Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218a.jpg" width="353">
It now is more than clear that the pace of the downturn in the U.S. housing market has accelerated. The latest Commerce Department figures indicate that in January starts fell to 466,000 (AR), another record low in the series&#39; history that extends back to 1959. December starts were revised slightly lower and the January level was well below Consensus expectations for 530,000 starts.
As with the release of the December figures, the January numbers indicate that the rate of decline in starts definitely has accelerated. At an annual rate, starts in January were eighty-six percent below the level of three months earlier. That surpassed the rate of decline during the &quot;credit crunch&quot; recession of 1980 and it&#39;s nearly one-third faster than the quickest in 2008.
Starts of single-family homes fell to another record low of 347,000 from a downwardly revised December level. The latest level is down eighty-one percent since the peak in early 2006, about equal to the annual rate of decline during the last three months. Permits to build single-family homes also fell to another record low, off by nearly one-third during the last three months. 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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218b.jpg" width="353">
Starts of multi-family homes fell 27.9% in January and the latest level matched their record low in early-1993. They are down by nearly one-half during the last three months.
By region, in January starts of single-family units in the Northeast fell by more than half from the December level and were off by three-quarters from one year ago. Starts in the Midwest fell 20.3% from December and they were also down by more than one-half from January of 2008. In the South starts fell by a lesser 5.4% during January but they too were off by more than one-half from their January 2008 level. In the West starts eked out a 2.5% rise last month but they were off by more than one-third from the year ago level.
The housing starts figures can be found in Haver&#39;s USECON database.
Facts and Myths about the Financial Crisis of 2008 from Federal Reserve Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/research/WP/WP666.pdf"> here</a>.
Looking Behind the Aggregates: A Reply to &#147;Facts and Myths about the Financial Crisis of 2008&#148; from the Federal Reserve Bank of Boston can be found <a href="http://www.bos.frb.org/bankinfo/qau/wp/2008/qau0805.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">Housing Starts (000s, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</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>466</td>
<td>560</td>
<td>655</td>
<td>-56.2%</td>
<td>902</td>
<td>1,341</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>347</td>
<td>395</td>
<td>456</td>
<td>-53.7</td>
<td>618</td>
<td>1,034</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>119</td>
<td>165</td>
<td>199</td>
<td>-62.1</td>
<td>285</td>
<td>307</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>521</td>
<td>547</td>
<td>615</td>
<td>-50.5</td>
<td>880</td>
<td>1,389</td>
<td>1,844</td>
</tr>
</tbody>
</table>
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It now is more than clear that the pace of the downturn in the U.S. housing market has accelerated. The latest Commerce Department figures indicate that in January starts fell to 466,000 (AR), another record low in the series' history [...]

U.S. Housing Starts Plumb Another Record Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218a.jpg" align="left" border="0" height="265" width="353">
It now is more than clear that the pace of the downturn in the
U.S. housing market has accelerated. The latest Commerce Department
figures indicate that in January starts fell to 466,000 (AR), another
record low in the series' history that extends back to 1959.
December starts were revised slightly lower and the January level was
well below Consensus expectations for 530,000 starts.
As with the release of the December figures, the January
numbers indicate that the rate of decline in starts definitely has
accelerated. At an annual rate, starts in January were eighty-six
percent below the level of three months earlier. That surpassed the
rate of decline during the "credit crunch" recession of 1980 and it's
nearly one-third faster than the quickest in 2008.
Starts of single-family homes fell to another record low of
347,000 from a downwardly revised December level. The latest level is
down eighty-one percent since the peak in early 2006, about equal to the
annual rate of decline during the last three months. Permits
to build single-family homes also fell to another record low, off by
nearly one-third during the last three months. 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218b.jpg" align="right" border="0" height="265" width="353">
Starts of multi-family homes fell 27.9% in January and the
latest level matched their record low in early-1993. They are down by
nearly one-half during the last three months.
By region, in January starts of single-family units in the
Northeast fell by more than half from the December level and were off
by three-quarters from one year ago. Starts in the Midwest fell 20.3%
from December and they were also down by more than one-half from
January of 2008. In the South starts fell by a lesser 5.4% during
January but they too were off by more than one-half from their January
2008 level. In the West starts eked out a 2.5% rise last month but they
were off by more than one-third from the year ago level.
The housing starts figures can be found in Haver's USECON
database.
Facts and Myths about the Financial Crisis of 2008
from Federal Reserve Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/research/WP/WP666.pdf">
here</a>.
Looking Behind the Aggregates: A Reply to &#8220;Facts and
Myths about the Financial Crisis of 2008&#8221; from the Federal
Reserve Bank of Boston can be found <a href="http://www.bos.frb.org/bankinfo/qau/wp/2008/qau0805.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">Housing
Starts (000s, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</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>466</td>
<td>560</td>
<td>655</td>
<td>-56.2%</td>
<td>902</td>
<td>1,341</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>347</td>
<td>395</td>
<td>456</td>
<td>-53.7</td>
<td>618</td>
<td>1,034</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>119</td>
<td>165</td>
<td>199</td>
<td>-62.1</td>
<td>285</td>
<td>307</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>521</td>
<td>547</td>
<td>615</td>
<td>-50.5</td>
<td>880</td>
<td>1,389</td>
<td>1,844</td>
</tr>
</tbody>
</table>
 CBI Finds Further
Weakening&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 18, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218c.jpg" align="left" border="0" height="265" width="353">
The UK MFG sector weakened further in February. The total
orders index is at its lowest since 2000 as is the export order
reading. Stocks of finished goods have never had a higher reading.
Looking ahead the expected outlook over the next three months is lowest
in this period. Average price expectations are in the bottom 36% of
their historic range. 
 

