Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113h.jpg" align="right" border="0" height="265" width="353">
The U.S. economy is strengthening, so suggests price pressures
in the foreign trade accounts. Overall import prices rose 0.7%, though
the gain fell short of Consensus expectations for a 1.0% increase. The
rise was led by a 0.9% increase in petroleum prices which reversed a
like decline in September and promises to be followed by another strong
gain this month. The report indicated that non-oil import prices rose
0.7%, which was the strongest monthly increase since June of last year.
Moreover, on a three-month basis, these prices have risen at a 5.7%
annual rate after declining at a 13.6% rate as of last December.
(During the last ten years, there has been a negative 81% correlation
between the nominal trade-weighted exchange value of the US dollar vs.
major currencies and the y/y change in non-oil import prices.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113i.jpg" align="right" border="0" height="265" width="353">

Import prices break down as follows: Chemical import prices
were quite strong and posted a 2.9% increase but they still were down
16.1% from last year. Iron &amp; steel prices also were strong, up
2.4% m/m, but down by one-third from a year ago. Food prices increased
0.1% and at an 8.0% rate during the last three months. Capital goods
prices similarly posted a modest gain after five months of no change.
Prices for nonauto consumer goods rose 0.3% lifting the three-month
gain to 1.2% versus its weakest reading of -2.6% in January. Durable
consumer goods prices rose 0.4% (-0.9% y/y) but prices of household
goods slipped (-1.9% y/y) and furniture prices fell as well (-1.2%
y/y). Apparel prices were unchanged for the third month (-0.5% y/y).
Petroleum prices reversed their prior month's decline with a 0.9%
increase during October. This month crude oil prices have found further
strength with a rise to $76.94 yesterday from the October average of
$75.82 per barrel.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113j.jpg" align="right" border="0" height="265" width="353">

Total export prices resumed increasing modestly. The 0.3% rise
was led by a 0.3% gain in nonagricultural export prices, down 2.7% y/y.
Agricultural export prices actually fell 1.0% (-10.0% y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT
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/USECON/@E8/@E807/@E807.HTM">Import/Export
Prices (NSA, %)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.7</td>
<td>0.2</td>
<td>1.6</td>
<td>-5.7</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>0.9</td>
<td>-0.9</td>
<td>7.7</td>
<td>-12.2</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.7</td>
<td>0.4</td>
<td>0.3</td>
<td>-3.8</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.6</td>
<td>-3.4</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. economy is strengthening, so suggests price pressures in the foreign trade accounts. Overall import prices rose 0.7%, though the gain fell short of Consensus expectations for a 1.0% increase. The rise was led by a 0.9% [...]

U.S. Import Prices Rise, Both Oil & Nonoil

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113d.jpg" align="left" border="0" height="265" width="353">
European GDP turned higher in Q3 but the results were
generally less than expected. Among the early &#8216;flash&#8217; GDP reporters
France posted a small rise but it was the second rise in a row for
France. Greece with always volatile results posted the strongest rise
followed by Austria. Italy and The Netherlands have the largest Yr/Yr
declines in this group; the EMU Yr/Yr drop is of 4.1%. Greece is lower
Yr/Yr by just 1.6% Austria but just 2.2%. Germany the largest e-Area
economy is off by 4.8% Yr/Yr even though it has two quarters in a row
of solid growth under its belt. 
 

Flash reports do not provide any GDP detail but the various
authorities do offer some account of their results. Both Germany and
France cited the role of exports in pushing growth ahead. In Germany
investment demand was also described as a key factor. 
 

Paragon of strength or parasite of growth? 
-- An unfolding theme in the Area is that exports, external demand, is
driving the European recovery. In France domestic demand was flat in
the quarter despite a ton of ongoing stimulus that has left France
unable to get its fiscal budget gap in line as soon as the EU
Commission wants it to. Hungary, in its GDP release today, complained
that exports were weak and that was sapping GDP strength. The largest
industrial economies would seem to be good candidates to spur world
growth with their own domestic demand instead of relying on the demand
increases elsewhere. Chancellor Merkel has defended Germanys &#8216;right&#8217; to
be a leading exporters, Japan always seeks a surplus to &#8216;defend&#8217;
against the country&#8217;s lack of oil and dependence on oil and other
natural resource imports. China&#8217;s trade surplus grew larger last month.
How can &#8216;everyone&#8217; have export led growth? How can the US (whose
current account deficit surged in November) get its deficit in line if
major competitor countries insist on running trade surpluses, spurring
exports and maintaining weak domestic demand at home? This is something
the G-20 has been completely unable to sort out. 
 

