Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123c.jpg" align="right" border="0" height="265" width="353">
The upward momentum in the U.S. economy sagged during the last
few months. That's the message from lower readings of the Chicago Fed
National Activity Index (CFNAI) from the Federal Reserve Bank of
Chicago. The index slipped again m/m after having improved sharply from
the January low. The October reading of -1.08 was off slightly from
-1.01 during September. Nevertheless, both figures are greatly improved
from the series' low of -4.13 reached this past January. Since 1970
there has been a 74% correlation between the level of the index and the
q/q change in real GDP but during the last ten years that correlation
has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index also slipped m/m but remained near
its highest level since February of 2008.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_november2009.pdf">here</a>.
The Chicago Fed indicated in its data release that the level
of the CFNAI "indicates low inflationary pressure from economic
activity over the coming year."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123d.jpg" align="right" border="0" height="265" width="353">

The Chicago Fed indicated that 32 of the series' individual
indicators made positive contributions to the October index while 53
made negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved during September after an upwardly
revised August reading. As a result, a discernable uptrend in the index
now is evident versus the June low. Indicators for the auto, steel, and
resource sectors improved while the reading for the machinery sector
hit a new low. The Chicago Federal Reserve figures are available in
Haver's SURVEYS database.
Rescuing asset-backed securities markets from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfljanuary2010_270.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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">October '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">CFNAI</td>
<td>-1.08</td>
<td>-1.01</td>
<td>-0.63</td>
<td>-1.48</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.91</td>
<td>-0.67</td>
<td>-0.94</td>
<td>-2.31</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.52</td>
<td>-0.61</td>
<td>-0.38</td>
<td>-0.46</td>
<td>-0.33</td>
<td>-0.10</td>
<td>0.06</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment Unemployment &amp; Hours</td>
<td>-0.46</td>
<td>-0.60</td>
<td>-0.53</td>
<td>-0.77</td>
<td>-0.62</td>
<td>-0.15</td>
<td>0.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>-0.07</td>
<td>0.23</td>
<td>0.53</td>
<td>0.07</td>
<td>-0.55</td>
<td>-0.05</td>
<td>-0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>-0.02</td>
<td>-0.04</td>
<td>-0.25</td>
<td>-0.31</td>
<td>-0.24</td>
<td>-0.06</td>
<td>-0.01</td>
</tr>
</tbody>
</table>

</body></html>

The upward momentum in the U.S. economy sagged during the last few months. That's the message from lower readings of the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago. The index slipped again m/m [...]

Chicago Fed Index Eases Again Pointing Towards Softer GDP Growth

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123a.jpg" align="right" border="0" height="265" width="353">
Improved affordability is a great help when buying a home. The
National Association of Realtors reported that October sales of
existing homes rose sharply to the highest level since July
2007. The 10.1% m/m increase to 6.100M units (SAAR) followed an 8.8%
rise during September and it raised sales to the highest level since
February 2007. Moreover, sales were up by more than one-third from the
January low. The gain in October home sales outpaced Consensus
expectations for a rise to 5.70M. Total sales include sales of condos
and co-ops.
Sales of existing single-family homes alone increased a sharp
9.7% to 5.330M (21.4% y/y) last month and were up 20.7% from the
January low. (These data have a longer history than the total sales
series). Sales of condos and co-ops rose 13.2% and were up by nearly
one-half from last October.
Sales have been helped by a recently extended tax credit for
first-time home buyers. The credit of up to $8,000 runs though early
next year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123b.jpg" align="right" border="0" height="265" width="353">