The UK MFG sector continues to be very weak. The pace of the
deterioration is slightly less than last month&#8217;s 13 point drop at -8.
But that is still a rapid month to month deceleration. There is little
in the February survey to suggest that the weakness is playing out. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK
Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Reported:</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>12 
MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-56</td>
<td>-48</td>
<td>-35</td>
<td>-38</td>
<td>-39</td>
<td>-16</td>
<td>0%</td>
<td>9</td>
<td>-48</td>
<td>57</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-49</td>
<td>-39</td>
<td>-33</td>
<td>-31</td>
<td>-32</td>
<td>-16</td>
<td>0%</td>
<td>3</td>
<td>-39</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">Stocks:FinGds</td>
<td>27</td>
<td>27</td>
<td>21</td>
<td>25</td>
<td>24</td>
<td>16</td>
<td>100%</td>
<td>27</td>
<td>-2</td>
<td>29</td>
</tr>
<tr style="font-weight: bold;" class="even">
<td class="firstcol" colspan="11">Looking
ahead</td>
</tr>
<tr>
<td class="firstcol">Output Volume:Nxt 3M</td>
<td>-44</td>
<td>-43</td>
<td>-42</td>
<td>-42</td>
<td>-31</td>
<td>-11</td>
<td>0%</td>
<td>28</td>
<td>-43</td>
<td>71</td>
</tr>
<tr>
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>-12</td>
<td>0</td>
<td>0</td>
<td>10</td>
<td>23</td>
<td>21</td>
<td>36%</td>
<td>34</td>
<td>-19</td>
<td>53</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">From
end 2000</td>
</tr>
<tr class="odd">
<td colspan="11" class="firstcol">Compare
to NTC MFG</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>Nov 
08</td>
<td>Oct-08</td>
<td>12 
MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>35.78</td>
<td>34.91</td>
<td>34.48</td>
<td>40.67</td>
<td>43.65</td>
<td>6%</td>
<td>56.28</td>
<td>34.48</td>
<td>22</td>
</tr>
</tbody>
</table>
 U.S. Import Price Decline Quickened 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 18, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218f.jpg" align="left" border="0" height="265" width="353">
The worldwide recession continued to dampen pricing power last
month. Overall U.S. import prices fell another 1.1% during January
after a 5.0% December decline that was deeper than reported initially.
The latest drop about matched Consensus expectations.
During the last twelve months, the 12.5% decline in import
prices is the quickest in the series' history which dates back to 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218g.jpg" align="right" border="0" height="265" width="353">
Petroleum prices fell 2.4% last month. That was a much slower
rate of decline than during earlier months, but here in February the
decline has quickened again. Crude oil prices are more than ten percent
below the January average cost of $41.74 per barrel of crude. That is
just back in the range of ten-to-thirty percent monthly declines in
place since August.
January import prices less petroleum were down for the sixth
straight month, by 0.8%. At an annual rate, the 13.4% decline over the
last three months is near the record.
Through early February, the foreign exchange value of the
dollar rose 12.6% versus the year-ago level and thus reduced the
pressure on U.S. import prices. During
the last ten years, there has been an 83% (negative) correlation
between the nominal trade-weighted exchange value of the US dollar vs.
major currencies and the y/y change in non oil import prices.
Capital goods import prices were unchanged last month
following two consecutive months of decline. That's a reversal from
earlier this year. On a three-month basis, prices fell at a 2.5% annual
rate after 5%-to-6% rates of increase during early 2008. Less the lower
prices of computers, capital goods prices in January rose 0.5%. The
three-month growth rate fell to 0.4 after 9.0% growth earlier this
year. Prices of computers, peripherals &amp; accessories were down
at an 8.7% rate during the last three months.
Prices for nonauto consumer goods were unchanged in January
for the second consecutive month. The three-month rate of change
remained a negative 1.9% versus the 5.9% peak rate of growth in
early-2008. Durable goods prices overall fell at a 5.4% annual rate
during the last three months, a reversal from the 6.2% rate of increase
in early 2008. To the upside, apparel prices rose 0.3% during January
and a 2.0% rate of growth during the last three months is stable with
the 1.9% increase in prices during all of last year. Motor vehicle
&amp; parts prices fell at a 1.5% rate during the last three months
after a 2.6% increase last year.
In yet another area, prices have weakened. Imported food
prices fell at a 9.0% annual rate during the last three months after an
11.8% jump during 2008. That increase followed an 8.2% 2007 surge and a
4.0% 2006 increase.
Total export prices increased 0.5% during January after five
months of sharp decline. Nonagricultural export prices were unchanged
(-2.9% year-to-year) but agricultural prices recovered all of their
December drop with a 6.2% (-9.7% y/y) increase.
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT
database.
Overview: Global Financial Crisis Spurs Unprecedented
Action from the BIS Quarterly Review is available <a href="http://www.bis.org/publ/qtrpdf/r_qt0812a.pdf"> here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
Prices (NSA, %)</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>-1.1</td>
<td>-5.0</td>
<td>-12.5</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-2.4</td>
<td>-27.2</td>
<td>-55.0</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>-0.8</td>
<td>-1.1</td>
<td>-0.6</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.5</td>
<td>-2.2</td>
<td>-3.6</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
 U.S. Factory Output Down Sharply
Again in January; Off 10.0% Y/Y 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 18, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218d.jpg" align="left" border="0" height="265" width="353">
The U.S. factory sector remained severely depressed last
month. Industrial production during January fell 1.8% after the 2.4%
drop during December which was revised deeper from the initial report.
Last month's decline about matched Consensus expectations for a 1.5%
decline.
Year-to-year output is off 10.0%, the sharpest
decline since early 1975. Reduced domestic demand, inventory cutbacks
and recessions abroad have combined to lower overall U.S. production
like it never has. And downward momentum has gained steam.
An acceleration in that downward momentum is apparent in the
19.7% annual rate of output decline during the last three months. But
that understates the severity of the shortfall because mining and
utility output is up. In the factory sector alone, output is off at a
26.7% annual rate during the last three months versus a modest 2.6%
drop during all of last year.
Output of construction supplies has fared the worst. A 3.4%
drop in production last month lowered the three-month rate of decline
to 37.3% following the 6.2% drop during all of last year. Output of
consumer goods fell 1.8% last month and the three-month rate of change
accelerated to -17.2%. That was accentuated by a 77.5% three-month
annual rate of decline in the output of motor vehicles &amp; parts.
That came on top of a 14.5% decline during all of last year. Outside of
the auto sector, output also was hard hit. Production of furniture fell
at a 28.0% during the last three months while apparel output fell at a
29.2% rate. Production of business equipment resumed its downward trend
last month with a 3.7% decline which reversed two months of increase.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090218e.jpg" align="right" border="0" height="265" width="353">
Industrial production in the high-tech sector fell 3.2% last
month capping a 12.8% year-to-year decline. Less that downdraft in high
tech, overall industrial production fell 2.6% last month and the annual
rate of change of -13.7% was the weakest since 1975.
Outside of output declines in autos and high tech, total
production which includes mining and utilities fell 0.9% last month and
the three-month annual rate of decline accelerated to -13.9%. The rate
of decline in factory sector output less these two sectors accelerated
to -20.7%.
Excess capacity continued to grow last month. Capacity
utilization fell to 72.0%, the lowest level since 2003. Utilization in
the factory sector dropped even harder to 68.0% from a peak near 80%
back in 2007. Capacity in the factory sector increased a somewhat
reduced 1.4% (y/y).
The industrial production data are available in Haver's USECON
database.
The Credit Crunch of 2007-2008: A Discussion of the
Background, Market Reactions and Policy Responses from the
Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/09/Mizen.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">INDUSTRIAL
PRODUCTION (SA, %)</th>
<th scope="col">January</th>
<th scope="col">December</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>-1.8</td>
<td>-2.4</td>
<td>-10.0</td>
<td>-1.8</td>
<td>1.7</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-2.6</td>
<td>-2.9</td>
<td>-12.8</td>
<td>-2.5</td>
<td>1.7</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Consumer Goods</td>
<td>-1.8</td>
<td>-2.0</td>
<td>-7.9</td>
<td>-2.2</td>
<td>1.7</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Business Equipment</td>
<td>-3.7</td>
<td>2.4</td>
<td>-10.9</td>
<td>-1.3</td>
<td>3.3</td>
<td>10.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Construction Supplies</td>
<td>-3.4</td>
<td>-4.1</td>
<td>-16.7</td>
<td>-6.2</td>
<td>-2.5</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>2.7</td>
<td>-0.2</td>
<td>1.4</td>
<td>0.5</td>
<td>3.3</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>72.0</td>
<td>73.3</td>
<td>81.0 (Jan.'08)</td>
<td>78.2</td>
<td>81.0</td>
<td>80.9</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Housing Starts Plumb AnotherRecord Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217i.jpg" align="left" border="0" height="265" width="353">
The Housing Market Index (HMI) from the National Association
of Home Builders ticked up this month after having reached the record
low in January. At nine the figure still was, however, less than half
the year-ago figure. 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.
The Home Builders Association indicated that its sub-index of
present sales conditions also ticked higher to 7 from the record low
reached in January. The latest figure remained well below last year's
average level of 16, 2007's average of 27, 2006's average of 45 and
2005's average of 73.Since 1990, the year-to-year change in this index
has had an 85% correlation with the year-to-year percentage change in
new single-family home sales.
The index of builders&#8217; expectations for sales in six months
fell to a record low but the &#8220;traffic" of
prospective buyers ticked up slightly for the second consecutive month
from its record low.
Index readings ticked up slightly last month in each of the
country's regions except the Northeast where the index plumbed a new
low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217j.jpg" align="right" border="0" height="265" width="353">
Not only are builders disturbed by the market for new homes,
but the assessment of conditions for remodeling a home also reached a
record low during the fourth quarter. Expectations also fell to a
record low.
During the third quarter 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, rose to
its highest level since early 2004. It was up by more than one-third
from the 2006 low due to lower home prices, lower interest rates and
higher income.
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.
Credit Easing: A Policy for a Time of Financial Crisis
from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2009/0209/02monpol.cfm">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">February</th>
<th scope="col">January
&nbsp;</th>
<th scope="col">&nbsp;February
'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>9</td>
<td>8</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>7</td>
<td>6</td>
<td>20</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>15</td>
<td>17</td>
<td>27</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>11</td>
<td>8</td>
<td>19</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

