Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716g.jpg" width="353">
According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June of last year. The index is compiled from survey questions asking builders to rate market conditions as &#147;good&#148;, &#147;fair&#148;, &#147;poor&#148; or &#147;very high&#148; to &#147;very low&#148;. Numerical results over 50 indicate a predominance of &#147;good&#148; readings.
Also showing improvement during all of the first quarter was the Home Builders&#39; Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income. It jumped to a record high of 72.5% buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)
The Home Builders Association indicated that its sub-index of present sales rose this month to the highest level since June &#39;08. At a reading of 17 the figure was up significantly from the January low of 6. Since 1990, the year-to-year change in this index has had an 80% correlation with the year-to-year percentage change in new single-family home sales.
The index of builders&#146; expectations for home sales in six months held stable but remained near its highest since September. The &#147;traffic&quot; of prospective buyers also improved from June and was up from the record lows of this past Winter.
The strength in the July composite index readings was concentrated in the South. Elsewhere in the country composite indexes were flat-to-lower.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716h.jpg" width="353">
The NAHB has compiled the Housing Market Index since 1985. The weights assigned to the individual index components are .5920 for single family detached sales, present time; .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver&#146;s SURVEYS database.
Today&#39;s House testimony by Fed Governor Elizabeth A. Duke titled Consumer Protection can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090716a.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/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">&nbsp;July &#39;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">Composite Housing Market Index (All Good = 100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales: Next Six Months</td>
<td>26</td>
<td>26</td>
<td>23</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of Prospective Buyers</td>
<td>14</td>
<td>13</td>
<td>12</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
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According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June [...]

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716e.jpg">
The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply negative levels this past Winter and, thus, suggests that recessionary forces have moderated. The index reached -38.23 this past March and the latest level was better than Consensus expectations for a reading of -5.0.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State. Participants from across the state in a variety of industries respond to a questionnaire and report the change in indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The figure is a diffusion index. Since the series&#39; inception in 2001, there has been a 75% correlation between its level and the three-month change in U.S. factory sector industrial production. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components. The series dates back only to 2001.
Improvement in the new orders component paced last month&#39;s index with a gain to the highest level since December of 2007. The shipments index also improved to its highest since the middle of last year while the average workweek expanded moderately. The employment index also improved slightly to the highest level since last October. In the history of the NY employment index, there has been an 87% correlation between it and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department. <img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716f.jpg">
To the downside was a sharp decline in the inventories index, to a series&#39; low, unfilled orders and delivery times.
Prices firmed as indicated by the first positive index reading since November. Nevertheless, the index level remained down sharply from last year. Since inception in 2001, there has been a 76% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.
The Empire State index of expected business conditions in six months slipped during July from its highest level since mid-2007. The subseries for new orders, shipments, employment and capital expenditures each fell but still remained improved from the winter lows..
The Empire State data is available in Haver&#39;s SURVEYS database.

<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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-0.55</td>
<td>-9.41</td>
<td>-6.16</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>5.89</td>
<td>-8.15</td>
<td>4.52</td>
<td>-6.25</td>
<td>15.71</td>
<td>20.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>-20.83</td>
<td>-21.84</td>
<td>-6.32</td>
<td>-5.36</td>
<td>11.28</td>
<td>12.62</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>10.42</td>
<td>-5.75</td>
<td>77.89</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>


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The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply [...]

Empire State Factory Conditions Improved To Best In Over One Year

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716c.jpg" width="353">
The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the manufacturing sector at -7.5 versus -2.2. However, both figures were materially improved from the lows of this past winter. Consensus expectations had been for a July reading of -5.0.
During the last ten years there has been a 77% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 70% correlation with q/q growth in real GDP. The latest survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0709.pdf">here</a>.
Amongst the components, both the shipments and employment indexes turned lower month-to-month but remained up from the March-April lows. During the last ten years there has been a 79% correlation between the index level and the m/m change in manufacturing sector payrolls. The new orders, unfilled orders and average workweek components each improved to new highs.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716d.jpg" width="353">
The prices paid index also improved to a less-negative 3.5. During the last ten years there has been a 74% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 83% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months also slipped during July after having improved to its highest level since 2003. Most of the index components fell except that expectations for prices paid, employment and inventories rose to new cycle highs.
The figures from the Philadelphia Federal Reserve can be found in Haver&#39;s SURVEYS database.
Residential Housing and Personal Bankruptcy from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q2/brq209_housing-and-bankruptcy.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">Philadelphia Fed (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-7.5</td>
<td>-2.2</td>
<td>-16.7</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-3.5</td>
<td>&nbsp;-13.0</td>
<td>&nbsp;71.3</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
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The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the [...]

