Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313c.jpg" width="353">
Initial claims for unemployment insurance were unchanged last week at 353,000 from the prior week&#39;s level which was revised up slightly. The figure about matched Consensus expectations and it left the early March level of claims slightly below the February average.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four week moving average of initial was about unchanged w/w at 358,500 (9.4% y/y).
Continuing claims for unemployment insurance moved higher again. A 7,000 increase during the latest week followed a 26,000 gain during the prior period which was unrevised. Insured unemployment stood at its highest level since Summer 2005. The figure provides some indication of workers&#39; ability to find employment.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 2.1% for the sixth consecutive week.

<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>&nbsp;</th>
<th scope="col">03/07/08</th>
<th scope="col">02/29/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;353</td>
<td>353</td>
<td>12.4%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,835</td>
<td>9.8%</td>
<td>2,551</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance were unchanged last week at 353,000 from the prior week's level which was revised up slightly. The figure about matched Consensus expectations and it left the early March level of claims [...]

U.S. Weekly Initial Claims for Unemployment Insurance Unchanged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313a.jpg" width="353">
During February, U.S. retail sales fell an unexpected 0.6%, below the Consensus forecast for a 0.2% gain. Weak retail sales were generally expected during the last two months. The weakness didn&#39;t come in the initial January report but it was clearly evident in February. The sales decline reversed January&#39;s 0.4% gain which was little revised.
Sales of motor vehicles &amp; parts provided much of the surprise to the reports for last month and for January. They fell 1.9% in February, reversing an unexpected 0.2% January gain. Expectations for both months were based on unit sales reports of a 0.3% m/m increase in February and a 5.4% January decline.
Retail sales excluding autos last month fell 0.2% after a 0.5% January increase that was revised up slightly. A 0.5% December drop also was revised deeper. The February decline was short of Consensus expectations for a 0.2% rise.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080313b.jpg" width="353">
A 1.0% decline in sales at gasoline service stations was in line with a 0.5% drop in retail gasoline prices last month. So far in March gasoline prices are up roughly 5.5% m/m. Less gasoline &amp; autos, February retail sales fell 0.1% and the January result was revised up.
Sales of discretionary items were mixed last month. Apparel store sales rose 0.2% (2.3% y/y) after an upwardly revised 2.2% January increase. Furniture, home furnishings &amp; appliance store sales, however, fell 0.4% (-2.1% y/y) and they are down 2.8% during the last three months. Sales of electronics &amp; appliances fell 0.4% (+0.5% y/y). Sales at general merchandise stores rose 0.4% (3.6% y/y) after little change during January.
Sales of nonstore retailers (internet &amp; catalogue) fell 0.1% (+1.8% y/y) during February, for the third consecutive monthly decline, and earlier months&#39; figures were revised lower.
Sales of building materials &amp; garden equipment continued their recent decline and fell 0.7% (-4.2% y/y). Since their peak early in 2006 these sales are down 8.3%.
Food &amp; beverage store sales fell 0.2% (+4.3% y/y) last month. Restaurant &amp; drinking place sales fell 0.4% (+4.6% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-0.6%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>4.0%</td>
<td>6.2%</td>
<td>6.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.2%</td>
<td>0.5%</td>
<td>4.4%</td>
<td>4.5%</td>
<td>7.4%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>4.3%</td>
<td>7.2%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
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During February, U.S. retail sales fell an unexpected 0.6%, below the Consensus forecast for a 0.2% gain. Weak retail sales were generally expected during the last two months. The weakness didn't come in the initial January report but [...]