The median price of all existing homes fell for the fourth
straight month, to $173,100. Though prices were still lower than the
year-ago level, they have risen 5.0% from the January low. The median
price for a single-family home alone fell to $173,100 (-6.8% y/y).
These price declines have sharply raised home affordability. During
September the composite index of home affordability rose again and was
up 18.2% from the year ago level.
The number of unsold homes (condos &amp; single-family)
for sale fell 3.7% (-14.9% y/y) during October fell to the lowest level
since January 2007. At the current sales rate there was a 7.0 months'
supply of homes on the market which was nearly the lowest since
early-2007. The latest figure was down from a high of 11.3 months early
last year. For single-family homes, the inventory fell 3.2% m/m (-14.3%
y/y). At the current sales rate there was a 6.8 month's supply of
single-family homes on the market, the lowest since early-2007.
The data on existing home sales, prices and affordability can
be found in Haver's USECON database. The regional
price, affordability and inventory data is available in the REALTOR
database.
Preventing a Repeat of the Money Market Meltdown of
the Early-1930s from the Federal Reserve Bank of Dallas can
be found <a href="http://dallasfed.org/research/papers/2009/wp0904.pdf">here</a><a href="http://dallasfed.org/research/papers/2009/wp0904.pdf">.
</a><table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Oct. 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</td>
<td>6,100</td>
<td>5,540</td>
<td>5,090</td>
<td>23.5%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>1,060</td>
<td>950</td>
<td>910</td>
<td>27.7</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,430</td>
<td>1,250</td>
<td>1,140</td>
<td>28.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,300</td>
<td>2,040</td>
<td>1,890</td>
<td>25.7</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,310</td>
<td>1,290</td>
<td>1,150</td>
<td>12.0</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>5,330</td>
<td>4,860</td>
<td>4,470</td>
<td>21.4</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>173,100</td>
<td>176,000</td>
<td>177,300</td>
<td>-7.1</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
</body></html>

Improved affordability is a great help when buying a home. The National Association of Realtors reported that October sales of existing homes rose sharply to the highest level since July 2007. The 10.1% m/m increase to 6.100M units [...]

U.S. Existing Home Sales Surge To Highest Since 2007 As Prices Fall Again

U.S. Existing Home Sales Surge ToHighest Since 2007 As Prices Fall Again

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="7">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey1">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey4">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
</body></html>

Orders in Italy and in France were up strongly in September but on different causes. Both posted an orders rise in excess of five percent on the month. But Italy’s orders were boosted by a 7% gain in foreign orders; in France foreign [...]

Italian and French Industrial Orders Are Up In September

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" width="353">
The leaders haven&#39;t missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board&#39;s Index of Leading Economic Indicators rose 0.3% in October. That followed an unrevised 1.0% September increase and was the seventh gain in a row. Moreover, the 10.2% (centered) rate of increase during the last six months was nearly the strongest since early-1983. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a bit last month. Sixty percent of the components rose during October versus last month&#39;s reading of 75%. During the most recent six months, however, 80% to 90% of the series rose. Prominent in last month&#39;s increase was the steeper interest rate yield curve. The money supply, stock prices, hours worked, jobless insurance claims and orders for consumer goods contributed to the index&#39;s rise as well. These gains were offset by lower capital goods orders, lower building permits, quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators. They were unchanged during October after a slight September decline. During the last six months the 1.4% rate of decline in the coincident series compares with a shortfall of 8.0% at its worst in January. Prompting the moderation have been slight increases in industrial production, real personal income and higher business sales as well as fewer declines in payroll employment.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" width="353">
In a continued sign that excesses in the U.S. economy are falling, the lagging index has been down since December of last year. Leading the decline has been lower commercial &amp; industrial loans outstanding as well as less consumer credit. The ratio of coincident-to-lagging indicators (a measure of economic excess) also continued higher for the seventh straight month to the highest level since November.
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.
The Peak Oil Debate from the Federal Reserve Bank of Atlanta can be found <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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 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>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</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>-0.1</td>
<td>0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The leaders haven't missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board's Index of Leading Economic Indicators rose 0.3% [...]

