y/y)
drop in medium-sized payrolls. Large payrolls fell 34,000 (-13.4% y/y).
In the manufacturing sector alone, payrolls fell a steady 74,000
(-12.8% y/y).


The ADP National Employment Report data is maintained in
Haver's 
USECON database;
historical figures date back to December 2000. The figures in this
report cover only private sector jobs and exclude employment in the
public sector, which rose an average 11,083 during the last twelve
months. 
 


The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_September_09.pdf">here</a>
 and the ADP
methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>-254</td>
<td>-277</td>
<td>-5.1%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>-100</td>
<td>-114</td>
<td>-4.4</td>
<td>-0.0</td>
<td>1.6</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>-93</td>
<td>-106</td>
<td>-5.7</td>
<td>-0.5</td>
<td>1.2</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>-61</td>
<td>-57</td>
<td>-5.7</td>
<td>-1.6</td>
<td>-0.1</td>
<td>0.4</td>
</tr>
</tbody>
</table>
 Consumer Confidence Spurts in
UK&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930c.jpg" align="left" border="0" height="265" width="353">
U.K. consumer confidence jumped in September by the most since
1995 as optimism about the economy&#8217;s prospects rebounded, according to
GfK NOP. The index of confidence jumped by the greatest amount since
1995 and the level reading of -16 is it&#8217;s highest Since January of 2008. 
 

Still the headline reading is only in the 57th percentile of
its 10-Year range. And the headline, at -16, is still negative. 
 

The current and past readings on the index are still sour. The
financial situation over the past 12 months is a bottom 29 percentile
reading while the current financial situation is rated in the 36th
percentile a bare-bones increase. But for the next 12-months the rating
flies up to 71st percentile. Even with that, the environment for making
a major purchase only rises from a 45th percentile response currently
to a 48th percentile response in the future. Improvement? Yes! Much
improvement? No! 
 

The general economic situation is rated in the 27th percentile
over the past 12 months that jumps to the highest reading in at least
10-years over the next 12-months. 
 
Deja-What? 
We have seen this sort of thing before. We got exactly the
same sort of response from Italy&#8217;s consumers within the last week.
There is a great belief on the part of consumers that in the
next12-months things are going to be much better than they were and
than they are. Meanwhile, although global stock markets are rising
sharply, there is a lot of stock market pessimism and the rise itself
has been accomplished on low volume for the most part. Government
projections for growth are moderate-to-downbeat and private sector
economists have been dragged every step of the way to an improved
forecast by ever improving economic data. It is curious that with
pessimism in the wind in the woodwork everywhere that consumers are so
upbeat. Are they right to be confident &#8211;do they know something? Or, are
they just naïve? In Italy we have observed that a day after its
consumers were so upbeat the business sentiment survey there
backtracked. 
 
Expectations&#8230; 
Very clearly this is a recovery with expectations scattered to the
winds. It is hard to tell what a given group will think and why, let
alone how long, that they will think it. We have markets that
outperform expectations but without believers. After the last 12-months
it is not surprising to have confusion, but despite some very active
government intervention it is strange indeed that consumers are the
most impressed and businesses are skeptical and financial experts seem
apoplectic with the good news to the point to disbelief or even
rejection. 
 
