Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730c.jpg" align="left" border="0" height="265" width="353">BETTER:
The EU commission indices for EU and EMU continue to show substantial
progress. The EU index rose to 75.0 from 71.1 while the EU index rose
to 76.0 from 73.2. The better showing in the EMU rise implies a better
rise in the month by non EMU members of EU. On a mo/mo basis the UK
index did rise sharply by 7.3% compared to Spain&#8217;s 5.3%, the best among
large EMU nations. 
&#8230;but still low: Overall the EU and EMU indices are standing the bottom
26% to 21% of their respective ranges. That is still a very low
reading. But the UK has bounced some 31% from its lowest level on this
overall index and Italy has risen by 25%. The least rebound by a major
EU/EMU economy is the 11.9% rises from its low reading posted by
Germany. Germany also has the lowest ranked sentiment index among large
EU/EMU economies (even though it is third highest by raw score).
 INDUSTRY: EU industry readings are only
in the
19th percentile of their range like services. But unfortunately the
worst reading on its components are from the selling prices expectation
that is in the bottom 7% of its historic range and from orders that are
in the bottom 3% of their range (both overall orders and export
orders). The production trend is in the 23rd percentile of its range
and production expectations are in the 35th percentile or their range -
despite the weaker reading in orders. Employment is a sort of neutral
17.8 percentile reading which is the same as for EMU industry
confidence overall. So we can&#8217;t say for industry that the problem is
jobs, it&#8217;s just demand.&nbsp;

SERVICE: Services Confidence in EMU stands
at it 12.1% percentile lower than for EU overall (19.0%). The weakest
reading for services is from current employment which is as low a
reading as it ever has seen. Current demand is the next lowest in the
bottom 10 percentile of its range. The business climate in services
ranks in the 12th percentile overall. Expected demand and expected
employment are more upbeat but still in only the 15th percentile of
their respective ranges. Despite some monthly improvement employment in
this sector is weak and expectations while improving are still very
weak. The weakest service sector by the relative measure of the
position of the index in its range is France followed closely by Spain;
the strongest is the UK.

RETAILING: Retailing ranks in the 28th
percentile of its range in EMU, making it relatively less strong than
in EU (35th percentile). The present situation is rated as in the 26th
percentile; the expected business situation is at a higher raw reading
but a lower position in its range at the 23rd range percentile.
Employment expectations are a weak 8% reading. The Italy has the
highest retail range reading in the 46th range percentile compared to
the UK in the 42nd percentile while Spain is at a 28 percentile
reading, worst reading for a large EMU country.&nbsp;

CONSUMER CONFIDENCE: Consumer confidence
ranks about the same as the retailing reading, in the 29th percentile
of its EMU range (below the 32.4 percentile for EU). Spain and Italy
have the highest relative consumer rankings at or above a 50 percentile
range reading; the UK reading is at the 42nd percentile. Germany stands
the lowest among large EMU nations at the 16th percentile. EU consumers
rate the past 12-months as in the bottom 5% of all readings
historically. While the next 12-months reading posted a much, much
higher 48th percentile reading.&nbsp;

SUMMING UP: The consumer confidence results
epitomize the EU/EMU results. Current conditions have improved from
their worst. Yet the quantitative measures that look forward are not
yet very strong. Still expectations for the future are advancing
strongly in Europe. There seems to be a much more &#8216;hard to pin down&#8217;
blanket optimism about the future that is in existence.&nbsp; 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="13">EU
Sectors and Country level Overall Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EU</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue rank%</td>
<td>R-SQ 
w/Overall</td>
</tr>
<tr>
<td class="firstcol">Overall</td>
<td>75</td>
<td>71.1</td>
<td>67.9</td>
<td>64</td>
<td>26.3</td>
<td>242</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>100</td>
<td>3.6%</td>
<td>1.00</td>
</tr>
<tr>
<td class="firstcol">Industrial</td>
<td>-30</td>
<td>-33</td>
<td>-34</td>
<td>-36</td>
<td>19.6</td>
<td>244</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-7</td>
<td>2.8%</td>
<td>0.90</td>
</tr>
<tr>
<td class="firstcol">Consumer Confid</td>
<td>-21</td>
<td>-23</td>
<td>-26</td>
<td>-28</td>
<td>32.4</td>
<td>224</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>10.8%</td>
<td>0.86</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-21</td>
<td>35.5</td>
<td>232</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-5</td>
<td>7.6%</td>
<td>0.66</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-37</td>
<td>-37</td>
<td>-39</td>
<td>-38</td>
<td>10.9</td>
<td>232</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-16</td>
<td>7.6%</td>
<td>0.47</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-19</td>
<td>-23</td>
<td>-26</td>
<td>-30</td>
<td>19.0</td>
<td>242</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>11</td>
<td>3.6%</td>
<td>0.75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Jul-09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>3.8%</td>
<td>4.3%</td>
<td>4.3%</td>
<td>76.0</td>
<td>21.7</td>
<td>236</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>6.0%</td>
<td>0.95</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>4.1%</td>
<td>4.3%</td>
<td>1.5%</td>
<td>80.8</td>
<td>17.6</td>
<td>235</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>6.4%</td>
<td>0.70</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.4%</td>
<td>4.4%</td>
<td>3.9%</td>
<td>81.2</td>
<td>19.8</td>
<td>236</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>6.0%</td>
<td>0.84</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>1.4%</td>
<td>7.3%</td>
<td>83.7</td>
<td>30.1</td>
<td>228</td>
<td>122</td>
<td>67</td>
<td>55</td>
<td>100</td>
<td>9.2%</td>
<td>0.83</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>5.2%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>79.0</td>
<td>24.7</td>
<td>230</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>8.4%</td>
<td>0.73</td>
</tr>
<tr>
<td class="firstcol">Memo:UK</td>
<td>7.3%</td>
<td>4.1%</td>
<td>7.8%</td>
<td>73.8</td>
<td>24.5</td>
<td>242</td>
<td>128</td>
<td>56</td>
<td>72</td>
<td>100</td>
<td>3.6%</td>
<td>0.59</td>
</tr>
<tr>
<td class="firstcol">Since April 1988</td>
<td></td>
<td></td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>251</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="9">Sentiment is an index, sector
readings are net balance diffusion measures</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>


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BETTER: The EU commission indices for EU and EMU continue to show substantial progress. The EU index rose to 75.0 from 71.1 while the EU index rose to 76.0 from 73.2. The better showing in the EMU rise implies a better rise in the [...]