U.S. Leading Indicators Continue To Signal Economic Recovery

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" align="left" border="0" height="265" width="353">
The leaders haven't missed one yet in their sixty year
history. Therefore, the probability is high that economic recovery is
near for the U.S. Released yesterday, the Conference Board's Index of
Leading Economic Indicators rose 0.3% in October. That followed an
unrevised 1.0% September increase and was the seventh gain in a row.
Moreover, the 10.2% (centered) rate of increase during the last six
months was nearly the strongest since early-1983. The leading index is
based on actual reports for eight economic data series. The Conference
Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a
bit last month. Sixty percent of the components rose during October
versus last month's reading of 75%. During the most recent six months,
however, 80% to 90% of the series rose. Prominent in last month's
increase was the steeper interest rate yield curve. The money supply,
stock prices, hours worked, jobless insurance claims and orders for
consumer goods contributed to the index's rise as well. These gains
were offset by lower capital goods orders, lower building permits,
quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators. They were unchanged during
October after a slight September decline. During the last six months
the 1.4% rate of decline in the coincident series compares with a
shortfall of 8.0% at its worst in January. Prompting the moderation
have been slight increases in industrial production, real personal
income and higher business sales as well as fewer declines in payroll
employment.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" align="left" border="0" height="265" width="353">
In a continued sign that excesses in the U.S. economy are
falling, the lagging index has been down since December of last year.
Leading the decline has been lower commercial &amp; industrial
loans outstanding as well as less consumer credit. The ratio of
coincident-to-lagging indicators (a measure of economic excess) also
continued higher for the seventh straight month to the highest level
since November.
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.


The Peak Oil Debate from the
Federal Reserve Bank of Atlanta can be found <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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 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>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</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>-0.1</td>
<td>0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
 Italian and French Industrial
Orders Are Up In September 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 


 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey2">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey5">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
</body></html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. The decline
reflects the improved job market but may also be a function of the
exhaustion of benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell modestly to 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% and
matched its lowest since late-March. 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) and Florida (3.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.

<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">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</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>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</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>4.3</td>
<td>4.3</td>
<td>3.1(11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Layoffs from the U.S. workforce held steady last week at the recent low. That's according to the Labor Department which reported that initial claims for unemployment insurance equaled the prior week's upwardly revised level of [...]

U.S. Weekly Initial Claims Unemployment Insurance Hold Steady Near January Low

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119a.jpg" align="right" border="0" height="265" width="353">
The
Philadelphia Federal Reserve Bank indicated that the November index of
factory sector activity in the region continued to expand this month.
Moreover, the index was unexpectedly strong at 16.7 and positive for
the fourth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter. 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/bos1109.pdf">here.</a>·
Amongst the components new orders and shipments each improved to the
highest since 2007. Also showing improvement was the employment index
which rose to nearly break-even 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. The inventory component reversed the October decline and
suggests that any turn towards inventory accumulation will be modest.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119b.jpg" align="right" border="0" height="265" width="353">
A decline in the prices paid index reversed all of its October
increase. Nevertheless, the positive figure compares to negative
readings this past winter and spring. 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 deteriorated for the fifth
straight month. The November index fell to a still-positive reading of
36.8 but that was well-off the recent high. Most of the index
components, especially orders and shipments, were down sharply. The
figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database. The exchange rate: what's in it for prices?
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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">Philadelphia
Fed (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '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>16.7</td>
<td>11.5</td>
<td>14.1</td>
<td>-39.8</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>14.8</td>
<td>6.2</td>
<td>3.3</td>
<td>-29.3</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-14.3</td>
<td>-23.8</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;14.9</td>
<td>&nbsp;-26.6</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 the November index of factory sector activity in the region continued to expand this month. Moreover, the index was unexpectedly strong at 16.7 and positive for the fourth [...]

Philadelphia Fed Index Improves To Highest Since 2007

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Sandy Batten

260702A4.jpg

260702B4.jpg

The luster fell a bit off the employment rose in June with nonfarm payrolls rising 57,000 against expectations of a 115,000 increase, according to today’s report from the Bureau of Labor Statistics. Moreover, the increases previously reported for April and May were revised down by a total of 74,000. Upon revision, payrolls increased 148,000 in April versus 179,000 previously reported and rose 129,000 in May versus 172,000 previously reported. The average increase over the past three months fell to 111,000 from 164,000 in May while the average increase over the past six months rose to 92,000 in June, its highest reading since February 2025, from 80,000 in May. Both remain on a modest uptrend and much stronger than payroll gains last year. In 2025, monthly payroll gains averaged only 10,000.