Philadelphia Fed Index Remains Somewhat Weak

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<img align="left" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716a.jpg" width="353">
Conditions in the labor market improved further last week as evidenced by a sharp decline in both initial and continuing claims for unemployment insurance. For the second consecutive week, the report on initial claims was surprising. A 47,000 drop to 522,000 which followed a similar decline during the prior week. The latest level was the lowest since the first week of January and it was off from the March peak of 674,000. The four-week average of claims, which smoothes out some of the volatility in the weekly numbers, also fell to 584,000. The latest weekly level was quite a bit lower than Consensus expectations for 554,000.
The Labor Department indicated that the largest decreases in initial claims for the week ending July 4 were in New Jersey (-5,030), California (-4,293), North Carolina (-3,983), Kansas (-3,544), and Oregon (-1,454) while the largest increases were in Michigan (+12,144), New York (+8,913), Wisconsin (+5,838), Indiana (+5,430), and Ohio (+4,240).
Confirming the labor market&#39;s improvement was a 642,000 drop in continuing claims for unemployment insurance to the lowest level since mid-April. The continuing claims figures lag initial claims by one week and provide an indication of workers&#39; ability to find employment. At 6,273,000 claims still were nearly double the year ago level. The four-week average of continuing claims fell back to 6,666,750 which was the lowest since mid-May. The series dates back to 1966.<img align="right" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716b.jpg" width="353">
The insured rate of unemployment dropped sharply to 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 June 27 were in Michigan (7.2 percent), Puerto Rico (6.9), Oregon (6.5), Pennsylvania (6.3), Nevada (6.1), Wisconsin (5.8), California (5.4), South Carolina (5.4), Connecticut (5.2), Illinois (5.2), New Jersey (5.2), and North Carolina (5.2). Rates were lowest in Texas (3.0), Wyoming (3.2), Colorado (3.2), Maine (3.4), Maryland (3.6), Minnesota (4.0), Florida (4.1), Georgia (4.2) and Mississippi (4.3).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database.
The minutes to the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20090624.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">07/11/09</th>
<th scope="col">07/04/09</th>
<th scope="col">06/27/09</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>522</td>
<td>569</td>
<td>617</td>
<td>34.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,273</td>
<td>6,915</td>
<td>97.9%</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>5.2</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Conditions in the labor market improved further last week as evidenced by a sharp decline in both initial and continuing claims for unemployment insurance. For the second consecutive week, the report on initial claims was surprising. [...]

Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716c.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that, during July,
factory sector activity in the region continued to contract. The rate
of decline even quickened versus June as indicated by the Index of
General Activity in the manufacturing sector at -7.5 versus -2.2.
However, both figures were materially improved from the lows of this
past winter. Consensus expectations had been for a July reading of -5.0.
During the last ten years there has been a 77% correlation between
the level of the Philadelphia Fed Business Conditions Index and the
three-month growth in factory sector industrial production. There has
been a 70% correlation with q/q growth in real GDP. The latest survey
from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0709.pdf">here</a>.
Amongst the components, both the shipments and employment indexes
turned lower month-to-month but remained up from the March-April lows.
During the last ten years there has been a 79% correlation between the
index level and the m/m change in manufacturing sector payrolls. The
new orders, unfilled orders and average workweek components each
improved to new highs.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716d.jpg" align="right" border="0" height="265" width="353">
The prices paid index also improved to a less-negative 3.5. During
the last ten years there has been a 74% correlation between the prices
paid index and the three-month growth in the intermediate goods PPI.
There has been an 83% correlation with the change in core intermediate
goods prices.
The separate index of expected business conditions in six months
also slipped during July after having improved to its highest level
since 2003. Most of the index components fell except that expectations
for prices paid, employment and inventories rose to new cycle highs.
The figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS database.
Residential Housing and Personal Bankruptcy from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q2/brq209_housing-and-bankruptcy.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">Philadelphia Fed (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-7.5</td>
<td>-2.2</td>
<td>-16.7</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-3.5</td>
<td>&nbsp;-13.0</td>
<td>&nbsp;71.3</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
 Empire State Factory Conditions Improved To Best In Over One Year 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716e.jpg" align="left" border="0">
The Federal Reserve Bank of New York reported yesterday that its
Empire State Factory Index of General Business Conditions improved to
its highest level since April of last year. The latest reading of -0.55
compares to sharply negative levels this past Winter and, thus,
suggests that recessionary forces have moderated. The index reached
-38.23 this past March and the latest level was better than Consensus
expectations for a reading of -5.0.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State. Participants from across the state in
a variety of industries respond to a questionnaire and report the
change in indicators from the previous month. Respondents also state
the likely direction of these same indicators six months ahead. For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The figure is a diffusion index. Since the series' inception in
2001, there has been a 75% correlation between its level and the
three-month change in U.S. factory sector industrial production. Like
the Philadelphia Fed Index of General Business Conditions, the Empire
State Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.
Improvement in the new orders component paced last month's index
with a gain to the highest level since December of 2007. The shipments
index also improved to its highest since the middle of last year while
the average workweek expanded moderately. The employment index also
improved slightly to the highest level since last October. In the
history of the NY employment index, there has been an 87% correlation
between it and the three-month growth in overall U.S. factory sector
employment as reported by the Labor Department. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716f.jpg" align="right" border="0">
To the downside was a sharp decline in the inventories index, to a series' low, unfilled orders and delivery times.
Prices firmed as indicated by the first positive index reading since
November. Nevertheless, the index level remained down sharply from last
year. Since inception in 2001, there has been a 76% correlation between
the index of prices paid and the three-month change in the core
intermediate materials PPI.
The Empire State index of expected business conditions in six months
slipped during July from its highest level since mid-2007. The
subseries for new orders, shipments, employment and capital
expenditures each fell but still remained improved from the winter
lows..
The Empire State data is available in Haver's SURVEYS database.