EMU Recovery Continues

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730a.jpg" width="353">
The rate of improvement in the job market again appears to have slowed. The latest figures from the Labor Department indicate that initial claims rose for the second consecutive week after sharp declines early in the month. The latest increase to 584,000 from an upwardly revised level during the prior period returned claims to near where they started July. Nevertheless, so far this month the 559,000 average level of claims is down from the 616,000 averaged during June and from the March high of 674,000. The four-week average of claims, which smoothes out some of the volatility in the weekly numbers, fell to 559,000 which was its lowest level since late-January. Claims of 580,000 had been expected during the latest week.
The Labor Department indicated that the largest increases in initial claims for the week ending July 18 were in California (+4,290, 41.1% y/y), Michigan (+3,654, 21.0% y/y), Florida (+3,291, 41.2% y/y), Connecticut (+749, 79.1% y/y), and Indiana (+526, -0.7% y/y)), while the largest decreases were in New York (-22,052, 46.2% y/y), Wisconsin (-6,791, 5.5% y/y), Missouri (-6,529, 63.1% y/y), Pennsylvania (-6,420, 60.2% y/y), and Ohio (-5,062, 28.5% y/y).
The rate of labor market improvement may have slowed, but a trend improvement in conditions is clearly evident from the decline in continuing claims for unemployment insurance. They fell a modest 54,000 last week after a similar decline during the prior week. However, the average this month is down sharply from June and the weekly figure is the lowest since mid-April. The continuing claims figures lag initial claims by one week and provide an indication of workers&#39; ability to find employment. Despite the latest decline, however, the level of 6,197,000 claims still up sharply from the year ago level. The four-week average of continuing claims fell back to 6,416,250 which was the lowest since mid-May. The series dates back to 1966.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730b.jpg" width="353">
The insured rate of unemployment remained at 4.7% which was the lowest level since mid-April. During the last ten years, there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.
The highest insured unemployment rates in the week ending July 11 were in Puerto Rico (7.3 percent), Michigan (7.2), Oregon (6.7), Pennsylvania (6.4), Nevada (6.2), Wisconsin (6.1), Connecticut (5.6), New Jersey (5.6), Arkansas (5.5), California (5.5), North Carolina (5.5), and South Carolina (5.5). The lowest rates were in Wyoming (3.0), Texas (3.1), Maine (3.3), Colorado (3.4), Maryland (3.6), Minnesota (3.9), Florida (4.4), Mississippi (4.4) and Georgia (4.6).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090729/default.htm">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">07/25/09</th>
<th scope="col">07/18/09</th>
<th scope="col">07/11/09</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>584</td>
<td>559</td>
<td>524</td>
<td>32.1%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,197</td>
<td>6,251</td>
<td>87.3%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td></td>
<td>4.7</td>
<td>4.7</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The rate of improvement in the job market again appears to have slowed. The latest figures from the Labor Department indicate that initial claims rose for the second consecutive week after sharp declines early in the month. The latest [...]

U.S. Weekly Claims For Jobless Insurance Rise, But Falling Trend Suggests Improved Labor Market

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730a.jpg" align="left" border="0" height="265" width="353">
The rate of improvement in the job market again appears to
have slowed. The latest figures from the Labor Department indicate that
initial claims rose for the second consecutive week after sharp
declines early in the month. The latest increase to 584,000 from an
upwardly revised level during the prior period returned claims to near
where they started July. Nevertheless, so far this month the 559,000
average level of claims is down from the 616,000 averaged during June
and from the March high of 674,000. The four-week average of claims,
which smoothes out some of the volatility in the weekly numbers, fell
to 559,000 which was its lowest level since late-January. Claims of
580,000 had been expected during the latest week.
The Labor Department indicated that the largest increases in
initial claims for the week ending July 18 were in California (+4,290,
41.1% y/y), Michigan (+3,654, 21.0% y/y), Florida (+3,291, 41.2% y/y),
Connecticut (+749, 79.1% y/y), and Indiana (+526, -0.7% y/y)), while
the largest decreases were in New York (-22,052, 46.2% y/y), Wisconsin
(-6,791, 5.5% y/y), Missouri (-6,529, 63.1% y/y), Pennsylvania (-6,420,
60.2% y/y), and Ohio (-5,062, 28.5% y/y).
The rate of labor market improvement may have slowed, but a
trend improvement in conditions is clearly evident from the decline in
continuing claims for unemployment insurance. They fell a modest 54,000
last week after a similar decline during the prior week. However, the
average this month is down sharply from June and the weekly figure is
the lowest since mid-April. The continuing claims figures lag initial
claims by one week and provide an indication of workers' ability to
find employment. Despite the latest decline, however, the level of 6,197,000
claims still up sharply from the year ago level. The
four-week average of continuing claims fell back to 6,416,250 which was
the lowest since mid-May. The series dates back to 1966.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730b.jpg" align="right" border="0" height="265" width="353">
The insured rate of unemployment remained at 4.7% which was
the lowest level since mid-April. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.
The highest insured unemployment rates in the week ending July
11 were in Puerto Rico (7.3 percent), Michigan (7.2), Oregon (6.7),
Pennsylvania (6.4), Nevada (6.2), Wisconsin (6.1), Connecticut (5.6),
New Jersey (5.6), Arkansas (5.5), California (5.5), North Carolina
(5.5), and South Carolina (5.5). The lowest rates were in Wyoming
(3.0), Texas (3.1), Maine (3.3), Colorado (3.4), Maryland (3.6),
Minnesota (3.9), Florida (4.4), Mississippi (4.4) and Georgia (4.6).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database
The Fed's latest Beige Book covering
regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090729/default.htm">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">07/25/09</th>
<th scope="col">07/18/09</th>
<th scope="col">07/11/09</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>584</td>
<td>559</td>
<td>524</td>
<td>32.1%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,197</td>
<td>6,251</td>
<td>87.3%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td></td>
<td>4.7</td>
<td>4.7</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
EMU Recovery Continues 
by <a href="/comment/Brusca.html">
Robert
Brusca</a>July
30, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730c.jpg" align="left" border="0" height="265" width="353">BETTER:
The EU commission indices for EU and EMU continue to show substantial
progress. The EU index rose to 75.0 from 71.1 while the EU index rose
to 76.0 from 73.2. The better showing in the EMU rise implies a better
rise in the month by non EMU members of EU. On a mo/mo basis the UK
index did rise sharply by 7.3% compared to Spain&#8217;s 5.3%, the best among
large EMU nations. 
&#8230;but still low: Overall the EU and EMU indices are standing the bottom
26% to 21% of their respective ranges. That is still a very low
reading. But the UK has bounced some 31% from its lowest level on this
overall index and Italy has risen by 25%. The least rebound by a major
EU/EMU economy is the 11.9% rises from its low reading posted by
Germany. Germany also has the lowest ranked sentiment index among large
EU/EMU economies (even though it is third highest by raw score).
 INDUSTRY: EU industry readings are only
in the
19th percentile of their range like services. But unfortunately the
worst reading on its components are from the selling prices expectation
that is in the bottom 7% of its historic range and from orders that are
in the bottom 3% of their range (both overall orders and export
orders). The production trend is in the 23rd percentile of its range
and production expectations are in the 35th percentile or their range -
despite the weaker reading in orders. Employment is a sort of neutral
17.8 percentile reading which is the same as for EMU industry
confidence overall. So we can&#8217;t say for industry that the problem is
jobs, it&#8217;s just demand.&nbsp;

SERVICE: Services Confidence in EMU stands
at it 12.1% percentile lower than for EU overall (19.0%). The weakest
reading for services is from current employment which is as low a
reading as it ever has seen. Current demand is the next lowest in the
bottom 10 percentile of its range. The business climate in services
ranks in the 12th percentile overall. Expected demand and expected
employment are more upbeat but still in only the 15th percentile of
their respective ranges. Despite some monthly improvement employment in
this sector is weak and expectations while improving are still very
weak. The weakest service sector by the relative measure of the
position of the index in its range is France followed closely by Spain;
the strongest is the UK.

