Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210d.jpg" width="353">
For October, the National Association of Realtors reported that the level of pending home sales ticked 0.6% higher after a modest 1.4% rise during the prior month. The level of sales still is 18.4% below October of last year and 23.0% year to date. The last two months are the first back to back gains since early last year.
The latest monthly figure is about one third below the peak level during the Summer of 2005. The data date back only to 2001.
These figures are analogous to the new home sales data from the Commerce Dept. They measure existing home sales when the sales contract is signed, not at the time the sale is closed.
The Realtors also indicated in an earlier report that the number of homes on the market and available for sale rose 1.9% in October after two months of moderate decline. The rise was to a level of 445,300 units, double the level at the low in early 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210e.jpg" width="353">
In the Northeast, pending home sales rose 6.0% m/m and recouped all of a September decline. The rise, however, followed two months a sharp drop so sales remained 20% lower than at the start of the year. Sales in the Western part of the nation also posted an 8.7% m/m rise but remained off 21% from the level early in the year.
Sales in the rest of the country were down in October. In the Midwest sales fell a slight 1.4% to remain 17% below early this year. In the South sales fell another 7.8% to a level that was 31% from the early year high.
The pending home sales data are available in Haver&#39;s PREALTOR database and the number of homes on the market are in the REALTOR database.
Housing Woes Weigh Heavily on the Economy from the Federal Reserve Bank of St. Louis can be found <a href="http://stlouisfed.org/publications/re/2007/d/pdf/housing-woes.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>87.2</td>
<td>&nbsp;86.7</td>
<td>&nbsp;&nbsp; -18.4%</td>
<td>112.1&nbsp;</td>
<td>124.2</td>
<td>120.5&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>80.6</td>
<td>69.5</td>
<td>-11.1</td>
<td>98.0</td>
<td>108.0</td>
<td>109.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>85.5</td>
<td>86.7</td>
<td>-11.7</td>
<td>102.0</td>
<td>116.4</td>
<td>118.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>91.6</td>
<td>99.3</td>
<td>-25.3</td>
<td>127.4</td>
<td>134.8</td>
<td>126.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>87.3</td>
<td>80.5</td>
<td>-16.9</td>
<td>109.6</td>
<td>128.7</td>
<td>122.7</td>
</tr>
</tbody>
</table>
</body>
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For October, the National Association of Realtors reported that the level of pending home sales ticked 0.6% higher after a modest 1.4% rise during the prior month. The level of sales still is 18.4% below October of last year and 23.0% [...]

U.S. Pending Home Sales Ticked Higher, Again

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210c.jpg" align="left" border="0" height="265" width="353">
German IP edged lower in October in the face of a spurt in
orders for the month that was dominated by bulk orders. Still with the
-0.3% October result German IP is entering the new quarter on an up
note. Q/Q calculations are concerned with comparing the average level
of IP in the current quarter to the average level in the previous
quarter. The spurt for IP in August and small the rise in September
still leave the level of IP in October, after its fall, above the Q3
average. IP is growing at annual rate of 2.6% entering Q4. Consumer
goods output is much weaker, up at just a 0.4% pace in Q4. As has been
the case capital goods output is up a strong 14.3% at an annual rate.
Intermediate output is off at a 2.2% pace. Ex construction, IP is
rising at nearly a nine percent annual rate. 
 

So Germany continues to be a bit of a conundrum. The trends in
the chart show that no direction is really dominant. The sectors are
moving in different directions, too. We know the strong euro is
creating problems; we are unsure how many. Germany remain a bit of an
enigma. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Total German IP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>7.1%</td>
<td>7.5%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer goods</td>
<td>-1.3%</td>
<td>0.1%</td>
<td>4.2%</td>
<td>12.0%</td>
<td>0.4%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital goods</td>
<td>2.1%</td>
<td>-0.5%</td>
<td>1.6%</td>
<td>13.4%</td>
<td>13.4%</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediary goods</td>
<td>-1.0%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>2.9%</td>
<td>6.9%</td>
<td>5.6%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>0.2%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>12.6%</td>
<td>4.3%</td>
<td>-0.8%</td>
</tr>
</tbody>
</table>
</body></html>

German IP edged lower in October in the face of a spurt in orders for the month that was dominated by bulk orders. Still with the -0.3% October result German IP is entering the new quarter on an up note. Q/Q calculations are concerned [...]

