Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204g.jpg" width="353">
The January Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose for the second consecutive month. The rise to 42.9 raised the level to its highest since October and it was much firmer than Consensus expectations for a reading of 39.0. A level of the ISM indices below 50 indicates declining activity. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index for the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204h.jpg" width="353">
The rise in the overall figure last month was led by improvement in the business activity sub-component, also its highest since October. The new orders sub-index increased as well to 41.6.
The employment index was relatively less robust and was about unchanged from December at 34.4, but that was still up moderately from the November low. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.
Pricing power firmed as well to a reading of 42.5 which was the highest since October. Since its inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report On Business</cite>&reg;, the composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indexes for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62 industries including law firms, hospitals, government and retailers. The nonmanufacturing survey dates back to July 1997.

<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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#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">Composite Index</td>
<td>42.9</td>
<td>40.1</td>
<td>44.6</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>42.5</td>
<td>36.1</td>
<td>71.2</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>


</html>

The January Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose for the second consecutive month. The rise to 42.9 raised the level to its highest since October and it was much firmer [...]

U.S. ISM Nonmanufacturing Index Moved Higher Again

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204f.jpg" align="left" border="0" height="265" width="353">
The EMU Services PMIs from Market show continued weakness in
EMU and UK service sectors but not accelerating weakness. 
 

The signal for the Zone is just one month up from its low.
Country indices are low in their respective ranges, but generally they
are not on their bottoms. Germany for example saw its service sector
slip further this month; it now lies in the bottom 10 percentile of its
range. Italy and the UK each saw some of their weakness dissipate yet
they remain the worst tow countries with the lowest services diffusion
readings in this grouping. . The EU Commission&#8217;s measures on services
and confidence are generally a bit weaker and are at or nearer all time
lows compared to the Market treatment for services. 
 

The bounce in services in Europe is echoed by the bounce in
the US non-MFG ISM, the closest US measure to these European service
sector indices. The US ISM is in the bottom 23% of its range. Europe
and the US seem to be passing though this cycle with remarkably similar
impacts on their respective goods and services sectors. 
 

<div> </div>


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td> Dec-08</td>
<td> Nov-08</td>
<td> 3Mo</td>
<td> 6Mo</td>
<td> 12Mo</td>
<td> Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol"> Euro-13</td>
<td> 42.16</td>
<td> 42.06</td>
<td> 42.47</td>
<td> 42.23</td>
<td> 44.89</td>
<td> 47.77</td>
<td>0.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>45.20</td>
<td>46.57</td>
<td>45.14</td>
<td>45.64</td>
<td>47.81</td>
<td>50.40</td>
<td>10.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>42.56</td>
<td>40.57</td>
<td>46.17</td>
<td>43.10</td>
<td>45.84</td>
<td>49.27</td>
<td>8.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>41.10</td>
<td>40.30</td>
<td>39.46</td>
<td>40.29</td>
<td>44.07</td>
<td>46.03</td>
<td>7.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain</td>
<td>31.84</td>
<td>32.10</td>
<td>28.23</td>
<td>30.72</td>
<td>33.24</td>
<td>37.17</td>
<td>11.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ireland</td>
<td>33.94</td>
<td>34.14</td>
<td>32.60</td>
<td>33.56</td>
<td>36.23</td>
<td>40.52</td>
<td>3.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="8"> EU
only</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK (CIPs)</td>
<td>42.48</td>
<td>40.21</td>
<td>40.06</td>
<td>40.92</td>
<td>43.38</td>
<td>46.76</td>
<td>11.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; US NONFMG ISM</td>
<td>42.90</td>
<td>40.10</td>
<td>37.40</td>
<td>40.13</td>
<td>44.23</td>
<td>47.21</td>
<td>22.9%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol"> EU Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol"> EU Index</td>
<td>Jan-09</td>
<td> Dec-08</td>
<td> Nov-08</td>
<td> 3Mo</td>
<td> 6Mo</td>
<td> 12Mo</td>
<td> Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">EU Services</td>
<td>-28</td>
<td>-23</td>
<td>-18</td>
<td> -28.67</td>
<td> -24.67</td>
<td> -19.67</td>
<td>0.0%</td>
</tr>
<tr class="grey4">
<td class="firstcol"> EMU</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-22</td>
<td>-17</td>
<td>-12</td>
<td> -17.00</td>
<td>-9.50</td>
<td> -2.58</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Cons Confidence</td>
<td>-31</td>
<td>-30</td>
<td>-25</td>
<td> -28.67</td>
<td>-24.67</td>
<td> -8.28</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">
Consumer confidence by
country</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany-Ccon</td>
<td>-27</td>
<td>-22</td>
<td>-15</td>
<td> -21.33</td>
<td>-15.67</td>
<td> -9.50</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France-Ccon</td>
<td>-35</td>
<td>-34</td>
<td>-29</td>
<td> -32.67</td>
<td>-29.50</td>
<td> -23.75</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ital-Ccon</td>
<td>-26</td>
<td>-30</td>
<td>-26</td>
<td> -27.33</td>
<td>-25.17</td>
<td> -24.17</td>
<td>12.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain-Ccon</td>
<td>-44</td>
<td>-46</td>
<td>-44</td>
<td> -44.67</td>
<td>-42.33</td>
<td> -35.58</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK-Ccon</td>
<td>-35</td>
<td>-29</td>
<td>-27</td>
<td> -30.33</td>
<td>-27.50</td>
<td> -21.50</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">percentile
is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

