Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030a.jpg" align="right" border="0" height="265" width="353">
The weak job market continued last month to exact its toll on
labor income growth. Personal income slipped
marginally during September after two months of just 0.1% increase. The
August gain was revised down from 0.2% and the latest figure about
matched Consensus forecasts. These weak increases wholly reflect the
current recession. The good news, however, was that the worst
performance of early this year is over. On a three-month basis income
grew 0.2% during 3Q after a 0.4% 2Q gain. These figures compare to 2.6%
and 0.9% declines during 1Q and 4Q'08, respectively.
Job loss continued to account for recent weakness in income
growth, but here again the recent numbers are "less bad." Wages
&amp; salaries fell 0.2% last month and reversed a 0.2% August
increase. Year-to-year wages fell 5.2% after a 2.1% 2008 increase.
Downward momentum, however, has eased. During the last three months,
wages were roughly unchanged with the lessened rate of job loss
reported in the monthly reports on payroll employment. Wages in the
factory sector fell 0.2% following the 0.6% August drop. Yet, the
three-month change fell to -0.1% from -2.7% and -6.9% during 2Q and 1Q.
In the service sector wages slipped 0.1% last month but posted a modest
increase during 3Q after declines during the prior three quarters.
Offsetting this improvement has been a weaker government sector where
wages ticked up just 0.4% during the last three months after 1.1% and
1.6% increases during the prior twp three-month periods.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030b.jpg" align="right" border="0" height="265" width="353">
Even the growth in unemployment insurance payments slowed
recently. A 2.7% September decline was part of a 3Q slowing to 0.9%
growth from gains between 20%29 and 65% during each of the prior four
quarters. Interest income continued to show the effects of lower rates
and fell for the third straight month while dividend income fell by
one-quarter versus last year as corporate profits evaporated.
Disposable personal income fell slightly
and reversed the August uptick. Adjusted for inflation, real disposable
income fell for the fourth straight month after having been lifted this
spring by tax cuts. The saving rate increased modestly m/m to 3.3% but
remained down from the May peak of 5.9%. The rate remained up slightly
from last year and double the 2007 level.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030c.jpg" align="right" border="0" height="265" width="353">
Personal spending fell 0.5% after having
been lifted during August by the "cash for clunkers" program for new
motor vehicle purchases. Durables spending more-than reversed the
August rise with a 7.0% decline (-4.2% y/y). Spending on motor vehicles
fell 19.5% (-5.9% y/y) and reversed all of the August gain. Spending on
furniture rose a modest 0.4% (-4.7% y/y) and has risen slightly during
the last three months. Spending on nondurables rose 0.7% (-3.7% y/y) as
outlays on apparel rose for the third straight month (-1.7% y/y).
Outlays on services increased 0.2% (1.5% y/y) as spending on health
care continued quite strong and posted a 5.6% gain versus last year.
Spending in restaurants and on recreation remained negative.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030d.jpg" align="left" border="0" height="265" width="353">
Prices increased 0.1% during September reflecting an easier
1.2% rise (-29.8% y/y) rise in gasoline costs and another rise is in
store for October. Nevertheless, the PCE chain price index
still was down by 0.5% versus last year. Less food-and-energy, "core"
prices were again soft and posted their fifth consecutive 0.1%
increase. Goods prices rose 0.2% (-1.7% y/y) after two months of
decline while prices for services gained a steady 1.0% y/y.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
Regulatory reform is the title of
yesterday's speech by Fed Governor Daniel K. Tarullo and it can be
found <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.8</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.5</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>-0.5</td>
<td>1.4</td>
<td>0.2</td>
<td>-0.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.3</td>
<td>2.8</td>
<td>4.0</td>
<td>2.2 (Sept. '08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

The weak job market continued last month to exact its toll on labor income growth. Personal income slipped marginally during September after two months of just 0.1% increase. The August gain was revised down from 0.2% and the latest [...]