These sorts of structural imbalances helped to lead to the
last financial crisis. Such flows underpinned the 1973-78 oil boom-bust
cycle. Factors that put persistent surpluses sand deficits in play are
dangerous and the G-20 has not plan to sort it out. At the weaker
dollar works to mitigate the US imbalance problem even if it is playing
with fire. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> European Growth for Selected Flash GDP Results</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Q/Q Saar</td>
<td colspan="3">Yr/Yr</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td> Q3-09</td>
<td> Q2-09</td>
<td> Q1-09</td>
<td>Q3-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
</tr>
<tr class="even">
<td class="firstcol">Austria</td>
<td>14.0%</td>
<td>-3.7%</td>
<td>-13.8%</td>
<td>-2.2%</td>
<td>-5.4%</td>
<td>-4.8%</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>1.1%</td>
<td>1.1%</td>
<td>-5.5%</td>
<td>-2.4%</td>
<td>-2.9%</td>
<td>-3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>2.9%</td>
<td>1.8%</td>
<td>-13.4%</td>
<td>-4.8%</td>
<td>-5.8%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece</td>
<td>17.6%</td>
<td>32.7%</td>
<td>-29.8%</td>
<td>-1.6%</td>
<td>-1.2%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>2.4%</td>
<td>-1.9%</td>
<td>-10.5%</td>
<td>-4.6%</td>
<td>-5.9%</td>
<td>-6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands</td>
<td>1.7%</td>
<td>-4.0%</td>
<td>-9.4%</td>
<td>-4.0%</td>
<td>-5.1%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol"> EMU</td>
<td> 1.5%</td>
<td> -0.7%</td>
<td> -9.6%</td>
<td> -4.1%</td>
<td> -4.8%</td>
<td> -4.9%</td>
</tr>
</tbody>
</table>
</body></html>

European GDP turned higher in Q3 but the results were generally less than expected. Among the early ‘flash’ GDP reporters France posted a small rise but it was the second rise in a row for France. Greece with always volatile results [...]

European GDP Turns Higher-But Disappoints

Carol Stone, CBE

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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113e.jpg" align="right" border="0" height="265" width="353">Consumer
sentiment declined again in early November, falling from October's 70.6
to 66.0, measured by the Reuters/University of Michigan Index of
Consumer Sentiment.&nbsp; Forecasters had looked for only a
marginal decrease to 70.0. The reading on expectations for
mid-November was down 4.9 points to 63.7 from October's 68.6. The
primary weakness came in survey participants' outlook for business
conditions over the next year.&nbsp; That had leaped to 88 in
September and then fell back in October to 81 and now to 67.&nbsp;
This move seems to show that the nice rise in September was a temporary
blip, reversed last month and again now.&nbsp; Indeed, November's
expectations for "times" to be "good" fell by 7 points and those for
"times" to be "bad" increased by 7 points from October's
amounts.&nbsp; Expected personal finances were also less
optimistic, decreasing by 6 points in this survey round after a 2-point
uptick last month.&nbsp; The latest move was related to a rise in
the number of people who expect their income to fall during the coming
year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113f.jpg" align="right" border="0" height="265" width="353">The
reading of current economic conditions also fell; it went
down 4.1 points from October to mid-November.&nbsp; People's
assessments of their current financial condition and business
conditions in general both moved adversely.&nbsp; In particular,
more respondents indicated that current "bad times" make this a "bad
time" to buy large consumer items.&nbsp; At 21, this reading was up
3 points in the month and returned to its level back at the beginning
of this year.&nbsp; The record high for this negative indicator is
24, reached in August 2008. Prior to this cycle, the record was 17 in
October 1992.
Expected price inflation during the next year
amounted to 3.3% in this mid-November survey, according to the mean of
participants' estimates, edging up from October's 3.2%.&nbsp; In
contrast, the median of those estimates ticked down from 2.9% to 2.8%,
suggesting that people see little overall change in price pressures
this month.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113g.jpg" align="right" border="0" height="265" width="353">Respondents'
views on government
policy, which may eventually influence economic expectations, showed
mixed developments in this current survey.&nbsp; The number
expressing a favorable opinion rose from 86% in October to 88%,
reflected in a like increase in the number believing government is
doing "a good job" in November.&nbsp; At the same time, the
open-ended query about news reports people have heard gave a negative
spin to their impressions of government; the number hearing favorable
news about government fell from 6% last month to 3% and the number
hearing unfavorable news increased from 7% to 11%.&nbsp; While this
latter "news" reading has hardly ever been positive on a net basis, the
current -8 is well above averages between -3.5 and -4.&nbsp; So
people are clearly uneasy about the news they're getting on government
even though they're feeling marginally better about how government is
working in the economy.
 The Reuters/University of Michigan survey data
are not seasonally adjusted. The reading is based on telephone
interviews with about 500 households at month-end.&nbsp; These
mid-month results are based on about 320 interviews. The summary
indexes are in Haver's USECON database with
details in the proprietary UMSCA database.p
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Mid-November
</th>
<th scope="col">October </th>
<th scope="col">September</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">Consumer Sentiment</td>
<td>66.0</td>
<td>70.6</td>
<td>73.5</td>
<td>18.2%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>69.6</td>
<td>73.7</td>
<td>73.4</td>
<td>21.0</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>63.7</td>
<td>68.6</td>
<td>73.5</td>
<td>20.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>