RETAILING: Retailing ranks in the 28th
percentile of its range in EMU, making it relatively less strong than
in EU (35th percentile). The present situation is rated as in the 26th
percentile; the expected business situation is at a higher raw reading
but a lower position in its range at the 23rd range percentile.
Employment expectations are a weak 8% reading. The Italy has the
highest retail range reading in the 46th range percentile compared to
the UK in the 42nd percentile while Spain is at a 28 percentile
reading, worst reading for a large EMU country.&nbsp;

CONSUMER CONFIDENCE: Consumer confidence
ranks about the same as the retailing reading, in the 29th percentile
of its EMU range (below the 32.4 percentile for EU). Spain and Italy
have the highest relative consumer rankings at or above a 50 percentile
range reading; the UK reading is at the 42nd percentile. Germany stands
the lowest among large EMU nations at the 16th percentile. EU consumers
rate the past 12-months as in the bottom 5% of all readings
historically. While the next 12-months reading posted a much, much
higher 48th percentile reading.&nbsp;

SUMMING UP: The consumer confidence results
epitomize the EU/EMU results. Current conditions have improved from
their worst. Yet the quantitative measures that look forward are not
yet very strong. Still expectations for the future are advancing
strongly in Europe. There seems to be a much more &#8216;hard to pin down&#8217;
blanket optimism about the future that is in existence.&nbsp; 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="13">EU
Sectors and Country level Overall Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EU</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue rank%</td>
<td>R-SQ 
w/Overall</td>
</tr>
<tr>
<td class="firstcol">Overall</td>
<td>75</td>
<td>71.1</td>
<td>67.9</td>
<td>64</td>
<td>26.3</td>
<td>242</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>100</td>
<td>3.6%</td>
<td>1.00</td>
</tr>
<tr>
<td class="firstcol">Industrial</td>
<td>-30</td>
<td>-33</td>
<td>-34</td>
<td>-36</td>
<td>19.6</td>
<td>244</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-7</td>
<td>2.8%</td>
<td>0.90</td>
</tr>
<tr>
<td class="firstcol">Consumer Confid</td>
<td>-21</td>
<td>-23</td>
<td>-26</td>
<td>-28</td>
<td>32.4</td>
<td>224</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>10.8%</td>
<td>0.86</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-21</td>
<td>35.5</td>
<td>232</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-5</td>
<td>7.6%</td>
<td>0.66</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-37</td>
<td>-37</td>
<td>-39</td>
<td>-38</td>
<td>10.9</td>
<td>232</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-16</td>
<td>7.6%</td>
<td>0.47</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-19</td>
<td>-23</td>
<td>-26</td>
<td>-30</td>
<td>19.0</td>
<td>242</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>11</td>
<td>3.6%</td>
<td>0.75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Jul-09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>3.8%</td>
<td>4.3%</td>
<td>4.3%</td>
<td>76.0</td>
<td>21.7</td>
<td>236</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>6.0%</td>
<td>0.95</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>4.1%</td>
<td>4.3%</td>
<td>1.5%</td>
<td>80.8</td>
<td>17.6</td>
<td>235</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>6.4%</td>
<td>0.70</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.4%</td>
<td>4.4%</td>
<td>3.9%</td>
<td>81.2</td>
<td>19.8</td>
<td>236</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>6.0%</td>
<td>0.84</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>1.4%</td>
<td>7.3%</td>
<td>83.7</td>
<td>30.1</td>
<td>228</td>
<td>122</td>
<td>67</td>
<td>55</td>
<td>100</td>
<td>9.2%</td>
<td>0.83</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>5.2%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>79.0</td>
<td>24.7</td>
<td>230</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>8.4%</td>
<td>0.73</td>
</tr>
<tr>
<td class="firstcol">Memo:UK</td>
<td>7.3%</td>
<td>4.1%</td>
<td>7.8%</td>
<td>73.8</td>
<td>24.5</td>
<td>242</td>
<td>128</td>
<td>56</td>
<td>72</td>
<td>100</td>
<td>3.6%</td>
<td>0.59</td>
</tr>
<tr>
<td class="firstcol">Since April 1988</td>
<td></td>
<td></td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>251</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="9">Sentiment is an index, sector
readings are net balance diffusion measures</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>


</body></html>

U.S. Weekly Claims For JoblessInsurance Rise, But Falling Trend Suggests Improved Labor Market

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729d.jpg" align="left" border="0" height="265" width="353">
Japan retail sales fell in June but June caps a three-month
period in which sales have expanded. Still, in the quarter-to-date
Japan&#8217;s retail sales are falling but only slightly. 
 

Over 12-months retail sales are off by about 3%, led by
declines in fabric and apparel and the rest of retail which dropped by
4.2%. Auto sales are only off by 0.5% Yr/Yr. Food and beverage sales
are off by 1.2%. Sales at department stores and supermarkets slipped
6.7% on the year, and after those figures are adjusted for the number
of stores (same-store sales), sales posted their 15th straight monthly
decline, according to METI. 
 

This is hardly a robust picture of activity yet today the MoF
upgraded its assessment of Japan&#8217;s economy for the first time in five
years. The Ministry of Economy, Trade and Industry said. The
government's massive stimulus measures, which include tax-cut programs
such as incentives to buy new cars, may help to boost retail sales in
the future. For now the consumer is in the doldrums and spending habits
remain subdued. Leading indicators for Japan have not turned the corner
to signal positive trends yet. 
 
 


Japan Retail Sales Trends
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Total SA</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>-1.6%</td>
<td>-2.9%</td>
<td>1.2%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Not
seasonally adjusted</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Total: Nominal</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>0.7%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-1.9%</td>
<td>-4.1%</td>
<td>7.5%</td>
<td>4.7%</td>
<td>-5.7%</td>
<td>-0.5%</td>
<td>-3.2%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.4%</td>
<td>2.0%</td>
<td>-1.0%</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-1.2%</td>
<td>14.8%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fabric
apparel&amp; access</td>
<td>-4.5%</td>
<td>1.4%</td>
<td>1.5%</td>
<td>-6.5%</td>
<td>-1.0%</td>
<td>-5.7%</td>
<td>-6.6%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rest of Retail</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>3.5%</td>
<td>2.3%</td>
<td>-4.2%</td>
<td>-5.0%</td>
<td>-1.9%</td>
</tr>
</tbody>
</table>
</body></html>

Japan retail sales fell in June but June caps a three-month period in which sales have expanded. Still, in the quarter-to-date Japan’s retail sales are falling but only slightly. Over 12-months retail sales are off by about 3%, led by [...]