The Housing Market Index (HMI) from the National Association of Home Builders ticked up this month after having reached the record low in January. At nine the figure still was, however, less than half the year-ago figure. The index is [...]

U.S. Home Builders' Survey Ticked Up Slightly

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217g.jpg" align="left" border="0" height="265" width="353">
While German investors continue to see current economic
conditions getting worse, they have begun to be less negative on the
outlook. The German government has approved an 80 billion euro ($102
billion) stimulus program to be spent over two years. The European
Central Bank, after reducing its key interest by 225 basis points since
October 2008, kept the rate at 2% in February but, in his press
conference on February 5, Jean-Claude Trichet, President of the Bank
stated that 2% was not considered by the Governing Council to be a
lower limit and that the situation would be examined at the next
meeting.
These developments may have influenced the institutional
investors and analysts who participated in the latest ZEW survey which
took place between February 2 and 16.The excess of pessimists over
optimists regarding economic conditions six months ahead fell from
31.0% to 5.8%. Although the decline in pessimists regarding the outlook
is encouraging, put in perspective, it is less reassuring. It is still
negative and well below the long term average of an excess of optimists
over pessimists of 26.4%. ZEW President, Wolfgang Franz, summarized the
results of the survey as "A ray of hope--no more, no less."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217h.jpg" align="right" border="0" height="265" width="353">
Although the investors were less negative about the prospects
six months ahead, they became even more negative about current
conditions. The excess of pessimist over optimists regarding current
economic conditions increased from 72.1% to 86.2%.
In line with their less negative view of the outlook, the
investors have become less negative about their profit expectations,
but they are still far from expecting anything but lower profits. The
highest expectations of profits in a -9.2% for Utilities. That is,
those expecting a decrease in profits outweigh those expecting an
increase by 9.2%. The worst is for Vehicles/Automobile where the excess
of those expecting a decrease in profits over those expecting an
increase is 75.3%. The outlook for profits in the Machinery industry is
only marginally better than that for Automobiles.The excess of those
expecting a decrease in profits over those expecting an increase is
74.6%. Profit expectations for the these industries are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">ZEW Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions (%
Balance)</td>
<td>-86.2</td>
<td>-72.1</td>
<td>-64.5</td>
<td>-50.4</td>
<td>-35.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Condition 6 Months
Ahead (% Balance)</td>
<td>-5.8</td>
<td>-31.0</td>
<td>-45.2</td>
<td>-53.5</td>
<td>-63.0</td>
</tr>
<tr>
<td class="firstcol">Profit
Expectation&nbsp; (% Increase-Decrease)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Utilities&nbsp;</td>
<td>-9.2</td>
<td>-12.4</td>
<td>-11.2</td>
<td>-15.9</td>
<td>-22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Vehicles/Automobiles&nbsp;</td>
<td>-75.3</td>
<td>-90.3</td>
<td>-89.3</td>
<td>-94.6</td>
<td>-91.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Machinery&nbsp;</td>
<td>-74.6</td>
<td>-80.1</td>
<td>-75.2</td>
<td>-74.8</td>
<td>-61.2</td>
</tr>
</tbody>
</table>
</body></html>

While German investors continue to see current economic conditions getting worse, they have begun to be less negative on the outlook. The German government has approved an 80 billion euro ($102 billion) stimulus program to be spent [...]