U.S. Personal Income Slips Marginally And Spending Declines

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030a.jpg" align="right" border="0" height="265" width="353">
The weak job market continued last month to exact its toll on
labor income growth. Personal income slipped
marginally during September after two months of just 0.1% increase. The
August gain was revised down from 0.2% and the latest figure about
matched Consensus forecasts. These weak increases wholly reflect the
current recession. The good news, however, was that the worst
performance of early this year is over. On a three-month basis income
grew 0.2% during 3Q after a 0.4% 2Q gain. These figures compare to 2.6%
and 0.9% declines during 1Q and 4Q'08, respectively.
Job loss continued to account for recent weakness in income
growth, but here again the recent numbers are "less bad." Wages
&amp; salaries fell 0.2% last month and reversed a 0.2% August
increase. Year-to-year wages fell 5.2% after a 2.1% 2008 increase.
Downward momentum, however, has eased. During the last three months,
wages were roughly unchanged with the lessened rate of job loss
reported in the monthly reports on payroll employment. Wages in the
factory sector fell 0.2% following the 0.6% August drop. Yet, the
three-month change fell to -0.1% from -2.7% and -6.9% during 2Q and 1Q.
In the service sector wages slipped 0.1% last month but posted a modest
increase during 3Q after declines during the prior three quarters.
Offsetting this improvement has been a weaker government sector where
wages ticked up just 0.4% during the last three months after 1.1% and
1.6% increases during the prior twp three-month periods.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030b.jpg" align="right" border="0" height="265" width="353">
Even the growth in unemployment insurance payments slowed
recently. A 2.7% September decline was part of a 3Q slowing to 0.9%
growth from gains between 20%29 and 65% during each of the prior four
quarters. Interest income continued to show the effects of lower rates
and fell for the third straight month while dividend income fell by
one-quarter versus last year as corporate profits evaporated.
Disposable personal income fell slightly
and reversed the August uptick. Adjusted for inflation, real disposable
income fell for the fourth straight month after having been lifted this
spring by tax cuts. The saving rate increased modestly m/m to 3.3% but
remained down from the May peak of 5.9%. The rate remained up slightly
from last year and double the 2007 level.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030c.jpg" align="right" border="0" height="265" width="353">
Personal spending fell 0.5% after having
been lifted during August by the "cash for clunkers" program for new
motor vehicle purchases. Durables spending more-than reversed the
August rise with a 7.0% decline (-4.2% y/y). Spending on motor vehicles
fell 19.5% (-5.9% y/y) and reversed all of the August gain. Spending on
furniture rose a modest 0.4% (-4.7% y/y) and has risen slightly during
the last three months. Spending on nondurables rose 0.7% (-3.7% y/y) as
outlays on apparel rose for the third straight month (-1.7% y/y).
Outlays on services increased 0.2% (1.5% y/y) as spending on health
care continued quite strong and posted a 5.6% gain versus last year.
Spending in restaurants and on recreation remained negative.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030d.jpg" align="left" border="0" height="265" width="353">
Prices increased 0.1% during September reflecting an easier
1.2% rise (-29.8% y/y) rise in gasoline costs and another rise is in
store for October. Nevertheless, the PCE chain price index
still was down by 0.5% versus last year. Less food-and-energy, "core"
prices were again soft and posted their fifth consecutive 0.1%
increase. Goods prices rose 0.2% (-1.7% y/y) after two months of
decline while prices for services gained a steady 1.0% y/y.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
Regulatory reform is the title of
yesterday's speech by Fed Governor Daniel K. Tarullo and it can be
found <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.8</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.5</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>-0.5</td>
<td>1.4</td>
<td>0.2</td>
<td>-0.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.3</td>
<td>2.8</td>
<td>4.0</td>
<td>2.2 (Sept. '08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
German Retail Sales Sink For
Second Month In A Row 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030e.jpg" align="left" border="0" height="265" width="353">
German retail sales fell for the second month in a row. For Q3
sales are now falling at a 4.3% annual rate. Real ex auto sales are
dropping in the quarter at a pace of -3.2%. All three month growth
rates for key retail categories are declining as are six month growth
rates. For most categories the decline in sales is at a steeper annual
rate over three months than for six months. With euro Area unemployment
at a 10 ½ year high and German firms cutting back on working hours,
consumption in Germany has pulled back. This an important issue since
the consumer confidence index has been one of the strongest sector
indices in the EMU. There is no telling how much the Europe recovery
could be set back by a pessimistic consumer.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="8">German
Real and Nominal Retail Sales</th>
<th scope="col">QTR</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Nominal</td>
<td> Sep-09</td>
<td> Aug-09</td>
<td> Jul-09</td>
<td> 3-MO</td>
<td> 6-MO</td>
<td> 12-MO</td>
<td> YrAgo</td>
<td> Saar</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.2%</td>
<td>0.7%</td>
<td> -4.0%</td>
<td> -3.2%</td>
<td> -4.8%</td>
<td>3.1%</td>
<td> -4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; MV and Parts</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td> -3.0%</td>
<td>3.1%</td>
<td> -0.7%</td>
<td> -2.8%</td>