Japan Retail Sales Remain Sour

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<body>
 



<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729a.jpg">
The recent improvement in factory sector activity stuttered last month as June durable goods orders fell. The 2.5% decline reversed nearly all of the increases during the prior two months. Moreover, the May increase was revised weaker. Consensus expectations had been for a lesser 0.6% drop. That&#39;s not to say that the recent improvement in factory sector orders was totally reversed last month. Most of the latest decline was due to lower orders for aircraft. On a three-month basis durable goods orders less the transportation sector overall have risen at a 7.2% annual rate.
Perhaps setting the stage for an orders rebound is the lower level of factory inventories. Inventories of durable goods fell for the sixth consecutive month. The 0.9% decline (-4.3% y/y) followed a 1.1% May decline that was deeper than reported initially. Notable, though, has been the vigor of the recent cutback of unwanted inventories On a three-month basis, decumulation of durable goods inventories continued last month at a near-record 12.3% annual rate. Decumulation of inventories has been notable across industries, but especially so in the metals, machinery and motor vehicle sectors. <img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729b.jpg">
Lower new orders for transportation equipment paced last month&#39;s decline in the total. The 12.8% m/m decline followed a 2.7% gain during May. Notably weak were orders for commercial aircraft which fell 38.5% (-61.0% y/y), reversing all of the strong gain during May. In addition, orders for motor vehicles &amp; parts fell 1.0% (-31.8% y/y) following the 8.7% May decline, prompted by lower sales. Adding to this weakness was a 2.5% decline in orders for computers &amp; electronic products (-15.1% y/y) which returned them to the lowest level since January. Computer orders slipped just 1.2% (-17.3% y/y) after a strong May but orders for communications equipment fell a hard 10.8% (-26.2% y/y) to their lowest level since late-2005. Moving the other way were machinery orders which posted a 4.4% increase (-26.3% y/y) after a firm May gain. Orders for primary metals were even stronger as they posted an 8.9% increase but that nevertheless left them off by nearly one-half from their year ago level. Electrical equipment orders were up just 0.9% (-31.1% y/y) following large declines during May and April.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729c.jpg">
The recent improvement in the capital goods sector indeed stuttered last month. Orders for nondefense capital goods fell 3.4% as aircraft orders plunged. Conversely, orders excluding aircraft rose for a second month. The 1.4% increase followed a stronger May gain and that was enough to raise orders to their highest level this year. During the last ten years there has been an 80% correlation between the y/y change in nondefense capital goods orders and the change in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.
Despite the improvement in orders, shipments of durable goods continued to languish. Shipments of durable goods slipped 0.2% (-21.0% y/y) last month and have fallen in each month since February of last year. That y/y decline in shipments has been accompanied by a 21.9% y/y drop in industrial production of durable goods which has shown little or no sign of turning around. During the last ten years, there has been an 80% correlation between the change in shipments of durable goods and the change in durables industrial production.
The durable goods figures are available in Haver&#39;s USECON database.
Monetary Policy in the 2008--2009 Recession from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/economic_quarterly/2009/spring/pdf/hetzel2.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>-2.5</td>
<td>1.3</td>
<td>-26.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>1.1</td>
<td>0.8</td>
<td>-24.1</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.4</td>
<td>9.1</td>
<td>-28.8</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.4</td>
<td>4.3</td>
<td>-22.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The recent improvement in factory sector activity stuttered last month as June durable goods orders fell. The 2.5% decline reversed nearly all of the increases during the prior two months. Moreover, the May increase was revised [...]

U.S. Durable Goods Orders Decline Led By Aircraft & Computers; Lower Inventories May Set Stage for Rebound

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729a.jpg" align="left" border="0">
The recent improvement in factory sector activity stuttered
last month as June durable goods orders fell. The 2.5% decline reversed
nearly all of the increases during the prior two months. Moreover, the
May increase was revised weaker. Consensus expectations had been for a
lesser 0.6% drop. That's not to say that the recent improvement in
factory sector orders was totally reversed last month. Most of the
latest decline was due to lower orders for aircraft. On a three-month
basis durable goods orders less the transportation sector overall have
risen at a 7.2% annual rate.
Perhaps setting the stage for an orders rebound is the lower
level of factory inventories. Inventories of durable goods fell for the
sixth consecutive month. The 0.9% decline (-4.3% y/y) followed a 1.1%
May decline that was deeper than reported initially. Notable, though,
has been the vigor of the recent cutback of unwanted inventories
On a three-month basis, decumulation of durable goods
inventories continued last month at a near-record 12.3% annual rate.
Decumulation of inventories has been notable across industries, but
especially so in the metals, machinery and motor vehicle sectors. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729b.jpg" align="right" border="0">
Lower new orders for transportation equipment paced last
month's decline in the total. The 12.8% m/m decline followed a 2.7%
gain during May. Notably weak were orders for commercial aircraft which
fell 38.5% (-61.0% y/y), reversing all of the strong gain during May.
In addition, orders for motor vehicles &amp; parts fell 1.0%
(-31.8% y/y) following the 8.7% May decline, prompted by lower sales.
Adding to this weakness was a 2.5% decline in orders for computers
&amp; electronic products (-15.1% y/y) which returned them to the
lowest level since January. Computer orders slipped just 1.2% (-17.3%
y/y) after a strong May but orders for communications equipment fell a
hard 10.8% (-26.2% y/y) to their lowest level since late-2005. Moving
the other way were machinery orders which posted a 4.4% increase
(-26.3% y/y) after a firm May gain. Orders for primary metals were even
stronger as they posted an 8.9% increase but that nevertheless left
them off by nearly one-half from their year ago level. Electrical
equipment orders were up just 0.9% (-31.1% y/y) following large
declines during May and April.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729c.jpg" align="left" border="0">
The recent improvement in the capital goods sector indeed
stuttered last month. Orders for nondefense capital goods fell 3.4% as
aircraft orders plunged. Conversely, orders excluding aircraft rose for
a second month. The 1.4% increase followed a stronger May gain and that
was enough to raise orders to their highest level this year. During the
last ten years there has been an 80% correlation between the y/y change
in nondefense capital goods orders and the change in equipment
&amp; software spending in the GDP accounts. The correlation of the
GDP figure with capital goods shipments is, as one would expect, a
larger 92%.
Despite the improvement in orders, shipments of durable goods
continued to languish. Shipments of durable goods slipped 0.2% (-21.0%
y/y) last month and have fallen in each month since February of last
year. That y/y decline in shipments has been accompanied by a 21.9% y/y
drop in industrial production of durable goods which has shown little
or no sign of turning around. During the last ten years, there has been
an 80% correlation between the change in shipments of durable goods and
the change in durables industrial production.
The durable goods figures are available in Haver's USECON
database.
Monetary Policy in the 2008--2009 Recession from
the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/economic_quarterly/2009/spring/pdf/hetzel2.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>-2.5</td>
<td>1.3</td>
<td>-26.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>1.1</td>
<td>0.8</td>
<td>-24.1</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.4</td>
<td>9.1</td>
<td>-28.8</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.4</td>
<td>4.3</td>
<td>-22.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
Japan Retail Sales Remain Sour
 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729d.jpg" align="left" border="0" height="265" width="353">
Japan retail sales fell in June but June caps a three-month
period in which sales have expanded. Still, in the quarter-to-date
Japan&#8217;s retail sales are falling but only slightly. 
 