German Investors Begin To See A Ray Of Hope For The Economy

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217d.jpg" align="left" border="0" height="265" width="353">
Recession has hit the Euro Area trade flows hard as exports
already lower by 6.8% lower in November fell by another 0.9% in
December. But imports that fell by 4.8% on November fell by a
further-chilling 3.9% in December. The confluence of these trends
shrank the EMU trade deficit in December to Eur 257mln from Eur 4.0 Bln
in November. Yr/Yr exports are lower by 5.4% compared to imports which
are down by 6.6%. Over three months the annual rates of decline are
-35% for exports and -43% for imports. Over the last six months the
pace of decline has accelerated sharply. Yr/yr numbers do not begin to
show the depth of the problem. 
 

German finance minister Steinbrueck warned that Euro-region
countries may be forced to bail out other members of the 16-nation bloc
that face problems refinancing their debt. &#8220;Some countries are slowly
getting into difficulties with their payments,&#8221; Steinbrueck said late
yesterday in a speech in Dusseldorf. &#8220;The euro-region treaties don&#8217;t
foresee any help for insolvent countries, but in reality the other
states would have to rescue those running into difficulty.&#8221; This
underscores the degree of difficulty of economic times in Europe. Also
underlining that tough sledding is the warning by the rating agency
Moody&#8217;s today. Moody&#8217;s cautions that banks with substantial lending
exposure to Eastern Europe could be downgraded. Thus another class of
assets (Eastern European loans) has gone bad. Of course the banks with
the most of this type of lending are European. Emerging Europe is being
called the &#8216;sub-prime&#8217; of Europe. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col">Euro Area
13 - Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (257)</td>
<td>&#8364;&#8364; (4,005)</td>
<td>&#8364;&#8364; (1,922)</td>
<td>&#8364;&#8364; (3,760)</td>
<td>&#8364;&#8364; (2,235)</td>
</tr>
<tr class="even">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>-0.9%</td>
<td>-6.8%</td>
<td>-35.3%</td>
<td>-17.1%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-3.0%</td>
<td>-7.1%</td>
<td>-3.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-13.0%</td>
<td>-60.4%</td>
<td>-34.9%</td>
<td>-12.2%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-4.0%</td>
<td>-24.7%</td>
<td>-10.8%</td>
<td>-6.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Imports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>-3.9%</td>
<td>-4.8%</td>
<td>-43.4%</td>
<td>-21.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-2.9%</td>
<td>-15.1%</td>
<td>-7.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-0.4%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-0.5%</td>
<td>-8.2%</td>
<td>-1.8%</td>
<td>-1.3%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">*Eur mlns; mo or period average;
Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
</body></html>

Recession has hit the Euro Area trade flows hard as exports already lower by 6.8% lower in November fell by another 0.9% in December. But imports that fell by 4.8% on November fell by a further-chilling 3.9% in December. The [...]

Exports and Imports Plunge in the Euro Area as Deficit Contracts

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217a.jpg" width="353">
The February Empire State Index of manufacturing sector activity, reported by the Federal Reserve Bank of New York, fell to a new low for the series which dates back to 2001. The figure of -34.65 was down from -22.20 in January and it was lower than Consensus expectations for a reading of -24.0.
The figure is a diffusion index. Since the series&#39; inception in 2001 there has been a 68% correlation between its level and the three-month change in U.S. factory sector industrial production.
The index of pricing pressure improved slightly month-to-month but it too remained near the series&#39; low. Since inception in 2001, there has been a 77% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.
The new orders index fell sharply from January to a new series low of -30.51. That compares to last February&#39;s reading of -10.40.Fifty percent of survey participants reported lower levels of orders while only twenty percent reported higher orders.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217b.jpg" width="353">
The employment index improved just slightly month-to-month but also remained near the series&#39; low. 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.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The Empire State index of expected business conditions in six months fell to near the series&#39; low. The subseries for employment collapsed and new orders remained near the series&#39; low. The pricing index moved into negative territory.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217c.jpg" width="353">
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 Empire State data is available in Haver&#39;s SURVEYS database.
Stabilizing the Housing Market: Focus on Communities is yesterday&#39;s speech by Federal Reserve Governor Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20090216a.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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February &#39;08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-34.65</td>
<td>-22.20</td>
<td>-7.52</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>-13.79</td>
<td>-18.18</td>
<td>47.37</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>


</html>

The February Empire State Index of manufacturing sector activity, reported by the Federal Reserve Bank of New York, fell to a new low for the series which dates back to 2001. The figure of -34.65 was down from -22.20 in January and it [...]

U.S. Empire State Index Fell To A New Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217a.jpg" align="left" border="0" height="265" width="353">
The February Empire State Index of manufacturing sector
activity, reported by the Federal Reserve Bank of New York, fell to a
new low for the series which dates back to 2001. The figure of -34.65
was down from -22.20 in January and it was lower than Consensus
expectations for a reading of -24.0.
The figure is a diffusion index. Since the series' inception
in 2001 there has been a 68% correlation between its level and the
three-month change in U.S. factory sector industrial production.
The index of pricing pressure improved slightly month-to-month
but it too remained near the series' low. Since inception in 2001,
there has been a 77% correlation between the index of prices paid and
the three-month change in the core intermediate materials PPI.
The new orders index fell sharply from January to a new series
low of -30.51. That compares to last February's reading of -10.40.Fifty
percent of survey participants reported lower levels of orders while
only twenty percent reported higher orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217b.jpg" align="right" border="0" height="265" width="353">
The employment index improved just slightly month-to-month but
also remained near the series' low. 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.
Like the Philadelphia Fed Index of General Business
Conditions, the Empire State Business Conditions Index reflects answers
to an independent survey question; it is not a weighted combination of
the components.
The Empire State index of expected business
conditions in six months fell to near the series' low. The
subseries for employment collapsed and new orders remained near the
series' low. The pricing index moved into negative territory.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State conducted by the Federal Reserve Bank
of New York. Participants from across the state in a variety of
industries respond to a questionnaire and report the change in a
variety of indicators from the previous month. Respondents also state
the likely direction of these same indicators six months ahead. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217c.jpg" align="left" border="0" height="265" width="353">
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 Empire State data is available in Haver's SURVEYS
database.