<td> -1.6%</td>
<td> -3.8%</td>
<td>2.4%</td>
<td> -3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>2.4%</td>
<td> -7.0%</td>
<td>3.6%</td>
<td> -5.3%</td>
<td> -3.1%</td>
<td> -5.1%</td>
<td>1.4%</td>
<td> -5.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Car registrations
(units)</td>
<td>-2.7%</td>
<td> -9.5%</td>
<td>-5.8%</td>
<td> -52.7%</td>
<td>-7.9%</td>
<td>20.9%</td>
<td>-1.7%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">
Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment
Improves From Mid-Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030f.jpg" align="left" border="0" height="265" width="353">
Consumer sentiment for all of October fell from September but
the trend during the month improved. The University of Michigan
indicated that its October reading of consumer sentiment of 70.6 was
improved from the mid-month reading of 69.4 but both figures were down
from a September figure of 73.5. Despite the latest decline, sentiment
remained up by roughly one-quarter from the low last fall. Consensus
expectations had been for a full-month figure of 70. During the last
ten years, there has been a 69% correlation between the level of
sentiment and the growth in real consumer spending during the next five
months.
The October reading of expected economic conditions fell a
sharp 6.7% m/m. It was shallower-than reported at mid-month but still
erased much of September's gain. The latest decline was led by a 16.5%
drop in expected business conditions during the next five years which
reversed much of the improvement since July. Expected conditions during
the next year fell just modestly and the index remained
more-than-double the February low. Conversely, the expected change in
personal finances improved slightly with the index rising nearly
one-quarter from the low during 2008 with the higher stock market.
The reading of current economic conditions increased
moderately. The readings of personal finances and of buying conditions
for large household goods held steady m/m, but the latter was up by
one-third from the November trough due to low prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030g.jpg" align="right" border="0" height="265" width="353">
Expected price inflation during the next year amounted to
3.2%, up slightly from September but down from a high of 7.0% during
May of last year. A low of 0.3% inflation was expected by 25% of
respondents but 5.0% inflation was expected by another quarter.
Inflation of 3.2% during the next 5-10 years was the mean expectation.
The opinion of government policy, which may eventually
influence economic expectations, fell from September and remained near
the lowest level since February. Thirty-two percent of respondents
thought that a poor job was being done by government. A reduced 18%
thought that a good job was being done, down from 30% in April.
The University of Michigan survey data is not seasonally
adjusted. The reading is based on telephone interviews with about 500
households at month-end. These results are based on about 300
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.
Optimism Amid Uncertainty from the Federal
Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/update-us/index.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">October (Final)</th>
<th scope="col">Mid-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">Consumer Sentiment</td>
<td>70.6</td>
<td>69.4</td>
<td>73.5</td>
<td>65.7</td>
<td>22.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>73.7</td>
<td>72.1</td>
<td>73.4</td>
<td>66.6</td>
<td>26.2</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.6</td>
<td>67.6</td>
<td>73.5</td>
<td>65.0</td>
<td>20.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
 U.S. Employment Cost Index Rose
Slightly Q/Q But Reaches A New Low Y/Y 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 30, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030h.jpg" align="right" border="0" height="265" width="353">Employment
compensation picked up slightly last quarter, but high unemployment
dragged down the y/y change to its lowest on record. (The series dates
back to 1980). The total employment cost index for private industry
workers rose 0.5% during 3Q following gains of 0.2% during the prior
two quarters. The latest rise about matched Consensus
expectations.
Improved wage and salary growth provided most
of the "oomph" to last quarter's gain with a 0.5% rise. However, here
again, the y/y gain of 1.3% was a new record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030i.jpg" align="right" border="0" height="265" width="353">
In the factory sector
wages rose just 1.2% y/y but in the education &amp; health care
sectors wages rose a still-modest 1.8%. In the goods producing sector
wage growth fell to just 1.2% and in education &amp; health
services they rose 1.8%.
Total benefit costs in private sector
increased just 0.3% and the 1.0% y/y gain was a record low. What y/y
strength there was was led by a 2.3% gain in production, transportation
&amp; materials handling industries and a 1.6% rise in services
occupations. The cost of health benefits showed a stable 4.7% rise in
the latest 12 months.&nbsp;· The employment cost index figures are
available in Haver's USECON database.
Financial
Intermediaries and Monetary Economics from the Federal
Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr398.pdf">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/@EB/@EB08/@EB08.HTM">ECI
- Private Industry Workers</a> (%)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">3Q 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">Compensation</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>2.8</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp;
Salaries</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>3.0</td>
<td>3.4</td>
<td>&nbsp;2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.3</td>
<td>0.2</td>
<td>0.2</td>
<td>1.0</td>
<td>2.6</td>
<td>2.4</td>
<td>2.9</td>
</tr>
</tbody>
</table>