U.S. Retail Sales Fell Unexpectedly, Discretionary Sales Mixed

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312g.jpg" align="left" border="0" height="265" width="353">
French headline inflation began to level off in February of
2008. The 12-month rate that rose to 3.2% in January from 2.8% in
December held steady at that 3.2% pace in February. The ECB has a
ceiling objective only for the inflation&#8217;s headline. At 3.2% France&#8217;s
own pace is well above that 2% ceiling. Still it is something that
year/year acceleration has stopped, for now. The core inflation reading
is not available but the HICP core rate edged above the 2% mark last
month.
As to the various inflation categories we can turn to France&#8217;s
domestic inflation measure that has slightly different ingredients form
the HICP. France&#8217;s overall inflation on that measure is up by 2.9%
year/year the same as it was last month. The French domestic core
inflation rate is at 2.1% in February up from 2% in January. Inflation
overall, at 2.9%, is higher than it was 12 months ago (1.1%). Not
surprisingly the diffusion condition based that result is high at 72.7%.
This diffusion reading is a US ISM type measure that counts
all inflation accelerating categories in the CPI as a value of &#8216;one.&#8217;
If inflation is steady period to period it counts as 0.5. The category
results are totaled and taken as a percentage of the total number of
categories. Roughly this means that above 50% inflation is accelerating
and below 50% inflation is decelerating. For the year ago comparison we
find that inflation accelerated year/year in 72% of the categories. And
that seems bad. But over six months, although the inflation rate was
higher-still at a 3.6% pace, inflation diffusion was only 36%. Over
three months inflation is at 3% and diffusion is at 27%. So inflation
is not accelerating on a broader patch, but rather on a narrower one,
if at all.
The overall inflation rate, while still high, has come down.
You can see it in the core domestic French rate that is 2.1% year/year,
2.3% over 6 months and 1.9% over 3 months. Inflation is not getting out
of hand in France despite the ugly headlines. Food costs are a problem,
surging and steadily accelerating over the past year until those costs
are up at an 8% pace over the most recent three months. In addition,
energy prices have been rising and spot oil is still higher than it was
in January and February on average.
Inflation is still a &#8216;threat&#8217; but the detailed trends from
France suggest that the ECB and the strong euro are helping to keep
inflation from spreading. France has the fourth best record in EMU on
keeping core inflation in check from 2000 to date. Finland has the best
record, Germany the second best for that period. Greece has the worst
record followed by Ireland and Spain.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> France
HICP and CPI details</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">HICP Total</td>
<td>0.0%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>3.0%</td>
<td>4.1%</td>
<td>3.2%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.3%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.4%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">CPI</td>
</tr>
<tr class="odd">
<td class="firstcol">All</td>
<td>0.0%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI ex Food &amp; Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>2.3%</td>
<td>2.1%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>0.2%</td>
<td>1.2%</td>
<td>0.6%</td>
<td>8.0%</td>
<td>7.2%</td>
<td>5.1%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Alcohol</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>2.5%</td>
<td>4.7%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>-0.2%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-2.8%</td>
<td>-0.8%</td>
<td>0.6%</td>
<td>0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rent&nbsp;
&amp;Utilities</td>
<td>0.2%</td>
<td>0.5%</td>
<td>0.6%</td>
<td>4.9%</td>
<td>6.7%</td>
<td>4.6%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Health Care</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.0%</td>
<td>5.1%</td>
<td>8.2%</td>
<td>5.8%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Communication</td>
<td>-1.4%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-8.0%</td>
<td>-3.1%</td>
<td>-2.1%</td>
<td>-1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Recreation &amp; Culture</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-2.1%</td>
<td>-1.7%</td>
<td>-1.3%</td>
<td>-2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Education</td>
<td>0.2%</td>
<td>0.5%</td>
<td>0.2%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>3.0%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.3%</td>
<td>0.8%</td>
<td>2.8%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>1.6%</td>
<td>1.8%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Diffusion Type</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>27.3%</td>
<td>36.4%</td>
<td>72.7%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="4">Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

French headline inflation began to level off in February of 2008. The 12-month rate that rose to 3.2% in January from 2.8% in December held steady at that 3.2% pace in February. The ECB has a ceiling objective only for the inflation’s [...]