Stabilizing the Housing Market: Focus on
Communities is yesterday's speech by Federal Reserve Governor
Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20090216a.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/@S511/@S511.HTM">Empire
State Manufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February '08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>-34.65</td>
<td>-22.20</td>
<td>-7.52</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>-13.79</td>
<td>-18.18</td>
<td>47.37</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>
 Exports and Imports Plunge in the
Euro Area as Deficit Contracts&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217d.jpg" align="left" border="0" height="265" width="353">
Recession has hit the Euro Area trade flows hard as exports
already lower by 6.8% lower in November fell by another 0.9% in
December. But imports that fell by 4.8% on November fell by a
further-chilling 3.9% in December. The confluence of these trends
shrank the EMU trade deficit in December to Eur 257mln from Eur 4.0 Bln
in November. Yr/Yr exports are lower by 5.4% compared to imports which
are down by 6.6%. Over three months the annual rates of decline are
-35% for exports and -43% for imports. Over the last six months the
pace of decline has accelerated sharply. Yr/yr numbers do not begin to
show the depth of the problem. 
 

German finance minister Steinbrueck warned that Euro-region
countries may be forced to bail out other members of the 16-nation bloc
that face problems refinancing their debt. &#8220;Some countries are slowly
getting into difficulties with their payments,&#8221; Steinbrueck said late
yesterday in a speech in Dusseldorf. &#8220;The euro-region treaties don&#8217;t
foresee any help for insolvent countries, but in reality the other
states would have to rescue those running into difficulty.&#8221; This
underscores the degree of difficulty of economic times in Europe. Also
underlining that tough sledding is the warning by the rating agency
Moody&#8217;s today. Moody&#8217;s cautions that banks with substantial lending
exposure to Eastern Europe could be downgraded. Thus another class of
assets (Eastern European loans) has gone bad. Of course the banks with
the most of this type of lending are European. Emerging Europe is being
called the &#8216;sub-prime&#8217; of Europe. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col">Euro Area
13 - Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (257)</td>
<td>&#8364;&#8364; (4,005)</td>
<td>&#8364;&#8364; (1,922)</td>
<td>&#8364;&#8364; (3,760)</td>
<td>&#8364;&#8364; (2,235)</td>
</tr>
<tr class="even">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>-0.9%</td>
<td>-6.8%</td>
<td>-35.3%</td>
<td>-17.1%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-3.0%</td>
<td>-7.1%</td>
<td>-3.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-13.0%</td>
<td>-60.4%</td>
<td>-34.9%</td>
<td>-12.2%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-4.0%</td>
<td>-24.7%</td>
<td>-10.8%</td>
<td>-6.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Imports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>-3.9%</td>
<td>-4.8%</td>
<td>-43.4%</td>
<td>-21.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-2.9%</td>
<td>-15.1%</td>
<td>-7.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-0.4%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-0.5%</td>
<td>-8.2%</td>
<td>-1.8%</td>
<td>-1.3%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">*Eur mlns;
mo or period average;
Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
 German Investors Begin To See A
Ray Of Hope For The Economy 
by <a href="/comment/Curley.html">Louise
Curley</a> February 17, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217g.jpg" align="left" border="0" height="265" width="353">
While German investors continue to see current economic
conditions getting worse, they have begun to be less negative on the
outlook. The German government has approved an 80 billion euro ($102
billion) stimulus program to be spent over two years. The European
Central Bank, after reducing its key interest by 225 basis points since
October 2008, kept the rate at 2% in February but, in his press
conference on February 5, Jean-Claude Trichet, President of the Bank
stated that 2% was not considered by the Governing Council to be a
lower limit and that the situation would be examined at the next
meeting.
These developments may have influenced the institutional
investors and analysts who participated in the latest ZEW survey which
took place between February 2 and 16.The excess of pessimists over
optimists regarding economic conditions six months ahead fell from
31.0% to 5.8%. Although the decline in pessimists regarding the outlook
is encouraging, put in perspective, it is less reassuring. It is still
negative and well below the long term average of an excess of optimists
over pessimists of 26.4%. ZEW President, Wolfgang Franz, summarized the
results of the survey as "A ray of hope--no more, no less."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217h.jpg" align="right" border="0" height="265" width="353">
Although the investors were less negative about the prospects
six months ahead, they became even more negative about current
conditions. The excess of pessimist over optimists regarding current
economic conditions increased from 72.1% to 86.2%.
In line with their less negative view of the outlook, the
investors have become less negative about their profit expectations,
but they are still far from expecting anything but lower profits. The
highest expectations of profits in a -9.2% for Utilities. That is,
those expecting a decrease in profits outweigh those expecting an
increase by 9.2%. The worst is for Vehicles/Automobile where the excess
of those expecting a decrease in profits over those expecting an
increase is 75.3%. The outlook for profits in the Machinery industry is
only marginally better than that for Automobiles.The excess of those
expecting a decrease in profits over those expecting an increase is
74.6%. Profit expectations for the these industries are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">ZEW Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions (%
Balance)</td>
<td>-86.2</td>
<td>-72.1</td>
<td>-64.5</td>
<td>-50.4</td>
<td>-35.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Condition 6 Months
Ahead (% Balance)</td>
<td>-5.8</td>
<td>-31.0</td>
<td>-45.2</td>
<td>-53.5</td>
<td>-63.0</td>
</tr>
<tr>
<td class="firstcol">Profit
Expectation&nbsp; (% Increase-Decrease)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Utilities&nbsp;</td>
<td>-9.2</td>
<td>-12.4</td>
<td>-11.2</td>
<td>-15.9</td>
<td>-22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Vehicles/Automobiles&nbsp;</td>
<td>-75.3</td>
<td>-90.3</td>
<td>-89.3</td>
<td>-94.6</td>
<td>-91.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Machinery&nbsp;</td>
<td>-74.6</td>
<td>-80.1</td>
<td>-75.2</td>
<td>-74.8</td>
<td>-61.2</td>
</tr>
</tbody>
</table>
 U.S. Home Builders' Survey Ticked
Up Slightly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217i.jpg" align="left" border="0" height="265" width="353">
The Housing Market Index (HMI) from the National Association
of Home Builders ticked up this month after having reached the record
low in January. At nine the figure still was, however, less than half
the year-ago figure. 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.
The Home Builders Association indicated that its sub-index of
present sales conditions also ticked higher to 7 from the record low
reached in January. The latest figure remained well below last year's
average level of 16, 2007's average of 27, 2006's average of 45 and
2005's average of 73.Since 1990, the year-to-year change in this index
has had an 85% correlation with the year-to-year percentage change in
new single-family home sales.
The index of builders&#8217; expectations for sales in six months
fell to a record low but the &#8220;traffic" of
prospective buyers ticked up slightly for the second consecutive month
from its record low.
Index readings ticked up slightly last month in each of the
country's regions except the Northeast where the index plumbed a new
low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217j.jpg" align="right" border="0" height="265" width="353">
Not only are builders disturbed by the market for new homes,
but the assessment of conditions for remodeling a home also reached a
record low during the fourth quarter. Expectations also fell to a
record low.
During the third quarter 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, rose to
its highest level since early 2004. It was up by more than one-third
from the 2006 low due to lower home prices, lower interest rates and
higher income.
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.
Credit Easing: A Policy for a Time of Financial Crisis
from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2009/0209/02monpol.cfm">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">February</th>
<th scope="col">January
&nbsp;</th>
<th scope="col">&nbsp;February
'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>9</td>
<td>8</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>7</td>
<td>6</td>
<td>20</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>15</td>
<td>17</td>
<td>27</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>11</td>
<td>8</td>
<td>19</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Empire State Index Fell To ANew Low

