Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820g.jpg" width="353">
The Philadelphia Federal Reserve Bank indicated that its August index of factory sector activity in the region rose to its highest since November of 2007. The level of 4.2 compared to figures near -40.0 this past fall and winter. Consensus expectations had been for a slightly negative reading of -1.5 for this month.
During the last ten years there has been a 77% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 70% correlation with q/q growth in real GDP. The latest survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0809.pdf">here.</a><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820h.jpg" width="353">
Amongst the components, new orders improved to 4.2 from -2.2 and the latest figure was the highest since 2007. A sharp rise in the inventory component to its highest since 2007 may indicate that the period of strong inventory decumulation reached its end. The latest figure of 0.3 compares to a low of -55.6 reached this past March. Also showing improvement was the employment index. It rose to a still negative -12.9 but that compared with a low of -52.0 during March. During the last ten years there has been a 79% correlation between the index level and the m/m change in manufacturing sector payrolls.
Improved pricing power accompanied the gains in real activity. The prices paid index jumped to its first positive reading since last October. During the last ten years there has been a 74% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 83% correlation with the change in core intermediate goods prices.
Expected business conditions in six months also have improved. The August index ticked up to 56.8 and recovered most of its July decline. The latest figure was still near its highest level since 2003. Most of the index components moved sideways at improved levels but the inventories series jumped sharply to new cycle high.
The figures from the Philadelphia Federal Reserve can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Philadelphia Fed (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August &#39;08</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">General Activity Index</td>
<td>4.2</td>
<td>-7.5</td>
<td>-20.1</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>4.2</td>
<td>-2.2</td>
<td>-15.2</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-12.9</td>
<td>-25.3</td>
<td>-4.6</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>10.0</td>
<td>&nbsp;-3.5</td>
<td>&nbsp;53.0</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The Philadelphia Federal Reserve Bank indicated that its August index of factory sector activity in the region rose to its highest since November of 2007. The level of 4.2 compared to figures near -40.0 this past fall and winter. [...]

Philadelphia Fed Index Remains Positive At Its Highest Level Since 2007

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820e.jpg" width="353">
The Conference Board&#39;s Index of Leading Economic Indicators continued to suggest a pending economic recovery. The July composite index of leaders rose another 0.6% after gains of 0.8%, 1.2% and 1.1% during the prior three months. The combined 3.8% rise during those four months was the strongest since early-2002 while the index itself was at the highest level since last June. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.
For the fourth straight month, nearly three-quarters of the ten components of the leading index increased.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820f.jpg" width="353">
Again suggesting that the rate of decline in the economy is slowing were the coincident indicators which were unchanged m/m. This compares with monthly declines of 0.6%-to-1.1% dating back to September.
In a sign that excesses in the U.S. economy are diminishing, the lagging index fell for the seventh month in the last eight. The ratio of coincident-to-lagging indicators (a measure of economic excess) rose again m/m to the highest level since December.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April 6-Month % (AR)</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">Leading</td>
<td>0.6</td>
<td>0.8</td>
<td>1.2</td>
<td>6.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>-0.4</td>
<td>-0.4</td>
<td>-5.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-1.0</td>
<td>-0.7</td>
<td>-0.3</td>
<td>-8.6</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The Conference Board's Index of Leading Economic Indicators continued to suggest a pending economic recovery. The July composite index of leaders rose another 0.6% after gains of 0.8%, 1.2% and 1.1% during the prior three months. The [...]

U.S. Leading Indicators Signal Economic Recovery With Fourth Straight Monthly Increase

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820d.jpg" align="left" border="0" height="265" width="353">
The 0.4% rise in real UK retail sales is the largest increase
in fourteen months. Retail sales ex autos also rose by 0.4% and put in
its second month-in-row increase. 
 

The momentum in real retail sales is positive, having
recovered from some very deep lows reached just after mid-year in 2008.
In contrast this global business cycle hit the US consumer most
strongly at the end of 2008 and in early 2009. 
 

UK food and beverage purchases have been a mainstay of growth
over the past year. But spending in this category fell in July.
Clothing and foot wear expenditures have run hot and cold and these
took a small decline in July as well. The strength in retail sales came
from other sectors in July. 
 