</body></html>

Consumer sentiment declined again in early November, falling from October's 70.6 to 66.0, measured by the Reuters/University of Michigan Index of Consumer Sentiment. Forecasters had looked for only a marginal decrease to 70.0. The [...]

Michigan Consumer Sentiment Sags Once Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113a.jpg" align="right" border="0" height="265" width="353">
Following
months of shrinkage due to lower oil prices and a poor economy, the
September U.S. trade deficit widened significantly. The deficit of
$36.5B followed a little-revised August figure of $30.8B and the m/m
deterioration greatly exceeded Consensus expectations for a deficit of
$31.6B.&nbsp;The latest figure was the deepest trade shortfall
since January. The rise in oil prices is evident in the trade deficit
figures adjusted for inflation. The m/m deterioration in the real
deficit was just under half that for nominal. However, offsetting that
was the improved economy which also lifted the inflation-adjusted
deficit as real imports jumped 6.2% m/m and by 10.1% over the last
three months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113b.jpg" align="right" border="0" height="265" width="353">
During September, petroleum imports jumped 20.9% after
having risen by over one-half since February. Higher prices prompted
that increase as crude oil costs rose to a September average of $68.17
per barrel versus the February low of $39.22. Since then crude oil has
risen even further to roughly $75 per barrel. The firmer economy raised
real imports of petroleum products by 6.9% during September and by 7.7%
over the last twelve months. That rise compares to declines of between
one and four percent during each of the last three years.
Economic recovery also was apparent in real nonoil imports which rose
4.2% during September and 11.3% during the last three months. These
gains lessened the y/y decline to 14.8% from its worst of 24.6%. Real
non-auto capital goods imports rose 2.5% (-18.9% y/y) and by 6.7%
during the last three months. Real nonauto consumer goods rose 1.9% and
5.5% since June. Both of these increases are turnarounds from sharp
declines through June. Real automotive vehicles &amp; parts imports
also turned higher by 11.4% (-12.1% y/y) in September and by nearly
one-half since June.&nbsp;Despite the lower value of the dollar,
economic recovery is further suggested by better travel figures.
Imports of services have recently risen, with travel imports strong
during three of the last four months as more U.S. residents went
abroad. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113c.jpg" align="right" border="0" height="265" width="353">
Reflecting the competitive value of the dollar, real
merchandise exports during September rose 4.4% (-9.5% y/y) following
three months of 7.0% increase. That's a turnaround from 20% rates of
decline this summer. The chained dollar value of real capital goods
exports led the September increase with a 5.2% gain (-14.3% y/y) which
reversed an August drop. Non-auto consumer goods exports also rose 3.6%
and the y/y decline eased to 5.6% from the peak of -15.7%. Auto exports
were strong for the fourth straight month and the y/y decline of 26.2%
was half its worst reading. Exports of services also have been strong
of late.The international trade data can be found in
Haver's USECON database. Detailed figures are
available in the USINT database. Trade, Globalization and the
Financial Crisis from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0908.html">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</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">U.S. Trade Deficit</td>
<td>$-36.5</td>
<td>$30.8B</td>
<td>$31.9B</td>
<td>$60.1B (9/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>2.9</td>
<td>0.2%</td>
<td>2.5%</td>
<td>-13.2%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>5.8</td>
<td>-0.4%</td>
<td>4.9%</td>
<td>-20.6%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>20.9</td>
<td>-5.4%</td>
<td>3.3%</td>
<td>-31.9%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>4.4</td>
<td>0.3%</td>
<td>6.4%</td>
<td>-19.2%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body></html>

Following months of shrinkage due to lower oil prices and a poor economy, the September U.S. trade deficit widened significantly. The deficit of $36.5B followed a little-revised August figure of $30.8B and the m/m deterioration [...]