The EMU Services PMIs from Market show continued weakness in EMU and UK service sectors but not accelerating weakness. The signal for the Zone is just one month up from its low. Country indices are low in their respective ranges, but [...]

EMU Services PMI's Slow Descent Signal In January

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204e.jpg" align="left" border="0" height="265" width="353">
The chart at top shows the Yr/Yr trend in EMU consumer
spending. It is working its way lower, lead by a declining trend in
consumer spending plans. The Yr/Yr drops seem to have stopped to hover
around the -2% pace, Yr/Yr. But the table shows that more recently
downward momentum seems to have picked up. Over six months the sales
volume is only lower at a 1.2% annual rate but over three-months that
is down to a -4.4% pace. The drop in the pace of nonfood items has
accelerated even more sharply over the recent 3-months as economic
conditions have worsened. Despite some really poor consumer sentiment
surveys spending in the UK is holding up. In Germany, though,
conditions are poor. 
 

<div> </div>


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Ezone (15)
Retail Sales Volume</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Oct-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone-15 Total</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-1.0%</td>
<td>-4.4%</td>
<td>-1.2%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-2.2%</td>
<td>0.0%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">NonFood</td>
<td>-0.4%</td>
<td>-0.2%</td>
<td>-1.1%</td>
<td>-6.6%</td>
<td>-2.2%</td>
<td>-2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Textiles</td>
<td>#N/A</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>-4.3%</td>
<td>-6.6%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Books news,
etc</td>
<td>#N/A</td>
<td>-1.1%</td>
<td>-1.1%</td>
<td>-9.0%</td>
<td>-5.0%</td>
<td>-3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Pharma</td>
<td>#N/A</td>
<td>0.2%</td>
<td>-0.6%</td>
<td>-1.6%</td>
<td>1.1%</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Other
NonSpec</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-3.6%</td>
<td>-2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mail Order</td>
<td>#N/A</td>
<td>-0.1%</td>
<td>-1.9%</td>
<td>-4.3%</td>
<td>-1.9%</td>
<td>-0.6%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Country
detail; Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany: VolxAuto</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-0.9%</td>
<td>-4.6%</td>
<td>0.6%</td>
<td>0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy (Total; Value)</td>
<td>#N/A</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>-1.5%</td>
<td>-1.5%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU): Vol</td>
<td>1.6%</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>6.7%</td>
<td>6.2%</td>
<td>3.9%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">Shaded areas
calculated on a
one-month lag due to lagging data</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany,</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Greece,
Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

The chart at top shows the Yr/Yr trend in EMU consumer spending. It is working its way lower, lead by a declining trend in consumer spending plans. The Yr/Yr drops seem to have stopped to hover around the -2% pace, Yr/Yr. But the [...]