<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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July '08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-0.55</td>
<td>-9.41</td>
<td>-6.16</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>5.89</td>
<td>-8.15</td>
<td>4.52</td>
<td>-6.25</td>
<td>15.71</td>
<td>20.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>-20.83</td>
<td>-21.84</td>
<td>-6.32</td>
<td>-5.36</td>
<td>11.28</td>
<td>12.62</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>10.42</td>
<td>-5.75</td>
<td>77.89</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>
 Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716a.jpg" align="left" height="265" width="353">
Conditions in the labor market improved further last week as
evidenced by a sharp decline in both initial and continuing claims for
unemployment insurance. For the second consecutive week, the report on
initial claims was surprising. A 47,000 drop to 522,000 which followed
a similar decline during the prior week. The latest level was the
lowest since the first week of January and it was off from the March
peak of 674,000. The four-week average of claims, which smoothes out
some of the volatility in the weekly numbers, also fell to 584,000. The
latest weekly level was quite a bit lower than Consensus expectations
for 554,000.
The Labor Department indicated that the largest decreases in initial
claims for the week ending July 4 were in New Jersey (-5,030),
California (-4,293), North Carolina (-3,983), Kansas (-3,544), and
Oregon (-1,454) while the largest increases were in Michigan (+12,144),
New York (+8,913), Wisconsin (+5,838), Indiana (+5,430), and Ohio
(+4,240).
Confirming the labor market's improvement was a 642,000 drop in
continuing claims for unemployment insurance to the lowest level since
mid-April. The continuing claims figures lag initial claims by one week
and provide an indication of workers' ability to find employment. At 6,273,000 claims still were nearly double the year ago level. The
four-week average of continuing claims fell back to 6,666,750 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/090716b.jpg" align="right" height="265" width="353">
The insured rate of unemployment dropped sharply to 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 June 27
were in Michigan (7.2 percent), Puerto Rico (6.9), Oregon (6.5),
Pennsylvania (6.3), Nevada (6.1), Wisconsin (5.8), California (5.4),
South Carolina (5.4), Connecticut (5.2), Illinois (5.2), New Jersey
(5.2), and North Carolina (5.2). Rates were lowest in Texas (3.0),
Wyoming (3.2), Colorado (3.2), Maine (3.4), Maryland (3.6), Minnesota
(4.0), Florida (4.1), Georgia (4.2) and Mississippi (4.3).
The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database.
The minutes to the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20090624.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">07/11/09</th>
<th scope="col">07/04/09</th>
<th scope="col">06/27/09</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>522</td>
<td>569</td>
<td>617</td>
<td>34.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,273</td>
<td>6,915</td>
<td>97.9%</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>5.2</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
 U.S. Home Builders&#8217; Index Recovers To Its Highest Since June '08 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716g.jpg" align="left" border="0" height="265" width="353">
According to the National Association of Home Builders, improvement
in the housing market continued during July. Their Composite Housing
Market Index recovered the June slip and rose to 17, which equaled the
highest level since June of last year. The index is compiled from
survey questions asking builders to rate market conditions as &#8220;good&#8221;,
&#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very low&#8221;. Numerical results over 50 indicate a predominance of &#8220;good&#8221; readings.
Also showing improvement during all of the first quarter was the
Home Builders' Housing Opportunity Index, which is the share of homes
sold that could be considered affordable to a family earning the median
income. It jumped to a record high of 72.5% buoyed by lower home
prices, lower interest rates and higher income. (There is a break in
the series from 2002 to 2003.)
The Home Builders Association indicated that its sub-index of
present sales rose this month to the highest level since June '08. At a
reading of 17 the figure was up significantly from the January low of
6. Since 1990, the year-to-year change in this index has had an 80%
correlation with the year-to-year percentage change in new
single-family home sales.
The index of builders&#8217; expectations for home sales in six months held stable but remained near its highest since September. The &#8220;traffic" of prospective buyers also improved from June and was up from the record lows of this past Winter.
The strength in the July composite index readings was concentrated
in the South. Elsewhere in the country composite indexes were
flat-to-lower.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716h.jpg" align="right" border="0" height="265" width="353">
The NAHB has compiled the Housing Market Index since 1985. The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s SURVEYS database.
Today's House testimony by Fed Governor Elizabeth A. Duke titled Consumer Protection can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090716a.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/@S4/@S4.HTM">Nat'l Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">&nbsp;July '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">Composite Housing Market Index (All Good = 100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales: Next Six Months</td>
<td>26</td>
<td>26</td>
<td>23</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of Prospective Buyers</td>
<td>14</td>
<td>13</td>
<td>12</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090715f.jpg" width="353">
EMU inflation remained tempered in June; the Yr/Yr rate even turned negative! Headline inflation&#146;s trend, however, is actually doing a slow up-creep as energy prices dived and have since begun to rise. But that was through June. Recent energy market events suggest some of that rebound may be giving way. But with oil you can&#146;t be sure. The ECB practice of &#145;targeting&#146; headline inflations surely suffers a lot in times like this. The Fed&#146;s preference to look at core inflation certainly looks superior and was a much better, more consistent, guide to policy in the recession and before when energy prices soared. Energy prices never did affect the Fed&#146;s preferred core measure of inflation much, while the ECB needed the &#145;cover&#146; of an international rate cut to allow it to cut rates with inflation still screaming over the top of its target and the financial sector in dire need of a rate cut. Maybe someday the ECB will see the error in its ways. 
Core inflation technically has perked up slightly in June but it&#146;s really hovering around the 1% mark. While there is tendency to look at such a mild acceleration as a non-event, the data across key EMU countries (where available) show that both core and headline inflation are engaged in an acceleration from 6-months to three-months. Germany&#146;s core rate has accelerated from 12-months to six months as well. 
With central banks having pumped a lot of liquidity into markets there are investors on edge and on an inflation watch despite the fact that some bankers still warn of a deflation threat. This report embodies all those oddities by having such low inflation &#150; indeed a rate that drops year-over-year- but at the same time emits signs of inflation acceleration. The IMF has been cautioning countries not to wind their easing yet. But, if these inflation trends press ahead, there will be a moment of conflict not too far down the road. 
The Fed has all-but-pledged to keep the stimulus on &#145;longer&#146; noting that the BIG MISTAKE in past financial episodes has been for the central bank to let up too soon. The subtext of that message is that the Fed will not have a hair-trigger response to rising inflation despite concerns about its bloated bank reserve base. US core inflation and core is above the pace in EMU and even above the pace in Germany. While 1.5% to 1.8% to 2.0% core pace (core ex tobacco) step up in the US over, respectively, 12-mos to 6-mos, to 3-mos, is not severe, it is above Europe&#146;s profile. With huge increases in the bank reserves in the US one wonders how long until some sort of inflation concern grips markets? 
For now the recent flirtation with renewed economic weakness has trumped any concerns about inflation. It is also true that even core inflation often shows pressure when energy prices rise and the rise from energy this month was severe. This pressure too may pass. Still, there is a risk that policymaking is about to get more interesting. Perhaps the US and Europe are getting closer to a period when their policy directions will even diverge. That would have an interesting impact on currency markets. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Trends in HICP
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% saar</td>
</tr>
<tr class="even">
<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>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.0%</td>
<td>0.9%</td>
<td>1.3%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.8%</td>
<td>1.1%</td>
<td>-1.5%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>1.2%</td>
<td>1.9%</td>
<td>2.5%</td>
</tr>
<tr class="even">
<td class="firstcol">&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">HICP</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>1.1%</td>
<td>0.7%</td>
<td>0.0%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>0.7%</td>
<td>0.5%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.9%</td>
<td>-1.4%</td>
<td>-1.5%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">Core excl FE&amp;A</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.2%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.9%</td>
<td>1.6%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
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EMU inflation remained tempered in June; the Yr/Yr rate even turned negative! Headline inflations trend, however, is actually doing a slow up-creep as energy prices dived and have since begun to rise. But that was through June. [...]

