Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080314g.jpg" align="left" border="0" height="265" width="353">
The Bank of France has put the logical spin on its survey as
showing that growth continues.
After a marked slowdown in French GDP growth in 4Q, the new
BoF survey shows that activity has picked up somewhat, although the
Industry sentiment index is still below its 12-month average.On the basis of its February business
survey, the central bank actually has revised down its projection for
Q1 GDP growth to 0.4% from the 0.5% it initially forecast. This is just
below the December forecast of the national statistics institute Insee
and just above the 0.3% gain in 4Q.
Industry output continued to expand in February but less
strongly than in January, to say the least. The February reading for
production is 4.55 compared to 19.17 for January and a 12-month average
of +7. Weaker gains were
reported in most sectors. Autos posted an outright decline in February
after a spike in January and a decline in the auto output in December.
Manufacturing capacity utilization slipped to 83.4% after a rebound in
January to 83.5%, remaining above the long-term average of 83 since
1987 but below the average of 84 for the last 12 months.
Executives said new domestic orders slowed in February and
overall order books were somewhat lighter, in fact at 8.76 they are
below the 12-month average for orders and below the long-term average
of 9. 
Growth also slowed in most segments of the services sector in
February.
Activity is expected to continue to expand in most branches
but at a more moderate pace. Foreign orders gains were much weaker in
February, as the euro climbed. Importantly, service providers indicated
that price hikes would be slightly less rapid in the months ahead. Cleary the BoF has put some positive
spin on the report in which growth is indicated but momentum seems to
be fading.
Going back to 1987 the semi-finished goods sector is in dire
straits with the lowest production outlook and lowest new orders it has
ever seen. Production in this sector is in the bottom 16 percent of the
range for orders in the past 30 years. Auto sector production is in the
bottom third of its range as is the agriculture and food sector;
consumer goods production is in the bottom 42 percent of its range. The production outlook for capital
goods and consumer goods is the lower 36th
percentile and lower 15th percentile of their
respective ranges. This report is really very weak.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Bank of France Monthly INDUSTRY Survey: SUMMARY</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>12 MO</td>
<td>Since Jan-87</td>
<td>2Yr Percentile</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>AVERAGE</td>
<td>Average</td>
<td>rank/range</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Production-latest mo</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>5.44</td>
<td>19.17</td>
<td>-4.13</td>
<td>7</td>
<td>7</td>
<td>32.5%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Production Outlook</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>12.91</td>
<td>15.86</td>
<td>22.21</td>
<td>16</td>
<td>15</td>
<td>29.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Demand</td>
</tr>
<tr>
<td class="firstcol">Overall order books</td>
<td>22.81</td>
<td>24.85</td>
<td>25.33</td>
<td>27</td>
<td>4</td>
<td>39.7%</td>
</tr>
<tr class="even">
<td class="firstcol">Foreign Orders</td>
<td>10.24</td>
<td>10.87</td>
<td>8.89</td>
<td>11</td>
<td>9</td>
<td>27.0%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">New Orders</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>8.76</td>
<td>12.28</td>
<td>9.3</td>
<td>10</td>
<td>9</td>
<td>18.9%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Stocks: Finished Gds</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>-3.76</td>
<td>-1.88</td>
<td>-4.76</td>
<td>-3</td>
<td>-2</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>83.35</td>
<td>83.48</td>
<td>80.86</td>
<td>84</td>
<td>83</td>
<td>57.2%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol"> Hiring</td>
</tr>
<tr>
<td class="firstcol">Latest Mo</td>
<td>0.41</td>
<td>2.74</td>
<td>-1.43</td>
<td>0</td>
<td>-1</td>
<td>74.8%</td>
</tr>
<tr class="even">
<td class="firstcol">Outlook</td>
<td>-0.44</td>
<td>-1.48</td>
<td>-0.67</td>
<td>-2</td>
<td>-4</td>
<td>88.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industry Sentiment
Index</td>
<td>106.8</td>
<td>106.47</td>
<td>105.68</td>
<td>107</td>
<td>107</td>
<td>48.3%</td>
</tr>
</tbody>
</table>
</body></html>

The Bank of France has put the logical spin on its survey as showing that growth continues. After a marked slowdown in French GDP growth in 4Q, the new BoF survey shows that activity has picked up somewhat, although the Industry [...]