Impact on performance 
All of this has to affect how the economy actually performs. We know
that expectations are important but we also know they are not etched in
stone and we can debate how much they affect behavior. For the time
being the consumer seems to be the backbone of whatever optimism we
have. This is clear in the UK and in the Italy; it seems somewhat the
same in the US. Will it be enough to keep the consumer-led expansions
going? Since we depend on the consumers&#8217; spending it may be. But note
the dark side to the UK response on spending; it is different from the
Italian response. In the UK there is skepticism that the buying climate
will improve by much but in Italy a big improvement is expected in that
climate. On balance we can say that consumers appear to be more
optimistic than most but we cannot say that their optimism is for the
same reasons and therefore it might not be well-grounded. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="7">GFK
Consumer Survey</th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>% of 2Yr</td>
<td>% of 10Yr</td>
</tr>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>Range</td>
<td>Range</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer Confidence</td>
<td>-16</td>
<td>-25</td>
<td>-25</td>
<td>-25</td>
<td>65.7%</td>
<td>57.5%</td>
</tr>
<tr class="grey4">
<td colspan="7" class="firstcol">Current</td>
</tr>
<tr class="grey5">
<td class="firstcol">Household Financial Situation</td>
<td>18</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>36.4%</td>
<td>36.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Major Purchases</td>
<td>-15</td>
<td>-26</td>
<td>-25</td>
<td>-26</td>
<td>59.6%</td>
<td>45.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Last
12 Months</td>
</tr>
<tr class="grey5">
<td class="firstcol">Household Financial Situation</td>
<td>-13</td>
<td>-18</td>
<td>-19</td>
<td>-18</td>
<td>29.2%</td>
<td>29.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">General Economic Situation</td>
<td>-63</td>
<td>-69</td>
<td>-72</td>
<td>-73</td>
<td>33.3%</td>
<td>27.5%</td>
</tr>
<tr class="grey5">
<td class="firstcol">CPI</td>
<td>67</td>
<td>62</td>
<td>65</td>
<td>68</td>
<td>10.4%</td>
<td>37.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Savings</td>
<td>-5</td>
<td>-10</td>
<td>-12</td>
<td>-15</td>
<td>29.9%</td>
<td>29.9%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">Next
12-Months</td>
</tr>
<tr class="grey5">
<td class="firstcol">Household Financial Situation</td>
<td>5</td>
<td>0</td>
<td>0</td>
<td>1</td>
<td>74.2%</td>
<td>71.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">General Economic Situation</td>
<td>4</td>
<td>-9</td>
<td>-8</td>
<td>-8</td>
<td>100.0%</td>
<td>100.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Unemployment</td>
<td>46</td>
<td>53</td>
<td>56</td>
<td>57</td>
<td>38.8%</td>
<td>50.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Major Purchases</td>
<td>-28</td>
<td>-36</td>
<td>-36</td>
<td>-36</td>
<td>54.5%</td>
<td>48.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Savings</td>
<td>0</td>
<td>-1</td>
<td>1</td>
<td>-2</td>
<td>13.0%</td>
<td>11.5%</td>
</tr>
<tr class="grey5">
<td class="firstcol">CPI</td>
<td>58</td>
<td>52</td>
<td>51</td>
<td>49</td>
<td>35.3%</td>
<td>35.3%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">By
Income</td>
</tr>
<tr class="grey5">
<td class="firstcol">Lower</td>
<td>-23</td>
<td>-30</td>
<td>-31</td>
<td>-31</td>
<td>59.5%</td>
<td>51.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Upper</td>
<td>-12</td>
<td>-15</td>
<td>-16</td>
<td>-15</td>
<td>60.6%</td>
<td>51.3%</td>
</tr>
</tbody>
</table>
 Q2 GDP Fell A Lessened 0.7%;
Hesitant Profits Recovery Continues 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 30, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930d.jpg" align="right" border="0" height="265" width="353">The second
revision of GDP growth last quarter showed that activity fell slightly
less than initially estimated. A 0.7% (AR) 2Q decline compared to 1.0%
declines indicated in the two prior reports. During the course of the
numbers' release, the decline in domestic final demand has been
lessened to 0.9% after a 6.4% collapse to open the year. That easing
has offset an increased negative influence from inventory
decumulation.
Inventory decumulation
continued as the major drag on GDP growth last quarter with a 1.4
percentage point reduction that was unrevised. Final demand revisions
were modest. Consumer spending is now estimated to have fallen at a
0.9% annual rate (-1.7% y/y) led by a 5.6% (-8.8% y/y) drop in durables
consumption. Residential investment fell at a little-revised 23.2% rate
-25.6% y/y) and business investment dropped at a 9.6% rate (-19.7% y/y)
which was similar to earlier reports. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930e.jpg" align="right" border="0" height="265" width="353">
Government investment rose at a
little revised 6.7% rate (2.5% y/y) and exports declined at a lessened
4.1% rate. Imports dropped 14.7%; therefore, net-foreign trade
improvement added 1.7 percentage points to 2Q GDP growth.
Corporate profits in Q2 rose 3.7% (-12.6% y/y) pre-tax,
including IVA and CCA, from Q1 which was slightly less of a rise than
reported initially. The latest gain followed a 5.3% 1Q increase but
both just dented a 22.8% 4Q decline. Financial industries saw their
quarterly profits gain 12.0% in Q2 (-1.8% y/y) after having nearly
doubled in Q1 versus 4Q. Nonfinancial company profits improved last
quarter by a marginally unrevised 4.7% (-7.5% y/y).&nbsp;Rest of
world profits fell for the fifth quarter in the last six and by 4.6%
(-17.9% y/y).
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090930f.jpg" align="right" border="0" height="265" width="353">
The GDP price deflator was unrevised
and was unchanged from 1Q. A 1.4% gain (-0.2% y/y) in the PCE price
index followed a 1.5% 1Q decline. Overall, the domestic final sales
price index rose at a negligible 0.5% rate (-0.3% y/y).
 The U.S.
National Income &amp; Product Account data are available in Haver's
USECON and the USNA
databases.
Excerpts from Dallas
Fed Chairman Richard W. Fisher's remarks before the Texas
Christian University Business Network of Dallas can be found <a href="http://dallasfed.org/news/speeches/fisher/2009/fs090929.cfm">
here</a>.
&nbsp;

