Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630e.jpg" width="353">
Unemployment is creeping higher in France, with the unemployment rate for May holding at April&#39;s 10.2% of the labor force, according to INSEE&#39;s monthly labor force survey, released today. The rate there, defined according to the ILO specifications used throughout the Euro-Zone, has been on a upward trend since the slowdown in economic activity began in late 2000 (there has been no &quot;official&quot; recession in France as there was in the US).
INSEE also published its household confidence survey for June, which showed a continuing erosion in the overall indicator. The current reading, -30, is the lowest since survey questions were revised in November 2003. More people reported that their living standards had deteriorated during the last year, that this is a poor time to make make major purchases and that they expect to have difficulty saving over the next year. On the less worrisome side, interestingly, their concerns over unemployment prospects actually diminished. And that variable has only weak correlation with the unemployment rate itself. The overall index and the assessment of the household&#39;s current financial condition are much more closely related to the current unemployment rate, as seen in the graph. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630f.jpg" width="353">
Germany&#39;s unemployment situation continues to make news, although the figures reported today for May and June actually look better. The ILO-defined rate fell 0.3 percentage point in May to 9.3%. This is not &quot;low&quot;, but does give the impression that the climb in the rate that had begun in December may have run its course. &quot;Registered&quot; unemployment, the count of people registered with government unemployment offices, edged down in June to a rate of 11.7% from 11.8% in May; this rate peaked in March at 12.0%. Local observers, quoted in a Reuters news story, point out that the new &quot;Hartz IV&quot; regulations are starting to take effect, reducing unemployment benefits and requiring unemployed workers to accept new jobs more quickly. Thus, it is too early to conclude that these slight improvements in both unemployment rates mark a genuine firming of German economic activity. In fact, ever higher energy costs continue to cast a cloud on the economic outlook everywhere.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France: Unemployment Rate (ILO, %)</td>
<td>--</td>
<td>10.2</td>
<td>10.2</td>
<td>10.0</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">Household Confidence (%)</td>
<td>-30</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-22</td>
<td>-27*</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Germany: Employment (Change, Thous)</td>
<td>--</td>
<td>-4</td>
<td>9</td>
<td>134</td>
<td>140</td>
<td>-356</td>
<td>-217</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate &nbsp;(ILO, %)</td>
<td>--</td>
<td>9.3</td>
<td>9.6</td>
<td>9.3</td>
<td>9.2</td>
<td>9.6</td>
<td>8.7</td>
</tr>
<tr>
<td class="firstcol">Registered Unemployment Rate (%)</td>
<td>11.7</td>
<td>11.8</td>
<td>11.8</td>
<td>10.6</td>
<td>10.6</td>
<td>10.5</td>
<td>9.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Unemployment is creeping higher in France, with the unemployment rate for May holding at April's 10.2% of the labor force, according to INSEE's monthly labor force survey, released today. The rate there, defined according to the ILO [...]

French Unemployment High, Consumer Confidence Low; Germany Sees Slight Declines in Unemployment

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/n:\\tina\\clientarea\\comment\\050630g.jpg" width="353">
The Federal Open Market Committee increased interest rates for the ninth time since last June. The target rate for federal funds was raised an expected 25 basis points to 3.25% and the discount rate was raised 25 basis points to 4.25%.
The decision was unanimous.
Today&#39;s press release from the Fed continued to contain a comment suggesting that rates could be raised again. &quot;The Committee believes that, even after this action, the stance of monetary policy remains accommodative ...&quot;
For emphasis the statement indicated that &quot;with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal.&quot;
Discretion was indicated with the comment &quot;the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.&quot;
For the complete text of the Fed&#39;s latest press release please click <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2005/20050630/default.htm">here</a>.
A Search for a Structural Phillips Curve from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr203.pdf">here</a>.

</body>
</html>

The Federal Open Market Committee increased interest rates for the ninth time since last June. The target rate for federal funds was raised an expected 25 basis points to 3.25% and the discount rate was raised 25 basis points to [...]