BoF Indicator Continues to be Weak

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/080314d.jpg" width="353">
The University of Michigan&#39;s consumer sentiment index, in the preliminary reading for March, fell another 0.4% m/m to 70.5 after the 9.7% plunge during February. Consensus expectations had been for a somewhat sharper decline to a reading of 70.1 for early this month.
A lower index of expected business conditions during the next year accounted for all of the decline in overall March sentiment. The 1.6% decline followed an 8.4% February drop and left the index at its lowest since early 1992. Expectations for business conditions during the next year fell 6.0% (-49.5% y/y) but expectations for conditions over the next five years rose, making up virtually all of a February decline. They remained down 7.4% y/y. Expectations for personal finances also improved and made up a February drop but still were down 7.4% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080314d.jpg" width="353">
Opinions about government policy were stable m/m (-22.5% y/y) following the sharp 11.5% shortfall during February. The percentage of those surveyed who indicated that they thought government was doing a good job made up the February decline. They rose to 13% but an increased 44% had a poor opinion.
Expectations for inflation during the next twelve months surged to 4.6%, the highest level in nearly two years though inflation expectations during the next five to ten years fell slightly to 3.3%.
The current conditions index rose a slight 1.0% m/m after the 11.2% February slide. The view of current conditions for buying large household goods ticked up 1.6% after falling 15.8% m/m in February and the view of current personal finances was unchanged after a 4.1% (-15.3% y/y) February drop.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
Assessing Employment Growth in 2007 from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-09.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">March (Prelim)</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">March y/y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>70.5</td>
<td>70.8</td>
<td>78.4</td>
<td>-20.2% </td>
<td>85.6</td>
<td>87.3</td>
<td>88.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>84.6</td>
<td>83.8</td>
<td>94.4</td>
<td>-18.3%</td>
<td>101.2</td>
<td>105.1</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>61.4</td>
<td>62.4</td>
<td>68.1</td>
<td>-22.0%</td>
<td>75.6</td>
<td>75.9</td>
<td>77.4</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's consumer sentiment index, in the preliminary reading for March, fell another 0.4% m/m to 70.5 after the 9.7% plunge during February. Consensus expectations had been for a somewhat sharper decline to a [...]

Michigan Consumer Sentiment 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/080314a.jpg" width="353">
The consumer price index (CPI-U) was unchanged in February following two consecutive months of 0.4% increase. It compared to expectations for a 0.3% rise and was the weakest since prices were unchanged last August. A slight dip in the y/y rate of increase to 4.0% left it still at the second strongest growth rate since 2005.
Less food &amp; energy, consumer prices also were unchanged m/m after January&#39;s elevated 0.3% increase. That also fell short of expectations for a 0.2% increase and it was the weakest reading since November 2006. The lack of an increase brought the y/y gain down to 2.3%, its lowest since last October. A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/07v13n3/0712rich.pdf">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080314b.jpg" width="353">
Inflation of food &amp; beverage prices took a breather last month and dipped to 0.4% after a 0.7% January increase. It nevertheless left the y/y gain elevated at 4.6%, up from a 4.0% rate of increase last year. Prices for meats poultry &amp; fish actually fell 0.1% m/m (4.7% y/y) after a 0.8% January pop and prices for fruits &amp; vegetables also fell by 1.3% (+1.4% y/y) after the 2.2% rise during January. Cereal &amp; bakery product prices, however, surged 1.8%. The y/y increase here of 6.6% was the strongest since 1990.
Energy prices prices also were tame last month and posted a 0.5% decline. The drop owed to a 2.0% m/m decline in gasoline prices but that still left them up 32.7% from twelve months earlier. Moreover, the weekly data for this month already indicate that the respite from price strength has ended. A 5.5% m/m rise in average gasoline prices so far in March to $3.23 per gallon would be the strongest since November. Also, it will add by itself 0.3% to the March CPI increase. Prices for fuel oil &amp; other fuels in February backed off 1.3% (+33.0% y/y) after a strong 3.7% January surge. Natural gas &amp; electricity prices, however, worked the other way and rose 1.7% (3.5% y/y).<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080314c.jpg" width="353">
Core goods prices in February dipped 0.1%, the first m/m decline since last June. It reflected a 0.3% decline (-1.0% y/y) in apparel prices and no change (-0.6% y/y) in household furnishings &amp; operations (-0.6% y/y). Prices for new &amp; used motor vehicles also fell by 0.2% (0.0% y/y) during February.
Core services price inflation also took a breather in February and eased to 0.1%. Shelter prices, which constitute 33% of the total CPI, were unchanged (2.9% y/y). Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, ticked up 0.1% (2.6% y/y). Medical care services prices also rose just 0.1% after a 0.6% January surge. Prices were up a strong 5.0% y/y after last year&#39;s 5.3% increase. Tuition costs rose 0.3% (5.5% y/y), about equal to the strong 5.6% gain during all of last year. Public transportation prices dipped 0.1% (+5.2% y/y).
Stable Prices, Stable Economy: Keeping Inflation in Check Must be No. 1 Goal of Monetary Policymakers from the Federal Reserve bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2008/a/pdf/inflation.pdf"> here</a>.A Falling Dollar Raises Inflation in the Gulf also from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/iet/20080201/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Feb. Y/Y&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.0</td>
<td>0.4</td>
<td>0.4</td>
<td>4.0&nbsp;</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.3</td>
<td>0.2</td>
<td>2.3&nbsp;</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.0</td>
<td>0.0&nbsp;</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services less Energy</td>
<td>0.1</td>
<td>0.4</td>
<td>0.3</td>
<td>3.2</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>-0.5</td>
<td>0.7</td>
<td>1.7</td>
<td>18.9</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp; Beverages</td>
<td>0.4</td>
<td>0.7</td>
<td>0.1</td>
<td>4.6&nbsp;</td>
<td>4.0</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td>&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.7 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9 </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy&nbsp;</td>
<td>0.3</td>
<td>0.3</td>
<td>-0.1</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The consumer price index (CPI-U) was unchanged in February following two consecutive months of 0.4% increase. It compared to expectations for a 0.3% rise and was the weakest since prices were unchanged last August. A slight dip in the [...]