</body></html>

U.S. Personal Income SlipsMarginally And Spending Declines

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029f.jpg" align="right" border="0" height="265" width="353">The trend
toward improvement in the job market continued this month. The Labor
Department indicated that initial claims for unemployment insurance
held roughly steady w/w at 530,000. The figures are down moderately
from an average of 549,000 claims during September and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 526,250 while the latest weekly figure was
slightly higher than Consensus expectations for 521,000 claims.The
largest increases in initial claims during the week ending October 17
were in California (+5,774, +12.6% y/y), Puerto Rico (+685, +52.9%
y/y), Minnesota (+614, +38.8% y/y), Nevada (+366, 8.7% y/y ), and
Nebraska (+239, -1.6% y/y), while the largest decreases were in
Wisconsin (-5,681, +29.5%), New York (-4,711, +15.5% y/y), Pennsylvania
(-4,033, +28.2% y/y), Illinois (-3,870, +44.9% y/y), and Oregon
(-2,706, -16.6% y/y). Continuing claims for unemployment insurance
during the latest week fell 148,000 to their lowest level since
late-March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029g.jpg" align="right" border="0" height="265" width="353">
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 5,960,750 and have fallen
12.0% from their peak. This series dates back to
1966.Extended benefits for unemployment insurance
fell slightly for the first decline in seven weeks. The prior week's
level was revised up. Through early-October extended benefits averaged
551,381.The insured rate of unemployment slipped again to 4.4%, from
an unrevised 4.5%, 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/091029h.jpg" align="right" border="0" height="265" width="353">
The lowest insured unemployment
rates during the week ending October 9 were in North Dakota (1.1%),
South Dakota (1.1), Virginia (2.0), Wyoming (2.4), Maine (2.4), Texas
(2.6), Colorado (2.9), Minnesota (3.0), Maryland (3.1), Mississippi
(3.5), New York (3.5), Florida (3.7), and Georgia (3.8). The highest
insured unemployment rates were in Puerto Rico (6.3), Oregon (5.3),
Nevada (5.3), Pennsylvania (5.0), California (4.6), Michigan (4.6),
Wisconsin (4.8), North Carolina (4.5), South Carolina (4.5), and
Washington (4.3).The unemployment insurance claims data is available
in Haver's WEEKLY database and the state data is in
the REGIONW database.Birth date,
business cycles, and lifetime income from the U.S. Office of
Management and Budget is available <a href="http://www.whitehouse.gov/omb/blog/09/10/22/Birth-date-business-cycles-and-lifetime-income/">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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</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>530</td>
<td>531</td>
<td>520</td>
<td>9.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,797</td>
<td>5,945</td>
<td>53.6%</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>4.4</td>
<td>4.5</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The trend toward improvement in the job market continued this month. The Labor Department indicated that initial claims for unemployment insurance held roughly steady w/w at 530,000. The figures are down moderately from an average of [...]

U.S. Weekly Initial Claims For Unemployment Insurance Hold Steady

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029e.jpg" align="left" border="0" height="265" width="353">
The EU Commission indices made their eight largest advance
Since October 1988 for the EU region as a whole. This boosted the
overall index for the EU to the 46th percentile of range much closer to
its midpoint but still 14% below its average level for the same period. 
 

Surprisingly in relative terms it is the consumer that is
boosting the region the most. Consumer confidence stands at the 50%
mark of its range. Construction lags the most of all sectors, standing
in the 17th percentile of its range followed by services that languish
in the 31st percentile of their range. Both retailing and the
industrial sector are in their respective 41st percentiles. 
 

As to countries, the large countries are clustered closely
together in their respective range readings. Spain is the weakest in
the 38th percentile of its range. Compared to the UK in the 47th range
percentile; among EMU members Italy is the relative strongest in its
42nd percentile leaving a small gap between the best reading and the
worst among large countries in the e-Zone. 
 

Still if we look at the rankings by queue the results are much
weaker. The range ranking positions the current reading between the
highest and lowest range values. The queue orders the various readings
by component or country depending on its application. It ranks them
presenting the result as a percentage (100 is highest). The queue
percentiles show that while the various indicators have come sharply up
from their lows and some although some are closing in on range
midpoints the ranked readings are still no where near normal. 
 

The overall EU reading that stands in the 46th percentile of
its range also stands in the 11th percentile of its queue &#8211; a terribly
low standing. The real message here is that yes there is a significant
recovery from the lows in gear but the current levels of the indices
are still well below normal. 
 