In the quarter to date real ex-auto retail sales are growing
at a robust 6.4% annual rate. The new quarter is only one month old but
it is off to a very good start for UK retailers.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> UK Real and Nominal Retail Sales
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr AGo</td>
<td>Quarter-2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>3.1%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>-0.4%</td>
<td>0.7%</td>
<td>0.5%</td>
<td>3.0%</td>
<td>7.1%</td>
<td>5.2%</td>
<td>7.1%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-0.1%</td>
<td>3.2%</td>
<td>-2.2%</td>
<td>3.3%</td>
<td>-1.4%</td>
<td>2.7%</td>
<td>1.0%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td>0.4%</td>
<td>1.4%</td>
<td>-0.9%</td>
<td>3.6%</td>
<td>1.8%</td>
<td>3.3%</td>
<td>1.1%</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
</body></html>

The 0.4% rise in real UK retail sales is the largest increase in fourteen months. Retail sales ex autos also rose by 0.4% and put in its second month-in-row increase. The momentum in real retail sales is positive, having recovered [...]

UK Retail Sales Stir

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820a.jpg" width="353">
The Labor Department indicated that initial claims for unemployment insurance increased unexpectedly for the second consecutive week to 576,000 after an upwardly revised rise to 561,000. The four-week moving average of claims, which smoothes out some of the volatility in the weekly numbers, increased to 570,000 but was down from the April high of 658,750 and near its lowest level since late-January. A decline in weekly claims to 550,000 had been expected.
The latest figures cover the survey period for August nonfarm payrolls and initial claims were up 17,000 (3.0%) from the July survey period. During the last ten years there has been a negative 86% correlation between the level of initial claims and the m/m change in payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820b.jpg" width="353">
The Labor Department indicated that the largest increases in initial claims for the week ending August 8 were in Tennessee (+2,525), North Carolina (+2,469), Wisconsin (+2,078), Georgia (+1,753), and Washington (+1,697), while the largest decreases were in California (-5,635), Michigan (-1,490), Ohio (-951), Kentucky (-690), and Delaware (-226).
Continuing claims for unemployment insurance ticked higher in the latest week but remained down by nearly 10% from their late-June high, a decline which probably owes to the exhaustion of benefits. Continuing claims provide an indication of workers&#39; ability to find employment and the level of 6,241,000 claims is up sharply from the year-ago level. The four-week average of continuing claims fell modestly to 6,266,000 and that was the lowest since late-April. The series dates back to 1966.
Extended benefits for unemployment insurance fell slightly w/w at the end of July. The slip to 400,779 compared to a high of 491,684 reached during the middle of the month. Extended benefits began to rise slowly in June of 2008 but surged by January.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820c.jpg" width="353">
The insured rate of unemployment held steady at 4.7% which was the lowest level since mid-April. The rate reached a high of 5.2% during late-June. During the last ten years, there has been a 93% 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 August 1 were in Puerto Rico (7.3 percent), Oregon (6.2), Pennsylvania (6.1), Michigan (5.9), Nevada (5.9), Wisconsin (5.5), California (5.3), Connecticut (5.3), New Jersey (5.3), North Carolina (5.1), and South Carolina (5.1). The lowest rates were in South Dakota (1.3) and North Dakota (1.5), Virginia (2.4), Wyoming (2.9), Texas (3.0), Maine (3.1), Colorado (3.2), Maryland (3.6), Minnesota (3.7), Florida (4.2), New York (4.2), Mississippi (4.3) and Georgia (4.7).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database.
The Peak Oil Debate from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.pdf"> here</a>.

<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">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">07/31/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>576</td>
<td>561</td>
<td>554</td>
<td>31.5%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,241</td>
<td>6,239</td>
<td>83.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.7</td>
<td>4.7</td>
<td>2.5</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The Labor Department indicated that initial claims for unemployment insurance increased unexpectedly for the second consecutive week to 576,000 after an upwardly revised rise to 561,000. The four-week moving average of claims, which [...]