U.S. CPI Total & Core Unchanged

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313i.jpg" align="left" border="0" height="265" width="353">Japan&#8217;s index of industrial
output was revised lower. But the
general growth trend remains in force. Year/year output trends are
fairly stable at a moderate 2% or so rate of growth. Over six months,
trends point lower; over 3 months trends point sharply lower.

All major industrial and product growth sectors show weakness
in the recent one-month and three-month periods. Textiles, investment
goods and mining show the more persisting decelerating trends.

However, different leading indicators tell different stories
about Japan&#8217;s economy and where it is going. The OECD sees an upturn in
progress in six months, as its CLI has turned higher. Japan&#8217;s own
leading index is still locked in a downtrend going back to 2006.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313j.jpg" align="right" border="0" height="265" width="353">
The recent surge in the yen comes against this mixed
background. In the past the yen has not been able to rise strongly
unless the domestic economy was doing well. But in this case the yen&#8217;s
rise is the counter part of the dollar&#8217;s ubiquitous fall. The yen may
be driven more by the US and by yen funding unwinds than by Japan&#8217;s own
fundamentals. The BOJ is not talking of intervention, indeed, the
Keidanren, the influential Japan employers union, said it would not ask
for intervention unless the dollar got much stronger.

Japan&#8217;s exports have been holding up and there is some talk of
improved productivity in Japanese companies. But the dollar&#8217;s move up
could put all of this in jeopardy. Year-over-year output trends remain
steady but over shorter horizons we do have something to think about. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Japan
Industrial Production Trends </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">seas adjusted</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Mining &amp; MFG</td>
<td>-2.2%</td>
<td>1.4%</td>
<td>-1.6%</td>
<td>-9.3%</td>
<td>2.6%</td>
<td>2.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>-2.6%</td>
<td>1.7%</td>
<td>-1.3%</td>
<td>-8.6%</td>
<td>3.4%</td>
<td>2.3%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-2.2%</td>
<td>1.4%</td>
<td>-1.6%</td>
<td>-9.6%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Textiles</td>
<td>-3.0%</td>
<td>2.5%</td>
<td>-2.2%</td>
<td>-10.2%</td>
<td>-8.6%</td>
<td>-5.6%</td>
<td>-4.2%</td>
</tr>
<tr>
<td class="firstcol">Transport</td>
<td>-3.2%</td>
<td>2.4%</td>
<td>-2.9%</td>
<td>-14.2%</td>
<td>31.5%</td>
<td>11.6%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Product Group</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-1.7%</td>
<td>2.1%</td>
<td>-2.1%</td>
<td>-6.8%</td>
<td>12.8%</td>
<td>4.0%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>-2.8%</td>
<td>1.3%</td>
<td>-1.1%</td>
<td>-10.3%</td>
<td>3.1%</td>
<td>4.0%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Investment Goods</td>
<td>-0.8%</td>
<td>-0.6%</td>
<td>-1.9%</td>
<td>-12.6%</td>
<td>-8.3%</td>
<td>-3.8%</td>
<td>5.8%</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>-2.9%</td>
<td>1.1%</td>
<td>-5.9%</td>
<td>-27.2%</td>
<td>-15.9%</td>
<td>-5.1%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Electricity &amp; Gas</td>
<td>-1.9%</td>
<td>0.2%</td>
<td>2.0%</td>
<td>1.0%</td>
<td>14.0%</td>
<td>5.3%</td>
<td>-2.8%</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s index of industrial output was revised lower. But the general growth trend remains in force. Year/year output trends are fairly stable at a moderate 2% or so rate of growth. Over six months, trends point lower; over 3 months [...]