French Inflation Begins to Level Off in February

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312e.jpg" width="353">
The Bureau of Labor Statistics reported in the Job Openings &amp; Labor Turnover Survey (JOLTS) that the January &#39;08 job openings rate was unchanged from the prior month at 2.8%. That level was, however, down from early 2007. Past year&#39;s figures were revised. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. In private industries the rate fell in January to 2.9% from 3.0% in December and from 3.2% in 2006.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312f.jpg" width="353">
The actual number of total job openings fell 1.2% m/m to 3.925 million and the number of job openings was down 8.9% from one year earlier. Job openings in retail trade fell 16.7% y/y. They were down 34.6% in construction and down 14.0% in manufacturing. Education &amp; health services jobs fell 3.1% y/y and leisure &amp; hospitality job openings fell 7.1%. Only openings in the professional &amp; business services industry rose, by 3.4% y/y.
The hires rate also fell m/m to 3.3% to its lowest level since 2004. The hires rate is the number of hires during the month divided by employment.The decline was across most industries. The actual number of January hires fell 3.6% (-9.0% y/y) to 4.545 million.
The job separations rate in January fell to 3.1% from 3.2% at yearend 2007 and from 3.3% at yearend 2006. Separations include quits, layoffs, discharges, and other separations as well as retirements. The level of job separations fell 4.1% since yearend 2006.
The JOLTS survey dates only to December 2000 but has since followed the movement in nonfarm payrolls, though the actual correlation between the two series is low.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.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/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;07</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">Job Openings, Total&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.8</td>
<td>2.8</td>
<td>3.0</td>
<td>2.8</td>
<td>3.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,925</td>
<td>3,974</td>
<td>4,307</td>
<td>3,974</td>
<td>4,272</td>
<td>3,863</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total </td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.4</td>
<td>3.6</td>
<td>41.9</td>
<td>43.4</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,545</td>
<td>4,717</td>
<td>4,992</td>
<td>57,771</td>
<td>59,153</td>
<td>57,501</td>
</tr>
</tbody>
</table>
</body>
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The Bureau of Labor Statistics reported in the Job Openings & Labor Turnover Survey (JOLTS) that the January '08 job openings rate was unchanged from the prior month at 2.8%. That level was, however, down from early 2007. Past year's [...]

JOLTS: Job Openings Broadly Down Early in 2008

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312c.jpg" width="353">
The Mortgage Bankers&#39; Association reported that during the 4th quarter of 2007, foreclosures were started on .83% of all mortgages outstanding. That was by far the highest foreclosure rate on record. Moreover, it raised the total for the full year to 2.84% of the number outstanding.Foreclosure rates on both prime and subprime mortgages rose sharply last year.
Foreclosures on all prime mortgage loans rose to 0.41% by yearend and totaled 1.30% of those outstanding for the full year. That was nearly double the rate during the prior nine years. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312d.jpg" width="353">
Though rates for prime fixed rate mortgages held steady at yearend at 0.22% of loans outstanding, the foreclosure rate for the year of 0.79% was a record and it was up from 0.56% during 2006. There were 25.8 million of these loans outstanding last year. Of the 6.5 million prime adjustable rate mortgages during 4Q, the foreclosure rate rose to 1.06%. That pulled the full year rate of foreclosures up to 3.23% which was nearly triple the rate during 2006.
As bad as the above data on prime debt was, the figures on subprime mortgage debt were far worse. Though short-term interest rates fell slightly during the year the average level of rates was double that a few years earlier. In total, the rate of foreclosure on subprime mortgages rose to 3.44% of outstanding loans during 4Q &#39;07. The rise pulled foreclosures for the full year to 11.71% of loans outstanding.
The foreclosure rate on subprime fixed rate debt rose to 1.52% of loans outstanding. That was up by half from the quarterly running rate in early 2006 and the rate for the year jumped to 5.55%.There were 2.5 million of these loans outstanding last year. On variable rate subprime debt, however, foreclosures soared to 5.29% of loans outstanding from 4.72% during 3Q. Seventeen percent of these loans were foreclosed on last year and there were 2.9 million of these loans on the books.
By the country&#39;s regions the Northeast saw an increase in the overall rate of foreclosure to 2.29% last year from 1.59% during 2006. In the Midwest that rate rose to 3.44% from 2.71%. The West saw an increase to 2.68% of loans outstanding from 1.18% in 2006 and in the South foreclosures were started last year on 2.69% of loans versus 1.73% in 2006.
The Rise and Fall of Subprime Mortgages from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/eclett/2007/el0711.pd">here</a>.
These data series are available in Haver&#39;s MBAMTG database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Mortgages in Foreclosure (%)</th>
<th scope="col">4Q &#39;07</th>
<th scope="col">3Q &#39;07</th>
<th scope="col">4Q &#39;06</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">All Mortgages</td>
<td>0.83</td>
<td>0.78</td>
<td>0.54</td>
<td>2.84</td>
<td>1.84</td>
<td>1.64</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Conventional Prime</td>
<td>0.41</td>
<td>0.37</td>
<td>0.24</td>
<td>1.30</td>
<td>0.77</td>
<td>0.72</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Fixed Rate</td>
<td>0.22</td>
<td>0.22</td>
<td>0.16</td>
<td>0.79</td>
<td>0.56</td>
<td>0.61</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; ARM</td>
<td>1.06</td>
<td>1.02</td>
<td>0.41</td>
<td>3.23</td>
<td>1.19</td>
<td>0.75</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Subprime</td>
<td>3.44</td>
<td>3.12</td>
<td>2.00</td>
<td>11.71</td>
<td>7.23</td>
<td>5.66</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Fixed Rate</td>
<td>1.52</td>
<td>1.38</td>
<td>1.09</td>
<td>5.55</td>
<td>4.24</td>
<td>4.33</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; ARM</td>
<td>5.29</td>
<td>4.72</td>
<td>2.70</td>
<td>17.08</td>
<td>8.80</td>
<td>6.07</td>
</tr>
</tbody>
</table>
</body>
</html>