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">2Q '09 (3rd Release)</th>
<th scope="col">2Q '09 (2nd Release)</th>
<th scope="col">2Q '09 (Advance)</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>-0.7</td>
<td>-1.0</td>
<td>-1.0</td>
<td>-6.4</td>
<td>-3.8</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-1.4</td>
<td>-1.4</td>
<td>-0.8</td>
<td>-2.4</td>
<td>-1.0</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>0.7</td>
<td>0.4</td>
<td>-0.2</td>
<td>-4.1</td>
<td>-2.8</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.7</td>
<td>1.6</td>
<td>1.4</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-0.9</td>
<td>-1.2</td>
<td>-1.5</td>
<td>-6.4</td>
<td>-3.7</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.0</td>
<td>0.0</td>
<td>0.2</td>
<td>1.9</td>
<td>1.5</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>
</body></html>

ADP Report: Sharp Decline InNonfarm Payroll Employment Continues

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929k.jpg" width="353">
The EU Commission indices for the EU area show that improvement continued in September. Still it was the smallest mo/mo gain since the string of increases began. As a percentage of their range of values the country specific readings are still 15% or more below their respective range midpoints. The UK is the relative strongest and Spain is the relative weakest. In Sept both Italy and Spain backtracked. The UK reading was flat. Those are not good developments. 
EU sectors: The EU sector readings show great divergence. Retailing stands in the 45th percentile of its range, the best relative reading over all sectors. Consumer confidence in the 44th percentile and is second best. The industrial and services sectors are behind with relative readings of about the 32nd percentile. Construction is far weaker, standing in its 15th percentile. The raw readings are all negative thus no sector is advancing. That is a key difference between the EU Commission and the NTC-Markit indices where both MFG and Services readings are close to 50 and where the combined reading already shows expansion. 
Queue Percentiles - Note that the EU readings are even weaker when ranked by queue than by their percentage of range percentiles. Queuing, positions the various readings in their range of ranked values, setting the actual level of the observations themselves aside. Calculated in this way the current EMU readings are in the bottom 10% to 20% of their respective queue ranges for EU sectors; they are largely in the 10% to 15% range for country specific readings. Theses readings mean that the actual levels of the September reading are in the bottom 10% to 20% of all readings since late 1988. That is still very weak despite the degree of rebound that is apparent. It is much weaker than the picture portrayed by the range rankings 
Industrial sector across large EU countries - Looking at the individual sectors across countries we find the weakness is fairly widespread. For the industrial sector the UK ranks highest in its 34th range percentile followed by France in its 33rd percentile. Germany is weakest in its 23rd percentile. For all of EMU orders are only in the 9th percentile of their range, a very weak reading export orders are in the same relative position. However the production is in its 42nd percentile and the production trend is assessed to be in its 46th percentile. 
Consumer readings across large countries - Consumer readings are somewhat better across countries standing in their 59th percentile in the UK, above the range midpoint of 50, at 52.5 in Italy. Spain is on the edge at 49.1 and Germany is the weakest relative reading standing in the 32nd percentile of its range. Consumers still fear unemployment as that reading is a still with a top 30% value. Still the economic situation in the next 12-months is assessed to be in its 60th percentile. The time to make a major purchase had been rated in the bottom 15 percentile over the past 12 months but that is now up to a 52 percentile reading in September looking ahead to the next 12 months. That is quite a bit of an improvement. 
Retailing across large countries - The EU retail reading for the UK is actually good in the 70th percentile of its range in September. But France in the 47th percentile stands next in its range followed by Germany at the 41st percentile. Italy is weakest in its 15th percentile. All reading for the EMU retailing sector overall are bottom 25th percentile or worse. 
Services in large countries - The service sector is weak with most EU nations at or near the bottom third of their respective ranges. The best range ranking is in the UK at the 36th percentile followed by Germany in the 34th percentile and France in the 28th percentile; Spain is the weakest in its 15th percentile. For the EU sector as a whole employment is in the bottom 6 percentile of its range and expected employment is in the bottom 15th percentile of its range Current demand is assessed as in the 26th percentile while expected demand is in the 29th percentile. 