While the EU and EMU regions are making progress there is
still a very long way to go. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment</th>
</tr>
<tr>
<td class="firstcol">EU</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Percen 
-tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall
Index</td>
<td>86</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>46.0</td>
<td>222</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>99</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-20</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>41.3</td>
<td>225</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>50.0</td>
<td>188</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>25.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>-12</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>41.9</td>
<td>215</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-34</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>17.4</td>
<td>216</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>13.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>31.7</td>
<td>143</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Oct 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>4.1%</td>
<td>2.5%</td>
<td>6.3%</td>
<td>86.2</td>
<td>41.1</td>
<td>222</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>3.9%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>90.8</td>
<td>38.0</td>
<td>201</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>19.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>3.4%</td>
<td>5.9%</td>
<td>2.3%</td>
<td>91.1</td>
<td>40.9</td>
<td>187</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>25.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>90.0</td>
<td>42.7</td>
<td>214</td>
<td>121</td>
<td>67</td>
<td>54</td>
<td>100</td>
<td>14.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>2.4%</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>82.6</td>
<td>31.9</td>
<td>220</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>12.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>3.8%</td>
<td>0.0%</td>
<td>13.1%</td>
<td>86.7</td>
<td>47.1</td>
<td>219</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Since Oct 1988</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>154</td>
<td>-Count</td>
<td colspan="4">&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is
an index, sector
readings are net balance diffusion measures</td>
</tr>
</thead>
</table>
</body></html>

The EU Commission indices made their eight largest advance Since October 1988 for the EU region as a whole. This boosted the overall index for the EU to the 46th percentile of range much closer to its midpoint but still 14% below its [...]

EU Indices Jump in October

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029a.jpg" align="right" border="0" height="265" width="353">
The U.S. economy grew last quarter at hardly a barn-burning
rate, but at least it was positive for the first time in over a year.
Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7%
decline since late-2007. The rise was fueled by upturns in domestic
demand and inventories but lessened by deterioration in the foreign
trade deficit. Consensus expectations are that economic growth will
continue in coming quarters at roughly a 3.0% rate which, by postwar
standards, would be subpar. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029b.jpg" align="right" border="0" height="265" width="353">
Domestic final demand growth was positive for just the second
quarter since 1Q'08. The upturn owed to a 3.1% gain in consumer
spending (-0.3% y/y) that was led by a 22.8% rise in durables
consumption. The Cash for Clunkers sales incentive program by
auto-makers caused motor vehicle consumption to jump at a 56.4% annual
rate, though it still was up just 1.4% from one-year earlier.
Elsewhere, personal consumption of furniture grew at a 6.4% (-5.9% y/y)
rate following a like downturn during 2Q. Spending on clothing
&amp; shoes fell at a 1.5% (-5.1% y/y) rate while services spending
gained a modest 1.8% (0.4% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029c.jpg" align="right" border="0" height="265" width="353">
In the fixed-investment side of the GDP accounts, residential
spending also grew for the first time since 1Q'06. The 23.3% rise
(-18.1% y/y) followed a 2Q decline of similar magnitude. During the
downturn, which spanned three years, residential investment fell by
more than one-half. Continuing to the downside at a 2.5% (-18.9% y/y)
rate was business investment. The decline was led by a 9.0% (-20.8%
y/y) drop in spending on structures though equipment spending rose a
modest 1.1% (-17.9% y/y). That increase was led by a gain in
transportation equipment spending (-47.2% y/y) and an upturn in
information processing equipment &amp; software (-6.4% y/y).
Government investment rose at a 2.3% rate (1.8% y/y) led by a gain in
defense spending (5.0% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029d.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation made a positive contribution to GDP
growth for just the second time in two years. The modest 0.9% addition
followed subtractions of 1.4 and 2.4 percentage points during the prior
two quarters.
For the first time in a year, deterioration in the foreign
trade deficit lowered GDP growth. The 0.5 percentage point subtraction
was due to a 16.3% (-14.9% y/y) rise in real imports which outpaced the
14.7% (-11.2% y/y) gain in exports.
The GDP price deflator rose a slim 0.8%. Though the PCE price
index gained 2.8% (-0.6% y/y), the rise in the overall domestic final
sales price index was held to just 1.6% (-1.0% y/y) as the fixed
investment price index fell sharply (-2.5% y/y).
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.3</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.5</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.7</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

</body></html>

The U.S. economy grew last quarter at hardly a barn-burning rate, but at least it was positive for the first time in over a year. Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7% decline since late-2007. The [...]