EMU Inflation Really Does Turn Lower and Higher, Too

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090715d.jpg" width="353">
Perhaps the decline in industrial production has moderated this year, but it&#39;s tough to say for sure given the very erratic size of the month-to-month declines; big one month, small the next. Last month, industrial output which includes mining and utilities declined 0.4%. The drop was somewhat less than expected but it followed a large 1.2% May shortfall. That&#39;s been the monthly pattern this year. Nevertheless, so far output has declined at a 13.2% annual rate which is near this cycle&#39;s worst rate of decline reached last January of -17.8%.
Output of consumer goods overall slipped just 0.3% during June but the rate of decline in 2009 amounted to 8.0%, near the worst for the cycle. Last month, production of autos fell 2.7% following the 8.2% May decline. Furniture output also fell a hard 0.7% and at a 19.7% rate in 2009 as consumers continue to defer purchases of large durable goods. Apparel output fell a whopping 4.9% and it&#39;s down at a 21.7% rate this year while output of business equipment fell 0.8%. The 23.9% six-month rate of decline here is the worst since 1958. The output of construction supplies fell just 0.1% but this year it&#39;s down at an 18.0% rate, versus -31.2% at its weakest.
In the the high-tech sector the rate of decline in output also has slowed ... maybe. Industrial production fell 1.0% last month and at a reduced 9.8% rate for all of this year. Less high tech, overall industrial production fell a reduced 0.3% last month and the annual rate of change eased to -13.3% over the last six months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090715e.jpg" width="353">
Outside of the auto and high-tech sectors, output declines also have yet to moderate much. Here output fell 0.3% last month and at an 11.6% rate this year. That&#39;s against the worst six-month rate of decline recently reached of -14.9%.
Excess capacity grew even further last month. Capacity utilization fell to a record low of 68.0%. The series dates back to 1966. In the factory sector the figures indicate that there&#39;s even more slack. Utilization in the factory sector dropped even harder to 64.6% from a peak near 80% back in 2007. The latest rate was a record low since WW II.
The industrial production data are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL PRODUCTION (SA, %)</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 Output </td>
<td>-0.4</td>
<td>-1.2</td>
<td>-13.6</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-0.5</td>
<td>-1.2</td>
<td>-15.5</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Consumer Goods</td>
<td>-0.3</td>
<td>-1.0</td>
<td>-7.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Business Equipment</td>
<td>-0.8</td>
<td>-1.9</td>
<td>-17.8</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Construction Supplies</td>
<td>-0.1</td>
<td>-0.4</td>
<td>-20.6</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.7</td>
<td>-1.3</td>
<td>-3.9</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>68.0</td>
<td>68.2</td>
<td>78.7 (June &#39;08)</td>
<td>77.6</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
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Perhaps the decline in industrial production has moderated this year, but it's tough to say for sure given the very erratic size of the month-to-month declines; big one month, small the next. Last month, industrial output which [...]