Summing up- On balance the EU is showing some improvement but the pace of gain has slowed with the current readings still quite low. For a more robust recovery the monthly improvements must continue. We looked at the EU index, EMU index and at select large countries in the data above and found weakness is still a major hallmark. Spain and Italy took set backs this month among the large countries. In the UK the country index was flat. Germany slowed its pace of improvement. France alone among the larger countries saw acceleration in its improvement. The outlook for continued expansion is still solid but the assessment of the likely pace is still up in the air and several things, unfortunately now point to a reduced pace of increase including the slowdown in the gain for the EU index this month. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EU Sectors and Country level Overall Sentiment&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">EU</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td> By Queue rank%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Overall Index</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>71.1</td>
<td>39.9</td>
<td>226</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>100</td>
<td>10.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Industrial</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>-33</td>
<td>32.6</td>
<td>230</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-7</td>
<td>8.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Confid</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>-23</td>
<td>44.1</td>
<td>208</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>17.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Retail</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>-17</td>
<td>45.2</td>
<td>202</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>19.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Construction</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>-37</td>
<td>15.2</td>
<td>221</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-16</td>
<td>12.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>-23</td>
<td>31.7</td>
<td>144</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>6.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Sep-09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">EMU</td>
<td>2.5%</td>
<td>6.3%</td>
<td>3.8%</td>
<td>82.8</td>
<td>34.7</td>
<td>225</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>10.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>1.7%</td>
<td>6.3%</td>
<td>4.1%</td>
<td>87.4</td>
<td>31.1</td>
<td>212</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>15.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>5.6%</td>
<td>2.3%</td>
<td>0.5%</td>
<td>87.9</td>
<td>34.0</td>
<td>213</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>15.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>4.4%</td>
<td>86.2</td>
<td>34.7</td>
<td>224</td>
<td>122</td>
<td>67</td>
<td>55</td>
<td>100</td>
<td>10.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>5.2%</td>
<td>80.7</td>
<td>28.1</td>
<td>226</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>10.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo:UK</td>
<td>0.0%</td>
<td>13.1%</td>
<td>7.3%</td>
<td>83.5</td>
<td>42.1</td>
<td>225</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>10.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Since Oct 1988</td>
<td colspan="4">251-Count</td>
<td colspan="7">Services: 154-Count</td>
</tr>
<tr class="grey1">
<td colspan="12">Sentiment is an index, sector readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
</body>
</html>

The EU Commission indices for the EU area show that improvement continued in September. Still it was the smallest mo/mo gain since the string of increases began. As a percentage of their range of values the country specific readings [...]

EU Index Rises For The Sixth Month In A Row, But...

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929i.jpg" align="right" border="0">Eurostat
reported today that its economic sentiment indicator
(ESI) for September rose to 82.8 from 80.8 in August. The measure has
now risen in the last five months from the low of 64.6 reached in
March. Although it is still below its long term average of 100, the
improvement that has taken place in the indicator suggests that
economic activity in third quarter is likely to be positive for the
Euro area as a whole. The attached chart of the month to month changes
in the ESI and the quarter to quarter changes in GDP shows that the
change in the ESI is a good predictor of subsequent changes in GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929j.jpg" align="right" border="0">
Another indicator of rising sentiment in the Euro Area is the
"EuroCOIN" indicator that was released a few days ago. This is a
monthly indicator of GDP that, according to its authors, the Bank of
Italy in collaboration with the Centre for Economic Policy Research, is
"a real-time estimate of underlying trend of GDP. i.e. growth adjusted
for short term fluctuations." The EuroCOIN indicator has been rising
since January of this year and was slightly positive at 0.07 in
September, the first time it was positive since June 2008. The second
chart compares the EuroCOIN indicator with the changes in real GDP and
like the ESI suggests an ending of the recession in the third quarter
for the Euro Area as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Eurostat Economic Sentiment
Indicator (CSI)</td>
<td>82.8</td>
<td>80.8</td>
<td>76.0</td>
<td>73.2</td>
<td>70.2</td>
<td>9.73</td>
<td>64.6</td>
<td>65.3</td>
<td>67.2</td>
</tr>
<tr>
<td class="firstcol">EuroCOIN</td>
<td>0.07</td>
<td>-0.21</td>
<td>-0.42</td>
<td>-0.61</td>
<td>-0.88</td>
<td>-1.09</td>
<td>-1.22</td>
<td>-1.27</td>
<td>-1.21</td>
</tr>
</tbody>
</table>
</body></html>