EMU Consumer Spending Tanks Along With Spending Plans

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204c.jpg" width="353">
Consumers&#39; aversion to purchasing autos continued last month. U.S. sales of light vehicles fell a surprising 7.1% m/m to 9.57M (SAAR) from 10.31M during December. Sales of 10.2M had been expected for January. The latest figure was the lowest since 1982 according to the Autodata Corporation and Ward&#39;s Automotive News. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). The decline pulled the comparison versus a year ago to -37.7% which was its worst since the data became available in the late 1960s.
Sales of domestically-made light vehicles were particularly hard hit as they posted a 12.2% decline from December to 6.75M units. The level is now 42.4% below that in January 2008. Sales of domestically made autos fell a hard 20.8% m/m, enough to pull the comparison versus a year earlier to -43.7%. Light truck sales fell 4.6% for the month (-41.4% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204d.jpg" width="353">
Imported light vehicle sales outperformed the domestics again last month as they posted a 7.6% increase. Moreover, while sales fell 22.8% year-to-year, the decline is roughly half that for U.S. made vehicles. Sales of imported light trucks were the strongest as they increased 6.0% from January. The increase enabled sales of imported light trucks to grab 21.4% of total market share, a record and double the share of ten years earlier. Sales of imported autos also firmed and rose 8.5% (-23.0% y/y) after two months of decline.
Higher truck sales pulled import&#39;s share of the U.S. light vehicle market to a record 29.5%, up three percentage points from the 2008 average. (Imported vehicles are those produced outside the U.S. and do not include vehicles with the nameplate of a foreign manufacturer produced within the U.S.)

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Jan. / Jan.</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.57</td>
<td>10.31</td>
<td>-37.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>4.60</td>
<td>5.21</td>
<td>-37.2</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>2.84</td>
<td>3.59</td>
<td>-43.7</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.76</td>
<td>1.62</td>
<td>-23.0</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.97</td>
<td>5.10</td>
<td>-38.2</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.91</td>
<td>4.10</td>
<td>-41.4</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.06</td>
<td>1.00</td>
<td>-22.6</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>


</html>

Consumers' aversion to purchasing autos continued last month. U.S. sales of light vehicles fell a surprising 7.1% m/m to 9.57M (SAAR) from 10.31M during December. Sales of 10.2M had been expected for January. The latest figure was the [...]

January U.S. Light Vehicle Sales Lowest Since 1982

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204a.jpg" width="353">
In its latest National Employment Report, the payroll processor ADP indicated that private nonfarm payrolls fell 522,000 during January after a revised 659,000 decline during December. The decline was the thirteenth consecutive monthly decline and during the last three months, payrolls have fallen at a 5.6% annual rate.
The U.S. Bureau of Labor Statistics will report on December payroll employment this Friday. Last month, the 659,000 worker decline (-2.2% y/y) in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 531,000 worker decline (-2.4% y/y) in the BLS measure of private sector payrolls.According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90. 
Employment in the service producing industry again fell hard. The 279,000 (-1.7% y/y) drop was the twelfth consecutive monthly decline. Medium sized payrolls fell 135,000 (-2.1% y/y) and small sized payrolls fell 101,000 (-1.3% y/y). Large service producing payrolls dropped by 43,000 (-2.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090204b.jpg" width="353">
Weakness in goods producing payrolls added again to the service sector&#39;s decline with a 243,000 (-6.6% y/y) drop. Medium sized payrolls fell 120,000 (-6.8% y/y) followed by a 74,000 (-6.0% y/y) drop in small sized payrolls. Large payrolls fell 49,000 (-7.5% y/y). 
Employment in the manufacturing sector fell 160,000 (-6.3% y/y) in January. It has fallen in almost every month since 2001.
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_january_09.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>. <div> </div>

<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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</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>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-522,000</td>
<td>-659,000</td>
<td>-2.7%</td>
<td>-0.4</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>


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In its latest National Employment Report, the payroll processor ADP indicated that private nonfarm payrolls fell 522,000 during January after a revised 659,000 decline during December. The decline was the thirteenth consecutive [...]