Japan's Industrial Sector Slows Down, Does the Economy?

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313h.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s seasonally adjusted headline sales spurted over six
months then slowed over three months. The three-month slowdown however
is at a slightly slower pace than year-to-year sales. On the
quarter-to-date sales are better than their year/yearr pace and better
than their three-month pace.

For not seasonally adjusted data, Japan&#8217;s January retail sales
also jumped over six months compared to 12 months ago, but over the
recent three months sales were much weaker and generally back to their
year/year pace (a little better). In the current quarter too, Japan
retail sales are advancing at a pace close to the pace they posted over
the past year. These trends apply to most retail sales components.

Motor vehicles are one category that is an exception to some
of these generalities. MV sales did spurt over six months and slowed
from that pace over 3 months but the three-month pace has remained
above the year/year pace and as a result the quarter to date pace is
also elevated. But since MV sales are volatile it is never possible to
know if it is spurting and will have legs or will dissipate or even
reverse. Japan&#8217;s economy has been engaged in a long slowdown. But
recently several of its cyclical measures have shown some upside. Auto
sales may be another one of those new bright signs.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Japan
Retail Sales Trends </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.6%</td>
<td>-0.8%</td>
<td>0.7%</td>
<td>1.8%</td>
<td>7.2%</td>
<td>1.2%</td>
<td>-4.7%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>2.9%</td>
<td>-0.8%</td>
<td>0.1%</td>
<td>8.5%</td>
<td>17.7%</td>
<td>5.6%</td>
<td>-14.2%</td>
<td>14.7%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Beverage</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>2.6%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">Fabric apparel &amp;
accessories</td>
<td>1.2%</td>
<td>-2.6%</td>
<td>1.5%</td>
<td>0.0%</td>
<td>6.2%</td>
<td>0.0%</td>
<td>-24.6%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">Rest of Retail</td>
<td>0.2%</td>
<td>-0.9%</td>
<td>1.2%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>0.9%</td>
<td>-3.0%</td>
<td>0.1%</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s seasonally adjusted headline sales spurted over six months then slowed over three months. The three-month slowdown however is at a slightly slower pace than year-to-year sales. On the quarter-to-date sales are better than [...]

Japan Retail Sales: A Jump Then a Slowing

<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/080313f.jpg" width="353">
The U.S. government ran a budget deficit of $175.6B last month, quite a bit higher than last year&#39;s February deficit of $120B.
For the first five months of FY08 the government ran a budget deficit of $263.3B versus a deficit of 162.2B during the first five months of FY07.
For the fiscal year to date, growth in federal receipts slowed to just 1.3%, down from 9.3% growth during the first five months of FY07. Lower stock prices and the weaker economy with its slower employment growth stalled growth in individual income tax receipts (44% of total receipts) at 0.7% from 12.8% last FYTD. Withheld income taxes grew 5.3%, half the rate of gain last year, but non-withheld taxes grew just 3.6% versus 20.9% growth during the five months of FY07.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313g.jpg" width="353">
Corporate income taxes (13% of total receipts) fell 4.8% due to lower corporate profits. During FY07 they rose 16.5% during the first five months. Unemployment insurance receipts fell 6.1% due to lower employment growth.
U.S. net outlays grew 10.2% early this fiscal year and that was nearly four times the growth early in FY07. Growth in defense spending (19% of total outlays) surged to 27.8% while Medicare expenditures (12% of outlays) surged 47.3%. Growth in social security spending (21% of outlays) held about steady at 4.8% but interest expense fell 1.5% as interest rates backed down a bit.
The Government&#39;s financial data is available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Finance</a> &nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005 &nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-$175.6B</td>
<td>$17.8B</td>
<td>-$120.0B (2/07)</td>
<td>-$162.0B</td>
<td>-$248.2B</td>
<td>-$318.7B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$105.7B</td>
<td>$255.2B</td>
<td>-12.1%</td>
<td>6.7%</td>
<td>11.8%</td>
<td>14.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$281.3B</td>
<td>$237.4B</td>
<td>17.1%</td>
<td>2.8%</td>
<td>7.4%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. government ran a budget deficit of $175.6B last month, quite a bit higher than last year's February deficit of $120B. For the first five months of FY08 the government ran a budget deficit of $263.3B versus a deficit of 162.2B [...]