Q3 GDP Posts First Gain After More-Than Year Long Recession

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029a.jpg" align="right" border="0" height="265" width="353">
The U.S. economy grew last quarter at hardly a barn-burning
rate, but at least it was positive for the first time in over a year.
Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7%
decline since late-2007. The rise was fueled by upturns in domestic
demand and inventories but lessened by deterioration in the foreign
trade deficit. Consensus expectations are that economic growth will
continue in coming quarters at roughly a 3.0% rate which, by postwar
standards, would be subpar. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029b.jpg" align="right" border="0" height="265" width="353">
Domestic final demand growth was positive for just the second
quarter since 1Q'08. The upturn owed to a 3.1% gain in consumer
spending (-0.3% y/y) that was led by a 22.8% rise in durables
consumption. The Cash for Clunkers sales incentive program by
auto-makers caused motor vehicle consumption to jump at a 56.4% annual
rate, though it still was up just 1.4% from one-year earlier.
Elsewhere, personal consumption of furniture grew at a 6.4% (-5.9% y/y)
rate following a like downturn during 2Q. Spending on clothing
&amp; shoes fell at a 1.5% (-5.1% y/y) rate while services spending
gained a modest 1.8% (0.4% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029c.jpg" align="right" border="0" height="265" width="353">
In the fixed-investment side of the GDP accounts, residential
spending also grew for the first time since 1Q'06. The 23.3% rise
(-18.1% y/y) followed a 2Q decline of similar magnitude. During the
downturn, which spanned three years, residential investment fell by
more than one-half. Continuing to the downside at a 2.5% (-18.9% y/y)
rate was business investment. The decline was led by a 9.0% (-20.8%
y/y) drop in spending on structures though equipment spending rose a
modest 1.1% (-17.9% y/y). That increase was led by a gain in
transportation equipment spending (-47.2% y/y) and an upturn in
information processing equipment &amp; software (-6.4% y/y).
Government investment rose at a 2.3% rate (1.8% y/y) led by a gain in
defense spending (5.0% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029d.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation made a positive contribution to GDP
growth for just the second time in two years. The modest 0.9% addition
followed subtractions of 1.4 and 2.4 percentage points during the prior
two quarters.
For the first time in a year, deterioration in the foreign
trade deficit lowered GDP growth. The 0.5 percentage point subtraction
was due to a 16.3% (-14.9% y/y) rise in real imports which outpaced the
14.7% (-11.2% y/y) gain in exports.
The GDP price deflator rose a slim 0.8%. Though the PCE price
index gained 2.8% (-0.6% y/y), the rise in the overall domestic final
sales price index was held to just 1.6% (-1.0% y/y) as the fixed
investment price index fell sharply (-2.5% y/y).
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.3</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.5</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.7</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

EU Indices Jump in October 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029e.jpg" align="left" border="0" height="265" width="353">
The EU Commission indices made their eight largest advance
Since October 1988 for the EU region as a whole. This boosted the
overall index for the EU to the 46th percentile of range much closer to
its midpoint but still 14% below its average level for the same period. 
 

Surprisingly in relative terms it is the consumer that is
boosting the region the most. Consumer confidence stands at the 50%
mark of its range. Construction lags the most of all sectors, standing
in the 17th percentile of its range followed by services that languish
in the 31st percentile of their range. Both retailing and the
industrial sector are in their respective 41st percentiles. 
 

As to countries, the large countries are clustered closely
together in their respective range readings. Spain is the weakest in
the 38th percentile of its range. Compared to the UK in the 47th range
percentile; among EMU members Italy is the relative strongest in its
42nd percentile leaving a small gap between the best reading and the
worst among large countries in the e-Zone. 
 

Still if we look at the rankings by queue the results are much
weaker. The range ranking positions the current reading between the
highest and lowest range values. The queue orders the various readings
by component or country depending on its application. It ranks them
presenting the result as a percentage (100 is highest). The queue
percentiles show that while the various indicators have come sharply up
from their lows and some although some are closing in on range
midpoints the ranked readings are still no where near normal. 
 

The overall EU reading that stands in the 46th percentile of
its range also stands in the 11th percentile of its queue &#8211; a terribly
low standing. The real message here is that yes there is a significant
recovery from the lows in gear but the current levels of the indices
are still well below normal. 
 