Extended Benefits Dip

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820a.jpg" align="left" border="0" height="265" width="353">
The Labor Department indicated that initial claims for
unemployment insurance increased unexpectedly for the second
consecutive week to 576,000 after an upwardly revised rise to 561,000.
The four-week moving average of claims, which smoothes out some of the
volatility in the weekly numbers, increased to 570,000 but was down
from the April high of 658,750 and near its lowest level since
late-January. A decline in weekly claims to 550,000 had been expected.
The latest figures cover the survey period for August nonfarm
payrolls and initial claims were up 17,000 (3.0%) from the July survey
period. During the last ten years there has been a negative 86%
correlation between the level of initial claims and the m/m change in
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820b.jpg" align="right" border="0" height="265" width="353">
The Labor Department indicated that the largest increases in
initial claims for the week ending August 8 were in Tennessee (+2,525),
North Carolina (+2,469), Wisconsin (+2,078), Georgia (+1,753), and
Washington (+1,697), while the largest decreases were in California
(-5,635), Michigan (-1,490), Ohio (-951), Kentucky (-690), and Delaware
(-226).
Continuing claims for unemployment insurance ticked higher in
the latest week but remained down by nearly 10% from their late-June
high, a decline which probably owes to the exhaustion of benefits.
Continuing claims provide an indication of workers' ability to find
employment and the level of 6,241,000 claims is up sharply
from the year-ago level. The four-week average of continuing
claims fell modestly to 6,266,000 and that was the lowest since
late-April. The series dates back to 1966.
Extended benefits for unemployment insurance fell slightly w/w
at the end of July. The slip to 400,779 compared to a high of 491,684
reached during the middle of the month. Extended benefits began to rise
slowly in June of 2008 but surged by January.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820c.jpg" align="left" border="0" height="265" width="353">
The insured rate of unemployment held steady at 4.7% which was
the lowest level since mid-April. The rate reached a high of 5.2%
during late-June. During the last ten years, there has been a 93%
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
August 1 were in Puerto Rico (7.3 percent), Oregon (6.2), Pennsylvania
(6.1), Michigan (5.9), Nevada (5.9), Wisconsin (5.5), California (5.3),
Connecticut (5.3), New Jersey (5.3), North Carolina (5.1), and South
Carolina (5.1). The lowest rates were in South Dakota (1.3) and North
Dakota (1.5), Virginia (2.4), Wyoming (2.9), Texas (3.0), Maine (3.1),
Colorado (3.2), Maryland (3.6), Minnesota (3.7), Florida (4.2), New
York (4.2), Mississippi (4.3) and Georgia (4.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.
The Peak Oil Debate from the
Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.pdf">
here</a>.

<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">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">07/31/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>576</td>
<td>561</td>
<td>554</td>
<td>31.5%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,241</td>
<td>6,239</td>
<td>83.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.7</td>
<td>4.7</td>
<td>2.5</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
UK Retail Sales Stir by <a href="/comment/Brusca.html">Robert
Brusca</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820d.jpg" align="left" border="0" height="265" width="353">
The 0.4% rise in real UK retail sales is the largest increase
in fourteen months. Retail sales ex autos also rose by 0.4% and put in
its second month-in-row increase. 
 

The momentum in real retail sales is positive, having
recovered from some very deep lows reached just after mid-year in 2008.
In contrast this global business cycle hit the US consumer most
strongly at the end of 2008 and in early 2009. 
 

UK food and beverage purchases have been a mainstay of growth
over the past year. But spending in this category fell in July.
Clothing and foot wear expenditures have run hot and cold and these
took a small decline in July as well. The strength in retail sales came
from other sectors in July. 
 