Over 12-months retail sales are off by about 3%, led by
declines in fabric and apparel and the rest of retail which dropped by
4.2%. Auto sales are only off by 0.5% Yr/Yr. Food and beverage sales
are off by 1.2%. Sales at department stores and supermarkets slipped
6.7% on the year, and after those figures are adjusted for the number
of stores (same-store sales), sales posted their 15th straight monthly
decline, according to METI. 
 

This is hardly a robust picture of activity yet today the MoF
upgraded its assessment of Japan&#8217;s economy for the first time in five
years. The Ministry of Economy, Trade and Industry said. The
government's massive stimulus measures, which include tax-cut programs
such as incentives to buy new cars, may help to boost retail sales in
the future. For now the consumer is in the doldrums and spending habits
remain subdued. Leading indicators for Japan have not turned the corner
to signal positive trends yet. 
 
 


Japan Retail Sales Trends
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Total SA</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>-1.6%</td>
<td>-2.9%</td>
<td>1.2%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Not
seasonally adjusted</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Total: Nominal</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>0.7%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-1.9%</td>
<td>-4.1%</td>
<td>7.5%</td>
<td>4.7%</td>
<td>-5.7%</td>
<td>-0.5%</td>
<td>-3.2%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.4%</td>
<td>2.0%</td>
<td>-1.0%</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-1.2%</td>
<td>14.8%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fabric
apparel&amp; access</td>
<td>-4.5%</td>
<td>1.4%</td>
<td>1.5%</td>
<td>-6.5%</td>
<td>-1.0%</td>
<td>-5.7%</td>
<td>-6.6%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rest of Retail</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>3.5%</td>
<td>2.3%</td>
<td>-4.2%</td>
<td>-5.0%</td>
<td>-1.9%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders DeclineLed By Aircraft & Computers; Lower Inventories May Set Stage for Rebound

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090728e.jpg" width="353">
According to the Conference Board, consumer confidence fell slightly during July for the second consecutive monthly decline. Despite these shortfalls, however, confidence remained up sharply from the February low. The Conference Board data can be found in Haver&#39;s CBDB database.
During the last ten years there has been an 86% correlation between the level of consumer confidence and the y/y change in real consumer spending.
Consumers&#39; assessment of the current economic conditions fell the hardest last month and remained near the recent low. It remained off by almost two-thirds from a year earlier. Jobs were seen as hard to get by an increased 48.1% of respondents and jobs were seen as plentiful by 3.6% which was near the series&#39; low. Business conditions were seen as good by just 9.1% and that was near the 1991 low. Consumers who thought business conditions were bad rose slightly to 46.3%, still near the highest since 1983.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090728f.jpg" width="353">
The decline in the expectations component of confidence lagged just slightly with a 5.3% m/m decline. Still, the index remained near the highest level since late 2007. The percentage of respondents expecting business conditions to improve fell to 18.0% though that remained near the highest level since 2004. A much reduced 18.9% expected conditions to worsen. Only 15.0% of respondents expected any economic improvement to generate more jobs, more than double the percentage at the recent low.
Expectations for the inflation rate in twelve months fell back to 5.5%. That&#39;s down from last year&#39;s high of 7.7%. Interest rates in twelve months were expected by 51.9% to be higher while 16.6% expected rates to fall. A greatly increased 31.5% of respondents expected stock prices to rise.
Consumers certainly plan to manage their spending plans cautiously. Just 2.1% plan to buy a home during the next six months while 25.4% plan to buy a major appliance. That&#39;s versus 30.9% who did back in 2007. Only 4.5% plan to buy an automobile, versus 6.0% in 2007.
The Federal Reserve Board announced that it will soon begin a statistical study of household finances to update data collected at the outset of the economic downturn that began in late 2007.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Conference Board &nbsp;(SA, 1985=100)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Index</td>
<td>46.6</td>
<td>49.3</td>
<td>-10.2</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Present Situation</td>
<td>23.4</td>
<td>25.0</td>
<td>-64.4</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>62.0</td>
<td>65.5</td>
<td>45.2</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the Conference Board, consumer confidence fell slightly during July for the second consecutive monthly decline. Despite these shortfalls, however, confidence remained up sharply from the February low. The Conference Board [...]

U.S. Consumer Confidence Slips For A Second Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090728d.jpg" align="left" border="0" height="265" width="353">
Confidence is UP! Consumer confidence in
Italy is at its highest since November 2007. Still since January 1992
the reading stand is at the 40th to 41st percentile of its range and in
terms of the ranking among all previous observations. This it is some
10 percentage points below its middle position in terms of range or
ranking percentiles. Ranking percentiles position a reading in a queue
of values while range percentiles position the reading in a range
bounded by the high and low readings. Both readings have some merit. 
 

Past 12 month - Rating the past twelve
months, the overall situation is rates as a -68 which puts it in the
55th percentile in terms of rankings. Prices trends at -48 are the
worst in this period by either range of ranking methods. 
 

The expected future - Looking ahead the
next twelve months overall situation is assigned a value of +2 leaving
it in the top 92nd percentile by ranking, but only the 65th percentile
according to the position of the reading in its range. Obviously among
all rankings this reading is relatively strong but there must be a
strong reading that lies at a much, much higher level to depress the
range reading so much. That would be a reading from June 2001, as from
April to Sept of 2001 readings on this score soared then dipped back to
a more normal range. Unemployment readings are still elevated at a +8
reading. That leaves the reading in the moderated 55th percentile by
range but at a much higher 94th percentile by ranking. Those two
readings tell us that the unemployment reading is rarely higher than
this but it has spiked much higher in the past. The response to the
household budget situation remains weak by any measure at a +1. 
 

Current/Future comparisons - Households
assess their current and future situations as about to be much improved
in the next twelve months with their range and ranking percentile
readings rising from a bottom quarter or third position currently to a
50% to two-thirds position in the outlook. Current savings are
considered high, future savings are expected to be low. Similarly,
major purchase environment was construed as middling over the past
12-months abut is expected to improve sharply to top 4% or better in
the future. 
 