German IP Trends Caught in Cross Currents

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210b.jpg" align="left" border="0" height="265" width="353">
The MAIN OECD LEIs (leading economic Indicators, trend
adjusted) are dropping at a faster pace over the recent three months.
Japan&#8217;s drop is the sharpest. The OECD itself pushes emphasis on the
6-month changes in these indexes. On that basis the OECD, the OECD main
seven OECD Europe, Japan and the US all are declining. The US move is
the least negative. Japan&#8217;s is the most. Europe's slide is a bit less
than for the OECD overall. 
 

Still the message from these OECD LEIs is very clear. The area
is slowing. The OECD itself flags Japan as a worrisome case and talks
of moderate slowing elsewhere. Clearly financial markets and central
bank events can have an influence on events in these various countries
and regions. The outlook remains in flux since these indicators have
worsened since last month. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">OECD
Leading Indicators by Main regions/countries </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">OECD</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-5.1%</td>
<td>-2.0%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Big 7</td>
<td>-0.5%</td>
<td>-0.5%</td>
<td>-0.8%</td>
<td>-7.0%</td>
<td>-2.9%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">OECD Europe</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>-1.5%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td>-1.4%</td>
<td>-1.2%</td>
<td>-1.6%</td>
<td>-15.7%</td>
<td>-11.5%</td>
<td>-11.7%</td>
</tr>
<tr>
<td class="firstcol">OECD US</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-6.0%</td>
<td>-0.7%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
</body></html>

The MAIN OECD LEIs (leading economic Indicators, trend adjusted) are dropping at a faster pace over the recent three months. Japan’s drop is the sharpest. The OECD itself pushes emphasis on the 6-month changes in these indexes. On [...]

OECD LEIs Are Sagging

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210a.jpg" align="left" border="0" height="265" width="353">
Industrial production in France was up strongly in October
showing a rise of 2.1%. In the past three months overall output is up
but without any real strong sector leadership. Auto sales are up
strongly in October. In the quarter to date output is up strongly over
its Q3 level expanding at an 8.1% annual rate. France follows the same
trend as Germany as its consumer goods output is lagging, falling by
2.1% so far in Q3. Capital goods output is up at a 6.9% annual rate in
Q4. Europe continues to show weak consumer demand/output and displays
an ongoing strong capital goods sector. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">French IP excluding Construction </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>2.1%</td>
<td>-1.2%</td>
<td>0.1%</td>
<td>3.9%</td>
<td>5.7%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer goods</td>
<td>0.4%</td>
<td>-1.5%</td>
<td>0.9%</td>
<td>-1.1%</td>
<td>3.3%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Capital goods</td>
<td>1.0%</td>
<td>-1.0%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>7.0%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate goods</td>
<td>1.9%</td>
<td>-0.9%</td>
<td>-0.6%</td>
<td>1.6%</td>
<td>3.5%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Auto</td>
<td>6.9%</td>
<td>-4.0%</td>
<td>1.3%</td>
<td>16.5%</td>
<td>6.9%</td>
<td>5.7%</td>
</tr>
</tbody>
</table>
</body></html>

Industrial production in France was up strongly in October showing a rise of 2.1%. In the past three months overall output is up but without any real strong sector leadership. Auto sales are up strongly in October. In the quarter to [...]