In the quarter to date real ex-auto retail sales are growing
at a robust 6.4% annual rate. The new quarter is only one month old but
it is off to a very good start for UK retailers.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> UK Real
and Nominal Retail Sales
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr AGo</td>
<td>Quarter-2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>3.1%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>-0.4%</td>
<td>0.7%</td>
<td>0.5%</td>
<td>3.0%</td>
<td>7.1%</td>
<td>5.2%</td>
<td>7.1%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-0.1%</td>
<td>3.2%</td>
<td>-2.2%</td>
<td>3.3%</td>
<td>-1.4%</td>
<td>2.7%</td>
<td>1.0%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td>0.4%</td>
<td>1.4%</td>
<td>-0.9%</td>
<td>3.6%</td>
<td>1.8%</td>
<td>3.3%</td>
<td>1.1%</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Signal
Economic Recovery With Fourth Straight Monthly Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820e.jpg" align="left" border="0" height="265" width="353">
The Conference Board's Index of Leading Economic Indicators
continued to suggest a pending economic recovery. The July composite
index of leaders rose another 0.6% after gains of 0.8%, 1.2% and 1.1%
during the prior three months. The combined 3.8% rise during those four
months was the strongest since early-2002 while the index itself was at
the highest level since last June. The leading index is based on actual
reports for eight economic data series. The Conference Board initially
estimates two series, orders for consumer goods and orders for capital
goods.
For the fourth straight month, nearly three-quarters of the
ten components of the leading index increased.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820f.jpg" align="right" border="0" height="265" width="353">
Again suggesting that the rate of decline in the economy is
slowing were the coincident indicators which were unchanged m/m. This
compares with monthly declines of 0.6%-to-1.1% dating back to September.
In a sign that excesses in the U.S. economy are diminishing,
the lagging index fell for the seventh month in the last eight. The
ratio of coincident-to-lagging indicators (a measure of economic
excess) rose again m/m to the highest level since December.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April 6-Month % (AR)</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">Leading</td>
<td>0.6</td>
<td>0.8</td>
<td>1.2</td>
<td>6.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>-0.4</td>
<td>-0.4</td>
<td>-5.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-1.0</td>
<td>-0.7</td>
<td>-0.3</td>
<td>-8.6</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Remains
Positive At Its Highest Level Since 2007 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820g.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that its
August index of factory sector activity in the region rose to its
highest since November of 2007. The level of 4.2 compared to figures
near -40.0 this past fall and winter. Consensus expectations had been
for a slightly negative reading of -1.5 for this month.
During the last ten years there has been a 77% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 70% correlation with q/q growth in real GDP. The latest
survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0809.pdf">here.</a><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820h.jpg" align="right" border="0" height="265" width="353">
Amongst the components, new orders improved to 4.2 from -2.2
and the latest figure was the highest since 2007. A sharp rise in the
inventory component to its highest since 2007 may indicate that the
period of strong inventory decumulation reached its end. The latest
figure of 0.3 compares to a low of -55.6 reached this past March. Also
showing improvement was the employment index. It rose to a still
negative -12.9 but that compared with a low of -52.0 during March.
During the last ten years there has been a 79% correlation between the
index level and the m/m change in manufacturing sector payrolls.
Improved pricing power accompanied the gains in real activity.
The prices paid index jumped to its first positive reading since last
October. During the last ten years there has been a 74% correlation
between the prices paid index and the three-month growth in the
intermediate goods PPI. There has been an 83% correlation with the
change in core intermediate goods prices.
Expected business conditions in six months also have improved.
The August index ticked up to 56.8 and recovered most of its July
decline. The latest figure was still near its highest level since 2003.
Most of the index components moved sideways at improved levels but the
inventories series jumped sharply to new cycle high.
The figures from the Philadelphia Federal Reserve can be found
in Haver's SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Philadelphia
Fed (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</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">General Activity Index</td>
<td>4.2</td>
<td>-7.5</td>
<td>-20.1</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>4.2</td>
<td>-2.2</td>
<td>-15.2</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-12.9</td>
<td>-25.3</td>
<td>-4.6</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>10.0</td>
<td>&nbsp;-3.5</td>
<td>&nbsp;53.0</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body></html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819g.jpg" align="left" border="0" height="265" width="353">
The Confederation of British Industry continues to see very
weak orders in both its domestic and export surveys. Both total and
export orders are in the lower ten percentile of their historic range
of values. Stocks of goods with a diffusion reading that fell to +13
from +20 are now near their range mid range (standing at their 45th
percentile) and are well below their 12-monhth average, showing
inventory progress has been made. In contrast orders are weaker than
their 12-month averages. What ever is getting better it does not seem
to be boosting orders despite the gain in August. 
 

To compare with that finding we have the contrary result that
although orders are very weak output volume over the next three months
is expected to do much better. The survey measure rose to -5 in August
from -14 in July, thrusting output volume expectations into the 57th
percentile of their range, far better than the reading for orders. The
average price expected has however slipped in August to -17 from -6 in
June. That is on the lower 6 percentile of its range. These readings
contrast with the UK MFG readings from NTC which at 50.84 is indicating
expansion and stands in the 74th percentile of its range. (The NTC
survey is also a diffusion survey but it presents its statistics as
dose the US ISM rather than as an &#8216;up&#8217; minus &#8216;down&#8217; diffusion index as
the one used by the CBI. For the CBI, zero is neutral; for the NTC
index, 50 is the neutral mark. Also the NTC index is for manufacturing
not all of industry, as is the CBI report.) 
 