Fed Funds Rate Increased to 3.25%

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630c.jpg" width="353">
The Index of Help-Wanted Advertising from the Conference Board fell to 37 last month after two months at 39 and two months before that at 41.
During the last ten years there has been a 65% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume rose modestly to a still low 39%.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>39</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
</html>

The Index of Help-Wanted Advertising from the Conference Board fell to 37 last month after two months at 39 and two months before that at 41. During the last ten years there has been a 65% correlation between the level of help-wanted [...]

Help-Wanted Advertising Down

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630d.jpg" width="353">
Initial claims for unemployment insurance dropped another 6,000 to 310,000 last week following a 19,000 decline the week prior that was revised slightly shallower. Consensus expectations had been for an increase to 325,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims fell to 323,500 (-6.4% y/y).
Continuing claims for unemployment insurance rose a slight 4,000 following a deepened 42,000 drop the week prior.
The insured unemployment rate remained at 2.0%, the low for this cycle.

<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">Unemployment Insurance (000s)</a></th>
<th scope="col">06/25/05</th>
<th scope="col">06/18/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>310</td>
<td>316</td>
<td>-10.7%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,600</td>
<td>-11.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance dropped another 6,000 to 310,000 last week following a 19,000 decline the week prior that was revised slightly shallower. Consensus expectations had been for an increase to 325,000 claims. [...]

Initial Claims for Jobless Insurance Fell Further

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630b.jpg" width="353">
The Chicago Purchasing Managers Business Barometer fell again in June to 53.6, the lowest level in two years. Consensus expectations had been for a slight increase to 54.5.
During the last ten years there has been a 65% correlation between the level of Chicago PMI and the three month change in factory sector industrial production.
New orders fell for the third consecutive month and the employment index dropped to 48.9, below 50 for the first month since July of last year. During the last ten years there has been a 75% correlation between the level of the employment index and the three month change in factory sector employment.
The index of prices rose moderately. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>53.6</td>
<td>54.1</td>
<td>57.5</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>56.5</td>
<td>57.9</td>
<td>58.3</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>59.7</td>
<td>54.3</td>
<td>83.9</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The Chicago Purchasing Managers Business Barometer fell again in June to 53.6, the lowest level in two years. Consensus expectations had been for a slight increase to 54.5. During the last ten years there has been a 65% correlation [...]

Chicago Purchasing Agents' Index Fell Again

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630a.jpg" width="353">
May personal income rose just 0.2% following a downwardly revised 0.6% gain the prior month. Consensus expectations had been for a 0.3% increase.
Wages &amp; salaries rose a slim 0.1% (7.0% y/y) following the 0.7% pop in April. Wages in service producing industries rose 0.1% (8.3% y/y) after the 0.9% April gain but factory sector wages rose 0.3% (5.4% y/y) following a downwardly revised 0.4% April increase.
Disposable personal income rose 0.2% (5.5% y/y) following three months of 0.4% and 0.5% gain. When adjusted for price inflation take home pay rose 0.1% (3.2% y/y) for the second consecutive month.
Personal consumption was unchanged in May following a 0.6% increase in April due to the 4.5% m/m drop in light vehicle sales. Consensus expectations had been for a 0.1% rise. Spending on durables fell 1.8% (+3.7% y/y) and nondurables spending dipped 0.4% (+6.9% y/y) as gasoline prices fell. Spending on services rose 0.6% (5.6% y/y).
The PCE chain price index was unchanged with lower gas prices but less food &amp; energy the 0.2% m/m increase was double the prior month&#39;s slim increase.
Lessons Learned from the Recent Business Cycle from Philadelphia Federal Reserve Bank President Santomero is available <a href="http://www.philadelphiafed.org/files/br/Q2_05_Santomero.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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.2%</td>
<td>0.6%</td>
<td>6.7%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.0%</td>
<td>0.6%</td>
<td>5.7%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.6%</td>
<td>0.5%</td>
<td>1.0%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

May personal income rose just 0.2% following a downwardly revised 0.6% gain the prior month. Consensus expectations had been for a 0.3% increase. Wages & salaries rose a slim 0.1% (7.0% y/y) following the 0.7% pop in April. Wages in [...]