French IP Jumps in October

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210d.jpg" align="left" border="0" height="265" width="353">
For October, the National Association of Realtors reported
that the level of pending home sales ticked 0.6% higher after a modest
1.4% rise during the prior month. The level of sales still is 18.4%
below October of last year and 23.0% year to date. The last two months
are the first back to back gains since early last year.
The latest monthly figure is about one third below the peak
level during the Summer of 2005. The data date back only to 2001.
These figures are analogous to the new home sales data from
the Commerce Dept. They measure existing home sales when the sales
contract is signed, not at the time the sale is closed.
The Realtors also indicated in an earlier report that the
number of homes on the market and available for sale rose 1.9% in
October after two months of moderate decline. The rise was to a level
of 445,300 units, double the level at the low in early 2005.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210e.jpg" align="right" border="0" height="265" width="353">
In the Northeast, pending home sales rose 6.0% m/m and
recouped all of a September decline. The rise, however, followed two
months a sharp drop so sales remained 20% lower than at the start of
the year. Sales in the Western part of the nation also posted an 8.7%
m/m rise but remained off 21% from the level early in the year.
Sales in the rest of the country were down in October. In the
Midwest sales fell a slight 1.4% to remain 17% below early this year.
In the South sales fell another 7.8% to a level that was 31% from the
early year high.
The pending home sales data are available in Haver's PREALTOR
database and the number of homes on the market are in the REALTOR
database.
Housing Woes Weigh Heavily on the Economy from
the Federal Reserve Bank of St. Louis can be found <a href="http://stlouisfed.org/publications/re/2007/d/pdf/housing-woes.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>87.2</td>
<td>&nbsp;86.7</td>
<td>&nbsp;&nbsp; -18.4%</td>
<td>112.1&nbsp;</td>
<td>124.2</td>
<td>120.5&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>80.6</td>
<td>69.5</td>
<td>-11.1</td>
<td>98.0</td>
<td>108.0</td>
<td>109.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>85.5</td>
<td>86.7</td>
<td>-11.7</td>
<td>102.0</td>
<td>116.4</td>
<td>118.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>91.6</td>
<td>99.3</td>
<td>-25.3</td>
<td>127.4</td>
<td>134.8</td>
<td>126.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>87.3</td>
<td>80.5</td>
<td>-16.9</td>
<td>109.6</td>
<td>128.7</td>
<td>122.7</td>
</tr>
</tbody>
</table>
French IP Jumps in October 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 10, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210a.jpg" align="left" border="0" height="265" width="353">
Industrial production in France was up strongly in October
showing a rise of 2.1%. In the past three months overall output is up
but without any real strong sector leadership. Auto sales are up
strongly in October. In the quarter to date output is up strongly over
its Q3 level expanding at an 8.1% annual rate. France follows the same
trend as Germany as its consumer goods output is lagging, falling by
2.1% so far in Q3. Capital goods output is up at a 6.9% annual rate in
Q4. Europe continues to show weak consumer demand/output and displays
an ongoing strong capital goods sector. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">French IP
excluding Construction </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>2.1%</td>
<td>-1.2%</td>
<td>0.1%</td>
<td>3.9%</td>
<td>5.7%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer goods</td>
<td>0.4%</td>
<td>-1.5%</td>
<td>0.9%</td>
<td>-1.1%</td>
<td>3.3%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Capital goods</td>
<td>1.0%</td>
<td>-1.0%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>7.0%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate goods</td>
<td>1.9%</td>
<td>-0.9%</td>
<td>-0.6%</td>
<td>1.6%</td>
<td>3.5%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Auto</td>
<td>6.9%</td>
<td>-4.0%</td>
<td>1.3%</td>
<td>16.5%</td>
<td>6.9%</td>
<td>5.7%</td>
</tr>
</tbody>
</table>
OECD LEIs Are Sagging&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 10, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210b.jpg" align="left" border="0" height="265" width="353">
The MAIN OECD LEIs (leading economic Indicators, trend
adjusted) are dropping at a faster pace over the recent three months.
Japan&#8217;s drop is the sharpest. The OECD itself pushes emphasis on the
6-month changes in these indexes. On that basis the OECD, the OECD main
seven OECD Europe, Japan and the US all are declining. The US move is
the least negative. Japan&#8217;s is the most. Europe's slide is a bit less
than for the OECD overall. 
 