U.S. Budget Deficit Deeper Due to Revenue Shortfall & Spending Surge

<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>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313d.jpg" width="353">
Overall import prices during February gained only 0.2% after a very firm, little revised 1.6% January increase. Expectations had been for a stronger 0.8% rise last month.
Petroleum prices fell an unexpected 0.5% after a 4.8% surge in January. That decline helped industrial materials prices to rise just 0.2%, but crude petroleum prices look to be up 8.0% this month versus February.
Less petroleum import prices were strong again last month and rose 0.6%. The lower foreign exchange value of the dollar has pushed the y/y increase in these prices to 4.5%, the strongest rate of increase since 1995. 
 During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a reduced 47% against a broader basket of currencies.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313e.jpg" width="353">
Prices for industrial supplies &amp; materials excluding petroleum surged again, last month by 2.5% (12.5% y/y) led by another surge in chemical prices (23.9% y/y). Finished metal prices also have been strong (12.4% y/y) as have been paper prices (2.3% y/y). They are recovering after deflation last year. The detailed import price series can be found in the Haver USINT database. 
Capital goods import prices rose just 0.1% (0.9% y/y) but that y/y gain follows a 0.4% increase last year and a 0.7% decline in 2006. Prices of computers, peripheral and semiconductors fell 0.5% last month (-5.0% y/y). Less the high tech sector, capital goods prices rose 0.3% (3.4% y/y) and here again the y/y increase is well elevated from a 2.7% rise last year and a 1.4% 2006 gain.
Finally, prices for nonauto consumer goods imports rose 0.3% in February (2.1% y/y) and the y/y rise in prices is now up from a 1.6% 2007 increase and a 0.4% uptick during 2006. Apparel prices are well up (2.0% y/y), double the rise of last year.
Total export prices have been quite strong with the 6.8% y/y gain led by a 30.8% jump in agricultural prices. That is followed by an accelerated 4.6% y/y gain in nonagricultural export prices which rose 3.6% last year. 
Today&#39;s remarks by Treasury Secretary Henry M. Paulson, Jr. can be found <a href="http://www.treas.gov/press/releases/hp872.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.2%</td>
<td>1.6%</td>
<td>13.6%</td>
<td>4.2%</td>
<td>4.9%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-0.5%</td>
<td>4.8%</td>
<td>60.9%</td>
<td>11.6%</td>
<td>20.6%</td>
<td>37.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.6%</td>
<td>0.7%</td>
<td>4.5%</td>
<td>2.7%</td>
<td>1.7%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.9%</td>
<td>1.2%</td>
<td>6.8%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>


</html>

Overall import prices during February gained only 0.2% after a very firm, little revised 1.6% January increase. Expectations had been for a stronger 0.8% rise last month. Petroleum prices fell an unexpected 0.5% after a 4.8% surge in [...]

U.S. Total Import Prices Eased, Nonoil Strongest Since 1995

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

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

Service Health

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

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Sandy Batten

260617V1.jpg

260617W1.jpg

Total retail sales rose a much larger-than-expected 0.9% m/m (6.9%y/y) in May following a slightly downwardly revised 0.4% monthly gain in April (previously 0.5% m/m), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 0.5% m/m gain. Excluding autos, other sales increased 0.8% m/m (7.5% y/y) after an unrevised 0.7% m/m increase in April. Expectations were for a 0.5% monthly rise.

Elevated retail gasoline prices continued to boost the value of gasoline sales in May. Gasoline sales increased 3.4% m/m (26.5% y/y) in May on top of a 2.8% m/m increase in April. However, both monthly increases were slower than the 14.2% monthly jump reported in March. Gasoline sales accounted for 31% of total sales in May. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.7% m/m in April, up from 0.2% m/m in April. Sales excluding both autos and gasoline increased 0.5% m/m in May, the same monthly gain as in April.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in May, rising 0.7% m/m (6.3% y/y) following an unrevised 0.5% monthly increase in April. The strong performance at the end of Q1 followed by solid gains in April and May put the April-May level of control group sales up 8.6% at an annual rate from the Q1 average, pointing to another solid contribution by consumption to overall GDP growth in Q2. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales generally increased across major sectors in May. Auto sales rebounded, rising 1.2% m/m in May and more than reversing the 0.9% monthly decline in April. This was the third gain in auto sales in the past four months. Furniture sales rose 1.0% m/m but sales at electronics and appliance stores slipped 0.5% m/m. Building material sales gained 1.0% m/m on top of a 1.1% monthly increase in April. Clothing sales rose 0.3% m/m. Sales at general merchandise stores gained 0.4% m/m in May. Miscellaneous sales jumped 2.3% m/m in May, their first monthly gain in three months. Sales by nonstore retailers continued their strong performance, increasing 1.5% m/m in May on top of a 1.1% monthly rise in April. Over the first five months of this year, nonstore retail sales have risen 7.2%, not annualized. By contrast, food sales were unchanged in May from April while sales at restaurants edged down 0.1% m/m in May, their first monthly decline in four months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