U.S. Personal Income Growth Eased in May

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630a.jpg" width="353">
May personal income rose just 0.2% following a downwardly revised 0.6% gain the prior month. Consensus expectations had been for a 0.3% increase.
Wages &amp; salaries rose a slim 0.1% (7.0% y/y) following the 0.7% pop in April. Wages in service producing industries rose 0.1% (8.3% y/y) after the 0.9% April gain but factory sector wages rose 0.3% (5.4% y/y) following a downwardly revised 0.4% April increase.
Disposable personal income rose 0.2% (5.5% y/y) following three months of 0.4% and 0.5% gain. When adjusted for price inflation take home pay rose 0.1% (3.2% y/y) for the second consecutive month.
Personal consumption was unchanged in May following a 0.6% increase in April due to the 4.5% m/m drop in light vehicle sales. Consensus expectations had been for a 0.1% rise. Spending on durables fell 1.8% (+3.7% y/y) and nondurables spending dipped 0.4% (+6.9% y/y) as gasoline prices fell. Spending on services rose 0.6% (5.6% y/y).
The PCE chain price index was unchanged with lower gas prices but less food &amp; energy the 0.2% m/m increase was double the prior month&#39;s slim increase.
Lessons Learned from the Recent Business Cycle from Philadelphia Federal Reserve Bank President Santomero is available <a href="http://www.philadelphiafed.org/files/br/Q2_05_Santomero.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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.2%</td>
<td>0.6%</td>
<td>6.7%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.0%</td>
<td>0.6%</td>
<td>5.7%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.6%</td>
<td>0.5%</td>
<td>1.0%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630b.jpg" width="353">
The Chicago Purchasing Managers Business Barometer fell again in June to 53.6, the lowest level in two years. Consensus expectations had been for a slight increase to 54.5.
During the last ten years there has been a 65% correlation between the level of Chicago PMI and the three month change in factory sector industrial production.
New orders fell for the third consecutive month and the employment index dropped to 48.9, below 50 for the first month since July of last year. During the last ten years there has been a 75% correlation between the level of the employment index and the three month change in factory sector employment.
The index of prices rose moderately. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>53.6</td>
<td>54.1</td>
<td>57.5</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>56.5</td>
<td>57.9</td>
<td>58.3</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>59.7</td>
<td>54.3</td>
<td>83.9</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Fell Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630d.jpg" width="353">
Initial claims for unemployment insurance dropped another 6,000 to 310,000 last week following a 19,000 decline the week prior that was revised slightly shallower. Consensus expectations had been for an increase to 325,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims fell to 323,500 (-6.4% y/y).
Continuing claims for unemployment insurance rose a slight 4,000 following a deepened 42,000 drop the week prior.
The insured unemployment rate remained at 2.0%, the low for this cycle.

<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">Unemployment Insurance (000s)</a></th>
<th scope="col">06/25/05</th>
<th scope="col">06/18/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>310</td>
<td>316</td>
<td>-10.7%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,600</td>
<td>-11.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630c.jpg" width="353">
The Index of Help-Wanted Advertising from the Conference Board fell to 37 last month after two months at 39 and two months before that at 41.
During the last ten years there has been a 65% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume rose modestly to a still low 39%.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>39</td>
<td>39</td>
</tr>
</tbody>
</table>
Fed Funds Rate Increased to 3.25% 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630g.jpg" width="353">
The Federal Open Market Committee increased interest rates for the ninth time since last June. The target rate for federal funds was raised an expected 25 basis points to 3.25% and the discount rate was raised 25 basis points to 4.25%.
The decision was unanimous.
Today&#39;s press release from the Fed continued to contain a comment suggesting that rates could be raised again. &quot;The Committee believes that, even after this action, the stance of monetary policy remains accommodative ...&quot;
For emphasis the statement indicated that &quot;with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal.&quot;
Discretion was indicated with the comment &quot;the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.&quot;
For the complete text of the Fed&#39;s latest press release please click <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2005/20050630/default.htm">here</a>.
A Search for a Structural Phillips Curve from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr203.pdf">here</a>.