While the EU and EMU regions are making progress there is
still a very long way to go. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment</th>
</tr>
<tr>
<td class="firstcol">EU</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Percen 
-tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall
Index</td>
<td>86</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>46.0</td>
<td>222</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>99</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-20</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>41.3</td>
<td>225</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>50.0</td>
<td>188</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>25.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>-12</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>41.9</td>
<td>215</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-34</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>17.4</td>
<td>216</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>13.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>31.7</td>
<td>143</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Oct 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>4.1%</td>
<td>2.5%</td>
<td>6.3%</td>
<td>86.2</td>
<td>41.1</td>
<td>222</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>3.9%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>90.8</td>
<td>38.0</td>
<td>201</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>19.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>3.4%</td>
<td>5.9%</td>
<td>2.3%</td>
<td>91.1</td>
<td>40.9</td>
<td>187</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>25.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>90.0</td>
<td>42.7</td>
<td>214</td>
<td>121</td>
<td>67</td>
<td>54</td>
<td>100</td>
<td>14.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>2.4%</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>82.6</td>
<td>31.9</td>
<td>220</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>12.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>3.8%</td>
<td>0.0%</td>
<td>13.1%</td>
<td>86.7</td>
<td>47.1</td>
<td>219</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Since Oct 1988</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>154</td>
<td>-Count</td>
<td colspan="4">&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is
an index, sector
readings are net balance diffusion measures</td>
</tr>
</thead>
</table>
 U.S. Weekly Initial Claims For
Unemployment Insurance Hold Steady 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029f.jpg" align="right" border="0" height="265" width="353">The trend
toward improvement in the job market continued this month. The Labor
Department indicated that initial claims for unemployment insurance
held roughly steady w/w at 530,000. The figures are down moderately
from an average of 549,000 claims during September and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 526,250 while the latest weekly figure was
slightly higher than Consensus expectations for 521,000 claims.
The
largest increases in initial claims during the week ending October 17
were in California (+5,774, +12.6% y/y), Puerto Rico (+685, +52.9%
y/y), Minnesota (+614, +38.8% y/y), Nevada (+366, 8.7% y/y ), and
Nebraska (+239, -1.6% y/y), while the largest decreases were in
Wisconsin (-5,681, +29.5%), New York (-4,711, +15.5% y/y), Pennsylvania
(-4,033, +28.2% y/y), Illinois (-3,870, +44.9% y/y), and Oregon
(-2,706, -16.6% y/y).
 Continuing claims for unemployment insurance
during the latest week fell 148,000 to their lowest level since
late-March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029g.jpg" align="right" border="0" height="265" width="353">
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 5,960,750 and have fallen
12.0% from their peak. This series dates back to
1966.
Extended benefits for unemployment insurance
fell slightly for the first decline in seven weeks. The prior week's
level was revised up. Through early-October extended benefits averaged
551,381.
The insured rate of unemployment slipped again to 4.4%, from
an unrevised 4.5%, 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/091029h.jpg" align="right" border="0" height="265" width="353">The lowest
insured unemployment
rates during the week ending October 9 were in North Dakota (1.1%),
South Dakota (1.1), Virginia (2.0), Wyoming (2.4), Maine (2.4), Texas
(2.6), Colorado (2.9), Minnesota (3.0), Maryland (3.1), Mississippi
(3.5), New York (3.5), Florida (3.7), and Georgia (3.8). The highest
insured unemployment rates were in Puerto Rico (6.3), Oregon (5.3),
Nevada (5.3), Pennsylvania (5.0), California (4.6), Michigan (4.6),
Wisconsin (4.8), North Carolina (4.5), South Carolina (4.5), and
Washington (4.3).
The unemployment insurance claims data is available
in Haver's WEEKLY database and the state data is in
the REGIONW database.
Birth date,
business cycles, and lifetime income from the U.S. Office of
Management and Budget is available <a href="http://www.whitehouse.gov/omb/blog/09/10/22/Birth-date-business-cycles-and-lifetime-income/">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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</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>530</td>
<td>531</td>
<td>520</td>
<td>9.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,797</td>
<td>5,945</td>
<td>53.6%</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>4.4</td>
<td>4.5</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

</body></html>

Q3 GDP Posts First Gain AfterMore-Than Year Long Recession

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028e.jpg" width="353">
The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly revised August level of 417,000 and it fell well short of Consensus expectations for a rise to 440,000 sales. Nevertheless, sales have risen by nearly one-quarter from the January low.
Home prices firmed last month, but the recovery this year has been tepid. The median price of a new single-family home rose to $204,800 from an upwardly revised August level. Nevertheless the latest figure, which was down 9.1% y/y, remained near the lowest level since October of 2003. The average price of a new home was less weak and off 1.6% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028f.jpg" width="353">
Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. A September decline dropped them by more than one-third versus last year to the lowest level since 1982 (no typo). In the West the number of homes for sale fell by nearly one-half to a record low while inventories elsewhere in the country fell by roughly one-third.
The months&#39; supply of unsold homes held steady last month at 7.5 months and was down from the high of 12.4 months in January. The figure was the lowest since January 2007.
The Global Financial Crisis and Offshore Dollar Markets from the Federal Reserve Bank of New York can be found here <a href="http://www.newyorkfed.org/newsevents/news/research/2009/rp091027.html"> 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">US New Homes</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">Total Sales (SAAR, 000s)</td>
<td>402</td>
<td>417</td>
<td>413</td>
<td>-7.8%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>42</td>
<td>42</td>
<td>41</td>
<td>&nbsp;68.0</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>53</td>
<td>56</td>
<td>12.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>188</td>
<td>209</td>
<td>215</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>101</td>
<td>113</td>
<td>101</td>
<td>-1.0</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>204,800</td>
<td>199,900</td>
<td>215,600</td>
<td>&nbsp;-9.1</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
</html>

The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly [...]