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
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background-color:#edf5ff;
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.even{
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background-color:#f0f0f0;
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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217e.jpg" align="left" border="0" height="265" width="353">
The Cabinet office's first estimate of Gross Domestic Product
for the fourth quarter of 2008 revealed today that Japan's GDP declined
at a seasonally adjusted annual rate of 12.7%, a full percent above
consensus, confirming Kazuo Momma's fears that GDP may have declined at
"an unimaginable speed" expressed a week ago. (Kazuo Momma is Head of
Research and Statistics at the Bank of Japan.) The decline in GDP in
Japan compares with a 5.8% decline in the Euro Area and a 3.8% decline
in the United States in the same period, as shown in the first chart.
The sharpest decline was registered in exports, which, on a
seasonally adjusted annual rate basis, fell 45.0%. Gross Fixed Capital
Formation declined 11.3% and Private Consumption declined 1.6%. The
increase in inventories continued to decline. Government Consumption
increased 4.9%, the first this year, and imports were up by 12.0%.
Increased imports, however, affect GDP negatively.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217f.jpg" align="right" border="0" height="265" width="353">
Japan has been in recession since November 2007 according to a
government panel that dates recessions. Attempts to stimulate the
economy have been hampered by the already high ratio of debt to GDP
(1.70 for Japan in the fourth quarter, compared to 0.75 for the U. S.)
and political in-fighting.Kaoru Yosana, Economic and Fiscal Policy
Minister, is unwilling to support further stimulus until the
supplementary budget for fiscal year 2008 and the budget for fiscal
year 2009 have been passed in the Diet and begun to be implemented.
Meanwhile gridlock in the Parliament has blocked passage of a 10
trillion yen ($100 billion) stimulus package proposed by Prime Minister
Taro Aso.
One surprising result in the data is the increase in the
deflator. The first in ten years, as shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">JAPAN&nbsp;Seasonally
Adjusted Annual Rate of Change 
(ex where noted)</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08&nbsp;</th>
<th scope="col">Q4 07</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">GDP&nbsp;</td>
<td>-12.71</td>
<td>-2.28</td>
<td>-3.61</td>
<td>0.63</td>
<td>4.49</td>
</tr>
<tr class="odd">
<td class="firstcol">Private
Consumption&nbsp;</td>
<td>-1.63</td>
<td>1.19</td>
<td>-2.97</td>
<td>3.00</td>
<td>1.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Government
Consumption&nbsp;</td>
<td>4.93</td>
<td>-0.63</td>
<td>-3.63</td>
<td>-0.86</td>
<td>7.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Gross Fixed Capital
Formation&nbsp;</td>
<td>-11.29</td>
<td>-6.48</td>
<td>-7.82</td>
<td>-2.84</td>
<td>-0.66</td>
</tr>
<tr class="odd">
<td class="firstcol">Change in Inventory
(Billion Yen)</td>
<td>1932.7</td>
<td>2833.2</td>
<td>2599.3</td>
<td>4047.4</td>
<td>3566.5</td>
</tr>
<tr>
<td class="firstcol">Exports of Goods and
Services</td>
<td>-45.01</td>
<td>2.54</td>
<td>-9.00</td>
<td>12.57</td>
<td>12.40</td>
</tr>
<tr>
<td class="firstcol">Imports of Goods and
Services&nbsp;</td>
<td>12.03</td>
<td>6.28</td>
<td>-11.73</td>
<td>6.13</td>
<td>1.43</td>
</tr>
<tr class="even">
<td class="firstcol">Deflator&nbsp;Y/Y
% Chg</td>
<td>0.97</td>
<td>-1.66</td>
<td>-1.50</td>
<td>-1.32</td>
<td>-1.38</td>
</tr>
</tbody>
</table>
</body></html>

The Cabinet office's first estimate of Gross Domestic Product for the fourth quarter of 2008 revealed today that Japan's GDP declined at a seasonally adjusted annual rate of 12.7%, a full percent above consensus, confirming Kazuo [...]

Data Confirm Worst Fears Of Rapid Decline In Japanese Economy

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

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

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Andrew Cates

**US trade with Europe** 
Geopolitical tensions surrounding Greenland have abruptly sharpened investor sensitivity to US trade and foreign-policy risk. What might once have been dismissed as rhetorical brinkmanship has taken on greater macro-financial relevance as Donald Trump has coupled renewed interest in Greenland’s strategic importance with explicit threats of higher tariffs on European imports. The first chart below highlights that the US is materially more exposed to EU goods than the EU is to US trade, making any escalation asymmetrically more costly for the US economy. Beyond the direct inflationary impact of higher tariffs, the more immediate risk lies in confidence effects and capital flows: early signs of capital reallocation away from US assets over the past 24 hours suggest that markets could be beginning to price a broader erosion of policy predictability. In this environment, tariffs risk functioning less as a targeted trade tool and more as a systemic confidence shock—tightening financial conditions, unsettling the dollar’s safe-haven status and increasing downside risks to US growth via weaker investment and higher risk premia.