The Mortgage Bankers' Association reported that during the 4th quarter of 2007, foreclosures were started on .83% of all mortgages outstanding. That was by far the highest foreclosure rate on record. Moreover, it raised the total for [...]

U.S. Mortgage Foreclosures Continued To Surge

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312b.jpg" align="left" border="0" height="265" width="353">
In January Euro Area IP rose by a strong 0.9%. MFG output
advanced at a 1.2% pace and even consumer goods output was strong with
a gain of 0.8%. Consumer durables output led the advance within
consumption with a rise of 1.9% in the month. But capital goods
expansion was stronger still, rising by 2.7% in January as intermediate
goods output rose by 0.8%. These figures left Yr/Yr trends strong as
MFG output rose at a 3.2% pace over 12 months and capital equipment
rose at a 7.3% pace. Yr/Yr consumer output was up by just 1.3%.
However, in the new quarter with one month&#8217;s data overall IP is
expanding at a 7.2% pace led by capital equipment which is up at a
15.5% pace. Even consumer output is rising at a strong 4.4% pace in the
new quarter. 
 

As we saw in the country detail IP reports earlier, several
EMU nations experienced some exceptional factors that augmented growth
in January. The Bundesbank is looking for overall German growth to slow
below trend there. There is also the strong euro&#8217;s impact to consider.
While January was a stronger month it is best to be wary of what the
future holds for IP trends in the months ahead. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> E-zone and UK IP and MFG</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td colspan="3">Jan-08</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area Detail</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>Qtr-to-Date</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>1.2%</td>
<td>0.2%</td>
<td>-0.4%</td>
<td>3.8%</td>
<td>3.1%</td>
<td>3.2%</td>
<td>7.2%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>0.8%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>1.9%</td>
<td>-0.1%</td>
<td>-1.9%</td>
<td>-0.9%</td>
<td>-0.8%</td>
<td>0.1%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurables</td>
<td>0.6%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>2.4%</td>
<td>1.9%</td>
<td>1.6%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>0.8%</td>
<td>0.4%</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>1.8%</td>
<td>2.1%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>2.7%</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>9.3%</td>
<td>7.3%</td>
<td>7.3%</td>
<td>15.5%</td>
</tr>
</tbody>
</table>
</body></html>

In January Euro Area IP rose by a strong 0.9%. MFG output advanced at a 1.2% pace and even consumer goods output was strong with a gain of 0.8%. Consumer durables output led the advance within consumption with a rise of 1.9% in the [...]

Euro-Area IP Rebounds in January

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080312a.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s GDP was revised lower in Q4 on weaker capital
spending. Japan's gross domestic product increased a real 0.9% in the
quarter during the October-December period, or 3.5% in annualized
terms. That was lower than the original estimate made a month ago of an
annualized 3.7% growth. Capital spending was revised down to a 2.0%
on-quarter rise from preliminary 2.9% advance. 
 