U.S. Trade Deficit Increases Due To Higher Oil Costs, Improved Economy

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113a.jpg" align="right" border="0" height="265" width="353">Following
months of shrinkage due to lower oil prices and a poor economy, the
September U.S. trade deficit widened significantly. The deficit of
$36.5B followed a little-revised August figure of $30.8B and the m/m
deterioration greatly exceeded Consensus expectations for a deficit of
$31.6B.&nbsp;The latest figure was the deepest trade shortfall
since January. The rise in oil prices is evident in the trade deficit
figures adjusted for inflation. The m/m deterioration in the real
deficit was just under half that for nominal. However, offsetting that
was the improved economy which also lifted the inflation-adjusted
deficit as real imports jumped 6.2% m/m and by 10.1% over the last
three months.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113b.jpg" align="right" border="0" height="265" width="353">During
September, petroleum imports jumped 20.9% after
having risen by over one-half since February. Higher prices prompted
that increase as crude oil costs rose to a September average of $68.17
per barrel versus the February low of $39.22. Since then crude oil has
risen even further to roughly $75 per barrel. The firmer economy raised
real imports of petroleum products by 6.9% during September and by 7.7%
over the last twelve months. That rise compares to declines of between
one and four percent during each of the last three years.
Economic recovery also was apparent in real nonoil imports
which rose
4.2% during September and 11.3% during the last three months. These
gains lessened the y/y decline to 14.8% from its worst of 24.6%. Real
non-auto capital goods imports rose 2.5% (-18.9% y/y) and by 6.7%
during the last three months. Real nonauto consumer goods rose 1.9% and
5.5% since June. Both of these increases are turnarounds from sharp
declines through June. Real automotive vehicles &amp; parts imports
also turned higher by 11.4% (-12.1% y/y) in September and by nearly
one-half since June.&nbsp;Despite the lower value of the dollar,
economic recovery is further suggested by better travel figures.
Imports of services have recently risen, with travel imports strong
during three of the last four months as more U.S. residents went
abroad. 
 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113c.jpg" align="right" border="0" height="265" width="353">Reflecting
the competitive value of the dollar, real
merchandise exports during September rose 4.4% (-9.5% y/y) following
three months of 7.0% increase. That's a turnaround from 20% rates of
decline this summer. The chained dollar value of real capital goods
exports led the September increase with a 5.2% gain (-14.3% y/y) which
reversed an August drop. Non-auto consumer goods exports also rose 3.6%
and the y/y decline eased to 5.6% from the peak of -15.7%. Auto exports
were strong for the fourth straight month and the y/y decline of 26.2%
was half its worst reading. Exports of services also have been strong
of late.
The international trade data can be found in
Haver's USECON database. Detailed figures are
available in the USINT database.
 Trade,
Globalization and the
Financial Crisis from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0908.html">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</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">U.S. Trade Deficit</td>
<td>$-36.5</td>
<td>$30.8B</td>
<td>$31.9B</td>
<td>$60.1B (9/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>2.9</td>
<td>0.2%</td>
<td>2.5%</td>
<td>-13.2%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>5.8</td>
<td>-0.4%</td>
<td>4.9%</td>
<td>-20.6%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>20.9</td>
<td>-5.4%</td>
<td>3.3%</td>
<td>-31.9%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>4.4</td>
<td>0.3%</td>
<td>6.4%</td>
<td>-19.2%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>