The weaker-than-expected payroll report was reinforced by a weak report from the **household survey**. While the number of unemployed fell 213,000 and the unemployment rate edged down to 4.2% from 4.3% in May, the number of employed slumped 507,000 in June, the largest monthly decline since May 2025 (with population adjustment to January 2026). The labor force plunged 720,000 with the labor force participation rate falling to 61.5%, its lowest level since March 2021.

Growth of average hourly earnings (AHE), a key variable for the Federal Reserve, was relatively well behaved in June. AHE increased 0.3% m/m, the same monthly gain as in May, in line with expectations. The y/y rate of advance edged up to 3.5% in June from 3.4% in May. Wage growth in private services-producing firms picked up in June, rising 0.4% m/m (3.4% y/y) versus 0.2% m/m (3.2% y/y) in May. Goods-producing wages increased 0.2% m/m in June after 0.3% monthly gains in both April and May with the y/y rate holding at 4.1%.

260702C4.jpg

260702D4.jpg

In the **establishment survey**, private-sector employment was also weaker than expected in June, increasing only 49,000 against an expected 115,000 increase. Moreover, April and May figures were also revised down by a total of 50,000. Government employment rose 8,000 following a 32,000 increase in May. Private goods-producing employment increased 10,000, its largest monthly gain in three months with an 11,000 gain in construction and a 3,000 rise in manufacturing jobs, the first increase in three months. In contrast, services-producing employment increased only 39,000 in June, its weakest monthly performance in four months. Private education and health services jobs posted another solid gain of 69,000, up from 45,000 in May. However, retail jobs fell 7,500, their first monthly decline in four months, and leisure and hospitality jobs slumped 61,000, their largest monthly decline since December 2020, after increasing 40,000 in May. There had been speculation in the market that the World Cup would generate additional leisure and hospitality jobs, but this obviously failed to pan out. On a brighter note, although the one-month payroll diffusion index, a measure of the breadth of job gains, slipped to 54.4 in June from 56.0 in May, it remained well above the key 50 level that indicates that more industries were adding jobs than losing them.

The length of the workweek was unchanged at 34.3 hours in June with the aggregate weekly hours index edging up 0.1% m/m, the same monthly gain as in May. The aggregate hours index rose 1.3% q/q saar in Q2, the fastest quarterly gain in four quarters, providing a solid base for Q2 real GDP growth. The goods-producing workweek was unchanged at 40.1 hours, the highest since January 2023, while the private service-producing workweek edged down to 33.2 hours from 33.3 hours in May.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

260702X4.jpg

260702F4.jpg

- U.S. nonfarm payrolls increased 57,000 in June with meaningful downward revisions to both April and May.
- The market consensus looked for a 115,000 increase.
- The unemployment rate edged down to 4.2% from 4.3%, due mostly to a large decrease in the labor force.
- Average hourly earnings rose 0.3% m/m (3.5% y/y), in line with expectations.

U.S. Payroll Employment Gains Smaller than Expected in June

260702E.jpg

Unemployment rates in the European Monetary Union (EMU) were steady in May at 6.2%, the same level as in April, after April had fallen to 6.2% from 6.3%. The 6.2% reading is the lowest for the community since it was formed. Meanwhile, for the larger community, the EU, the unemployment rate has stabilized at 5.9%, the same as in April, again, a tick lower than it was in March. This 5.9% reading is a tick above the historic low for the European Union (EU). In both cases, the performance of these two economic conglomerations is quite excellent.

**Monthly**
The table looks at 12 of the most senior members of the monetary union, including an observation for the United Kingdom based on its claimant-count unemployment rate, presented at the bottom of the table. In May, the monetary union saw 4 of 12 members in the table with lower unemployment rates than they had in April. In April, five members had lower unemployment rates than in March. In March, seven members had lower unemployment rates than they posted in February. The progression to lower unemployment rates has slowed based on monthly data.