The outlook portion of the CBI index is relatively more
positive, but still is not as upbeat as the Markit/NTC index. And the
orders assessment from the CBI is downright depressing as its
improvement in July still leaves the index lower over three months and
longer. The picture of the UK MFG industry is curiously mixed. The
differences are not simply those between different surveys but among
somewhat related measures in the same survey. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-54</td>
<td>-59</td>
<td>-51</td>
<td>-56</td>
<td>-57</td>
<td>-43</td>
<td>7%</td>
<td>9</td>
<td>-59</td>
<td>68</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-48</td>
<td>-45</td>
<td>-52</td>
<td>-46</td>
<td>-34</td>
<td>-36</td>
<td>7%</td>
<td>3</td>
<td>-52</td>
<td>55</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>13</td>
<td>20</td>
<td>22</td>
<td>30</td>
<td>28</td>
<td>25</td>
<td>45%</td>
<td>31</td>
<td>-2</td>
<td>33</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Looking
ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-5</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-32</td>
<td>-31</td>
<td>57%</td>
<td>28</td>
<td>-48</td>
<td>76</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>-17</td>
<td>-6</td>
<td>-13</td>
<td>-20</td>
<td>-10</td>
<td>-1</td>
<td>6%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">From end
2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare to NTC MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>50.84</td>
<td>47.36</td>
<td>45.40</td>
<td>43.13</td>
<td>41.22</td>
<td>74%</td>
<td>56.32</td>
<td>34.93</td>
<td>21</td>
</tr>
</tbody>
</table>
</body></html>

The Confederation of British Industry continues to see very weak orders in both its domestic and export surveys. Both total and export orders are in the lower ten percentile of their historic range of values. Stocks of goods with a [...]

UK's CBI Orders Continue To Lag

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819d.jpg" align="right" border="0" height="265" width="353">Encouraging
indications that consumer spending was improving faded during August.
During the latest week, chain store sales fell 0.9% and that was enough
to leave the August average unchanged from July after that month's 1.0%
increase from June. During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise sales. The weekly figures
are available in Haver's SURVEYW database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819e.jpg" align="right" border="0" height="265" width="353">

The ICSC-Goldman Sachs
retail chain-store sales index is constructed using the same-store
sales (stores open for one year) reported by 78 stores of seven
retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and
Wal-Mart.Prospects for improvement in sales
seem limited. The leading indicator of sales ticked up 0.1% (-0.3% y/y)
during the latest week and it has been flat all this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819f.jpg" align="right" border="0" height="265" width="353">
The Johnson Redbook also reported soft sales of late. General
merchandise store sales so far this month slipped a seasonally adjusted
0.6% from July (-4.4% y/y). Department store sales were down 6.6% y/y
on a same-store basis while discount store sales fell a lesser 3.4% as
shoppers searched for bargains. Excluding
Items from Personal Consumption Expenditures Inflation from
the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/staff/2009/staff0901.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"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</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">Total Weekly Chain
Store Sales</td>
<td>491.0</td>
<td>495.6</td>
<td>-0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
</body></html>

Encouraging indications that consumer spending was improving faded during August. During the latest week, chain store sales fell 0.9% and that was enough to leave the August average unchanged from July after that month's 1.0% increase [...]

Weekly Chain Store Sales Remain Flat Versus July

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819a.jpg" align="right" border="0" height="265" width="353">The Mortgage
Bankers Association indicated that mortgage applications overall
increased 5.6% last week; however, that only made up for a 3.5% decline
during the prior period. Together, the latest figures left applications
for all of August up 0.6% from July after that month's 3.7% decline.
Applications still remained near the lowest level since last November.
There has been some life in purchase applications, but it's
hardly
vibrant. Applications rose 3.9% last week after a 1.1% increase during
the prior period. Together the gains lifted applications for the month
so far by 2.2% from July when applications fell 1.3% m/m. Nevertheless
since the early-February low, purchase applications have risen 15% as
new and existing home sales have recovered.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819b.jpg" align="right" border="0" height="265" width="353">
During the last ten years
there has been a (negative) 79% correlation between the level of
applications for purchase and the effective interest rate on a 30-year
mortgage.&nbsp; Moreover, during the last ten years there has been
a 61% correlation between the y/y change in purchase applications and
the change in new plus existing single family home sales.
Interest in
mortgage refinancing has been stifled of late by the rise in interest
rates. Applications to refinance made up merely the prior week's
decline with a 6.9% increase. So far in August, applications are 0.8%
lower than July and near the lowest level since November. Since their
peak in January, refinance applications have fallen by
three-quarters.
Since the
beginning of this year, fixed-rate
mortgage applications have fallen by slightly more than one-half while
adjustable-rate mortgages have doubled. The number of conventional
loans has fallen nearly two-thirds while gov't backed loans have fallen
by more than one-third. The earlier rise in mortgage interest rates
has stabilized, for the moment. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819c.jpg" align="right" border="0" height="265" width="353">
The effective interest rate on a
conventional 15-year mortgage fell last week to 4.76% and for the month
averaged 4.89%. These figures are up from the April low of 4.69% but
the rate had reached a high of 5.36% in early-June. For a 30-year
mortgage, the rate also fell last week to 5.35% after reaching a high
of 5.79% in early-June.&lt;
Interest rates on 15- and 30-year mortgages are
closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. Rates on adjustable 1-Year mortgages averaged 6.71% this
month versus the low near 6.0% during January. Nevertheless, the rate
remained down from the 7.07% peak reached last
fall.
The Mortgage Bankers Association surveys
between 20 to 35 of the top lenders in the U.S. housing industry to
derive its refinance, purchase and market indexes. The weekly survey
covers roughly 50% of all U.S. residential mortgage applications
processed each week by mortgage banks, commercial banks and thrifts.
Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.&nbsp;The figures for weekly
mortgage applications are available in Haver's SURVEYW
database.
 Sustaining a Global Recovery from the
International Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm">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"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>527.0</td>
<td>499.0</td>
<td>25.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>277.7</td>
<td>267.2</td>
<td>-11.6%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,982.5</td>
<td>1,853.8</td>
<td>91.6%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>