French Unemployment High, Consumer Confidence Low; Germany Sees Slight Declines in Unemployment 
by <a href="/comment/Stone.html">Carol Stone</a> June 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630e.jpg" width="353">
Unemployment is creeping higher in France, with the unemployment rate for May holding at April&#39;s 10.2% of the labor force, according to INSEE&#39;s monthly labor force survey, released today. The rate there, defined according to the ILO specifications used throughout the Euro-Zone, has been on a upward trend since the slowdown in economic activity began in late 2000 (there has been no &quot;official&quot; recession in France as there was in the US).
INSEE also published its household confidence survey for June, which showed a continuing erosion in the overall indicator. The current reading, -30, is the lowest since survey questions were revised in November 2003. More people reported that their living standards had deteriorated during the last year, that this is a poor time to make make major purchases and that they expect to have difficulty saving over the next year. On the less worrisome side, interestingly, their concerns over unemployment prospects actually diminished. And that variable has only weak correlation with the unemployment rate itself. The overall index and the assessment of the household&#39;s current financial condition are much more closely related to the current unemployment rate, as seen in the graph. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050630f.jpg" width="353">
Germany&#39;s unemployment situation continues to make news, although the figures reported today for May and June actually look better. The ILO-defined rate fell 0.3 percentage point in May to 9.3%. This is not &quot;low&quot;, but does give the impression that the climb in the rate that had begun in December may have run its course. &quot;Registered&quot; unemployment, the count of people registered with government unemployment offices, edged down in June to a rate of 11.7% from 11.8% in May; this rate peaked in March at 12.0%. Local observers, quoted in a Reuters news story, point out that the new &quot;Hartz IV&quot; regulations are starting to take effect, reducing unemployment benefits and requiring unemployed workers to accept new jobs more quickly. Thus, it is too early to conclude that these slight improvements in both unemployment rates mark a genuine firming of German economic activity. In fact, ever higher energy costs continue to cast a cloud on the economic outlook everywhere.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France: Unemployment Rate (ILO, %)</td>
<td>--</td>
<td>10.2</td>
<td>10.2</td>
<td>10.0</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">Household Confidence (%)</td>
<td>-30</td>
<td>-29</td>
<td>-24</td>
<td>-23</td>
<td>-22</td>
<td>-27*</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Germany: Employment (Change, Thous)</td>
<td>--</td>
<td>-4</td>
<td>9</td>
<td>134</td>
<td>140</td>
<td>-356</td>
<td>-217</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate &nbsp;(ILO, %)</td>
<td>--</td>
<td>9.3</td>
<td>9.6</td>
<td>9.3</td>
<td>9.2</td>
<td>9.6</td>
<td>8.7</td>
</tr>
<tr>
<td class="firstcol">Registered Unemployment Rate (%)</td>
<td>11.7</td>
<td>11.8</td>
<td>11.8</td>
<td>10.6</td>
<td>10.6</td>
<td>10.5</td>
<td>9.8</td>
</tr>
</tbody>
</table>
</body>
</html>