ADP Report: Payroll Employment Fell Another 522,000

ADP Report: Payroll EmploymentFell Another 522,000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090203h.jpg" width="353">
Of course the ECB sets its inflation ceiling for the HICP (consumer price index) not for the PPI. Still, the sharp drop in Europe&#146;s PPI inflation &#150; a drop that spreads pretty much across the board (see table) - is simply another manifestation of weak inflation. Today the OECD reported that inflation in the OECD area was at a 37 year low. These sorts of results can be used to warn of the heightened risk for deflation in the OECD area as well. So far Europe and the ECB have not taken the bait. The Fed has recently shifted to a more public stance of worry about deflation risk. But Europe has been slow to adopt stimulus and the ECB countries to use rhetoric that brands inflation as now under control and is publicly no more worried than that. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Ezone and UK PPI Trends
</tr>
</thead>
<tbody>
<tr class="grey7">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey6">
<td class="firstcol">Ezone-15</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey5">
<td class="firstcol">TotalxConstruct</td>
<td>-1.3%</td>
<td>-2.0%</td>
<td>-15.2%</td>
<td>-6.8%</td>
<td>1.8%</td>
<td>4.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Excl Energy</td>
<td>-0.6%</td>
<td>-0.9%</td>
<td>-7.4%</td>
<td>-2.3%</td>
<td>1.6%</td>
<td>3.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital Gds</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>1.4%</td>
<td>2.2%</td>
<td>1.5%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consurmer Gds</td>
<td>-0.2%</td>
<td>-0.3%</td>
<td>-2.2%</td>
<td>-0.6%</td>
<td>1.5%</td>
<td>4.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate&amp;Cap Gds</td>
<td>-0.7%</td>
<td>-1.1%</td>
<td>-9.6%</td>
<td>-3.1%</td>
<td>1.7%</td>
<td>2.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Energy</td>
<td>-3.7%</td>
<td>-5.2%</td>
<td>-35.7%</td>
<td>-19.9%</td>
<td>2.1%</td>
<td>8.6%</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-1.6%</td>
<td>-2.1%</td>
<td>-18.9%</td>
<td>-10.8%</td>
<td>-1.2%</td>
<td>4.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>-9.8%</td>
<td>-1.9%</td>
<td>4.3%</td>
<td>2.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Gy ExEnergy</td>
<td>-0.6%</td>
<td>-0.8%</td>
<td>-6.4%</td>
<td>-1.4%</td>
<td>1.5%</td>
<td>2.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-17.1%</td>
<td>-8.5%</td>
<td>0.6%</td>
<td>4.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; It ExEnergy</td>
<td>-0.6%</td>
<td>-1.0%</td>
<td>-8.9%</td>
<td>-3.9%</td>
<td>1.1%</td>
<td>3.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>-1.3%</td>
<td>-2.2%</td>
<td>-18.9%</td>
<td>-15.1%</td>
<td>5.7%</td>
<td>7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; UK ExEnergy</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-1.7%</td>
<td>0.9%</td>
<td>6.6%</td>
<td>4.1%</td>
</tr>
<tr class="grey1">
<td colspan="7">E-zone 15 Harmonized PPI excluding Construction</td>
</tr>
</tbody>
</table>
</body>
</html>

Of course the ECB sets its inflation ceiling for the HICP (consumer price index) not for the PPI. Still, the sharp drop in Europes PPI inflation  a drop that spreads pretty much across the board (see table) - is simply another [...]

PPI For E-Zone Is Plunging

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090203i.jpg" width="353">
The National Association of Realtors indicated that pending sales of existing homes in December rose 6.3% The increase reversed most of the declines during the prior two months. Consensus expectations were for no change in sales m/m. For the year as a whole, sales fell 9.3% after declines of 14.6% and 9.8% during the prior two years. Despite the monthly sales increase, the December level was near the series&#39; low.
The home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090203j.jpg" width="353">
Lower prices continued to bolster home sales. The median sales price of an existing home in December fell for the sixth straight month and was down 15.3% year-to-year. Prices were down 23.4% from their peak during June of last year. For single-family homes only, prices fell 2.9% during December and they were off 23.8% from their peak. Lower prices combined with lower interest rates significantly raised the affordability index of a home. It reached a record high for the series which extends back to 1970.
A 13.0% December rise in the South led the latest increase in total sales but were still off 16.2% for the year. Sales in the Midwest also posted a 12.8% gain in December but that was not enough to keep full-year sales from falling 9.7%. December sales in the West fell 3.7% in December but rose 7.8% for the full year. Home sales in the Northeast ticked lower by 1.7% for the month but repeated their decline of 2007 and fell 15.2%.
Weak home sales are encouraging potential sellers to keep their homes off the market. The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale fell by 11.7% last month, down 7.5% for the full year.
At the current sales rate there was a 9.3 months&#39; supply of homes on the market and there was a 10.4 months&#39; supply during all of last year, up from the 8.9 months supply during 2007 and 6.5 months during 2006. For single family homes, there was an 8.7 months&#39; supply in December versus a full-year figure of 10.0 months.
The pending home sales data are available in Haver&#39;s PREALTOR database. The number of homes on the market and prices are in the REALTOR database.
The American Recovery and Reinvestment Act of 2009 from the Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/99xx/doc9977/hr1senate.pdf">here.</a>
The Term Structure of Inflation Expectations from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr362.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/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></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&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>87.7</td>
<td>82.5</td>
<td>&nbsp;&nbsp; 2.1%</td>
<td>86.8</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>62.1</td>
<td>63.2</td>
<td>-14.5</td>
<td>72.6</td>
<td>85.6</td>
<td>98.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>83.7</td>
<td>74.2</td>
<td>-1.2</td>
<td>80.9</td>
<td>89.6</td>
<td>102.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>96.8</td>
<td>85.7</td>
<td>1.6</td>
<td>89.8</td>
<td>107.3</td>
<td>127.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>97.5</td>
<td>101.2</td>
<td>17.5</td>
<td>99.3</td>
<td>92.1</td>
<td>109.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Realtors indicated that pending sales of existing homes in December rose 6.3% The increase reversed most of the declines during the prior two months. Consensus expectations were for no change in sales m/m. [...]