Eurostat reported today that its economic sentiment indicator (ESI) for September rose to 82.8 from 80.8 in August. The measure has now risen in the last five months from the low of 64.6 reached in March. Although it is still below [...]

Confidence Improving in the Euro Area: Recession Ending?

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929g.jpg" align="right" border="0" height="265" width="353">
The Conference Board indicated that consumer confidence during
September dipped from August. Though both figures were up sharply from
the February low, the trend in the series has been roughly sideways
since May. The Conference Board data can be found in Haver's CBDB
database.
During the last ten years there has been an 86% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
Consumers' assessment of the current economic conditions fell
again this month and remained near the historic low. It remained off by
almost two-thirds from one year earlier. Jobs were seen as hard to get
by an increased 47.0% of respondents and jobs were seen as plentiful by
3.4% which was near the series' historic low. Business conditions were
seen as good by just 8.7% and that also was near the series' low.
Consumers who thought business conditions were bad rose slightly to
46.3%. While off somewhat from its high the reading still near the
highest since 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929h.jpg" align="right" border="0" height="265" width="353">
The expectations component of confidence slipped from August
but the index remained near the highest level since late-2007. The
percentage of respondents expecting business conditions to improve
slipped to 21.3% though that remained near the highest level since
2004. A much reduced 15.0% expected conditions to worsen. That was off
from the recent February high of 40.7%. An improved 17.9% of
respondents expected economic improvement to generate more jobs, more
than double the percentage at the recent low.
Expectations for the inflation rate in twelve months fell back
to 5.2%, the lowest level since 2007 and down from last year's high of
7.7%. Interest rates in twelve months were expected to be higher by
48.8% of respondents, while 14.8% expected rates to fall. A greatly
increased 35.4% of respondents expected stock prices to rise.
Consumers continued to manage their spending plans cautiously.
Just 2.3% plan to buy a home during the next six months while 23.8%
plan to buy a major appliance. That's versus 30.9% back in 2007. Only
4.4% plan to buy an automobile versus 6.0% in 2007. Just 2.1% plan to
buy a new one.
Is The Financial Crisis Over? A Yield Spread
Perspective from the Federal Reserve Bank of St. Louis is
available <a href="http://research.stlouisfed.org/publications/es/09/ES0940.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>53.1</td>
<td>54.5</td>
<td>-13.5</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>22.7</td>
<td>25.4</td>
<td>-62.8</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>73.3</td>
<td>73.8</td>
<td>19.2</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board indicated that consumer confidence during September dipped from August. Though both figures were up sharply from the February low, the trend in the series has been roughly sideways since May. The Conference Board [...]

U.S. Consumer Confidence Moves Sideways After Spring Bounce

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929d.jpg" align="right" border="0" height="265" width="353">
The pump
price for regular gasoline fell last week to the lowest
level since late-July. At an average $2.50 per gallon the price dropped
a nickel from the prior week and may have broken out of the sideways
pattern since early-June. These prices compare to the December low of
$1.61. Yesterday, prices fell further. The wholesale gasoline price was
down to $1.65 per gallon. Prices had reached a high in early-August of
$2.03. The figures are reported by the U.S. Department of Energy and
can be found in Haver's WEEKLY &amp; DAILY databases.
During August, the consumer price index for gasoline recouped the July
decline with a not seasonally adjusted 3.3% increase. Seasonally
adjusted gas prices were quite firm and rose 9.1% m/m, up 40.3% YTD. Crude
oil<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929e.jpg" align="right" border="0" height="265" width="353">
prices have led the decline in refined product prices.
Light sweet crude oil prices (WTI) fell to $68.41 per barrel, though
that still was up from the December low of $32.37. Yesterday, the spot
market price for light sweet crude oil fell further to $66.84 per
barrel versus a daily high of $71.55 last week.The demand for
gasoline continued to improve through mid-month. The y/y rise of 1.1%
was the first meaningful positive comparison since early-2007. Demand
for residual fuel oil slacked off from its earlier strength and fell
5.1% y/y while distillate demand is off 13.2% y/y. Finally, oil remains
plentiful as evidenced by a 16.5% y/y rise in inventories of crude oil
&amp; petroleum products. Inventories of gasoline recently have
surged&nbsp; and are up 19.2% versus last year. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929f.jpg" align="right" border="0" height="265" width="353">
Natural gas prices increased again last week
to an average of $3.48 per mmbtu (-54.9% y/y) but they remained down by
three-quarters from the high reached in early-July of last year of
$13.19/mmbtu. Yesterday prices were up from last week's level at
$3.54/mmbtu.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.50</td>
<td>2.55</td>
<td>-31.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body></html>