**Sequentially**
Looking at changes in the unemployment rates over broader sequential periods—three months, six months, and 12 months—6 out of 12 reporters have lower unemployment rates over three months; 7 have lower unemployment rates over six months; only 4 report unemployment rates that are lower over 12 months. The broader periods for comparison show changes in the unemployment rates that report more declines over the shorter and more recent periods compared to the longer/older periods. This is not the same trend leaning that we get from the last three months of data. It'll be good to watch these developments in the coming months to see if the tendency to lower unemployment rates is slowing or whether dropping unemployment is continuing in force.

**Rankings**
The ranking of unemployment rates since 1990 finds only three of these 12 monetary union members with unemployment rates above their medians. Those are Luxembourg, with a 98.2 percentile standing, Finland with an 81.9 percentile standing, and Austria with a 76.6 percentile standing. Italy, on the other hand, is reporting the lowest unemployment rate that it has seen during this period. The Greek unemployment rate has been this low or lower only about 3% of the time, while in Spain the unemployment rate has been this low or lower 11% of the time. For Portugal, the unemployment ranking figure has been weaker 13% of the time. The monetary union continues to report excellent labor market results even though economic growth has been relatively disappointing.

260702.jpg

**Summing up and central bankers**
In the wake of the monetary conference in the Sintra this past week, central banks featuring contributions from the European Central Bank, the Bank of England, the Federal Reserve, and the Bank of Canada, saw central bank heads talking about getting back to basics and stopping the use of some of the newer tools that had been pressed into service after the great financial crisis and during COVID. Bankers are getting back to basics to focus on short-term interest rates and say they will stop fiddling with the size of the balance sheet and to largely set aside the use of forward guidance. It will take time to determine what these changes are going to mean in terms of how policy performs and how markets will react. While there was a lot of discussion, and in some places concerns about the loss of forward guidance, what is clear is that, with forward guidance gone, there will be more volatility; however, the markets will be freer to price economic events themselves and will not be so stuck to the outlook of the central bank.  That could turn out to be a gigantic win for both markets and central bankers.

Europe

Unemployment Remains Quite Low in Europe

Andrew Cates

**Tightening Bias Intact, but Unevenly Distributed**
The July Blue Chip Financial Forecasts survey's expectations for policy rate changes over the next twelve months reveal a striking divergence across the major advanced economies, as chart 1 below makes clear. Across the board, the rate outlook is higher than it was in late February, before the US-Iran conflict escalated: the energy price shock and its inflationary consequences have left an imprint on the panel's thinking, even as oil prices have since retreated. Japan tops the list with an expected increase of around 40 basis points, reflecting the building pressure on the Bank of Japan to respond to yen weakness and still-elevated domestic inflation. Canada and the euro area also sit firmly in positive territory, with expected increases of around 30 and 20 basis points respectively. The US and the UK, by contrast, are in negative territory — the US barely so, the UK more distinctly, with the panel pencilling in modest rate reductions over the coming year. This pattern is not simply a reflection of where each economy sits in the inflation cycle. It also encodes a judgement about the current stance of monetary policy: in Japan, the euro area and Canada, policy is likely seen as insufficiently tight relative to the inflation challenge, and the conflict has reinforced that view. In the US and UK, by contrast, policy is judged to be closer to or already beyond neutral, meaning the next move is more likely to be an easing than a further tightening — even if, in the US case, that easing has been pushed well into 2027.

260702Z1.jpg

**When Will the Next Move Come?**
Chart 2 below adds a timing dimension to the rate outlook, showing where the BCFF panel currently places the next policy move for the Fed, ECB, Bank of England and Bank of Japan. For the BoJ, the distribution is concentrated around the near term, with a significant share of respondents expecting action in September or October — consistent with the building pressure illustrated in chart 1 and with the BoJ’s next scheduled decision on 31 July. For the ECB, September or later than November emerge as the most likely timing for the next step. The Bank of England panel is more spread, with a meaningful share expecting action to come later. For the Fed, the dominant view places the next move firmly in the ‘later’ category, consistent with the BCFF consensus that the Fed funds rate will hold through the rest of 2026, with a first cut not expected until Q2 2027. Under chair Kevin Warsh, the June FOMC meeting delivered a hawkish dot plot that shifted some participants toward a hike before year-end, but the panel as a whole has not moved that far.