U.S. Pending Home Sales Up in December But Down For 2008. Affordability At New High With Lower Rates & Prices

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

Sandy Batten

260122N8.jpg

260122C8.jpg

Real GDP increased 4.4% q/q saar in the third quarter of 2025 in the final estimate, up marginally from 4.3% in the first release. The Action Economics Forecast Survey expected no revision. Growth from a year ago was unrevised at 2.3% y/y. Growth of corporate profits was revised up to 4.5% q/q not annualized from 4.2% in the previous report.

The revision to GDP mostly reflected slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventory investment. Nonresidential fixed investment increased a revised 3.2% q/q saar versus a 2.8% gain in the previous release. This reflected a smaller decline in structures, a smaller increase in equipment and a larger increase in intellectual property products than previously estimated. Residential investment was revised weaker with a 7.1% quarterly decline versus -5.1% in the previous estimate.

Upon revision, exports rose 9.6% q/q in Q3 versus 8.8% in the first estimate. Consequently, the trade deficit narrowed a little more than in the first estimate, resulting in net exports adding 1.62%-points to overall growth, 0.03%-point more previously estimated. The decline in inventory investment in Q3 was smaller than previously estimated, reducing the drag from inventories by 0.1%-point versus the previous estimate. The decline in inventories subtracted 0.12%-point in Q3 on top of a 3.44%-point subtraction in Q2.

Domestic demand growth remained solid in Q3 but was revised down 0.1%-point. Final sales to domestic purchasers grew a revised 2.8% q/q saar in Q3 versus 2.9% in the first estimate. Final sales to private domestic purchasers increased 2.9% q/q, down slightly from 3.0% previously.

260122O8.jpg

260122P8.jpg

The primary driver of overall growth continued to be personal consumption expenditures. They increased an unrevised 3.5% q/q saar in Q3, adding 2.34%-points to total GDP growth. This reflected a 3.0% increase in spending on goods versus 3.1% previously and a 3.6% gain in spending on services versus 3.7% previously. The rise in government spending was unrevised at 2.2% q/q. However, spending by the federal government was revised slightly slower to 2.7% from 2.9% while spending by state and local governments was revised up slightly to 2.0% from 1.8%.

Key measures of inflation were unrevised. Inflation as measured by the GDP price index remained at 3.8% q/q saar in Q3, but this was up markedly from 2.1% in Q2. Similarly, PCE inflation in Q3 was unrevised at 2.8% versus 2.1% in Q2. Core PCE inflation was also unrevised at 2.9% in Q3.

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**.

260122Q8.jpg

260122S8.jpg

- Real GDP grew 4.4% q/q saar in Q3 2025, up slightly from 4.3% previously reported.
- The modest upward revision was due mostly to slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventories.
- Growth of domestic demand remained solid in Q3 but was revised down 0.1%-point.
- GDP and PCE inflation were unrevised at 3.8% and 2.8%, respectively. Both are meaningful accelerations from Q2.

U.S. Q3 GDP Growth Revised Slightly Faster

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

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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.