The pump price for regular gasoline fell last week to the lowest level since late-July. At an average $2.50 per gallon the price dropped a nickel from the prior week and may have broken out of the sideways pattern since early-June. [...]

Weekly Gasoline Prices Fall To Lowest Level In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929a.jpg" align="right" border="0" height="265" width="353">
Firmer
readings on home sales have given a lift to home prices. During July
the S&amp;P/Case-Shiller Home Price Composite
Index of twenty metro-markets rose 1.2% from June and that was the
firmest gain since late-2005. The monthly increase eased the y/y drop
to 13.3%, less than expected. Still, prices were down by
nearly one-third since the peak in May 2006. The July gain left prices
down less y/y than the expected 14.2%. Not seasonally adjusted prices
were even stronger m/m and posted a 1.6% increase after a 1.4% June
gain. The Case-Shiller index of 20 U.S. cities and their surrounding
areas is value-weighted. A greater index weight is assigned to more
expensive homes and the series dates back only to 2001. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929b.jpg" align="right" border="0" height="265" width="353">
Here is a <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092955.pdf">
link</a>&nbsp;to the latest press release. An overview of the
S&amp;P/Case-Shiller home price series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.·
The Case-Shiller composite index of home prices in 10 metropolitan
areas, which has a longer history and dates back to 1987, also firmed
last month by 1.3% (-12.8% y/y). This measure also was down by nearly
one-third since the 2006 peak.Less Weak
Regions:&nbsp;&nbsp;Home prices in some areas of the
country have firmed lately though they remain down year-to-year.&nbsp;
In Cleveland, Ohio (-1.4% y/y) and in Dallas (-1.6% y/y)
prices rose for the fourth consecutive month. Prices in Denver rose for
their fifth month (-3.0% y/y). Boston prices also were higher during
the July (-5.0% y/y) while in Chicago home prices were quite strong m/m
and rose 2.1% (-14.2% y/y). In New York prices ticked up 0.9% m/m
(-10.4% y/y) while in Charlotte, North Carolina prices were roughly
unchanged (-9.0% y/y.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929c.jpg" align="right" border="0" height="265" width="353">
Weakest Regions: Though
home prices in Phoenix, Arizona rose 1.2% m/m they remained off 28.5%
y/y. Home prices in Las Vegas, Nevada continued their rapid rate of
decline with a 1.9% m/m drop (-31.4% y/y) and also were down by roughly
one-half from their peak. Home prices in Miami edged up (-21.2% y/y
while home prices in Los Angeles also firmed (-14.9% y/y). In Tampa,
ticked higher for the second month but remained off 18.5% y/y. In
Detroit, the monthly rate of price decline also eased considerably
(-24.7% y/y) but prices were off by early one-half from the
peak.&nbsp;In San Francisco prices firmed for the second straight
month and that eased the y/y decline to 17.9%.The Credit
Crisis and Cycle-Proof Regulation from the Federal Reserve
Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>143.05</td>
<td>141.42</td>
<td>-13.3%</td>
<td>-15.8%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
</body></html>

Firmer readings on home sales have given a lift to home prices. During July the S&P/Case-Shiller Home Price Composite Index of twenty metro-markets rose 1.2% from June and that was the firmest gain since late-2005. The monthly [...]