260122Z1.jpg

**Japan’s JGB yields**
That said, recent capital outflows from US assets may owe as much to developments in Japan as to geopolitical and trade-related shocks. While tariff threats and policy unpredictability have clearly unsettled sentiment, an underappreciated driver of the sell-off in US Treasuries has been the sharp repricing in the Japanese government bond market. Renewed domestic political uncertainty and intensifying concerns over Japan’s debt dynamics have triggered a rapid rise in JGB yields, prompting portfolio rebalancing by Japanese investors and reducing the relative appeal of US duration. Given Japan’s role as one of the largest foreign holders of US Treasuries, yield gyrations at home can translate quickly into capital repatriation, hedging adjustments and reduced demand for US bonds. In this sense, recent moves in US yields may reflect less a direct reaction to geopolitical risk and more a globally transmitted capital-flow shock—originating in Japan but felt most acutely in US financial markets.

260122Z2.jpg

**Inflation expectations and oil prices**
Capital-flow dynamics may have also begun to spill over into how markets are pricing US inflation risk and monetary credibility. Historically, medium-term US inflation expectations have remained closely anchored to global energy prices, as illustrated by the strong co-movement between the 5-year forward inflation rate and Brent crude prices. More recently, however, that relationship has begun to fray: inflation expectations have proven notably resilient even as oil prices have softened, suggesting that markets are increasingly pricing political and policy risk rather than cost-push fundamentals alone. Renewed tariff threats under President Trump, combined with heightened geopolitical tensions involving Greenland and transatlantic relations, risk reinforcing concerns that future inflation outcomes could be shaped as much by political intervention as by macroeconomic conditions. Any perception that the Federal Reserve may face constraints on its operational independence would compound this shift—loosening inflation anchors, raising term premia and increasing the sensitivity of capital flows to US policy credibility.

260122Z3.jpg

**UK inflation** 
UK inflation data released this week show a small upside surprise in headline CPI at year-end. Headline CPI inflation specifically rose from 3.2% y/y in November to 3.4% in December, a little more than expected. The chart below shows that the pickup was driven by persistent underlying pressures—most notably in services. While a negative drag from energy prices has largely faded, services inflation continues to account for a disproportionate share of overall price growth, probably reflecting ongoing wage pressures and limited slack in parts of the domestic economy.

260122Z4.jpg

**Wage growth in the US and Europe** 
Labour-market data from the Indeed Hiring Lab reinforce the picture of persistent services-side pressure in the UK inflation mix. As the chart shows, UK posted wage growth remains elevated relative to both the euro area and the US, even though momentum has eased from its 2023 peak. At around the mid-5% range on a three-month moving average basis, UK wage growth is still running at a pace that is difficult to reconcile with a rapid return of services inflation to target. By contrast, posted wage growth in the euro area has slowed more decisively, while the US has seen a sharper deceleration from earlier extremes.

260122Z5.jpg

**China’s property market**
Finally, the Q4 GDP figures released in China this week sit uneasily alongside continued weakness in its domestic property sector, which remains a key drag on both investment and consumption. While Q4 growth of 4.5% y/y brought full-year GDP broadly in line with the authorities’ 5% target, the chart highlights how property-market adjustment is still running deep beneath the surface. Prices of existing homes across China’s 70 cities remain in year-on-year decline, while real estate investment continues to contract sharply, underscoring the scale and persistence of the sector’s retrenchment. This helps explain why fixed asset investment has softened further and why household demand remains subdued, despite more resilient industrial output.

260122Z6.jpg

This week’s data and market moves have been framed by an abrupt escalation in geopolitical tensions surrounding Greenland, which has served as a catalyst for broader financial unease rather than a standalone shock. The episode has sharpened investor focus on US policy predictability, amplifying concerns already evident in the charts on EU–US trade exposure, where tariff threats risk feeding directly into confidence effects and capital flows. At the same time, recent turbulence in Japanese government bonds appears to have been an underappreciated driver of the sell-off in US Treasuries, highlighting how global capital reallocation—rather than geopolitics alone—has contributed to higher US yields. These forces intersect with growing questions around the durability of US monetary credibility, as inflation expectations have shown signs of decoupling from traditional oil-price anchors, raising the sensitivity of markets to any perceived constraints on the Federal Reserve. Beyond the US, UK data delivered a modest upside surprise in headline inflation, with persistent services and wage pressures reinforcing a cautious policy backdrop for the Bank of England. In China, meanwhile, Q4 GDP growth of 4.5% y/y kept full-year expansion aligned with the government’s target, but continued weakness in the property sector remains a significant drag on investment and household confidence. Taken together, the week’s developments point to a global outlook increasingly shaped by geopolitical risk, capital-flow dynamics and domestic  structural constraints, rather than by straightforward cyclical momentum alone.

Charts of the Week: Seeing Green

Kathleen Stephansen, CBE

260122A2.jpg

260122B2.jpg

Initial claims for unemployment insurance edged up 1,000 to 200,000 in the week ending January 17, from 199,000 in the week ending January 10, revised from 198,000. The four-week moving average of initial claims was 201,500 in the January 17 week, down 3,750 from 205,250 in the January 10 week, revised from 205,000, and reaching the lowest level for this average since January 13, 2024, when it was 200,000.

Federal government employees initially filed 1010 (NSA) jobless insurance claims in the week ended January 10, after filing 646 (NSA) claims in the week ended January 3.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 26,000 to 1.849 million in the week ended January 10 from 1.875 million in the week ending January 3, revised from 1.884 million. The four-week moving average was 1.871 million in the latest week, down from 1.887 million in the January 3 week, revised from 1.889 million. The insured unemployment rate remained at 1.2% in the week of January 10, unchanged from previous 6 weeks.