Still the message from these OECD LEIs is very clear. The area
is slowing. The OECD itself flags Japan as a worrisome case and talks
of moderate slowing elsewhere. Clearly financial markets and central
bank events can have an influence on events in these various countries
and regions. The outlook remains in flux since these indicators have
worsened since last month. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">OECD
Leading Indicators by Main regions/countries </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">OECD</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-5.1%</td>
<td>-2.0%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Big 7</td>
<td>-0.5%</td>
<td>-0.5%</td>
<td>-0.8%</td>
<td>-7.0%</td>
<td>-2.9%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">OECD Europe</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>-1.5%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td>-1.4%</td>
<td>-1.2%</td>
<td>-1.6%</td>
<td>-15.7%</td>
<td>-11.5%</td>
<td>-11.7%</td>
</tr>
<tr>
<td class="firstcol">OECD US</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-6.0%</td>
<td>-0.7%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
German IP Trends Caught in Cross
Currents 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 10, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071210c.jpg" align="left" border="0" height="265" width="353">
German IP edged lower in October in the face of a spurt in
orders for the month that was dominated by bulk orders. Still with the
-0.3% October result German IP is entering the new quarter on an up
note. Q/Q calculations are concerned with comparing the average level
of IP in the current quarter to the average level in the previous
quarter. The spurt for IP in August and small the rise in September
still leave the level of IP in October, after its fall, above the Q3
average. IP is growing at annual rate of 2.6% entering Q4. Consumer
goods output is much weaker, up at just a 0.4% pace in Q4. As has been
the case capital goods output is up a strong 14.3% at an annual rate.
Intermediate output is off at a 2.2% pace. Ex construction, IP is
rising at nearly a nine percent annual rate. 
 

So Germany continues to be a bit of a conundrum. The trends in
the chart show that no direction is really dominant. The sectors are
moving in different directions, too. We know the strong euro is
creating problems; we are unsure how many. Germany remain a bit of an
enigma. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Total
German IP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>7.1%</td>
<td>7.5%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer goods</td>
<td>-1.3%</td>
<td>0.1%</td>
<td>4.2%</td>
<td>12.0%</td>
<td>0.4%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital goods</td>
<td>2.1%</td>
<td>-0.5%</td>
<td>1.6%</td>
<td>13.4%</td>
<td>13.4%</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediary goods</td>
<td>-1.0%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>2.9%</td>
<td>6.9%</td>
<td>5.6%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>0.2%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>12.6%</td>
<td>4.3%</td>
<td>-0.8%</td>
</tr>
</tbody>
</table>
</body></html>

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207d.jpg" align="left" border="0" height="265" width="353">
The University of Michigan's consumer sentiment index for
early this month slid 2.1% to 74.5 from an upwardly revised November
level. It was the third consecutive monthly decline and for the fourth
quarter sentiment looks to have dropped 10% from the 3Q average.
The current conditions index stabilized a bit and rose 0.7%
after a hefty 6.3% November decline. Conversely, the expectations index
continued the prior two month's rate of decline and fell 4.5% m/m to
63.2, the lowest reading since 2005.
Current buying conditions for large household goods improved
modestly m/m but remained down 13.0% from last December. The view of
current personal finances, however, slid 3.0% for the second sharp
monthly decline (-17.6% y/y).
Expectations for personal finances fell 3.5%, repeating a
November drop (-10.5% y/y) and expectations for business conditions
during the next year fell 11.0% (-38.1% y/y). Expectations for business
conditions during the next five years, however, remained stable with
the November level which was still depressed by nearly one quarter from
a year ago.
The rise in gasoline prices has raised expectations for
inflation during the next twelve months to 4.5% from 4.3% in November
and from 3.5% one year ago. For the next five to ten years expectations
were for a 3.6% rise in prices.
Opinions about government policy fell sharply. The 7.3% m/m
decline brought this opinion measure down 14.6% from one year ago.
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's USECON database,
with details in the proprietary UMSCA database.
Consumer sentiment, the economy, and the news media
is a 2004 paper from the Federal Reserve Bank of San
Francisco and it can be found <a href="http://www.frbsf.org/publications/economics/papers/2004/wp04-09bk.pdf">
here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Dec (Prelim</th>
<th scope="col">Nov </th>
<th scope="col">Nov&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>74.5</td>
<td>76.1</td>
<td>-18.8% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current
Conditions</td>
<td>92.1</td>
<td>91.5</td>
<td>-14.8%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Expectations</td>
<td>63.2</td>
<td>66.2</td>
<td>-22.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body></html>