Summing up - On balance these responses by
Italian households show a clear disappointment with past trends. In
that respect the expected future improvement is harder to read. Some of
the future readings are more middling some are strong. It is still not
clear if consumers simply are optimistic that things will improve from
the dregs of the last 12 months or if things are expected to improved
to true strong readings. As current conditions improve we will monitor
these future readings and see if they continue to show the strength
that some of the categories currently exhibit. If much better
conditions are expected then as the current readings improve the future
readings should remain high. If the future is simply expected to be
&#8216;normal&#8217; as the current situation normalizes the expectations readings
in the survey will recede to a region of boredom. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jul-09</th>
<th scope="col">Jun-09</th>
<th scope="col">May-09</th>
<th scope="col">Apr-09</th>
<th scope="col">Percentile</th>
<th scope="col">Rank</th>
<th scope="col">percentile</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>107.5</td>
<td>105.4</td>
<td>104.9</td>
<td>104.9</td>
<td>41.3</td>
<td>126</td>
<td>40.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Last 12 months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">OVERALL SITUATION</td>
<td>-68</td>
<td>-68</td>
<td>-73</td>
<td>-74</td>
<td>63.2</td>
<td>93</td>
<td>55.9%</td>
</tr>
<tr>
<td class="firstcol">PRICE TRENDS</td>
<td>-48</td>
<td>-40.5</td>
<td>-45</td>
<td>-43</td>
<td>0.0</td>
<td>211</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Next 12months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">OVERALL SITUATION</td>
<td>2</td>
<td>-8</td>
<td>-17</td>
<td>-26</td>
<td>65.1</td>
<td>16</td>
<td>92.4%</td>
</tr>
<tr>
<td class="firstcol">PRICE TRENDS</td>
<td>1.5</td>
<td>8.5</td>
<td>10</td>
<td>9.5</td>
<td>3.1</td>
<td>112</td>
<td>46.9%</td>
</tr>
<tr>
<td class="firstcol">UNEMPLOYMENT</td>
<td>8</td>
<td>15</td>
<td>17</td>
<td>21</td>
<td>55.9</td>
<td>11</td>
<td>94.8%</td>
</tr>
<tr>
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>1</td>
<td>0</td>
<td>5</td>
<td>1</td>
<td>17.0</td>
<td>199</td>
<td>5.7%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">HOUSEHOLD FIN SITUATION</td>
</tr>
<tr>
<td class="firstcol">Last 12 months</td>
<td>-40</td>
<td>-37</td>
<td>-34</td>
<td>-37</td>
<td>32.7</td>
<td>155</td>
<td>26.5%</td>
</tr>
<tr>
<td class="firstcol">Next12 months</td>
<td>-2</td>
<td>-4</td>
<td>-5</td>
<td>-11</td>
<td>67.3</td>
<td>91</td>
<td>56.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">HOUSEHOLD SAVINGS</td>
</tr>
<tr>
<td class="firstcol">Current</td>
<td>60</td>
<td>60</td>
<td>59</td>
<td>60</td>
<td>72.7</td>
<td>13</td>
<td>93.8%</td>
</tr>
<tr>
<td class="firstcol">Future</td>
<td>-30</td>
<td>-25</td>
<td>-29</td>
<td>-29</td>
<td>38.3</td>
<td>170</td>
<td>19.4%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">MAJOR
Purchases</td>
</tr>
<tr>
<td class="firstcol">Current</td>
<td>-40</td>
<td>-39</td>
<td>-43</td>
<td>-41</td>
<td>42.1</td>
<td>99</td>
<td>53.1%</td>
</tr>
<tr>
<td class="firstcol">Future</td>
<td>4</td>
<td>3</td>
<td>1</td>
<td>3</td>
<td>96.8</td>
<td>3</td>
<td>98.6%</td>
</tr>
<tr class="firstcol" colspan="8">
Total number of months: 211
</tr>
</tbody>
</table>
</body></html>

Confidence is UP! Consumer confidence in Italy is at its highest since November 2007. Still since January 1992 the reading stand is at the 40th to 41st percentile of its range and in terms of the ranking among all previous [...]

Italy's Recovery In Confidence Continues... Still A Ways To Go

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

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

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Winnie Tapasanun

260501A9.jpg

260501B9.jpg

The ISM U.S. manufacturing PMI held at a lower-than-expected 52.7 in April and March following a 0.2-point easing to 52.4 in February, data from the Institute for Supply Management showed. The April reading, above the 50 expansion-contraction dividing line, indicated the U.S. manufacturing sector expanded for the fourth successive month. A reading of 53.0 for April had been expected in the Action Economics Forecast Survey. The April manufacturing PMI, while above a contraction-level 48.8 in April 2025 and a low of 47.0 in October 2024, remained below a peak of 63.8 in March 2021.

The production index slipped to 53.4 in April from 55.1 in March, indicating production expanded for the sixth consecutive month but at the slowest pace since December. The index was above its recent low of 44.8 in April 2025 but below a peak of 66.5 in March 2021. In April, 28.3% (NSA) of respondents reported higher production while 13.0% reported lower production. The new orders index rebounded to 54.1 in April from 53.5 in March, signaling new orders grew for the fourth straight month following four successive months of contraction. The index remained well above a low of 41.8 in January 2023. In April, an increased 31.6% (NSA) of respondents reported higher new orders while 15.2% reported declines. The inventories index increased to 49.0 in April from 47.1 in March, marking the 12th straight month of contraction. The index was below its recent high of 52.7 in March 2025 but above a low of 43.8 in October 2024. Meanwhile, the supplier deliveries index rose to 60.6 in April from 58.9 in March, indicating slower delivery performance for the fifth consecutive month after faster deliveries in November. In April, 22.6% (NSA) of respondents reported slower delivery speeds while only 1.5% reported faster speeds.

On the labor front, the employment index slid to 46.4 in April from 48.7 in March, showing employment contracted for the 31st straight month and at the lowest level since December following a brief expansion in September 2023. The index was above its recent low of 44.1 in November 2025 but below a high of 49.7 in January 2025 and a high of 56.5 in March 2022. In April, 17.5% (NSA) of respondents reported higher employment while 20.2% reported less hiring.

On the pricing front, the prices paid index jumped to 84.6 (NSA) in April from 78.3 in March, indicating raw materials prices rose for the 19th consecutive month and at the fastest pace since April 2022. 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 April, an increased 70.3% (NSA) of respondents reported higher prices while only 1.2% reported price declines.

In other ISM series not included in the composite index, the new export orders index fell to 47.9 in April from 49.9 in March, indicating new export orders contracted for the second successive month after expanding in February and January. The index was up from a low of 40.1 in May 2025 but down from its recent high of 52.4 in January 2025 and a high of 57.1 in February 2022. The imports index decreased to 50.3 in April from 52.6 in March, suggesting imports expanded at the weakest pace in three months. 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 declined to 51.4 (NSA) in April from 54.4 in March, showing backlog levels grew at the slowest pace in four months. The index was well above a low of 37.5 in May 2023 but far below a peak of 70.6 in May 2021.

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.