 Michigan Consumer Sentiment Sags
Once Again 
by <a href="/comment/Stone.html">Carol
Stone</a> November 13, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113e.jpg" align="right" border="0" height="265" width="353">Consumer
sentiment declined again in early November, falling from October's 70.6
to 66.0, measured by the Reuters/University of Michigan Index of
Consumer Sentiment.&nbsp; Forecasters had looked for only a
marginal decrease to 70.0.
 The reading on expectations for
mid-November was down 4.9 points to 63.7 from October's 68.6. The
primary weakness came in survey participants' outlook for business
conditions over the next year.&nbsp; That had leaped to 88 in
September and then fell back in October to 81 and now to 67.&nbsp;
This move seems to show that the nice rise in September was a temporary
blip, reversed last month and again now.&nbsp; Indeed, November's
expectations for "times" to be "good" fell by 7 points and those for
"times" to be "bad" increased by 7 points from October's
amounts.&nbsp; Expected personal finances were also less
optimistic, decreasing by 6 points in this survey round after a 2-point
uptick last month.&nbsp; The latest move was related to a rise in
the number of people who expect their income to fall during the coming
year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113f.jpg" align="right" border="0" height="265" width="353">The
reading of current economic conditions also fell; it went
down 4.1 points from October to mid-November.&nbsp; People's
assessments of their current financial condition and business
conditions in general both moved adversely.&nbsp; In particular,
more respondents indicated that current "bad times" make this a "bad
time" to buy large consumer items.&nbsp; At 21, this reading was up
3 points in the month and returned to its level back at the beginning
of this year.&nbsp; The record high for this negative indicator is
24, reached in August 2008. Prior to this cycle, the record was 17 in
October 1992.
Expected price inflation during the next year
amounted to 3.3% in this mid-November survey, according to the mean of
participants' estimates, edging up from October's 3.2%.&nbsp; In
contrast, the median of those estimates ticked down from 2.9% to 2.8%,
suggesting that people see little overall change in price pressures
this month.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113g.jpg" align="right" border="0" height="265" width="353">Respondents'
views on government
policy, which may eventually influence economic expectations, showed
mixed developments in this current survey.&nbsp; The number
expressing a favorable opinion rose from 86% in October to 88%,
reflected in a like increase in the number believing government is
doing "a good job" in November.&nbsp; At the same time, the
open-ended query about news reports people have heard gave a negative
spin to their impressions of government; the number hearing favorable
news about government fell from 6% last month to 3% and the number
hearing unfavorable news increased from 7% to 11%.&nbsp; While this
latter "news" reading has hardly ever been positive on a net basis, the
current -8 is well above averages between -3.5 and -4.&nbsp; So
people are clearly uneasy about the news they're getting on government
even though they're feeling marginally better about how government is
working in the economy.
 The Reuters/University of Michigan survey data
are not seasonally adjusted. The reading is based on telephone
interviews with about 500 households at month-end.&nbsp; These
mid-month results are based on about 320 interviews. The summary
indexes are in Haver's USECON database with
details in the proprietary UMSCA database.p
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Mid-November
</th>
<th scope="col">October </th>
<th scope="col">September</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">Consumer Sentiment</td>
<td>66.0</td>
<td>70.6</td>
<td>73.5</td>
<td>18.2%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>69.6</td>
<td>73.7</td>
<td>73.4</td>
<td>21.0</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>63.7</td>
<td>68.6</td>
<td>73.5</td>
<td>20.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>

 European GDP Turns Higher-But
Disappoints 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113d.jpg" align="left" border="0" height="265" width="353">
European GDP turned higher in Q3 but the results were
generally less than expected. Among the early &#8216;flash&#8217; GDP reporters
France posted a small rise but it was the second rise in a row for
France. Greece with always volatile results posted the strongest rise
followed by Austria. Italy and The Netherlands have the largest Yr/Yr
declines in this group; the EMU Yr/Yr drop is of 4.1%. Greece is lower
Yr/Yr by just 1.6% Austria but just 2.2%. Germany the largest e-Area
economy is off by 4.8% Yr/Yr even though it has two quarters in a row
of solid growth under its belt. 
 

Flash reports do not provide any GDP detail but the various
authorities do offer some account of their results. Both Germany and
France cited the role of exports in pushing growth ahead. In Germany
investment demand was also described as a key factor. 
 

Paragon of strength or parasite of growth? 
-- An unfolding theme in the Area is that exports, external demand, is
driving the European recovery. In France domestic demand was flat in
the quarter despite a ton of ongoing stimulus that has left France
unable to get its fiscal budget gap in line as soon as the EU
Commission wants it to. Hungary, in its GDP release today, complained
that exports were weak and that was sapping GDP strength. The largest
industrial economies would seem to be good candidates to spur world
growth with their own domestic demand instead of relying on the demand
increases elsewhere. Chancellor Merkel has defended Germanys &#8216;right&#8217; to
be a leading exporters, Japan always seeks a surplus to &#8216;defend&#8217;
against the country&#8217;s lack of oil and dependence on oil and other
natural resource imports. China&#8217;s trade surplus grew larger last month.
How can &#8216;everyone&#8217; have export led growth? How can the US (whose
current account deficit surged in November) get its deficit in line if
major competitor countries insist on running trade surpluses, spurring
exports and maintaining weak domestic demand at home? This is something
the G-20 has been completely unable to sort out. 
 