The University of Michigan's consumer sentiment index for early this month slid 2.1% to 74.5 from an upwardly revised November level. It was the third consecutive monthly decline and for the fourth quarter sentiment looks to have [...]

Michigan Consumer Sentiment Down Hard

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207a.jpg" width="353">
The 94,000 worker rise in nonfarm payrolls in November reported today by the Bureau of Labor Statistics was a bit stronger than early expectations for a 70,000 increase. However, it was much weaker than forecasts which were ratcheted up after Wednesday&#39;s ADP report of a strong gain in private nonfarm payrolls. And while the increase was accompanied by a slight upward revision to the gain in October jobs, the rise in September employment was more than halved to 44,000.
The unemployment rate held steady at 4.7% last month. Household employment surged 696,000 (0.7% y/y) and more than offset the prior month&#39;s 250,000 decline. The labor force also surged 617,000 (0.9% y/y). The labor force participation rate jumped to 66.1%, its highest level since July but still down from 66.2% averaged last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207b.jpg" width="353">
The level of average hours worked has remained notably stable recently. As a result, for the fourth quarter so far the level of aggregate hours worked (employment times hours) is up just 0.9% (AR) following a 3Q rise of 1.2%. During the last ten years there has been a 44% correlation between the gain in hours and the gain in real GDP. That correlation is down from 56% over the last 20 years and from 74% over the last 30 due to the faster growth in worker productivity.
Private service sector jobs increased 97,000 (1.7% y/y) last month after an unrevised gain of 154,000 in October. Retail employment grew 24,200 (0.4% y/y) and professional &amp; business service jobs rose 30,000 (1.8% y/y). Jobs in the education sector ticked up 2,000 (2.6% y/y) while the health care sector added 25,300 workers (3.2% y/y). Employment in the temporary help industry rose by 11,300 (-1.2% y/y).
Job losses in the service sector were logged in the finance industry. The 20,000 worker decline (-0.1% y/y) was the fifth decline in the last six months. In addition, following the drop off in the housing industry, real estate employment fell 10,800 (-0.2% y/y) for the second decline in the last three months.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207c.jpg" width="353">
Employment in the government sector also rose a modest 30,000 (1.1% y/y) after a 38,000 worker increase in October. Very weak hiring by the Federal government (-0.3% y/y) has held back gains in the total.
Factory sector payrolls fell further by11,000, adding to a decline that began early last year. These declines remain at odds with the ISM reports of job growth in manufacturing. Construction employment fell 24,00 last month.
Average hourly earnings increased 0.3% while the prior month&#39;s gain was revised down sharply and now shows a decline of 0.2%. Factory sector earnings bounced back 0.4% (2.7% y/y) from a 0.3% decline in October which was initially reported as an increase. Private service-providing earnings rose 0.3% (3.9% y/y) following a 0.2% October decline that also was originally reported as an increase.
The minimum wage and the labor market from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/Commentary/2007/0501.pdf"> here</a>.
Fed GovernorRandall S. Kroszner&#39;s speech titled Loan Modifications and Foreclosure Prevention is available <a href="http://www.federalreserve.gov/newsevents/testimony/kroszner20071206a.htm"> 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/@EB/@EB01/@EB01.HTM">Employment</a> : 000s </th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>94</td>
<td>170</td>
<td>44</td>
<td>1.2%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>166</td>
<td>96</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-11</td>
<td>-15</td>
<td>-15</td>
<td>-1.3%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-24</td>
<td>-9</td>
<td>-25</td>
<td>-1.6%</td>
<td>4.8%</td>
<td>5.2%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8 (Nov &#39;06)</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td>3.8%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.5% (Nov &#39;06)</td>
<td>4.6%</td>
<td>5.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

