Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721a.jpg" align="right" border="0" height="265" width="353">
The Chicago Federal Reserve Bank reported that its June
National Activity Index rose further to the highest level since July of
last year. The reading of -1.80 was up from May and both figures were
higher than the series' low of -3.99 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP.
The three-month moving average of the index also
improved to its highest level since August.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_july2009.pdf">here.</a>
The production and income components made the largest positive
contributions to the JUnel CFNAI. Twenty-two of the index components
had a positive influence while 63 made a negative contribution.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721b.jpg" align="right" border="0" height="265" width="353">
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index fell during May to its lowest level since
1994. Indicators for the auto, steel, and machinery each fell. The
Chicago Federal Reserve figures are available in Haver's SURVEYS
database.
Today's testimony by Fed Chairman Ben S. Bernanke is available
<a href="http://www.federalreserve.gov/newsevents/testimony/DBBB5C9F26B6440AA4A21E104A61577A.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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-1.80</td>
<td>-2.30</td>
<td>-0.98</td>
<td>-1.76</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-2.12</td>
<td>-2.65</td>
<td>-1.07</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Chicago Federal Reserve Bank reported that its June National Activity Index rose further to the highest level since July of last year. The reading of -1.80 was up from May and both figures were higher than the series' low of -3.99 [...]

Chicago Fed Index Indicates That Economic Activity Improved Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721a.jpg" align="right" border="0" height="265" width="353">
The Chicago Federal Reserve Bank reported that its June
National Activity Index rose further to the highest level since July of
last year. The reading of -1.80 was up from May and both figures were
higher than the series' low of -3.99 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP.
The three-month moving average of the index also
improved to its highest level since August.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_july2009.pdf">here.</a>
The production and income components made the largest positive
contributions to the JUnel CFNAI. Twenty-two of the index components
had a positive influence while 63 made a negative contribution.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721b.jpg" align="right" border="0" height="265" width="353">
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index fell during May to its lowest level since
1994. Indicators for the auto, steel, and machinery each fell. The
Chicago Federal Reserve figures are available in Haver's SURVEYS
database.
Today's testimony by Fed Chairman Ben S. Bernanke is available
<a href="http://www.federalreserve.gov/newsevents/testimony/DBBB5C9F26B6440AA4A21E104A61577A.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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-1.80</td>
<td>-2.30</td>
<td>-0.98</td>
<td>-1.76</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-2.12</td>
<td>-2.65</td>
<td>-1.07</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
Gasoline Prices Fall Again 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 21, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721c.jpg" align="left" border="0" height="265" width="353">
Recession in the U.S. economy prompted a lower retail price
for gasoline last week. The pump price for regular gasoline fell
to an average $2.46 per gallon, down twenty-three cents from last
month's high. Nevertheless, prices remained up by eighty-five cents
(53%) from the December low. In the cash market, gasoline prices
yesterday continued to rally off last week's low. At $1.75 per gallon
the price was up from the low of $1.60. The figures are reported by the
U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721d.jpg" align="right" border="0" height="265" width="353">
Crude oil prices also fell last week, but
not by as much as gasoline costs. Light sweet crude oil prices (WTI)
fell to $61.27 per barrel, off nearly ten dollars from last week's high
of $70.83. Yesterday the one-month futures price for light sweet crude
oil recovered and moved up to $63.98 per barrel. Prices had reached a
daily high of $72.68.
The ongoing recession lowered the demand for motor gasoline by
2.2% y/y during the last four weeks. The rate of decline has moderated
from the 4.8% shortfall this past autumn. Demand for distillate also is
off by a sharp 21.5% though residual fuel oil demand has moved higher.
Finally, oil remains plentiful as evidenced by a 13.7% y/y rise in
inventories of crude oil &amp; petroleum products. The figures on
crude oil inventories are available in Haver's OILWKLY database.
The weakening of natural gas prices stabilized last week at
the seven-year low. Last week's average price of $3.28 per mmbtu
(-70.8% y/y) was down by three-quarters from the high reached in
early-July of $13.19/mmbtu.

<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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">07/20/09</th>
<th scope="col">07/13/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.46</td>
<td>2.53</td>
<td>-39.4%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>61.27</td>
<td>61.48</td>
<td>-54.7%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Remain
Flat 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 21, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090721e.jpg" align="left" border="0" height="265" width="353">
The strengthening of chain store sales around the July 4th
holiday faded as the month progressed. During the latest week, chain
store sales rose 0.5% but that recovered just half of the prior week's
decline. So far in July sales have increased 0.7% since June after that
month's 0.3% decline and a 0.2% May downtick.
During the last ten years there has been a 69% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. The weekly figures are available
in Haver's SURVEYW database.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