Japan&#8217;s GDP picture shows differing trends. The chart shows
that net exports are continuing to push GDP to stronger growth rates.
But real personal consumption trends are decelerating. Exports are
still growing strongly while real imports are being curtailed by
domestic weakness. Domestic demand in general is weakening with a Y/Y
growth rate of just 0.2% in Q4. Gross fixed capital formation is
negative and showing a sharp contraction. Housing is a leading negative
investment sector. Business plant and equipment expenditures have
steadied at a less than a 1% growth pace. In the recent quarter
government spending accelerated sharply hiking the yr/yr pace. Private
consumption did pick up in the quarter but the year/year pace
decelerated nonetheless. With the yen rising Japan will either have to
compete harder in overseas markets or supplement trade-led growth with
stronger domestic demand. 
 

For Japan, several cyclical indicators have become more
positive already. Its own economy watchers index has stopped its
decline but is still weak. Machinery orders have picked up. And, the
OECD composite leading indicators show that Japan&#8217;s index is making a
turn for the better after experiencing the worst slump among OECD
member countries so far in this cycle. But the US leading indicator is
weakening and the US remains an important export market for Japan. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"> Japan
GDP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td colspan="3">Consumption</td>
<td colspan="3">Capital 
Formation</td>
<td colspan="3">Trade 
Domestic</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Gross 
Fixed 
Capital</td>
<td>Plant&amp; 
Eqpt</td>
<td>Housing</td>
<td>Exp Imp</td>
<td>Exports</td>
<td>Imports</td>
<td>Demand</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">%
change Q/Q at annual
rates of change; X-M is Q/Q change in Bil of Real Yen</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-07</td>
<td>3.5%</td>
<td>0.9%</td>
<td>3.6%</td>
<td>-0.1%</td>
<td>8.1%</td>
<td>-32.3%</td>
<td>2.4</td>
<td>13.2%</td>
<td>2.2%</td>
<td>1.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-07</td>
<td>1.2%</td>
<td>0.6%</td>
<td>0.6%</td>
<td>-3.9%</td>
<td>3.7%</td>
<td>-29.4%</td>
<td>2.6</td>
<td>12.2%</td>
<td>-0.5%</td>
<td>-0.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>-1.5%</td>
<td>0.6%</td>
<td>1.2%</td>
<td>-9.6%</td>
<td>-6.4%</td>
<td>-16.4%</td>
<td>0.6</td>
<td>4.6%</td>
<td>2.1%</td>
<td>-2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>3.8%</td>
<td>2.5%</td>
<td>0.8%</td>
<td>1.5%</td>
<td>-1.8%</td>
<td>-5.0%</td>
<td>2.3</td>
<td>14.8%</td>
<td>4.1%</td>
<td>2.1%</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">%
change Yr/Yr; X-M is
Yr/Yr change in Gap in Bil of Real Yen</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-07</td>
<td>1.7%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>-3.1%</td>
<td>0.8%</td>
<td>-21.5%</td>
<td>7.9</td>
<td>11.1%</td>
<td>2.0%</td>
<td>0.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-07</td>
<td>1.9%</td>
<td>2.0%</td>
<td>0.3%</td>
<td>-1.2%</td>
<td>0.6%</td>
<td>-11.4%</td>
<td>6.1</td>
<td>8.6%</td>
<td>1.5%</td>
<td>0.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>1.7%</td>
<td>1.0%</td>
<td>0.6%</td>
<td>-0.6%</td>
<td>0.3%</td>
<td>-3.0%</td>
<td>5.4</td>
<td>7.9%</td>
<td>1.4%</td>
<td>0.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>2.9%</td>
<td>1.7%</td>
<td>0.8%</td>
<td>3.3%</td>
<td>7.1%</td>
<td>-1.1%</td>
<td>4.9</td>
<td>7.6%</td>
<td>1.9%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">5-Yrs</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>0.8%</td>
<td>5.2%</td>
<td>-4.2%</td>
<td>n.a.</td>
<td>9.6%</td>
<td>4.2%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s GDP was revised lower in Q4 on weaker capital spending. Japan's gross domestic product increased a real 0.9% in the quarter during the October-December period, or 3.5% in annualized terms. That was lower than the original [...]

Japan GDP is Revised Lower

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

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Sandy Batten

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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**.

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- 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

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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

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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.

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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

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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.

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- 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

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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.

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- 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

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U.S. Retail Sales Fell Unexpectedly, Discretionary Sales Mixed

U.S. Retail Sales Fell Unexpectedly, Discretionary Sales Mixed

French Inflation Begins to Level Off in February

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