260617X1.jpg

260617Y1.jpg

- Total sales increased 0.9% m/m in May, nearly twice expectations.
- Auto sales rebounded, rising 1.2% m/m in May, more than reversing a 0.9% monthly decline in April. 
- Gasoline sales rose 3.4% m/m in May.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in May, the same monthly increase as in April.
- Sales of the retail control group that is used to construct PCE rose 0.7% m/m in May and are 8.6% annualized above the Q1 average.

U.S. Retail Sales Jumped More than Expected in May

Winnie Tapasanun

260617A49.jpg

260617B49.jpg

Mortgage applications fell 3.8% w/w (+8.6% y/y) in the week ending June 12 following a 10.8% rebound in the week ending June 5, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the fourth w/w fall in five weeks, lowering the index to 269.5. Applications for loans to purchase a house slid 3.4% (+3.0% y/y) in the June 12 week, down for the fourth time in five weeks, after a 7.3% rise in the previous week. Applications for loan refinancing dropped 4.5% (+17.0% y/y) in the June 12 week, the seventh w/w decline in eight weeks, following a 15.3% jump in the June 5 week.

The effective interest rate on a 30-year fixed-rate loan was unchanged at 6.78% in the week ending June 12; it was above a low of 6.24% in the February 27 week but below a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages edged up 2bps to 6.18% in the June 12 week, the highest in three weeks, from 6.16% in the previous week; it was up from a low of 5.60% in the week of September 20, 2024 but down from a high of 7.44% in the week of October 27, 2023. Meanwhile, the rate on 30-year jumbo loans declined 4bps to 6.78% in the June 12 week from 6.82% in the prior week; it was above a low of 6.25% in the February 27 week but below a high of 7.99% in the week of October 27, 2023. The rate on a 5-year ARM fell 7bps to 6.16% in the June 12 week, the first w/w decline in six weeks, from 6.23% in the previous week (the highest since the week of August 15, 2025); it was above a low of 5.38% in the February 20 week but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan edged up to 40.3% of total applications in the week ending June 12—the fourth w/w increase in five weeks and the highest level since the May 15 week—after rising to 40.2% in the week ending June 5; it remained below a peak of 61.9% in the January 16 week but above a low of 34.6% in the week of May 23, 2025. The adjustable-rate mortgage (ARM) share of activity slipped to 8.5% in the June 12 week from 8.6% in the prior week; it was below a peak of 12.9% in the week of September 12, 2025 but above a low of 4.7% in the week of January 3, 2025.

The average size of a mortgage loan fell 1.5% w/w (+3.7% y/y) to $394,100 in the June 12 week, the lowest level since the April 3 week, after a 0.4% rebound to $399,900 in the June 5 week. The average size of a purchase loan dropped 1.9% (+4.0% y/y) to $456,600 in the June 12 week following a 2.8% recovery to $465,300 in the prior week. The average size of a loan to refinance a mortgage fell 0.4% (+7.0% y/y) to $301,400 in the June 12 week on top of a 2.3% decline to $302,500 in the previous week, marking the third consecutive w/w fall, the sixth decline in seven weeks, and the lowest level since the week of July 25, 2025.

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

- Purchase applications -3.4% w/w, down for fourth time in five weeks; refinance applications -4.5% w/w, seventh fall in eight weeks.
- Effective interest rate on 30-year fixed loans unchanged at 6.78%, up from a late-February low of 6.24%.
- Average loan size down for the second time in three weeks, lowest since the April 3 week.

U.S. Mortgage Applications Down 3.8% in the June 12 Week, Fourth Drop in Five Weeks

260617E.jpg

It's an interesting time for the Bank of England to be meeting; it has its next policy meeting on June 18. Top money center central banks have been meeting, and the European Central Bank delivered a rate hike, with what is believed to be a likelihood of another hike before the end of the year. The Bank of Japan as just met and executed a 25-basis-point rate hike that brought the overnight interest rate up to 1% for the first time in 31 years. The Federal Reserve meets today and although the Fed is not expected to make an interest rate change, it is widely expected to remove the language that implies the next rate change is likely to be a reduction. Against that background, there is a pending deal to be signed on Friday between the United States and Iran to end the hostilities, to open the Strait of Hormuz, and to allow a normalization—or at least a transition toward normalization—of traffic flow through the Strait of Hormuz and the restoration of the delivery of the world's oil supplies.