260702Z2.jpg

**Headline Up, Core Contained: The Inflation Picture Across Advanced Economies**
One of the more reassuring features of the current inflation episode has been the limited pass-through from energy prices to underlying price dynamics. Across the advanced economies, headline CPI inflation has risen materially since the conflict escalated in March, driven overwhelmingly by consumer energy costs. Core inflation — stripping out food and energy — has edged higher, but only modestly, suggesting that second-round effects remain contained for now. In the United States, the pressures are arguably more alarming, with core PCE rising sharply between February and May to its highest level since October 2023. In the euro area, the focus this week has been firmly on Eurostat's June flash CPI estimate, published yesterday. Headline inflation fell back to 2.8% from a peak of 3.2% in May, as energy costs — the main driver of the surge since the conflict began — eased meaningfully. Crucially, core inflation also ticked down, and services inflation retreated as well. The June data therefore tell a broadly reassuring story: the energy shock is unwinding without leaving a lasting imprint on underlying price dynamics — precisely what the ECB will have been hoping for.

260702Z3.jpg

**Consumer Price Expectations: Are Households Convinced?**
The aggregate inflation picture looks relatively contained at the macro level, but whether households are similarly reassured is a separate question. Chart 4 below draws on the European Commission's consumer survey data on price expectations — one of the more timely and widely watched indicators of inflation psychology in the euro area. The survey captures whether consumers expect prices to rise, stay the same or fall over the coming twelve months, and its relationship with actual inflation outturns has historically been close. A sustained elevation in consumer price expectations risks becoming self-fulfilling, feeding into wage demands and pricing behaviour in ways that complicate the ECB's task considerably. The June survey, however, brought an encouraging development: expectations fell steeply, suggesting that households have begun to register the reversal in energy prices and the broader easing of the inflationary impulse. That said, the absolute level of expectations remains elevated relative to the pre-conflict period, and one month's decline does not constitute a trend. Whether the June reading marks the beginning of a sustained normalisation — or proves a temporary dip before expectations re-anchor at a higher level — will be one of the key variables shaping the ECB's decision calculus in the months ahead.

260702Z4.jpg

**Japan: A Weak Yen at the Worst Possible Time**
Japan occupies a particularly uncomfortable position in the current global conjuncture. The yen has depreciated to levels not seen since December 1986, with USD/JPY touching 162 this week. The move reflects the persistence of a large interest rate differential: even as the Bank of Japan has continued its gradual tightening, the Fed’s hawkish pivot under chair Kevin Warsh — with the mid-June FOMC dot plot signalling a possible hike before year-end — has reinforced the carry trade dynamics weighing on the currency. For Japan, which imports virtually all of its energy, yen weakness at a time of still-elevated global oil prices is a double burden, amplifying domestic inflation and squeezing real incomes. Verbal warnings from Japan’s Finance Ministry have had only a modest and short-lived effect on the exchange rate. The Bank of Japan’s next policy decision is on 31 July, and the pressure to act more decisively is building. The BCFF panel’s July survey revised upward its expectation for a stronger US dollar against the yen over the coming year — consistent with the fundamental picture that chart 5 below describes.

260702Z5.jpg

**AI: Optimism on the Technology, Scepticism on the Price**
Returning to the BCFF survey, its special questions reveal a panel that continues to look beyond the current cyclical turbulence toward a longer-horizon structural narrative. On artificial intelligence, respondents are broadly optimistic: 45% expect a noticeable impact on US productivity and growth within one to three years, with a further 45% believing those effects are already becoming evident. That is a striking degree of conviction about a technology whose macro-level productivity impact remains, by most empirical measures, still to fully materialise. Yet the same panellists are considerably more cautious about financial markets than about the technology itself. Nearly all respondents believe that expected AI gains are already fully reflected — or even over-reflected — in current asset prices. Chart 6 below captures this tension. It is a combination — high conviction on transformative potential, high scepticism on current valuations — that has historically been associated with stretched risk premia and vulnerability to disappointment, even where the underlying technology story ultimately proves correct.