U.S. Factory Production Declines Again While Plant Utilization Reaches A Record Low

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090714j.jpg" align="right" border="0" height="265" width="353">
German investors and analysts have become somewhat less
positive about the economic outlook, six months ahead. In the July
survey of the financial community by the ZEW institute, the excess of
optimists over pessimists regarding the economic outlook dropped to
39.5% from 44.8% in June. It is not surprising that some of the
participants in the survey may be becoming more cautious about the
recovery after the rapid decline of pessimists and the rapid rise of
optimists that has taken place since the low of last July. The swing
from the majority of pessimists in July 2008 to the majority of
optimists in June was 108.7 percentage points. With the decline in
optimists in July, the swing is still large at 103.4 percentage points.
Moreover, the July excess of optimists of 39.5 % is still well above
the long term average of 26.3%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090714k.jpg" align="right" border="0" height="265" width="353">
Pessimists in the financial community continue to dominate the
optimists regarding the current economic situation. In July, although
slightly improved from the June figure of 89.7%, the excess of
pessimists was 89.3%. Expectations and appraisals of current conditions
are shown in the first chart.
Among the factors that may have influenced the participants in
the July ZEW survey are their profit expectations. In the July survey,
they expect a detererioration in profits for the banking and insurance
industries, the first deterioration since January, 2009. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090714l.jpg" align="right" border="0" height="265" width="353">
While the
expectations of profits in the producing industries, such as machinery,
metals/steel and electronics are expected to show some improvement,
profits in consumption and trade are expected to decline slightly.
Profit expectations that are expected to increase and those that are
expected to decrease are shown in the second and third charts.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
SURVEY (Percent Balances ex where noted)</th>
<th scope="col">July 09</th>
<th scope="col">June&nbsp; 09</th>
<th scope="col">July 08</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y Chg</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Expectations&nbsp;</td>
<td>39.5</td>
<td>44.8</td>
<td>-63.9</td>
<td>-5.3</td>
<td>103.4</td>
<td>-47.5</td>
<td>-30</td>
<td>22.3</td>
</tr>
<tr class="even">
<td class="firstcol">Current Conditions</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-17.0</td>
<td>0.4</td>
<td>-106.3</td>
<td>7.3</td>
<td>75.9</td>
<td>18.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Profit Expectations</td>
<td>July 09</td>
<td>June&nbsp; 09</td>
<td>May 09</td>
<td>Apr&nbsp; 09</td>
<td>Mar 09</td>
<td>Feb&nbsp; 09</td>
<td>Jan 09</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Banking</td>
<td>22.0</td>
<td>30.8</td>
<td>15.1</td>
<td>2.0</td>
<td>-31.6</td>
<td>-55.7</td>
<td>-65.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Insurance</td>
<td>3.2</td>
<td>9.7</td>
<td>5.1</td>
<td>-15.1</td>
<td>-34.2</td>
<td>-49.0</td>
<td>-56.5</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Consumption</td>
<td>-37.4</td>
<td>-36.6</td>
<td>-42.1</td>
<td>-46.0</td>
<td>-40.2</td>
<td>-44.3</td>
<td>-56.2</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Metal/Steel</td>
<td>-16.0</td>
<td>-22.3</td>
<td>-41.5</td>
<td>-55.1</td>
<td>-64.1</td>
<td>-69.3</td>
<td>-80.1</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Machinery</td>
<td>-28.4</td>
<td>-32.5</td>
<td>-45.6</td>
<td>-58.5</td>
<td>-69.4</td>
<td>-74.6</td>
<td>-80.1</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Electronics</td>
<td>-13.7</td>
<td>-17.3</td>
<td>-36.0</td>
<td>-48.9</td>
<td>-57.2</td>
<td>-64.0</td>
<td>-72.2</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

German investors and analysts have become somewhat less positive about the economic outlook, six months ahead. In the July survey of the financial community by the ZEW institute, the excess of optimists over pessimists regarding the [...]

German Investors And Analysts Become Less Positive On The Outlook

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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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.

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- 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

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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.

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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.

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**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.

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**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.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/20j2LcPyLFkPvV7NrquXuj?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

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

Jump to:

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

Empire State Factory Conditions Improved To Best In Over One Year

Philadelphia Fed Index Remains Somewhat Weak

Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement

Philadelphia Fed Index Remains Somewhat Weak

EMU Inflation Really Does Turn Lower and Higher, Too

U.S. Factory Production Declines Again While Plant Utilization Reaches A Record Low

German Investors And Analysts Become Less Positive On The Outlook