</body></html>

The Mortgage Bankers Association indicated that mortgage applications overall increased 5.6% last week; however, that only made up for a 3.5% decline during the prior period. Together, the latest figures left applications for all of [...]

U.S. Weekly Mortgage Applications Rise But Trend Remains Weak

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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.

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**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.

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

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

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

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

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

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Charts of the Week: Between Optimism and Uncertainty

Michael J. Moran

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The Bureau of Labor Statistics did not publish a report on export and import prices for October because of the government shutdown, and BLS was unable to construct statistics for October to include with the November report. The charts above have a gap in October, and the November figures are represented by a small dot.

Import prices have been remarkably stable in the past three years, as shown by the sideways movement in the level of the import price index (left chart). Focusing on percent changes (i.e. inflation rates) rather than the level of the index shows deflation in 2023 and early 2024 followed by higher prices more recently (right chart). Still, the net change in the past 12 months has totaled only 0.1% and the cumulative change in the past three years amounted to a decline of 0.4%.

A calm environment in the energy sector has helped to restrain import prices, as the price of crude oil showed little change in 2023 and 2024 and declined in 2025. Import prices excluding petroleum products have increased in recent years, but the changes have been modest: 0.9 in the past 12 months and 1.3% in the past three years.

The non-oil components of import prices have traced various patterns in recent years, but shifts have been largely offsetting. Prices of food and autos increased noticeably in 2023 and 2024, but they gave back much of those increases in 2025. Prices of capital goods were stable in 2023 and 2024, but they started to increase in 2025. Prices of consumer goods have been volatile, showing bursts of higher prices followed by discounting, leaving a modest net increase in the past three years.

The calm energy environment also seemed to play a role on the export side, as the industrial supply category showed little net change in prices over 2023 and 2024 before jumping in early 2025. Food prices followed a similar pattern, showing two years of restraint before moving higher in 2025. These two categories account for much of the upward movement in overall export prices in 2025. Prices of consumer goods also started to move higher in 2025 after little net change in the prior two years. Prices of capital goods and automobiles have traced reasonably steady upward paths.

Many observers might try to use the import component of this report to gain insight into the effect of tariffs on prices. That will be difficult because the figures from this report are pre-tariff; there will be no independent upward pressure on prices in this report because of tariffs. In fact, one should look for lower import prices in searching for a tariff effect. That is, if a foreign exporter were to absorb the tariff burden, that would be accomplished by reducing the pre-tariff price in order to keep the after-tariff price steady.

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Some exporters to the US may have made such efforts. The nearby chart shows the month-to-month change in import prices in 2025, and May and June both showed lower prices. These months were especially important because they followed the announcement by President Trump of marked increases in tariffs in April. Also, some of the downward pressure occurred in components that would be sensitive to price (autos and consumer goods). Of course, May and June might be too soon after the announcement of draconian tariffs for foreign exporters to assess and change their pricing strategy.

The chart on monthly changes ends in September because the absence of an October reading prevents the calculation of the month-to-month changes for October and November. However, the two-month change from September to November is easily calculated, and the increase of 0.4% suggests little or no effort to absorb the burden of tariffs.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

- Import prices have changed little in the past three years.
- Export prices were stable in 2023-24, but moved higher in 2025.