U.S. New Home Sales Decline Though Prices Increase

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028d.jpg" align="left" border="0" height="265" width="353">
Last month Italian consumers felt great and Italian businesses
felt worse. In October, Italian consumers felt decidedly worse while
business sentiment advanced nicely to a 13 month high. 

Still the overall biz indicator stands only in the 37th
percentile of its long term range that is well below the mid point and
not near enough to a normal, let alone recovery, reading yet. Orders
score a -51 raw reading a figure that stand in the bottom 20th
percentile of its range. Domestic orders are relatively better off than
foreign orders as domestic orders stand in their 25th range percentile
while foreign orders stand in their 17th percentile. 

In Italy investment goods stand in lower range percentiles
than do consumer goods. Italy&#8217;s revival seems to be more on the back of
the consumer that Germany&#8217;s which seems to be relatively more on the
aback of foreign demand. Since the consumer is lagging and troubled
that is something to keep a close eye on. Foreign orders to Italian
exporters have been showing signs of weakening. For that to happen as
Italian domestic demand form consumers fades is an ominous sign.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy ISAE
Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Oct 1996</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>77.1</td>
<td>74.3</td>
<td>74.7</td>
<td>72.5</td>
<td>37.7</td>
<td>136</td>
</tr>
<tr>
<td colspan="7" class="firstcol">TOTAL INDUSTRY</td>
</tr>
<tr>
<td colspan="7" class="firstcol">&nbsp;Order books
&amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-51</td>
<td>-52</td>
<td>-51</td>
<td>-58</td>
<td>20.0</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-49</td>
<td>-49</td>
<td>-48</td>
<td>-53</td>
<td>25.9</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-55</td>
<td>-56</td>
<td>-51</td>
<td>-61</td>
<td>17.5</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>37.5</td>
<td>122</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-49</td>
<td>-47</td>
<td>-47</td>
<td>-52</td>
<td>15.5</td>
<td>141</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INTERMEDIATE</td>
</tr>
<tr>
<td colspan="7" class="firstcol"> Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-57</td>
<td>-55</td>
<td>-54</td>
<td>-60</td>
<td>21.6</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-57</td>
<td>-54</td>
<td>-53</td>
<td>-60</td>
<td>23.2</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-56</td>
<td>-59</td>
<td>-57</td>
<td>-63</td>
<td>24.5</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-7</td>
<td>-1</td>
<td>-6</td>
<td>0</td>
<td>27.6</td>
<td>126</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-52</td>
<td>-51</td>
<td>-55</td>
<td>-58</td>
<td>21.0</td>
<td>139</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INVESTMENT GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-62</td>
<td>-61</td>
<td>-63</td>
<td>-69</td>
<td>10.5</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-54</td>
<td>-55</td>
<td>-56</td>
<td>-63</td>
<td>21.0</td>
<td>137</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-66</td>
<td>-61</td>
<td>-59</td>
<td>-72</td>
<td>6.3</td>
<td>142</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>-1</td>
<td>4</td>
<td>8</td>
<td>43.2</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-61</td>
<td>-58</td>
<td>-56</td>
<td>-67</td>
<td>5.9</td>
<td>143</td>
</tr>
<tr>
<td colspan="7" class="firstcol">CONSUMER GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-36</td>
<td>-38</td>
<td>-37</td>
<td>-37</td>
<td>26.1</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-36</td>
<td>-39</td>
<td>-35</td>
<td>-37</td>
<td>29.0</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-41</td>
<td>-42</td>
<td>-36</td>
<td>-39</td>
<td>22.9</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>1</td>
<td>3</td>
<td>-1</td>
<td>38.5</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-37</td>
<td>-33</td>
<td>-31</td>
<td>-35</td>
<td>15.8</td>
<td>143</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Total number of months:</td>
<td colspan="3">148</td>
</tr>
</tbody>
</table>
</body></html>

Last month Italian consumers felt great and Italian businesses felt worse. In October, Italian consumers felt decidedly worse while business sentiment advanced nicely to a 13 month high. Still the overall biz indicator stands only in [...]

Italy's Business Sentiment Bounces Back Highest Reading Since Sept 2008

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

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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%.

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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.

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- 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

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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.

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**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.

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**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.

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**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.

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**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.

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**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.