Prospects for improvement in sales seems limited. The leading
indicator of sales ticked up 0.3% (-2.4% y/y) during the latest week
and it has been flat-to-lower all this year.
Exit Strategies for the Federal Reserve
from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/econ/bullard/PhiladelphiaGIC28june2009FINAL653pm.pdf">here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></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</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>491.7</td>
<td>489.4</td>
<td>-0.3%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
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Chicago Fed Index Indicates ThatEconomic Activity Improved Further

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720g.jpg" align="left" border="0" height="265" width="353">
Industrial orders in Italy made a slight bounce in May. French
orders fell after a slight bounce in April. Neither shows any sign of
upward momentum and the downward momentum has only just been trimmed if
we compare 3-month growth rates to 12-month growth rates. 
What is interesting is the very different performance in foreign
orders as between Italy and France and Germany. Germany is showing some
very substantial recovery in foreign-sourced orders. But it Italy,
foreign order are falling at an accelerating pace through May. In
France, foreign orders have shown a clear patterns of progress with the
three-month growth rate reduced to an annual pace of -9.7% compared to
-24% Yr/Yr. 
Whatever progress is being experienced in Europe, it is irregular.
Clearly some economies in the Zone are doing better than others despite
the common currency regime - and that is true for sales overseas
underlining the that exchange rates are not the only factor in the
success of foreign sales efforts. The more variance there is across
e-Zone countries in their respective economic performances, the more it
will wear on the fragile e-Zone area where talk of integration is tough
despite member countries efforts to continue to go it alone on fiscal
policy. Europe still has a recession and still has some divisive
political forces to weather. And yet more European &#8216;integration&#8217; lies
ahead. 

<table border="0" cellspacing="0" width="100%">

</table>
Italy Orders<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>

</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-2.6%</td>
<td>-20.9%</td>
<td>-24.3%</td>
<td>-29.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.2%</td>
<td>-2.9%</td>
<td>-9.3%</td>
<td>-39.4%</td>
<td>-27.5%</td>
<td>-33.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>0.5%</td>
<td>-3.9%</td>
<td>1.0%</td>
<td>-9.3%</td>
<td>-22.7%</td>
<td>-26.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-7.3%</td>
<td>-22.3%</td>
<td>-21.9%</td>
</tr>
<tr>
<td colspan="7">French Orders</td>
</tr>
<tr>
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>-5.7%</td>
<td>-22.3%</td>
<td>-9.2%</td>
<td>-23.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.4%</td>
<td>6.5%</td>
<td>-8.8%</td>
<td>-9.7%</td>
<td>-12.4%</td>
<td>-27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>-1.4%</td>
<td>1.4%</td>
<td>-15.1%</td>
<td>-15.0%</td>
</tr>
</tbody>
</table>
</body></html>

Industrial orders in Italy made a slight bounce in May. French orders fell after a slight bounce in April. Neither shows any sign of upward momentum and the downward momentum has only just been trimmed if we compare 3-month growth [...]

Industrial Orders Trends Begin To Turn...Ever So Slowly

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720e.jpg">
The Conference Board&#39;s Index of Leading Economic Indicators continued to suggest a pending economic recovery. The June composite index of leaders rose another 0.7% after gains of 1.3% (upwardly revised) and 1.0% during the prior two months. The combined 3.0% rise during those three months was the strongest since early 2002 while the index itself was at the highest level since last July. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.
For the third straight month, nearly three quarters of the ten components of the leading index increased with the largest positive contributions coming from a steeper yield curve, higher building permits and higher stock prices. The money supply and consumer expectations made slight negative contributions.
Again suggesting that the rate of decline in the economy is slowing were the coincident indicators. They fell 0.2%, about as they have for three consecutive months. These compare with monthly declines of 0.6%-to-1.1% dating back to September. The negative contributions from lower employment and production have eased. The remaining two component series actually rose during June, led by very slight gains in real disposable income and business sales. Over the last ten years there has been a 76% correlation between this y/y change and real GDP.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720f.jpg">
In a sign that excesses in the U.S. economy are diminishing, the lagging index fell for the sixth month in the last seven. The declines have been paced by a longer duration of unemployment, lower commercial and industrial loans and lower consumer installment credit. The ratio of coincident-to-lagging indicators (a measure of economic excess) rose m/m to the highest level since December.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
World Economic Outlook Update; Contractionary Forces Receding But Weak Recovery Ahead from the international Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.7</td>
<td>1.3</td>
<td>1.0</td>
<td>4.1</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.7</td>
<td>-5.9</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.8</td>
<td>-0.6</td>
<td>-5.9</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The Conference Board's Index of Leading Economic Indicators continued to suggest a pending economic recovery. The June composite index of leaders rose another 0.7% after gains of 1.3% (upwardly revised) and 1.0% during the prior two [...]

U.S. Leading Indicators Rise For A Third Month Signaling Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<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/SURVEYS/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
</body></html>

The current recession has been harshest in the labor market. Employers look to cut costs as top-line revenues falter. Though the June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the speed of the rate's recent [...]