Import & Export Prices: Generally Modest Changes

Winnie Tapasanun

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The Empire State Manufacturing Index of General Business Conditions rose to a higher-than-expected 7.7 in January following a 17.2-drop to -3.7 in December, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 1.0 for January had been expected in the Action Economics Forecast Survey. The positive January figure indicated that the business activity in New York State expanded for the third time in four months; it was an improvement from -7.4 in January 2025 and a low of -29.7 in January 2024, though still below a high of 16.8 in November 2024. The percentage of respondents reporting an increase in general business conditions was 34.2% in January, up from 31.7% in December; the percentage reporting a decrease was 26.5%, down from December’s 35.4%. The latest survey was conducted between January 2 and January 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 51.2 in January following a 4.2-point decline to the neutral-level 50.0 in December (the lowest level since September); it was slightly up from 50.7 in January 2025 and well above a low of 43.0 in January 2024. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index rose to 6.6 in January after a 10.6-point drop to -1.0 in December, marking the third m/m gain in orders in four months and a sharp improvement from a low of -30.7 in January 2024. The shipments index jumped to 16.3 in January, the highest level since November 2024, following a 16.5-point fall to -5.0 in December; it was well above a low of -21.7 in April 2024. The unfilled orders index improved to -8.2 in January after a 9.1-point decrease to -14.9 in December, indicating that unfilled orders contracted for the eighth straight month but at a less severe pace; the index reached a low of -24.2 in January 2024. The inventories index fell to -2.1 in January, the lowest level since September, after a 2.7-point decline to 4.0 in December, signaling the first inventory contraction since October. Meanwhile, the delivery times index increased to 0.0 in January from -5.9 in December, with 12.4% of respondents reporting longer delivery times and an identical 12.4% reporting shorter times, indicating that delivery times were unchanged.

On the labor front, the number of employees index fell to -9.0 in January after a 1.0-point increase to 7.5 in December, indicating that employment contracted for the first time since September and reached its lowest level since January 2024. The index remained well below a peak of 24.9 in February 2022. In January, only 7.9% of respondents reported an increase in employment while a higher 16.8% reported a decline. The average workweek index dropped to -5.4 in January from 2.5 in December, turning negative for the first time since October and hitting the lowest level since April 2025.

Inflation pressures eased in January but remained high. The prices paid index fell to 42.8 in January, the lowest level since March 2025, after a 5.9-point decrease to 44.2 in December. Although still well below a peak of 84.9 in April 2022, the index remained above a low of 25.9 in December 2024 and a low of 20.8 in December 2023. In January, 44.5% of respondents reported higher prices paid while only 1.7% reported lower prices paid. The prices received index fell to 14.4 in January, the lowest reading since January 2025, from 25.4 in December. The index was up from a low of 7.5 in December 2024 and a low of 7.7 in July 2023 but far below a high of 51.9 in March 2022. In January, 18.9% of respondents reported higher prices received while 4.4% reported lower prices received.

Firms remained fairly optimistic about the future business outlook in the latest survey. The index for future business conditions eased to 30.3 in January after rising to 33.5 in December, with 50.6% of respondents expecting business conditions to improve over the next six months. Future new orders edged down to 33.3 in January from 34.5 in December, while future shipments rose to 34.9—the highest level since March 2022—from December’s 30.7. Growth in future employment strengthened to 14.9, the highest reading since November 2024, from December’s 7.8. Capital spending plans remained positive for the third consecutive month in January, with the future capital expenditures index rising to 10.3 from December’s 6.9. Expected prices paid fell to 52.6 in January from 55.4 in December and expected prices received fell to 36.5 from 41.6, with both measures at their lowest levels since December 2024.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- General Business Conditions Index up 11.4 pts. to 7.7 in January.
- Positive: Shipments (16.3, highest since Nov. ’24) and new orders (6.6).
- Negative: Employment (-9.0, lowest since Jan. ’24), unfilled orders (-8.2), and inventories (-2.1, a four-month low).
- Prices paid at a 10-month-low 42.8 and prices received at a one-year-low 14.4.
- Firms fairly optimistic: Future Business Conditions Index down to a still-positive 30.3; future prices paid at a one-year-low 52.6.

U.S. Empire State Manufacturing Index Returns to Positive Territory in January

Sandy Batten

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The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia rose to 12.6 in January from -8.8 in December. The survey covers the third Federal Reserve District. A reading of -4.5 for January was expected by the Action Economics Forecast Survey. Over 23% of respondents reported increases in activity in January (up from 21% last month), exceeding the 11% reporting decreases (down from 30%); 63% of the firms reported no change in current activity (up from 50%). Survey responses were collected from January 5 to January 12.