These sorts of structural imbalances helped to lead to the
last financial crisis. Such flows underpinned the 1973-78 oil boom-bust
cycle. Factors that put persistent surpluses sand deficits in play are
dangerous and the G-20 has not plan to sort it out. At the weaker
dollar works to mitigate the US imbalance problem even if it is playing
with fire. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> European
Growth for Selected Flash GDP Results</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Q/Q Saar</td>
<td colspan="3">Yr/Yr</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td> Q3-09</td>
<td> Q2-09</td>
<td> Q1-09</td>
<td>Q3-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
</tr>
<tr class="even">
<td class="firstcol">Austria</td>
<td>14.0%</td>
<td>-3.7%</td>
<td>-13.8%</td>
<td>-2.2%</td>
<td>-5.4%</td>
<td>-4.8%</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>1.1%</td>
<td>1.1%</td>
<td>-5.5%</td>
<td>-2.4%</td>
<td>-2.9%</td>
<td>-3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>2.9%</td>
<td>1.8%</td>
<td>-13.4%</td>
<td>-4.8%</td>
<td>-5.8%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece</td>
<td>17.6%</td>
<td>32.7%</td>
<td>-29.8%</td>
<td>-1.6%</td>
<td>-1.2%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>2.4%</td>
<td>-1.9%</td>
<td>-10.5%</td>
<td>-4.6%</td>
<td>-5.9%</td>
<td>-6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands</td>
<td>1.7%</td>
<td>-4.0%</td>
<td>-9.4%</td>
<td>-4.0%</td>
<td>-5.1%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol"> EMU</td>
<td> 1.5%</td>
<td> -0.7%</td>
<td> -9.6%</td>
<td> -4.1%</td>
<td> -4.8%</td>
<td> -4.9%</td>
</tr>
</tbody>
</table>
 U.S. Import Prices Rise, Both Oil
&amp; Nonoil 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113h.jpg" align="right" border="0" height="265" width="353">
The U.S. economy is strengthening, so suggests price pressures
in the foreign trade accounts. Overall import prices rose 0.7%, though
the gain fell short of Consensus expectations for a 1.0% increase. The
rise was led by a 0.9% increase in petroleum prices which reversed a
like decline in September and promises to be followed by another strong
gain this month. The report indicated that non-oil import prices rose
0.7%, which was the strongest monthly increase since June of last year.
Moreover, on a three-month basis, these prices have risen at a 5.7%
annual rate after declining at a 13.6% rate as of last December.
(During the last ten years, there has been a negative 81% correlation
between the nominal trade-weighted exchange value of the US dollar vs.
major currencies and the y/y change in non-oil import prices.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113i.jpg" align="right" border="0" height="265" width="353">

Import prices break down as follows: Chemical import prices
were quite strong and posted a 2.9% increase but they still were down
16.1% from last year. Iron &amp; steel prices also were strong, up
2.4% m/m, but down by one-third from a year ago. Food prices increased
0.1% and at an 8.0% rate during the last three months. Capital goods
prices similarly posted a modest gain after five months of no change.
Prices for nonauto consumer goods rose 0.3% lifting the three-month
gain to 1.2% versus its weakest reading of -2.6% in January. Durable
consumer goods prices rose 0.4% (-0.9% y/y) but prices of household
goods slipped (-1.9% y/y) and furniture prices fell as well (-1.2%
y/y). Apparel prices were unchanged for the third month (-0.5% y/y).
Petroleum prices reversed their prior month's decline with a 0.9%
increase during October. This month crude oil prices have found further
strength with a rise to $76.94 yesterday from the October average of
$75.82 per barrel.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091113j.jpg" align="right" border="0" height="265" width="353">

Total export prices resumed increasing modestly. The 0.3% rise
was led by a 0.3% gain in nonagricultural export prices, down 2.7% y/y.
Agricultural export prices actually fell 1.0% (-10.0% y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT
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/USECON/@E8/@E807/@E807.HTM">Import/Export
Prices (NSA, %)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.7</td>
<td>0.2</td>
<td>1.6</td>
<td>-5.7</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>0.9</td>
<td>-0.9</td>
<td>7.7</td>
<td>-12.2</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.7</td>
<td>0.4</td>
<td>0.3</td>
<td>-3.8</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.6</td>
<td>-3.4</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Trade Deficit Increases DueTo Higher Oil Costs, Improved Economy

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091112d.jpg" align="left" border="0" height="265" width="353">
MFG IP in the e-Zone rose in September laying a foundation for
continued economic recovery. Over three months the annual rate of IP
growth is now 1.9% compared to flat over six months and lower by 13.8%
over 12-months. 
 

To be sure the lift off in IP is less than in indicators such
as the Markit MFG PMI index or the jump in orders. But it takes longer
for actual output to be put to work than for indicators of improvement
to show progress. The large countries are showing more rapid increases
in growth than is EMU as a whole. 
 