Federal government employees’ continuing benefits claims were 12,977 (NSA) in the week ending January 3, from 12,803 (NSA) in the week of December 27.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 3, the highest unemployment rates were in Rhode Island (3.27%), New Jersey (3.17%), Washington (2.85%), Minnesota (2.75%), Massachusetts (2.74%), Oregon (2.37%), Connecticut (2.31%), Montana (2.26%), California (2.21%), and Alaska (2.06%). The lowest rates were in Florida (0.29%), North Carolina (0.40%), and Louisiana (0.43%). Rates in other notable states include New York (2.28%), Pennsylvania (2.23%), Illinois (2.21%), and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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U.S. Initial Claims for Unemployment Insurance Edged Up in Latest Week

Winnie Tapasanun

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The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, fell 9.3% m/m to 71.8 in December following unrevised increases of 3.3% in November and 2.4% in October, according to the National Association of Realtors (NAR). December marked the first m/m fall since July and the steepest since April 2020. The year-on-year rate was -3.0% in December, the first negative y/y reading since September, compared to +2.6% in November and -5.0% in December 2024. The index had fallen 42.6% since its October 2021 high of 125.1. In 2025, the PHSI declined 0.9% after drops of 3.0% in 2024 and 16.1% in 2023.

The m/m fall in December pending home sales occurred alongside a decline in the average 30-year mortgage rate to 6.20% in December, the lowest since September 2024, down from 6.24% in November and 6.25% in October. These rates, while below a peak of 7.62% in October 2023, had remained higher than a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales decreased m/m in December across all four major regions. The Midwest recorded the sharpest drop, with sales plunging 14.9% (-9.8% y/y) in December—the first m/m decline since September and the deepest since April 2020—after a 1.3% increase in November. Sales in the West slumped 13.3% (-5.1% y/y), the third m/m decrease in four months, following a 9.2% November rebound. Sales in the Northeast slid 11.0% (-3.6% y/y), the first m/m slide since August, after a 1.8% November rise. Sales in the South fell 4.0% (+2.0% y/y), the first m/m fall since June, after a 2.5% November gain.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- PHSI -9.3% m/m (-3.0% y/y) to 71.8 in Dec., lowest index level since July.
- Home sales m/m down in all four major regions, w/ the Midwest seeing the steepest drop (-14.9%).
- Home sales y/y down in the Northeast, Midwest, and West, but up in the South (+2.0%).

U.S. Pending Home Sales Drop in December Following Four Consecutive M/M Gains

Sandy Batten

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Total construction spending fell 0.6% m/m (-1.5% y/y) in September to $2,164.3 billion following a 0.4% monthly gain in August. However, it rebounded in October, rising 0.5% m/m (-1.0% y/y) to $2,175.2 billion (saar). This is the ninth consecutive month that construction spending has been lower than a year ago. A 0.1% m/m decline in September and an unchanged reading in October had been expected in the Action Economics Forecast Survey. Over the first ten months of this year, construction spending amounted to $1,825.3 billion, 1.4% below the $1,851.4 billion for the same period in 2024.

Spending on private construction was at a seasonally adjusted annual rate of $1,651.3 billion in October, 0.6% above the September estimate of $1,640.8 billion (-3.0% y/y), which fell 0.9% m/m from August. Private residential construction was at a seasonally adjusted annual rate of $913.9 billion in October, up 1.3% m/m from September, which declined 1.4% from August. Private nonresidential construction was at a seasonally adjusted annual rate of $737.4 billion in October, down 0.2% m/m from September, which also had declined 0.2% in September from August.

The October increase in private residential investment was due entirely to a 4.5% m/m increase in spending on improvements, its largest monthly gain since April 2024, following a 2.2% monthly decline in September. Single family construction fell 1.3% m/m in October, its eight consecutive monthly decline, while multi-family construction slipped 0.2% m/m, its first monthly decline in five months. The decline in private nonresidential construction was more than accounted for by a 0.9% m/m drop in manufacturing construction, its ninth consecutive monthly decline.

The value of public construction spending edged up 0.1% m/m in October to $524.0 billion after having risen 0.4% m/m in September. Of particular importance, educational construction was at a seasonally adjusted annual rate of $114.8 billion, up 0.7% m/m in October on top of a 1.1% m/m increase in September. Highway construction was at a seasonally adjusted annual rate of $141.6 billion, 0.1% m/m above the September estimate after a 0.4% monthly decline in September from August. Spending on highways and educational facilities are by far the two largest components of public construction spending. Spending on water supply construction at $35.2 billion was also important in October, up 1.2% m/m on top of a 1.5% monthly gain in September.

The construction figures can be found in Haver’s **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total construction spending fell 0.6% m/m in September but rebounded 0.5% m/m in October.
- Private construction spending slumped 0.9% m/m in September but rose 0.6% m/m in October.
- Private nonresidential construction fell for the fourth consecutive month while private residential construction posted a 1.3% m/m gain.

U.S. Construction Spending Slipped in September but Rebounded in October

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Mortgage applications rose 14.1% w/w (76.8% y/y) in the week ending January 16, after soaring 28.5% w/w (55.1% y/y) in the week ending January 9, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 5.1% w/w (19.1% y/y) in the week ending January 16, after rising 15.9% w/w (14.0% y/y) in the week ending January 9.  Applications for loan refinancing jumped 20.4% w/w (182.9% y/y) in the latest week, following a surge of 40.1% w/w (128.1% y/y) in the January 9 week.

The effective interest rate on a 30-year fixed-rate loan fell 3bps to 6.32% in the week ending January 16 from 6.35% in the week ending January 9. The rate on 15-year fixed-rate mortgages dropped 4bps to 5.71% in the latest week from 5.75% in the prior week. The 30-year Jumbo rate also fell 4bps to 6.50% in the January 16 week from 6.54% in the January 9 week. The rate on a 5-year ARM rose 5bps to 5.65% in the latest week from 5.60% in the January 9 week.

The share of applications for refinancing an existing loan rose to 61.9% of total applications in the January 16 week from 60.2% in the week ending January 9. The adjustable-rate mortgage (ARM) share of activity rose to 7.1% in the week ending January 16 from 7.0% in the week ending January 9.

The average size of a mortgage loan rose 2.9% w/w (11.1% y/y) to $415,300 in the week ending January 16, after rising 6.3% w/w (9.9% y/y) to $403,600 in the week ending January 9. The average size of a purchase loan edged down 0.7% w/w (+1.3% y/y) to $437,100 in the latest week after rising 7.7% w/w (4.9% y/y) to $440,300 in the January 9 week. The average size of a loan to refinance a mortgage rose 6.0% w/w (39.4% y/y) to $401,900 in the week ending January 16, after rising 6.0% w/w (27.8% y/y) to $379,200 in the week ending January 9.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Purchase and refinancing loan applications posted healthy rises in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.32%.
- Average loan size rose.