The headline index is the answer to just one question: whether activity increased, decreased or was unchanged from the previous month. Haver Analytics calculates an ISM-adjusted current activity diffusion index from the five key components using the methodology employed to construct the national ISM index. This figure rose to 52.9 in January from 52.5 in December, inching further above the critical 50 value that separates contraction from expansion.

For the component indexes, the new orders index rose to 14.4 from 5.7 in December. The percentage of respondents reporting an increase in orders edged up to 28.3% in January from 27.4% in the prior month while 13.9% reported a decrease, down markedly from 21.7% in December. The shipments index increased to 9.5 in January from 3.2 in December. The percentage of respondents reporting an increase in shipments rose slightly to 27.3% from 26.2% while the percentage reporting a decrease fell to 17.8% from 23.0%. Delivery times lengthened marginally to 7.3 in January from 5.2 in December. The inventories index fell 17 points to -8.4 in January, its lowest level since July 2024.

Respondents continued to report overall increases in employment with the employment index remaining in positive territory. However, the index fell to 9.7 in January from 13.0 in December, indicating that gains in employment slowed in the latest month. The percentage of respondents reporting an increase in employment rose to 19.8% from 13.6% in December but the percentage reporting a decline jumped to 10.1% in January from 0.6% in December. The average workweek index fell from 12.5 in December to 9.1 in January.

On balance, the firms continued to report overall increases in prices. The prices paid index edged down 2 points to 46.9 in January, its second consecutive decrease and its lowest level since June. Nearly 47% of respondents reported increases in input prices, while none reported decreases; 53% reported no change. The current prices received index ticked up 2 points to 27.8. More than 31% of respondents reported increases in the prices of their own goods, 3% reported decreases, and 66% reported no change.

The diffusion index for future general activity declined from a revised reading of 38.1 in December to 25.5 in January, its lowest reading since July. Nearly 35% of respondents expect an increase in activity over the next six months (down from 53% last month), exceeding the 9% that expect a decrease. The future new orders index fell 6 points to 32.9, while the future shipments index ticked up 1 point to 40.8. On balance, the firms continue to expect increases in employment over the next six months with the future employment index rising 4 points to 28.8. Both future price indexes were well above their long-run averages: The future prices paid index rose 2 points to 66.6; the future prices received index moved up 5 points to 61.8. The index for future capital expenditures edged up 1 point to 30.3.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The indexes range from -100 to +100 with positive values indicating an increase in activity. The series from the survey dating back to May 1968 can be found in Haver’s **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- The headline index increased to 12.6 in January, the highest reading since September, from -8.8 in December.
- Both new orders and shipments increased in January.
- Delivery times lengthened while the pace of input price increases slowed.
- Employment decreased but remained in positive territory, indicating further gains in employment though at a slower pace.

Philly Fed Manufacturing Activity Rebounds in January

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 9,000 to 198,000 in the week ending January 10, from 207,000 in the week ending January 3, revised from 208,000. The four-week moving average of initial claims was 205,000 in the January 10 week, a decline of 6,500 from 211,500 in the January 3 week, revised from 211,750, and reaching is the lowest level for this average since January 20, 2024, when it was 203,250.

Federal government employees initially filed 646 (NSA) jobless insurance claims in the week ended January 3, after filing 476 claims in the week ended December 27.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 19,000 to 1.884 million in the week ended January 3 from 1.903 million in the December 27 week, revised from 1.914 million. The four-week moving average was 1.889 million in the week ending January 3, a decrease of 250 from the prior week, revised from 1.893 million. The insured unemployment rate stood at 1.2% in the week of January 3, unchanged from previous 5 weeks.

Federal government employees’ continuing benefits claims were 12,803 (NSA) in the week of December 27, 12,161 (NSA) from 12,129 (NSA) in the week of December 20. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 27, the highest unemployment rates were in Rhode Island (2.86%), New Jersey (2.85%), Washington (2.81%), Minnesota (2.74%), Massachusetts (2.59%), Oregon (2.28%), Montana (2.16%), California and Connecticut (both 2.12%) and Alaska (2.06%). The lowest rates were in Florida (0.31%), North Carolina (0.41%), Louisiana (0.43%), Alabama and Virginia (both 0.49%). Rates in other notable states include Illinois (2.18%), New York (2.10%), Pennsylvania (2.02%), and Texas (1.20%). These state data are not seasonally adjusted.

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

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- Initial claims declined from the prior week.
- Continuing claims declined from the prior week.
- The insured unemployment rate was unchanged.

Economy in Brief

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