For Germany three-month growth is up at an 18.7% annual rate;
that is surpassed by the ever volatile results from Spain that
skyrocketed at a 29% pace over three months. France is up at an 8%
pace; Italy is up at a 4% pace. EU member the UK is lagging as it has
MFG IP up at a tiny 0.5% pace over three-months. For this group
six-month growth rates are all positive and the three-month results
show acceleration compared to six months. Over 12-months IP in all
countries still is falling rapidly, at a double-digit pace. 
 

By industry the consumer sector continues to lag. Consumer
durables output is off on the month and over three months it is down by
-2.1% countered by a three-month rise of 1.6% in consumer nondurables
output. Capital goods output is up at a 6.6% pace over three-months.
Intermediate goods output is flying at a 13% annual rate of expansion
as commodities and raw goods lead the cycle 
 

These figures confirm the trend we already have seen.
Consumers are lagging and raw goods are rising strongly. Investment is
picking up. Still consumer sentiment is one of the stronger barometers
for EMU even though consumer spending and the output of consumer goods
has been lagging. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="11">
E-zone
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar
except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol" style="white-space: nowrap;">Ezone
Detail</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>12Mo</td>
<td>Q-3</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.9%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-2.3%</td>
<td>-13.8%</td>
<td>-16.5%</td>
<td> 0.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer</td>
<td ="">0.3%</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>1.4%</td>
<td>-0.8%</td>
<td>1.7%</td>
<td>-0.6%</td>
<td>-3.2%</td>
<td>-4.9%</td>
<td> 1.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">C-Durables</td>
<td>-6.0%</td>
<td>5.2%</td>
<td>0.6%</td>
<td>-2.1%</td>
<td>8.3%</td>
<td>-10.7%</td>
<td>-4.2%</td>
<td>-19.2%</td>
<td>-15.0%</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">C-Non-durables</td>
<td>1.1%</td>
<td>-1.1%</td>
<td>0.4%</td>
<td>1.6%</td>
<td>-1.9%</td>
<td>3.4%</td>
<td>0.4%</td>
<td>-0.8%</td>
<td>-3.4%</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate</td>
<td>0.6%</td>
<td>1.0%</td>
<td>1.4%</td>
<td>13.0%</td>
<td>13.4%</td>
<td>10.7%</td>
<td>7.3%</td>
<td>-16.6%</td>
<td>-19.6%</td>
<td> 14.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital</td>
<td>1.7%</td>
<td>1.4%</td>
<td>-1.4%</td>
<td>6.6%</td>
<td>0.5%</td>
<td>3.0%</td>
<td>0.2%</td>
<td>-18.7%</td>
<td>-22.2%</td>
<td> 2.1%</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">Main
E-zone Countries and UK IP in MFG</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td colspan="3">
Mo/Mo</td>
<td> Sep 
09</td>
<td> Aug 
09</td>
<td> Sep 
09</td>
<td> Aug 
09</td>
<td> Sep 
09</td>
<td> Aug 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">MFG
Only</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>12Mo</td>
<td>Q:3 
Date</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany:</td>
<td>3.2%</td>
<td>2.1%</td>
<td>-1.0%</td>
<td>18.4%</td>
<td>7.1%</td>
<td>14.9%</td>
<td>9.6%</td>
<td>-14.3%</td>
<td>-19.2%</td>
<td> 15.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol" style="">France:IPx
Construct'n</td>
<td>-1.5%</td>
<td>2.8%</td>
<td>0.7%</td>
<td>8.0%</td>
<td>15.5%</td>
<td>6.3%</td>
<td>7.2%</td>
<td>-10.4%</td>
<td>-10.0%</td>
<td> 12.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>-5.7%</td>
<td>5.9%</td>
<td>1.1%</td>
<td>4.0%</td>
<td>32.7%</td>
<td>3.0%</td>
<td>5.9%</td>
<td>-16.9%</td>
<td>-13.5%</td>
<td> 12.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain</td>
<td>0.7%</td>
<td>-3.0%</td>
<td>9.1%</td>
<td>29.2%</td>
<td>47.0%</td>
<td>19.5%</td>
<td>6.9%</td>
<td>-12.4%</td>
<td>-10.6%</td>
<td> 33.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK:
EU
member</td>
<td>1.7%</td>
<td>-2.0%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>-4.0%</td>
<td>0.2%</td>
<td>-2.5%</td>
<td>-9.4%</td>
<td>-11.6%</td>
<td> -0.5%</td>
</tr>
</tbody>
</table>
</body></html>

MFG IP in the e-Zone rose in September laying a foundation for continued economic recovery. Over three months the annual rate of IP growth is now 1.9% compared to flat over six months and lower by 13.8% over 12-months. To be sure the [...]