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050629d.jpg" width="353">
Industrial activity in Japan and Korea shows sharply varying patterns, both in recent months and over the past several years. In Japan, mining and manufacturing output in May stood at 100.1, that is, barely above the amount five years ago for this index based at 100 in 2000. Looking at these endpoints, though, masks the recession in 2001 and a recovery in 2003 and 2004. However, the evolution over the past few months has started to show renewed hesitation. An industry segment in which Japan and Korea compete actively is motor vehicles. For Japan, the corresponding production sector, transport equipment (excluding ships and rolling stock), has been relatively volatile of late, but at 116.3 in May, the sector shows growth since 2000 averaging just over 3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050629e.jpg" width="353">
Total output in Korea has been considerably more vigorous, with the May 2005 index standing a 128.8, an average annualized gain of 5.1% since the base year in 2000. Despite this attractive average, the gains have been uneven over time and across industries. Chemicals and products have been strong fairly consistently, and radio, TV and communications equipment showed sizable increases in 2003 and 2004, but some recent hesitation. The motor vehicle sector, illustrated in the second graph along with that in Japan, has grown 9% - 10% yearly, but after a spike in December and January, has weakened markedly. These latest declines carried total vehicle production down to the lowest in seven months and to a level just equal to the average monthly output in the last two years. They are probably just an adjustment to that end-2004 surge, but may skittishness some skittishness as world energy prices stay high. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Indexes, 2000=100, Monthly, Seasonally adjusted</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Year Ago (Yr/Yr&nbsp;&nbsp; % Chg)</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Japan: Mining &amp; Manufacturing</td>
<td>100.1</td>
<td>102.5</td>
<td>100.6</td>
<td>100.5</td>
<td>100.2</td>
<td>95.0</td>
<td>92.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-2.3</td>
<td>1.9</td>
<td>-0.2</td>
<td>0.9</td>
<td>5.5</td>
<td>3.2</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport Equipment*</td>
<td>116.3</td>
<td>126.4</td>
<td>117.7</td>
<td>113.4</td>
<td>113.5</td>
<td>108.5</td>
<td>105.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-8.0</td>
<td>7.4</td>
<td>0.3</td>
<td>5.0</td>
<td>4.6</td>
<td>3.1</td>
<td>5.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Korea: Mining &amp; Manufacturing</td>
<td>128.8</td>
<td>128.0</td>
<td>129.9</td>
<td>126.6</td>
<td>125.7</td>
<td>113.7</td>
<td>108.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>0.6</td>
<td>-1.5</td>
<td>4.3</td>
<td>4.0</td>
<td>10.8</td>
<td>4.9</td>
<td>8.1</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>139.8</td>
<td>146.7</td>
<td>157.4</td>
<td>127.8</td>
<td>139.1</td>
<td>127.5</td>
<td>116.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>-4.7</td>
<td>-6.8</td>
<td>1.9</td>
<td>9.3</td>
<td>9.1</td>
<td>9.2</td>
<td>9.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Industrial activity in Japan and Korea shows sharply varying patterns, both in recent months and over the past several years. In Japan, mining and manufacturing output in May stood at 100.1, that is, barely above the amount five years [...]

Japanese Industrial Output Sluggish; Korea's Grows Unevenly

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250124J4.jpg

250124K4.jpg

Sales of existing homes increased 2.2% (9.3% y/y) to 4.24 million (SAAR) during December after rising an unrevised 4.8% to 4.15 million in November. Sales increased 3.4% during October but fell 1.3% in September. The December sales increase accompanied an easing last month in the effective 30-year mortgage interest rate to an average 6.72% from 6.81% in November. The Action Economics Forecast Survey expected December sales of 4.17 million units. The sales figures are based on closings of sales signed over the past couple of months.

The median price of all existing homes (NSA) held steady (+6.1% y/y) in December at $404,400, with November, revised from $406,100. Prices remained below the $426,900 high this past June. The median price of an existing single-family home also was unchanged (+6.1% y/y) at $409,300 in December. The median price of condos and co-ops edged 0.2% higher (4.5% y/y) to $359,000 in December from $358,200 in November.

By region, sales of existing homes in the Northeast rose 3.9% (10.4% y/y) to 530,000 after an 8.5% November gain. Sales in the South increased 3.2% (9.0% y/y) to 1.93 million after a 5.6% November rise. Sales in the West improved 2.6% (12.9% y/y) to 790,000 after holding steady in November. To the downside, sales in the Midwest eased 1.0% (+6.5% y/y) to 990,000 after a 5.3% November increase.

The number of existing homes for sale (NSA) fell 13.5% (+16.2% y/y) to 1.15 million after falling 2.9% in November. The supply of homes on the market at the current selling rate (NSA) fell to 3.3 months from 3.8 months in November. This figure rose to a high of 4.3 months in September. The record low in supply of 1.6 months was reached in January 2022. These figures date back to January 1999.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

**How Did U.S. Teenagers Benefit from Holiday Employment?** from the Federal Reserve Bank of St. Louis is available [here](https://www.stlouisfed.org/on-the-economy/2025/jan/how-us-teenagers-benefit-holiday-employment).

250124L4.jpg

250124M4.jpg

- Sales increase to highest level since February.
- Existing home sales rise in three of four regions of the country.
- Median price holds steady.