U.S. Unemployment Rates Rise Sharply And Rapidly For All

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<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/SURVEYS/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Rise For A
Third Month Signaling Economic Recovery 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720e.jpg" align="left" border="0">
The Conference Board's Index of Leading Economic Indicators
continued to suggest a pending economic recovery. The June composite
index of leaders rose another 0.7% after gains of 1.3% (upwardly
revised) and 1.0% during the prior two months. The combined 3.0% rise
during those three months was the strongest since early 2002 while the
index itself was at the highest level since last July. The leading
index is based on actual reports for eight economic data series. The
Conference Board initially estimates two series, orders for consumer
goods and orders for capital goods.
For the third straight month, nearly three quarters of the ten
components of the leading index increased with the largest positive
contributions coming from a steeper yield curve, higher building
permits and higher stock prices. The money supply and consumer
expectations made slight negative contributions.
Again suggesting that the rate of decline in the economy is
slowing were the coincident indicators. They fell 0.2%, about as they
have for three consecutive months. These compare with monthly declines
of 0.6%-to-1.1% dating back to September. The negative contributions
from lower employment and production have eased. The remaining two
component series actually rose during June, led by very slight gains in
real disposable income and business sales. Over the last ten years
there has been a 76% correlation between this y/y change and real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720f.jpg" align="right" border="0">
In a sign that excesses in the U.S. economy are diminishing,
the lagging index fell for the sixth month in the last seven. The
declines have been paced by a longer duration of unemployment, lower
commercial and industrial loans and lower consumer installment credit.
The ratio of coincident-to-lagging indicators (a measure of economic
excess) rose m/m to the highest level since December.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.



World Economic Outlook Update; Contractionary
Forces Receding But Weak Recovery Ahead from the
international Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.7</td>
<td>1.3</td>
<td>1.0</td>
<td>4.1</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.7</td>
<td>-5.9</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.8</td>
<td>-0.6</td>
<td>-5.9</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
Industrial Orders Trends Begin To
Turn...Ever So Slowly 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720g.jpg" align="left" border="0" height="265" width="353">
Industrial orders in Italy made a slight bounce in May. French
orders fell after a slight bounce in April. Neither shows any sign of
upward momentum and the downward momentum has only just been trimmed if
we compare 3-month growth rates to 12-month growth rates. 
 

What is interesting is the very different performance in
foreign
orders as between Italy and France and Germany. Germany is showing some
very substantial recovery in foreign-sourced orders. But it Italy,
foreign order are falling at an accelerating pace through May. In
France, foreign orders have shown a clear patterns of progress with the
three-month growth rate reduced to an annual pace of -9.7% compared to
-24% Yr/Yr. 
 

Whatever progress is being experienced in Europe, it is
irregular.
Clearly some economies in the Zone are doing better than others despite
the common currency regime - and that is true for sales overseas
underlining the that exchange rates are not the only factor in the
success of foreign sales efforts. The more variance there is across
e-Zone countries in their respective economic performances, the more it
will wear on the fragile e-Zone area where talk of integration is tough
despite member countries efforts to continue to go it alone on fiscal
policy. Europe still has a recession and still has some divisive
political forces to weather. And yet more European &#8216;integration&#8217; lies
ahead. 
 


<table border="0" cellspacing="0" width="100%">
</table>
Italy Orders
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-2.6%</td>
<td>-20.9%</td>
<td>-24.3%</td>
<td>-29.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.2%</td>
<td>-2.9%</td>
<td>-9.3%</td>
<td>-39.4%</td>
<td>-27.5%</td>
<td>-33.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>0.5%</td>
<td>-3.9%</td>
<td>1.0%</td>
<td>-9.3%</td>
<td>-22.7%</td>
<td>-26.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-7.3%</td>
<td>-22.3%</td>
<td>-21.9%</td>
</tr>
<tr>
<td colspan="7">French Orders</td>
</tr>
<tr>
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>-5.7%</td>
<td>-22.3%</td>
<td>-9.2%</td>
<td>-23.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.4%</td>
<td>6.5%</td>
<td>-8.8%</td>
<td>-9.7%</td>
<td>-12.4%</td>
<td>-27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>-1.4%</td>
<td>1.4%</td>
<td>-15.1%</td>
<td>-15.0%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Unemployment Rates RiseSharply And Rapidly For All

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>.
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.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">Housing Starts (000s, SAAR)</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">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


</html>

Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. [...]

U.S. Housing Starts Post A Surprising Gain During June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>. 
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.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">Housing Starts (000s, SAAR)</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">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


</html>

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

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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.

260430Z3.jpg

**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.

260430Z4.jpg

**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.

260430Z5.jpg

**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.

260430Z6.jpg

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.

Economy in Brief

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