260501C9.jpg

260501D9.jpg

- ISM Mfg. PMI at 52.7 in Apr. and Mar.; fourth consecutive month of expansion.
- Production (53.4) expands for the sixth straight mth.; new orders (54.1) for the fourth successive mth.
- Employment (46.4) contracts for the 31st straight mth.; at a four-month low.
- Prices Index (84.6) highest since Apr. ’22; prices rising for the 19th consecutive mth.
- Exports (47.9) contract; imports (50.3) still grow but at a three-month low.

U.S. ISM Manufacturing PMI Steady in April; New Orders and Production Growing; Employment Contracting

260501E.jpg

GDP growth in Europe in the first quarter of 2026 continued to be weak. First-quarter annualized growth at 0.6% followed a fourth-quarter annualized growth rate at 0.8%. Year-over-year growth in the monetary union logged a 0.8% annual rate; that represents a slowdown from earlier quarters where the growth rates were generally above 1% and more on the order of 1.5% at an annual rate.

**Early GDP reporters in EMU**
Among the 8 early reporters of GDP in the first quarter, in the table, only three posted growth pickups compared to the previous quarter. Those were Belgium, with a growth rate in the first quarter annualized at 0.8%, up from 0.2% in Q4 2025; Germany, where the growth rate picked up to 1.3% in the first quarter from 1.0% in Q4; and Ireland, with a dubious acceleration of growth to a -7.8% annualized rate, improving from -14.5% annualized in Q4.

**Big country, small country**
The table also looks at growth divided into the four largest economies in the monetary union versus the rest of the monetary union. There we see a growth rate of 1% for the four largest economies, a slowdown from 1.3% in the fourth quarter. For the rest of the monetary union, the growth rate held at 0.5% in the first quarter, the same rate logged in the fourth quarter.

**Median growth**
The median growth rate among these reporters was 0.6%, the same as for the weighted growth rate in the EMU, while the median in the fourth quarter was 1.5% compared to a weighted growth rate for the monetary union at 0.8%.

**Ranking the growth rates vs. their own histories**
The ranking data on the far-right column rank growth in the first quarter on its year-over-year growth pace. On a historic profile, we see only three monetary union reporters with growth in the first quarter at a rate that exceeds median on data back to the 1990s. Those economies are Italy with a 52.2 percentile ranking, Spain with a 53.3 percentile ranking, and Portugal with a 65.2 percentile ranking. For the monetary union as a whole, the growth rate rank is 28.3%, placing it at a ranking between its lower 1/4 and lower 1/3. The median for the monetary union among these early reporting countries is a 32.6 percentile growth rate, and these compared to the United States where the growth rate has a 60.2 percentile standing.

Other data sources report that growth in the services sector has been extremely weak, while there actually has been some resilience in manufacturing. That is somewhat surprising given the Middle East War that affects the world trade and global supply chains. New disruptions because of war in the Middle East are a new fact of life. However, war itself sometimes is a stimulant to some forms of growth. These sector trends will be for us to watch, but for right now growth rates are not impressive and they're certainly not gaining momentum.

260501.jpg

Europe

GDP Remains Weak in EMU

Andrew Cates

**Front-End Yields Reflect Policy Reassessment**
Against a backdrop of key central bank meetings either having just taken place or imminent, short-dated government bond yields have moved decisively higher across most major economies since the escalation of the Middle East conflict, with the sharpest increase seen in the UK. The rise in 2-year yields reflects a repricing of near-term monetary policy expectations, as markets respond to the inflationary implications of higher energy prices and the growing likelihood that central banks will delay easing cycles. Moves have been most pronounced in economies where inflation is expected to be more persistent—most notably the UK—while increases have been more modest in the US and particularly Japan, where policy normalisation remains gradual. In effect, the front end of the curve is signalling a shift away from the “rate cuts soon” narrative that prevailed earlier in the year toward a more cautious, higher-for-longer policy outlook.

260430Z1.jpg

**US Recession Risks Remain Contained—For Now**
Despite the recent deterioration in the macro backdrop, real-time recession risk indicators for the US remain relatively subdued. This is notable given the combination of softer growth momentum, higher bond yields and heightened geopolitical risk. The nowcast—derived from a blend of high-frequency activity data and financial stress measures—has historically tended to move sharply when conditions turn, rather than drift higher gradually. That asymmetry is important in the current environment. While recession risks are not yet flashing red, past cycles suggest they can reprice abruptly, and arguably at present if energy-driven inflation were to feed much more forcefully into financial conditions or begin to weigh more materially on demand.

260430Z2.jpg

**Consumer Confidence Diverges: Europe and UK Slide, US Stabilises**
Consumer confidence has weakened across the major economies, but the deterioration has been more pronounced in the euro area and the UK than in the US. While sentiment in the US has recently edged up, it remains at relatively subdued levels. By contrast, confidence in Europe and the UK has fallen more sharply, reflecting greater exposure to higher energy costs and a more direct squeeze on real household incomes. This divergence is consistent with broader macro trends, suggesting that demand in Europe may prove more sensitive to the current shock, with weaker sentiment feeding more quickly into consumption.

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**Euro area Credit Conditions Turn More Restrictive**
The latest ECB lending survey points to a clear tightening in credit conditions across the euro area, with banks raising lending standards for both firms and households while loan demand weakens. This combination—more restrictive supply alongside softer demand—is typically associated with a cooling in activity, particularly in interest-sensitive sectors. Recent evidence suggests that higher perceived risks, rising funding costs and geopolitical uncertainty are all weighing on banks’ willingness to lend, while weaker confidence and reduced investment appetite are dampening borrowing needs. The result is a tightening in financial conditions that is likely to amplify the broader slowdown already evident in survey data, reinforcing the more fragile growth dynamics now emerging across the region.

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**An Intensifying AI Boom with Supply-Side Undercurrents**
Against the backdrop of surging AI-related investment, semiconductor prices are not just high—they are rising at an increasingly rapid pace. This chart shows a clear acceleration in both prices and export values, pointing to an intensifying boom in global chip demand. While this is in part a reflection of strong, structural demand, supply-side factors may also be playing a growing role. Although the Middle East is not a direct source of key chip-making minerals, it is central to the energy and petrochemical inputs that underpin semiconductor production. Ongoing geopolitical tensions are therefore likely feeding into higher costs and renewed frictions across supply chains. The combination of accelerating demand and tightening supply conditions suggests that semiconductor inflation could prove more persistent—and more globally consequential—than currently assumed.

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**Labour Markets Reflect the AI Acceleration**
Our final chart this week highlights the extent to which the current AI boom is now feeding through into labour markets. This high-frequency indicator—based on the share of job listings containing AI-related keywords—shows a sharp and sustained increase since the widespread adoption of generative AI tools in late 2022. What began as a more traditional build-out in machine learning roles has evolved into a broader and more intense wave of hiring tied to generative AI capabilities, with demand accelerating markedly across multiple economies. The scale and persistence of this trend point to a structural shift rather than a cyclical upswing, reinforcing the view that AI is becoming an increasingly important driver of investment, productivity expectations and, potentially, broader macroeconomic dynamics.