Case-Shiller Home Price Index Posts Largest Monthly Increase Since 2005

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929a.jpg" align="right" border="0" height="265" width="353">Firmer
readings on home sales have given a lift to home prices. During July
the S&amp;P/Case-Shiller Home Price Composite
Index of twenty metro-markets rose 1.2% from June and that was the
firmest gain since late-2005. The monthly increase eased the y/y drop
to 13.3%, less than expected. Still, prices were down by
nearly one-third since the peak in May 2006. The July gain left prices
down less y/y than the expected 14.2%. Not seasonally adjusted prices
were even stronger m/m and posted a 1.6% increase after a 1.4% June
gain.
 The Case-Shiller index of 20 U.S. cities and their
surrounding
areas is value-weighted. A greater index weight is assigned to more
expensive homes and the series dates back only to 2001. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929b.jpg" align="right" border="0" height="265" width="353">
Here is a <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092955.pdf">
link</a>&nbsp;to the latest press release. An overview of the
S&amp;P/Case-Shiller home price series can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.·
The Case-Shiller composite index of home prices in 10 metropolitan
areas, which has a longer history and dates back to 1987, also firmed
last month by 1.3% (-12.8% y/y). This measure also was down by nearly
one-third since the 2006 peak.
Less Weak
Regions:&nbsp;&nbsp;Home prices in some areas of the
country have firmed lately though they remain down year-to-year.&nbsp;
In Cleveland, Ohio (-1.4% y/y) and in Dallas (-1.6% y/y)
prices rose for the fourth consecutive month. Prices in Denver rose for
their fifth month (-3.0% y/y). Boston prices also were higher during
the July (-5.0% y/y) while in Chicago home prices were quite strong m/m
and rose 2.1% (-14.2% y/y). In New York prices ticked up 0.9% m/m
(-10.4% y/y) while in Charlotte, North Carolina prices were roughly
unchanged (-9.0% y/y.)
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929c.jpg" align="right" border="0" height="265" width="353">Weakest
Regions: Though
home prices in Phoenix, Arizona rose 1.2% m/m they remained off 28.5%
y/y. Home prices in Las Vegas, Nevada continued their rapid rate of
decline with a 1.9% m/m drop (-31.4% y/y) and also were down by roughly
one-half from their peak. Home prices in Miami edged up (-21.2% y/y
while home prices in Los Angeles also firmed (-14.9% y/y). In Tampa,
ticked higher for the second month but remained off 18.5% y/y. In
Detroit, the monthly rate of price decline also eased considerably
(-24.7% y/y) but prices were off by early one-half from the
peak.&nbsp;In San Francisco prices firmed for the second straight
month and that eased the y/y decline to 17.9%.
The Credit
Crisis and Cycle-Proof Regulation from the Federal Reserve
Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>143.05</td>
<td>141.42</td>
<td>-13.3%</td>
<td>-15.8%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>

 Weekly Gasoline Prices Fall To
Lowest Level In One Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929d.jpg" align="right" border="0" height="265" width="353">The pump
price for regular gasoline fell last week to the lowest
level since late-July. At an average $2.50 per gallon the price dropped
a nickel from the prior week and may have broken out of the sideways
pattern since early-June. These prices compare to the December low of
$1.61. Yesterday, prices fell further. The wholesale gasoline price was
down to $1.65 per gallon. Prices had reached a high in early-August of
$2.03. The figures are reported by the U.S. Department of Energy and
can be found in Haver's WEEKLY &amp; DAILY databases.
During August, the consumer price index for gasoline recouped
the July
decline with a not seasonally adjusted 3.3% increase. Seasonally
adjusted gas prices were quite firm and rose 9.1% m/m, up 40.3% YTD.
 Crude
oil<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929e.jpg" align="right" border="0" height="265" width="353">
prices have led the decline in refined product prices.
Light sweet crude oil prices (WTI) fell to $68.41 per barrel, though
that still was up from the December low of $32.37. Yesterday, the spot
market price for light sweet crude oil fell further to $66.84 per
barrel versus a daily high of $71.55 last week.
The demand for
gasoline continued to improve through mid-month. The y/y rise of 1.1%
was the first meaningful positive comparison since early-2007. Demand
for residual fuel oil slacked off from its earlier strength and fell
5.1% y/y while distillate demand is off 13.2% y/y. Finally, oil remains
plentiful as evidenced by a 16.5% y/y rise in inventories of crude oil
&amp; petroleum products. Inventories of gasoline recently have
surged&nbsp; and are up 19.2% versus last year. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929f.jpg" align="right" border="0" height="265" width="353">
Natural gas prices increased again last week
to an average of $3.48 per mmbtu (-54.9% y/y) but they remained down by
three-quarters from the high reached in early-July of last year of
$13.19/mmbtu. Yesterday prices were up from last week's level at
$3.54/mmbtu.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.50</td>
<td>2.55</td>
<td>-31.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