The 94,000 worker rise in nonfarm payrolls in November reported today by the Bureau of Labor Statistics was a bit stronger than early expectations for a 70,000 increase. However, it was much weaker than forecasts which were ratcheted [...]

U.S. Payrolls Increase Light, Unemployment Steady

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207a.jpg" align="left" border="0" height="265" width="353">
The 94,000 worker rise in nonfarm payrolls in November
reported today by the Bureau of Labor Statistics was a bit stronger
than early expectations for a 70,000 increase. However, it was much
weaker than forecasts which were ratcheted up after Wednesday's ADP
report of a strong gain in private nonfarm payrolls. And while the
increase was accompanied by a slight upward revision to the gain in
October jobs, the rise in September employment was more than halved to
44,000.
The unemployment rate held steady at 4.7%
last month. Household employment surged 696,000 (0.7% y/y) and more
than offset the prior month's 250,000 decline. The labor force also
surged 617,000 (0.9% y/y). The labor force participation rate jumped to
66.1%, its highest level since July but still down from 66.2% averaged
last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207b.jpg" align="right" border="0" height="265" width="353">
The level of average hours worked has remained notably stable
recently. As a result, for the fourth quarter so far the level of
aggregate hours worked (employment times hours) is up just 0.9% (AR)
following a 3Q rise of 1.2%. During the last ten years there has been a
44% correlation between the gain in hours and the gain in real GDP.
That correlation is down from 56% over the last 20 years and from 74%
over the last 30 due to the faster growth in worker productivity.
Private service sector jobs increased 97,000 (1.7% y/y) last
month after an unrevised gain of 154,000 in October. Retail employment
grew 24,200 (0.4% y/y) and professional &amp; business service jobs
rose 30,000 (1.8% y/y). Jobs in the education sector ticked up 2,000
(2.6% y/y) while the health care sector added 25,300 workers (3.2%
y/y). Employment in the temporary help industry rose by 11,300 (-1.2%
y/y).
Job losses in the service sector were logged in the finance
industry. The 20,000 worker decline (-0.1% y/y) was the fifth decline
in the last six months. In addition, following the drop off in the
housing industry, real estate employment fell 10,800 (-0.2% y/y) for
the second decline in the last three months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207c.jpg" align="left" border="0" height="265" width="353">
Employment in the government sector also rose a modest 30,000
(1.1% y/y) after a 38,000 worker increase in October. Very weak hiring
by the Federal government (-0.3% y/y) has held back gains in the total.
Factory sector payrolls fell further by11,000, adding to a
decline that began early last year. These declines remain at odds with
the ISM reports of job growth in manufacturing. Construction employment
fell 24,00 last month.
Average hourly earnings increased 0.3%
while the prior month's gain was revised down sharply and now shows a decline
of 0.2%. Factory sector earnings bounced back 0.4% (2.7% y/y) from a
0.3% decline in October which was initially reported as an increase.
Private service-providing earnings rose 0.3% (3.9% y/y) following a
0.2% October decline that also was originally reported as an increase.
The minimum wage and the labor market
from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/Commentary/2007/0501.pdf">
here</a>.
Fed GovernorRandall S. Kroszner's speech titled Loan
Modifications and Foreclosure Prevention is available <a href="http://www.federalreserve.gov/newsevents/testimony/kroszner20071206a.htm">
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/@EB/@EB01/@EB01.HTM">Employment</a>
: 000s </th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>94</td>
<td>170</td>
<td>44</td>
<td>1.2%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>166</td>
<td>96</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-11</td>
<td>-15</td>
<td>-15</td>
<td>-1.3%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-24</td>
<td>-9</td>
<td>-25</td>
<td>-1.6%</td>
<td>4.8%</td>
<td>5.2%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8 (Nov '06)</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td>3.8%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.5% (Nov '06)</td>
<td>4.6%</td>
<td>5.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment DownHard 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 7, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207d.jpg" align="left" border="0" height="265" width="353">
The University of Michigan's consumer sentiment index for
early this month slid 2.1% to 74.5 from an upwardly revised November
level. It was the third consecutive monthly decline and for the fourth
quarter sentiment looks to have dropped 10% from the 3Q average.
The current conditions index stabilized a bit and rose 0.7%
after a hefty 6.3% November decline. Conversely, the expectations index
continued the prior two month's rate of decline and fell 4.5% m/m to
63.2, the lowest reading since 2005.
Current buying conditions for large household goods improved
modestly m/m but remained down 13.0% from last December. The view of
current personal finances, however, slid 3.0% for the second sharp
monthly decline (-17.6% y/y).
Expectations for personal finances fell 3.5%, repeating a
November drop (-10.5% y/y) and expectations for business conditions
during the next year fell 11.0% (-38.1% y/y). Expectations for business
conditions during the next five years, however, remained stable with
the November level which was still depressed by nearly one quarter from
a year ago.
The rise in gasoline prices has raised expectations for
inflation during the next twelve months to 4.5% from 4.3% in November
and from 3.5% one year ago. For the next five to ten years expectations
were for a 3.6% rise in prices.
Opinions about government policy fell sharply. The 7.3% m/m
decline brought this opinion measure down 14.6% from one year ago.
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's USECON database,
with details in the proprietary UMSCA database.
Consumer sentiment, the economy, and the news media
is a 2004 paper from the Federal Reserve Bank of San
Francisco and it can be found <a href="http://www.frbsf.org/publications/economics/papers/2004/wp04-09bk.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071207f.jpg" height="265" width="312">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Dec (Prelim</th>
<th scope="col">Nov </th>
<th scope="col">Nov&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>74.5</td>
<td>76.1</td>
<td>-18.8% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current
Conditions</td>
<td>92.1</td>
<td>91.5</td>
<td>-14.8%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Expectations</td>
<td>63.2</td>
<td>66.2</td>
<td>-22.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body></html>