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Against a backdrop of persistent geopolitical tensions, firmer energy prices and a busy week of central bank meetings—including the Fed, ECB, BoE and BoJ—financial markets have remained notably resilient, even as the macro narrative has softened at the margin. The message from this week’s charts is one of growing tension beneath that surface calm. Front-end bond yields have moved higher, signalling a shift toward a more cautious, “higher-for-longer” policy outlook (chart 1). At the same time, real-time recession indicators for the United States suggest risks remain contained for now (chart 2). Consumer confidence data paint a more uneven picture, with sharper declines in the euro area and UK than in the US, highlighting regional vulnerabilities to the current energy shock (chart 3). The ECB’s latest bank lending survey reinforces this, pointing to tighter credit conditions and weaker demand—factors that are likely to weigh further on European growth (chart 4). By contrast, developments in the semiconductor sector underline a different dynamic: an intensifying global boom, with accelerating price pressures reflecting both strong AI-driven demand and emerging supply-side constraints linked indirectly to energy and logistics disruptions (chart 5). Finally, labour market data confirm that the AI surge is not merely a market narrative but a tangible structural shift, with hiring for AI-related roles accelerating across economies (chart 6). Taken together, these signals point to a more complex macro environment—one in which resilient markets coexist with softening growth, more persistent inflation risks and increasingly delicate policy trade-offs.

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Charts of the Week: Tension Beneath the Surface

Michael J. Moran

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Real GDP grew at an annual rate of 2.0% in the first quarter of 2026, almost identical to the expected advance of 2.1%. The latest change was comfortably within the range of recent observations and close to the economy’s potential rate of growth. The year-over-year change totaled 2.7%, but that shift reflected what might be viewed as a special factor (robust growth in the second and third quarters that offset a trade-tariff-induced drop in 2025-Q1 GDP).

Business fixed investment was the star of the show in the first quarter, registering growth of 10.4%. Outlays for information processing equipment and software were especially strong, while outlays for industrial equipment and Research & Development contributed positively as well. Outlays for structures remained decidedly soft, dropping for the ninth consecutive quarter. Building of data centers have been vigorous, but softness in offices and manufacturing facilities has dwarfed the strength in this new area.

Federal spending surged 9.4% in Q1, but the rise reflected the reopening of most federal agencies after their closure during much of the fourth quarter. Excluding this noise, support from the federal government has been softening. Nondefense outlays peaked in the fourth quarter of 2024, and they were 6.9% shy of that total in the first quarter. Defense spending also peaked in 2024-Q4 and has eased 2.4% since then. Defense spending most likely will grow in coming quarters because of the efforts in the Middle East. Orders for defense goods have already started to rise.

Consumer spending rose 1.5% in the first quarter, a bit shy of the 2.1% pace over the four quarters of last year and less than half the rates in 2023 and 2024. Consumer spending showed signs of softening in late 2025 and January of this year, but activity picked up in February and March. Firm tax refunds might have provided a boost to household spending in the latest months. Some of the tax cuts from the One Big Beautiful Bill were applied retroactively to 2025, but withholding schedules were not adjusted last year. Thus, many households are receiving larger-than-normal tax refunds.

International trade acted as a drag on economic growth in Q1, with net exports subtracting 1.3 percentage points from the GDP increase. Exports did well in the first quarter with growth of 12.9%, but imports were even stronger with a jump of 21.4%. The real trade deficit of $1.1 trillion was noticeably smaller than the shortfall of $1.4 trillion in 2025-Q1 when importers were rushing to get goods into the US before the imposition of tariffs. Still, the trade shortfall was sizeable and its effect on growth noticeable.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Robust business investment led the advance; moderate support from consumers.
- Government spending jumped with the reopening of most federal agencies.
- The trade sector remained volatile, making a sizeable negative contribution in Q1.

Q1 GDP: Weathering the Challenges; Trend-Like Growth

Sandy Batten

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This monthly report contains a wealth of information concerning the state of the consumer. The anticipation ahead of today’s report centered on how much the surge in energy prices since the escalation of the US-Iran conflict in early March would push up overall PCE inflation. Prices of energy goods and services jumped 11.6% m/m not annualized in March. This was the largest monthly increase since September 2005. As a result, the headline PCE price index increased 0.7% m/m (3.5% y/y versus 2.8% y/y in February), the largest monthly gain since July 2022 but in line with expectations of the Action Economics Forecast Survey.

The core index (that is, excluding food and energy prices) rose by a more modest 0.3% m/m in March, down from a 0.4% monthly increase in February and in line with expectations. However, the yearly rate rose further to 3.2% y/y in March from 3.0% in February, well above and moving away from the Fed’s 2% target. The FOMC left its fed funds rate target unchanged at yesterday’s meeting, but some committee members dissented, opposing the implied easing bias contained in the statement. Chair Powell, in his press conference, noted that a number of members have become more concerned over the inflation outlook and the possible need for a Fed response.

Nominal personal income posted a solid 0.6% m/m (3.7% y/y) increase in March following an upwardly revised unchanged reading in February (previously -0.1% m/m). The March increase was twice the 0.3% monthly gain expected by the Action Economics Forecast Survey. However, after adjusting for inflation, real personal income slipped 0.1% m/m in March on top of a 0.4% m/m decline in February.

Employee compensation continued to be a major driver of personal income in March. It rose 0.4% m/m (4.1% y/y) in March after a 0.2% monthly increase in February. In March, proprietors’ income jumped 2.8%. This outsized increase reflected payments to farmers from the federal government’s Farmer Bridge Assistance Program. Rental income rose a solid 0.7% m/m, the same gain as in February. Income from financial assets increased 0.4% m/m following a 0.9% m/m decline in February. Personal current transfer payments edged up 0.1% m/m versus a 0.3% m/m decline in February.

Nominal consumption expenditures jumped 0.9% m/m (5.7% y/y) in March following an upwardly revised 0.6% monthly gain in February (previously +0.5% m/m). Spending on goods rose 2.0% m/m (4.5% y/y) while spending on services increased 0.4% m/m (6.3% y/y). As for overall inflation, the surge in energy prices also accounted for a large portion of the March gain in nominal spending. After adjusting for overall inflation, real PCE rose a more modest 0.2% m/m following an upwardly revised 0.3% m/m increase in February (previously +0.1% m/m). Still, the solid gains in February and March provide a strong starting point for Q2. The March level is 1.5% at an annual rate above the Q1 average. For all of Q1, real PCE rose 1.6% q/q saar.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- The PCE price index jumped 0.7%, reflecting an 11.6% m/m surge in energy prices.
- The core index was up 0.3%, in line with expectations but still well above the Fed’s target.
- Personal income increased 0.6% m/m, led by a 0.4% m/m rise in compensation.
- Personal consumption jumped 0.9% m/m with a slight upward revision to February.
- However, much of the March gain in nominal consumption also reflected the jump in energy prices.
- Real consumption rose by a more modest 0.2% m/m.