 U.S. Consumer Confidence Moves
Sideways After Spring Bounce 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929g.jpg" align="right" border="0" height="265" width="353">
The Conference Board indicated that consumer confidence during
September dipped from August. Though both figures were up sharply from
the February low, the trend in the series has been roughly sideways
since May. The Conference Board data can be found in Haver's CBDB
database.
During the last ten years there has been an 86% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
Consumers' assessment of the current economic conditions fell
again this month and remained near the historic low. It remained off by
almost two-thirds from one year earlier. Jobs were seen as hard to get
by an increased 47.0% of respondents and jobs were seen as plentiful by
3.4% which was near the series' historic low. Business conditions were
seen as good by just 8.7% and that also was near the series' low.
Consumers who thought business conditions were bad rose slightly to
46.3%. While off somewhat from its high the reading still near the
highest since 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929h.jpg" align="right" border="0" height="265" width="353">
The expectations component of confidence slipped from August
but the index remained near the highest level since late-2007. The
percentage of respondents expecting business conditions to improve
slipped to 21.3% though that remained near the highest level since
2004. A much reduced 15.0% expected conditions to worsen. That was off
from the recent February high of 40.7%. An improved 17.9% of
respondents expected economic improvement to generate more jobs, more
than double the percentage at the recent low.
Expectations for the inflation rate in twelve months fell back
to 5.2%, the lowest level since 2007 and down from last year's high of
7.7%. Interest rates in twelve months were expected to be higher by
48.8% of respondents, while 14.8% expected rates to fall. A greatly
increased 35.4% of respondents expected stock prices to rise.
Consumers continued to manage their spending plans cautiously.
Just 2.3% plan to buy a home during the next six months while 23.8%
plan to buy a major appliance. That's versus 30.9% back in 2007. Only
4.4% plan to buy an automobile versus 6.0% in 2007. Just 2.1% plan to
buy a new one.
Is The Financial Crisis Over? A Yield Spread
Perspective from the Federal Reserve Bank of St. Louis is
available <a href="http://research.stlouisfed.org/publications/es/09/ES0940.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>53.1</td>
<td>54.5</td>
<td>-13.5</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>22.7</td>
<td>25.4</td>
<td>-62.8</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>73.3</td>
<td>73.8</td>
<td>19.2</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>

 Confidence Improving in the Euro
Area: Recession Ending? 
by <a href="/comment/Curley.html">Louise
Curley</a> September 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929i.jpg" align="right" border="0">Eurostat
reported today that its economic sentiment indicator
(ESI) for September rose to 82.8 from 80.8 in August. The measure has
now risen in the last five months from the low of 64.6 reached in
March. Although it is still below its long term average of 100, the
improvement that has taken place in the indicator suggests that
economic activity in third quarter is likely to be positive for the
Euro area as a whole. The attached chart of the month to month changes
in the ESI and the quarter to quarter changes in GDP shows that the
change in the ESI is a good predictor of subsequent changes in GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090929j.jpg" align="right" border="0">
Another indicator of rising sentiment in the Euro Area is the
"EuroCOIN" indicator that was released a few days ago. This is a
monthly indicator of GDP that, according to its authors, the Bank of
Italy in collaboration with the Centre for Economic Policy Research, is
"a real-time estimate of underlying trend of GDP. i.e. growth adjusted
for short term fluctuations." The EuroCOIN indicator has been rising
since January of this year and was slightly positive at 0.07 in
September, the first time it was positive since June 2008. The second
chart compares the EuroCOIN indicator with the changes in real GDP and
like the ESI suggests an ending of the recession in the third quarter
for the Euro Area as a whole.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Eurostat Economic Sentiment
Indicator (CSI)</td>
<td>82.8</td>
<td>80.8</td>
<td>76.0</td>
<td>73.2</td>
<td>70.2</td>
<td>9.73</td>
<td>64.6</td>
<td>65.3</td>
<td>67.2</td>
</tr>
<tr>
<td class="firstcol">EuroCOIN</td>
<td>0.07</td>
<td>-0.21</td>
<td>-0.42</td>
<td>-0.61</td>
<td>-0.88</td>
<td>-1.09</td>
<td>-1.22</td>
<td>-1.27</td>
<td>-1.21</td>
</tr>
</tbody>
</table>
</body></html>

Case-Shiller Home Price IndexPosts Largest Monthly Increase Since 2005

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.

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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

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.

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.