Against this background, the Bank of England will be making its rate decision. Part of this background shows other central banks having taken steps to become less accommodative or more vigilant against inflation risks and what have been ongoing overshoots of inflation targets by monetary policy globally. The Bank of England is part of this phenomenon as its rate of inflation, measured by the CPIH, is 3% year-over-year, a full percentage point above where it's supposed to be. However, both the CPIH and the HICP treatments for measuring U.K. inflation show inflation edging slightly lower—from 3% for the CPIH over 12 months to 2.7% over three months annualized. For the HICP, it moves from 2.9% over 12 months to a 2.7% annual rate over three months. Both of these are small moves but in the right direction. In addition, the CPIH core measure, excluding food, energy, alcohol, and tobacco, shows inflation declining from 2.9% over 12 months to 2.6% at an annual rate over six months, and to 1.7% at an annual rate over three months.

In short, inflation progress in the U.K. is very much in gear for the headline; inflation is quite moderately easing, however. For the core, the move lower is impressive and considerable. The question is whether the MPC at the Bank of England will find these movements sufficient in and of themselves to stay their hand and hold interest rate policy, or whether the Committee will join the ranks of central banks hiking interest rates to make sure that inflation makes that turn lower.

The situation in the Strait of Hormuz is hopeful, but not definitive, and there have been a number of ceasefires in the Middle East that have been called and then broken up relatively quickly. This time, markets are reacting to this particular announcement much more decisively and treating it as if this one is the ‘Real McCoy’ with oil prices having fallen down into the mid $70/barrel range and other indicators showing that markets are convinced that prices are moving lower too. Are the Bank of England's MPC members buying onto this as well? Or are they going to treat this as perhaps one last opportunity to get interest rates up and to make sure that the inflation rate goes down?

U.K. inflation on a monthly basis shows a slight tendency to accelerate in May, with inflation diffusion measuring inflation acceleration month-to-month at 58.3%, above the neutral reading of 50. However, diffusion had been at 50% in April and at 41.7% in March. Acceleration has been broadly blunted. In addition, the May increase in the CPIH was only 0.1%, the same as in April, with March having posted a much stronger increase of 0.4%.

Looking at trends sequentially over 12 months, six months and three months, diffusion is only 25% over 12 months; it is 50% over six months and 25% over three months. These metrics reinforce the view that inflation is not broadly accelerating but rather decelerating and moving back into line.

Taking the year-over-year inflation rate, it's a ranking of overall inflation rates back to January 2000. The headline CPIH is still high at a 74.4 percentile standing; that means it has been higher than 3% about 25% of the time and lower about 75% of the time. The average ranking across the various metrics in the table is 61%. That's above a ranking of 50% that delineates the median for the period. And despite the fast fall in the CPIH core rate, the year-over-year core is at 2.9% and has an 81.2 percentile ranking, meaning it has been higher since January 2000, less than 20% of the time. However, that 12-month rate of 2.9% is now down to 1.7% over three months. There are too many ways to look at inflation, at the environment, at what other central banks have done, and at trends to know with any certainty what the BOE will do.

260617.jpg

The Bank of England has had a long period of overshooting its inflation target. It certainly will want to make sure that it's on a clear path toward getting inflation back to 2%. There's a question here about how much the Bank of England will want to trust the trend that it sees, how much it wants to trust the fast drop in the core rate, and then how much it wants to believe that the deal struck with Iran to open the Strait of Hormuz is going to prove durable. There are no real answers to these questions; they're going to be based upon opinions and perceptions, and they're also going to be based upon the pressure that the Bank of England feels about needing to make sure that it gets inflation back to 2% after its long period of intransigence. We'll find this out tomorrow.

United Kingdom

U.K. Inflation Dips and Shows Progress

Michael J. Moran

260616A.jpg

260616B.jpg

The headline index on import prices rose 1.9% in May, close to the blistering pace in April and the fourth consecutive high-side reading. This recent pressure has pulled the year-over-year change to 6.7%, a distinct shift from last year when import prices showed no change over the 12 months of 2025.

Prices of petroleum products have been the most important factor behind the recent surge, increasing 13.0% in May after an average of 17.8% in the prior two months. However, prices excluding petroleum products also have stirred this year, as they have increased more than 0.6% in each of the past five months. May posted the firmest increase in this string of brisk readings (1.3%). Prices of consumer goods had been increasing moderately in early 2026, but they jumped 0.5% in May. The changes in capital and consumer goods led to an increase of 0.8% in nonpetroleum prices in May and an average of 0.6% in the first five months of the year.