U.S. Existing Homes Sales Continue to Rise in December

Robert Brusca

250124E.jpg

The S&P composite PMIs in January improved across the board, with the exception of India and the United States. In the U.S., the PMI headline dropped back sharply on sharp weakness in the services sector in the month in the face of what had been resiliency and strength. 

From roughly February to July of 2024, the persistence of declines by sector especially in manufacturing diminished. However, now things have shifted, and we are again in a period when there seems to be more deterioration. The prevalence of manufacturing AND service sector deterioration together has reappeared.

The Russian invasion was a real catalyst of change for the EU, Germany, France, the United Kingdom, Japan, and the United States. Before Ukraine, the recovery from COVID was under way and both services and manufacturing sectors were running policies that left each sector with 50% or higher ranking in 60% to 100% of countries. After Russia’s aggressive action, both sectors were crushed across all these countries; the service sector rebounded first and from March 2024 to date services stood at a ranking above 50% or more in 60% to 100% of the countries. But in the post-invasion environment, the manufacturing sectors showed only about 20% of reporters above a 50% queue standing for manufacturing. Manufacturing continues to be hard hit and well short of normalcy.

Currently we are in another round of weakness looking at a broader group of early reporters that adds India and Australia into the mix. Still, six-month changes show weakness in at least two of three months or three of five months for manufacturing and service sectors. Together they are falling over the same six-months. The ‘best performance’ on this metric apart from the U.S. is Australia where manufacturing has improved on balance over six months for two months running but only after three months of deterioration on that basis.

U.S. performance is an outlier in several ways. The US service sector fell sharply in January, depressing services as well as the composite metric. But over six-months both US services and manufacturing have failed to worsen together for 16-months in a row.

The U.S. has been an anomaly in terms of international performance characteristics. U.S. manufacturing is weakening on balance over six months in six of the last seven months. But the service sector has risen on balance (over the previous six months) in 12 of the last 13 months.

The new sharp weakness in U.S. services (month-to-month) is an issue of it has any staying power.

The four-year queue standing of the manufacturing across eight countries and three sector readings (for each: two sectors plus a composite) shows only five of 24 of these rankings with standings above the 50% mark (above their respective medians) over the past four years. These readings are manufacturing in India (79.6%), services in Germany (63.3%) and services in the EMU (barely…. at 51.0%), and a 59.2 percentile standing for Japan’s service sector (the same for its composite).

250124.jpg

There is still a general trend of composite PMI readings to ease over three months compared to 12-months and generally to be in an easing profile. The U.S. is the only country showing composite progress accelerating sequentially (warning here: the sequential data lag by a month and are only executed on hard data so the sharp January U.S. weakness is not represented in this calculation).

Only eight of 24 sectors show a net rise over the last three months. Ten of 24 sectors still show net weakness over 12 months. Three composite readings are lower on balance over 12 months (India Japan, and the U.K.). Economic conditions are touch and go and, as we saw in Davos, there is some concern about the state of the European economy at a time that the U.S. is threatening to impose tariffs that will weaken their economies.

Composite PMIs Improve Except for the U.S.

250123A1.jpg

250123B1.jpg

Initial claims for unemployment insurance rose to 223,000 in the third week of January from an unrevised 217,000 during the prior week. A 215,000 increase in initial claims had been expected in the Action Economics Forecast Survey. Initial claims have risen from a 203,000 low in the first week of January. During the last four weeks, initial claims averaged 213,500, down from 226,750 four weeks earlier.

Continuing claims for jobless insurance increased 46,000 (7.8% y/y) to 1.899 million in the week ended January 11 from 1.853 million in the prior week. Ongoing claims have risen from a low of 1.834 million in the third week of December. The four week moving average of continuing jobless insurance claims eased to 1.866 million, down from a 1.888 million high in the third week of November.

The insured rate of unemployment was 1.2% for the fourth straight week. This level was increased from a 2022 low of 0.9% and compares to the rise in the overall unemployment rate to 4.1% from 3.4% over the same period.