260702Z6.jpg

Global financial markets have had a more settled feel this week, reflecting the continued unwinding of the geopolitical risk premium that had built up during the worst of the US-Iran conflict. Oil prices have fallen further, equity markets have been broadly supported, and incoming inflation data — notably the euro area’s June flash CPI estimate — have come in below expectations. The US holiday-shortened week ahead, with Independence Day on Friday, is likely to keep volumes thin and activity subdued. The bigger picture, however, remains one of tension between a more benign near-term inflation trajectory and central banks that may not yet be ready to stand down. In the charts below we look first at what the latest Blue Chip Financial Forecasts (BCFF) survey reveals about the expected change in and timing of policy rates across the major economies (charts 1 and 2), then at the divergence between headline and core inflation across the advanced economies (chart 3), and at what euro area consumers are more specifically expecting about inflation in the period ahead (chart 4). We turn next to Japan and the yen’s slide this week to 40-year lows (chart 5), and finally to the BCFF survey’s special questions on artificial intelligence and asset valuations (chart 6).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/6WAWvuhdCIiVMfa7lArFBI?utm_source=generator&si=a00a7c7e625c4035" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Forecasters Hold Firm

Winnie Tapasanun

260701A23.jpg

260701B23.jpg

The ISM U.S. manufacturing PMI fell to a lower-than-expected 53.3 in June, the first m/m fall since February, following a 1.3-point increase to 54.0 in May, according to data from the Institute for Supply Management. The June reading, above the 50 expansion-contraction threshold, indicated the U.S. manufacturing sector expanded for the sixth straight month, albeit at a slightly slower pace. A reading of 53.8 for June had been expected in the Action Economics Forecast Survey. The June manufacturing PMI, while above a contraction-level 49.0 in June 2025 and a low of 47.0 in October 2024, remained below a peak of 63.8 in March 2021.

The production index declined to 52.2 in June from 54.3 in May, indicating production expanded for the eighth consecutive month but at the slowest pace since December. The index was above a low of 44.8 in April 2025 but below a peak of 66.5 in March 2021. In June, 19.0% (NSA) of respondents reported higher production while 13.0% reported lower production. The new orders index slipped to 56.0 in June from 56.8 in May, signaling new orders grew for the sixth straight month following four successive months of contraction. The index remained well above a low of 41.8 in January 2023 but below a high of 67.0 in May 2021. In June, 22.3% (NSA) of respondents reported higher new orders while 13.4% reported declines. The inventories index climbed to 51.4 in June from 49.9 in May, marking the first expansion since April 2025. The index was slightly below a high of 52.7 in March 2025 but above a low of 43.8 in October 2024. Meanwhile, the supplier deliveries index fell to 57.4 in June from 60.6 in May and April, indicating slowing delivery performance for the seventh consecutive month after faster deliveries in November. In June, 18.1% (NSA) of respondents reported slower delivery speeds while 3.4% reported faster speeds.

On the labor front, the employment index improved to 49.7 in June from 48.6 in May, showing employment contracted for the 33rd straight month but at the slowest contraction pace since January 2025. The index was above a low of 44.1 in November 2025 but below a high of 56.5 in March 2022. In June, 16.2% (NSA) of respondents reported higher employment while 13.8% reported lower hiring.

On the pricing front, the prices paid index fell to a still-high 73.0 (NSA) in June, a 9.1-point drop—the largest decline since July 2022—from 82.1 in May, indicating raw materials prices rose for the 21st straight month but at the slowest rising pace since February. The index remained well above a low of 39.4 in December 2022 but below a high of 87.1 in March 2022 and a peak of 92.1 in June 2021. In June, 55.1% (NSA) of respondents reported higher prices while 9.2% reported price declines.