Some observers might seek to look for the effects of tariffs on import prices, but these figures would not be especially helpful in this regard, as prices are recorded before the imposition of tariffs. However, if foreign producers wished to absorb the tariff burden to remain competitive in the US market, they could reduce invoiced prices to keep post-tariff prices steady. Indeed, nonpetroleum prices softened after April of last year following the announcement of President Trump’s Liberation Day tariffs. The subsequent easing of some of the draconian tariffs and the nullification of tariffs imposed under the International Emergency Economic Powers Act might be factors leading importers to return to original prices this year. Given that the pressure on import prices ex-petroleum has been concentrated in the capital goods area, there does not seem to be a rush to return to pre-tariff pricing.

On the export side, prices rose 1.3% in May, continuing the firm pace seen in the preceding four months. Petroleum prices have played a role in this pressure, as shown by an increase of 2.4% in the industrial supply category (petroleum prices alone are not available on the export side). Food prices also have jumped this year, increasing 0.8% in May after an average of 1.2% in the prior three months. Prices of capital goods were tame in the early months of the year, but they have firmed in the past two months (0.5% in April and 0.7% in May).

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

260616C.jpg

260616D.jpg

- Petroleum products led import prices higher, but capital goods also had an influence.
- Petroleum was also a factor on the export side; some stirring in food and capital goods.

Import and Export Prices: Firm in May

260616F4.jpg

260616G4.jpg

Weighed down by further rises in longer-term interest rates, housing construction continued to languish in May. Housing starts plunged 15.4% m/m (-8.7% y/y) in May on top of a downwardly revised 8.5% monthly decline in April (previously -2.8% m/m). The level of starts plummeted to 1.177 million, the lowest since May 2020 when the economy was locked down during the COVID pandemic. The Action Economics Forecast Survey expected a 2.4% m/m decline to a level of 1.432 million units. The April/May average for starts was 1.285 million, 9.4% below the Q1 average. Residential investment has been a persistent drag on real GDP growth recently, subtracting from overall growth in each of the previous five quarters. Today’s report points to another subtraction in Q2.

Single-family starts fell 1.9% m/m (-6.7% y/y) in May on top of a downwardly revised 11.6% monthly plunge in April (previously -9.0% m/m). Multi-family starts, which had generally been trending up over the past year or so, albeit with quite a bit of volatility, plummeted 40.2% m/m (-14.2% y/y) in May following a downwardly revised 2.4% m/m decline in April (previously +10.3% m/m).

Starts fell in three of the four major geographic regions. Starts rose 3.7% m/m in the Midwest with gains in both single-family and multi-family starts. By contrast, starts fell in each of the other three regions, plunging 26.8% m/m in the Northeast, the third monthly decline in the past four months, falling 17.0% m/m in the South, also the third monthly decline in the past four months, and declining 17.2% m/m in the West, the fourth monthly decline in the past five months.

The performance of building permits is typically less volatile than that of starts. Total permits edged down 0.7% m/m (-0.2% y/y) to 1.413 million units in May following a 4.4% monthly gain in April and an 11.5% m/m fall in March. Expectations were for a 0.3% monthly increase in May. Single-family permits edged up 0.6% m/m (-1.8% y/y) in May versus a 1.6% monthly decline in April and a 3.7% m/m drop in March. By contrast, multi-family permits fell 2.8% m/m (+2.5 y/y) in May but this was after a 15.8% monthly surge in April.

In contrast to the regional performance of starts, permits fell in the Midwest (-18.7% m/m) but rose in each of the other three major geographic regions. Permits increased 3.1% m/m in the Northeast in May on top of a 18.1% monthly jump in April. They edged up 1.6% m/m in the South and rose 5.5% m/m in the West, the first monthly gain in three months.

The housing starts and permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

260616H4.jpg

260616I4.jpg

- Housing starts plunged 15.4% m/m in May to the lowest level since May 2020 with a significant downward revision to the previously reported April decline.
- Single family starts fell 1.9% m/m while multi-family starts plummeted 40.2% m/m to their lowest level since November 2024.
- Less volatile permits slid 0.7% m/m in May with a slight rise (+0.6% m/m) in single-family permits and a 2.8% monthly drop in multi-family permits.

Economy in Brief

Jump to:

BoF Indicator Continues to be Weak

Michigan Consumer Sentiment Fell Again

U.S. CPI Total & Core Unchanged

U.S. CPI Total & Core Unchanged

Japan's Industrial Sector Slows Down, Does the Economy?

Japan Retail Sales: A Jump Then a Slowing

U.S. Budget Deficit Deeper Due to Revenue Shortfall & Spending Surge

U.S. Total Import Prices Eased, Nonoil Strongest Since 1995