Unemployment rates vary widely across states. The Labor Department reports that for the week ended January 4, the insured unemployment rate was highest in Rhode Island (3.22%), New Jersey (3.07%), Minnesota (2.73%), Washington (2.52%) and Massachusetts (2.41%). The insured unemployment rates were lowest in Florida (0.33%), Virginia (0.43%), Tennessee (0.58%) and Alabama (0.52%) and the Virgin Islands (0.67%). Rates in other notable states include California (2.32%), Pennsylvania (2.24%), New York (2.08%) and Texas (1.13%). These state rates 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. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250123C1.jpg

250123D1.jpg

- Initial jobless claims increase to highest level in six weeks. 
- Continuing claims approach four-week high.
- The insured unemployment rate remains low.

U.S. Unemployment Insurance Claims Rise in Latest Week

250123E.jpg

EU order trends ‘improved’ slightly in January as the net diffusion reading rose from -40 to -34. Still, that improvement leaves orders below their 3-month, 6-month, or 12-month averages. The queue standard of January orders is in the lower 14th percentile of its historic queue of data. Obviously, it remains a historically weak reading. The order series is volatile as the chart shows. But it is still in a clear downtrend even with the uptick this month.

Export orders have approximately the same profile as for orders overall. But export orders weaken slightly in January compared to December. Export orders overall have a slightly weaker queue standing than total orders at a 13.4 percentile level.

The diffusion readings for stocks of finished goods weakened in January but even with its weaker January assessment, stocks have a firm-to-strong 72.5 percentile standing.

Looking ahead, the outlook for output volume over the next three months improved sharply from its stunning weak reading of -31 in December. However, the rise to -19 in January represents only a 4.8 percentile standing.

Unfortunately, average output prices for three months ahead has reading of +27 in January, up from +23 in December and +11 in November; the backtracking in prices expected, has brought the expectation level for the current reading to a high, 90-percentile standing. These rising inflation expectations are going to be a real problem for the Bank of England.

IP data lag the CBI survey responses. The manufacturing IP growth rate, year-on-year, has a 17.4 percentile standing as of its most recent observation in November 2024. That is also very weak. The CBI results are not giving a different message from the industrial production data, but they are timelier.

The ramp up in inflation expectation is not good new with CPI-H inflation at 3.5% year-over-year and with the core pace at 4.2%. Core inflation, sequentially, is looking stable around the 4.2% pace; for the headline, the pace has accelerated from 3.5% over 12 months to a pace of 5.4% over three months. These results, coupled with the rise in CBI expectations, are not good news for the U.K. or for the BOE.

250123.jpg

United Kingdom

U.K. Order Trends Are Still Eroding

Andrew Cates

**Energy and labour markets**
Chart 1 below highlights two key trends: the real consumer price of energy in the OECD economies (indexed to 1970) has shown significant volatility, with sharp spikes during periods of energy crises (e.g., 1970s oil shocks, 2008, and post-pandemic supply constraints) and declines following market adjustments or advances in energy production. Meanwhile, the US labour share of business output has experienced a steady decline since the 1980s, reflecting structural changes in the economy such as globalization, technological advances, a shift in bargaining power away from labour toward capital as well as higher real energy prices. These trends and the interplay between them will arguably form the basis of several policy choices that will be made (or already are being made) by a new US administration.

250123Z1.jpg

**Electricity prices**
Energy prices, their level and their volatility, arguably play a much bigger role in broader macroeconomic fluctuations than they are given credit for. Chart 2 below shows electricity prices (a 2-year average) across six major developed economies. It shows that the US has faced the cheapest electricity at around $44/MWh. The UK and Germany, in contrast, have faced the most expensive electricity at respectively $106/MWh and $94/MWh. This disparity reflects a mix of factors: European countries, particularly the UK and Germany, face elevated prices due to heavy reliance on natural gas imports, exacerbated by geopolitical tensions (e.g., reduced Russian supply), higher renewable energy integration costs, and carbon pricing mechanisms. The US, in contrast, enjoys lower electricity costs due to more abundant domestic energy resources, particularly natural gas, and less exposure to international energy markets. Against this backdrop it is hardly a surprise that the US economy has flourished (relative to other advanced economies) while the UK and Germany have floundered.