In other ISM series not included in the composite index, the new export orders index fell to 48.5 in June from 50.6 in May, indicating new export orders contracted for the third time in four months. The index was up from a low of 40.1 in May 2025 but down from a high of 52.4 in January 2025 and a peak of 57.1 in February 2022. The imports index edged down to 52.9 in June from 53.0 in May, suggesting imports expanded for the fifth successive month. The index was below its recent high of 54.9 in February but above a low of 39.9 in May 2025. The order backlog index decreased to 50.5 (NSA) in June from 52.2 in May, showing backlog levels grew at the slowest pace in six months. The index was below a high of 56.6 in February and a peak of 70.6 in May 2021 but well above a low of 37.5 in May 2023.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

260701C23.jpg

260701D23.jpg

- ISM Mfg. PMI down slightly to 53.3 in June; sixth straight month above 50.
- Production (52.2) expands for the eighth consecutive mth.; new orders (56.0) for the sixth successive mth.
- Employment (49.7) contracts for the 33rd straight mth.; at the slowest contraction pace since Jan. ’25.
- Prices Index (73.0) at a four-month low, still indicating prices rising for the 21st consecutive mth.
- Exports (48.5) contract for the third time in four mths.; imports (52.9) continue to grow.

U.S. ISM Manufacturing PMI Still Expansionary in June; New Orders and Production Growing at a Slower Pace; Employment Contracting

Michael J. Moran

260701A.jpg

260701B.jpg

The monthly report on construction activity receives scant attention in the financial press, and investors and traders in financial markets typically pay little heed. However, it is a valuable report for economists, as it provides a broad-based view of building activity, covering private residential and business construction, as well as government-related activity. The figures feed into the calculation of GDP. Unfortunately, results have been soft since early 2025.

Total construction activity rose 0.1 percent in May, marking the third consecutive increase. However, the gains have not been especially large, averaging 0.3%, and they have barely dented the string of weak readings in the preceding 17 months. The year-over-year change in May totaled -1.5%.

Private residential construction, the largest component of the total (41% share), rose 0.3% in May, adding to an average gain of 1.1% in the prior two months and leaving a year-over-year increase of 1.8% (chart, upper left). Most of the advance in the past year was the result of improvements to existing homes (up 8.1%). Construction of new multi-family units has shown little net change in the past year or so, while new single-family building has traced a mild downward trend (off 4.0% in the past year). Public construction has been flat in the past year, with both the federal government and state and local governments showing little net change (chart, upper right).

Private nonresidential construction (34% of the total) has received considerable press attention in the past few years because of explosive growth in the building of data centers. Growth has indeed been vigorous. Building started in 2020 and grew moderately at first, but this sector took off in 2022, about the time when artificial intelligence models became publicly available (chart, lower left, in levels to show the strong trend more clearly). Average annual growth for the three years ended 2025 totaled 48%.

Interestingly, despite the rapid growth in the building of data centers, the private nonresidential sector has been the weakest area of the construction report, with activity trending lower since early 2025 (chart, lower right). Some components of private nonresidential construction have held steady or improved (e.g. amusement & recreation, electric power), but three areas stand out on the soft side: general office, commercial, and manufacturing.

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

260701C.jpg

260701D.jpg

- Building activity in the US was firm in 2023 and 2024, but it has lost ground since then.
- Government-related construction and private residential building have been little changed in the past year or so.
- Private nonresidential construction has been notably weak, despite robust activity in the building of data centers.

Economy in Brief

Jump to:

Chicago Fed Index Eases Again Pointing Towards Softer GDP Growth

U.S. Existing Home Sales Surge To Highest Since 2007 As Prices Fall Again

U.S. Existing Home Sales Surge ToHighest Since 2007 As Prices Fall Again

Italian and French Industrial Orders Are Up In September

U.S. Leading Indicators Continue To Signal Economic Recovery

U.S. Leading Indicators Continue To Signal Economic Recovery

U.S. Weekly Initial Claims Unemployment Insurance Hold Steady Near January Low

Philadelphia Fed Index Improves To Highest Since 2007