EMU MFG Still Digging Its Way Out

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091112e.jpg" width="353">
The Mortgage Bankers Association indicated that mortgage applications rose 3.2% last week and remained up by nearly one-half from last year. But the overall figure masks conflicting trends between mortgage applications for purchase (down) and for refinance (up).
Applications to purchase a home fell hard for the fifth consecutive week and they are down by one-quarter during the period. The decline, no doubt, partially reflects the expiration of an up-to $8,000 Federal tax credit for first-time homebuyers. The credit, however, was recently extended to April of next year. During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales. The correlation has lessened recently. Applications to refinance mortgages rose solidly last week and were up by one-half from the June low due to declines in interest rates.
The effective interest rate on conventional 15-year mortgages fell last week to 4.61% which is near the recent low and down from the June average of 5.21%. For 30-year mortgages, the rate also fell last week to 5.11% after reaching a high of 5.79% in early-June. Interest rates on 15-year and 30-year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. Rates on adjustable one-year mortgages rose to 6.94% last week which was the highest level since November of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091112f.jpg" width="353">
During the last twelve months, the number of fixed-rate mortgage applications has risen 43.0% while the number of adjustable-rate mortgage applications has roughly tripled.
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>.The figures for weekly mortgage applications are available in Haver&#39;s SURVEYW database.
Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967&#150;2006 from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/research/SR/SR436.pdf">here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (SA, 3/16/90=100)</a></th>
<th scope="col">11/06/09</th>
<th scope="col">10/30/09</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>627.5</td>
<td>608.3</td>
<td>47.6%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>220.9</td>
<td>250.3</td>
<td>-22.3</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,998.2</td>
<td>2,693.7</td>
<td>140.2</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
<tr>
<td class="firstcol">15-Year Effective Interest Rate (%)</td>
<td>4.61%</td>
<td>4.67%</td>
<td>5.98% (11/08)</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Mortgage Bankers Association indicated that mortgage applications rose 3.2% last week and remained up by nearly one-half from last year. But the overall figure masks conflicting trends between mortgage applications for purchase [...]

U.S. Weekly Mortgage Applications Rise Overall But Purchases Slacken

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091112a.jpg" align="right" border="0" height="265" width="353">
U.S. job
market continues to improve. That's the message from the Labor
Department's report of another decline last week in initial claims for
jobless insurance. They're down to 502,000 from 514,000 during the
prior week which was revised up from 512,000. The latest figures are
the lowest of this year and are down sharply from the March peak of
674,000 claims. The four-week moving average of claims fell to 519,750
and the latest weekly figure was lower than Consensus expectations for
510,000.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091112b.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance during the
latest week fell a sharp 139,000 to the 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 5,790,750 and have fallen 14.5% from
their peak. This series dates back to 1966.&nbsp;Extended benefits
for unemployment insurance fell and reversed the prior week's increase.
Through late-October extended benefits averaged 523,061.The insured
rate of unemployment slipped 4.3%, the lowest since mid-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/091112c.jpg" align="right" border="0" height="265" width="353">
The highest insured unemployment
rates in the week ending October 24 were in Puerto Rico (6.4%), Oregon
(5.4), Nevada (5.2), Pennsylvania (4.9), California (4.8), Arkansas
(4.8), Wisconsin (4.8), Alaska (4.8), Michigan (4.5), North Carolina
(4.5), and South Carolina (4.5). The lowest insured unemployment rates
were in North Dakota (1.1%), South Dakota (1.1), Virginia (2.0),
Wyoming (2.6), Maine (2.5), Texas (2.5), Colorado (2.9), Maryland
(3.2), Mississippi (3.5), New York (3.5), Georgia (3.7) and Florida
(3.8).The unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.The Exchange Rate: What's in It for Prices? from
the Federal Reserve Bank of Philadelphia is available <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"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</th>
<th scope="col">10/24/09</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>502</td>
<td>514</td>
<td>532</td>
<td>-1.4%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,631</td>
<td>5,770</td>
<td>43.2%</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>4.3</td>
<td>4.4</td>
<td>3.1 (11/'08)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

U.S. job market continues to improve. That's the message from the Labor Department's report of another decline last week in initial claims for jobless insurance. They're down to 502,000 from 514,000 during the prior week which was [...]

U.S. Weekly Initial Jobless Insurance Claims Fall Again To 2009 Low

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

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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.

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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).

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Charts of the Week: Forecasters Hold Firm

Winnie Tapasanun

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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.

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- 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

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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**.

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- 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.