250123Z2.jpg

**The UK labour market**
This week’s labour market data additionally suggest that the UK will probably struggle to keep pace with the US economy in the period immediately ahead. The data specifically revealed that employment growth is slowing on all measures, and the PAYE measure of payrolls in particular (see chart 3 below). And while private sector pay growth has also slowed, the 6-month annualised rates of growth still stood at a relatively lofty 5.8% in December. Weaker employment growth will encourage the BoE to cut rates again before too long (probably in February) but weaker wage growth could also be necessary for a much looser policy stance to be enacted over the next few months.

250123Z3.jpg

**Household savings and labour market activity**
At a broader global level, a key risk to the economic outlook at present concerns restrictive monetary policy and its impact on labour market activity and household spending. Chart 4 below shows that household saving rates in the world’s major economies have – on the whole – been rebounding over the past two years. Simultaneously, the unemployment rate in advanced economies has begun to climb. These trends align with the tightening of monetary policy that’s been enacted in recent years and economic uncertainty. But if that combination persists, it could place a bigger brake on the world economy this year than many analysts are anticipating.

250123Z4.jpg

**China’s credit impulse**
Another big source of uncertainty, at present, concerns China. Chart 5 below compares the Citigroup Economic Surprise Index for emerging markets (EM) and Haver’s calculations for China’s credit impulse (the change in new credit as a percentage of GDP). The chart suggests that China's credit growth influences broader EM economic fluctuations. During periods of robust credit growth (e.g., 2020-2021), driven by stimulus measures, EM economies benefited from improved liquidity and demand from China. Conversely, periods of credit tightening (e.g., 2017 and 2023-2024) weighed on economic surprises, reflecting weaker support for growth. These dynamics underline China’s outsized role in shaping sentiment and economic conditions in emerging markets. That its credit impulse, moreover, remained negative in Q4 (of 2024) underscores how China might continue to exert downward pressure on the world economy in the period immediately ahead.

250123Z5.jpg

**South Korean trade**
Another source of uncertainty for the world economy, at present, is the optimism surrounding AI. While proponents highlight its transformative potential to boost productivity, efficiency, and innovation across industries, sceptics question the timeline for a meaningful economic impact. With that in mind it would be inappropriate to draw strong conclusions from chart 6 below but it is certainly of note that South Korea – which has been heavily reliant on AI-fuelled trade – saw a big slowdown in export growth in the first 20 days of January. Much of that slowdown, moreover, could be traced to a big drop in semiconductor trade.

250123Z6.jpg

Financial markets have enjoyed a notable lift in sentiment over recent days, driven by renewed optimism about the domestic economic policies of a new US administration. Investors have certainly been cheered by early signals of a pro-growth strategy, with the energy sector taking centre stage following a ceasefire between Israel and Gaza and the announcement of measures aimed at reducing US energy costs (see charts 1 and 2). Meanwhile, China’s stronger-than-expected growth figures last week and softer-than-expected inflation readings from both the US and the UK have fuelled gains across equity and bond markets, bolstering risk appetite in other markets. However, despite the prevailing optimism, several factors warrant caution. Chief among them is the global uncertainty that surrounds the policy choices of a new US administration. The policy choices of central banks will also be critical, particularly as labour market strength could keep inflation risks alive (charts 3 and 4). Questions also linger about China’s ability to sustain its growth momentum, especially as its property sector and consumer demand face ongoing challenges (chart 5). Finally, while artificial intelligence is increasingly seen as a driver of future growth and productivity, doubts persist over its near-term potential to meaningfully transform the world economy (chart 6). For now, investors appear content to ride the wave of positive sentiment, but vigilance over these risks will be critical as the economic landscape continues to evolve.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3FHPiTz4Zs3YDwhsUnwg5v?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Economy in Brief: June 2005

Jump to:

French Unemployment High, Consumer Confidence Low; Germany Sees Slight Declines in Unemployment

Fed Funds Rate Increased to 3.25%

Help-Wanted Advertising Down

Initial Claims for Jobless Insurance Fell Further

Chicago Purchasing Agents' Index Fell Again

U.S. Personal Income Growth Eased in May

U.S. Personal Income Growth Eased in May

Japanese Industrial Output Sluggish; Korea's Grows Unevenly