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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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

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

Sandy Batten

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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.

U.S. Housing Starts Plunged in May

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The ZEW diffusion survey (an up-minus-down survey) showed mixed improvements in the economic situation and improvements for macroeconomic expectations in June. The report shows the economic situation improving in the United States and China, with the euro area taking a small step back (to -43.4 in June from -41.4 in May), while Germany also saw a step back in the economic situation (to -81.0 from -77.8). The ranking metrics show the German reading as lower only 13.8% of the time—the weakest showing among the four. The EMU ranking is at a 36.7 percentile, with the U.S. ranking close to that at a 42.5 percentile. China has a 76.2 percentile ranking over a shorter timeline.

Macro expectations show solid improvements reported in Germany, the U.S., and China. Macroeconomic rankings all are muted, with the U.S. at a 39.9 percentile standing as the strongest, followed by Germany at a 35.2 percentile standing and China at a 22.2 percentile standing.

Inflation expectations are still high across the board, ranging from a low percentile standing for the EMU, Germany, and China—from a euro area low of 78.6 to a high standing for this group at 85.7 for China. In contrast, the U.S. ranking is still high, but only at its 61.8 percentile. And all the inflation expectations readings fell in June as optimism on opening the Strait of Hormuz has been growing. 

Nonetheless, expectations for short-term rates have been rising. They rose solidly in the EMU and China, and strongly in the U.S., from 10.5 in May to 38.5 in June.

In contrast, long-term rate expectations rose across the board as well but by modest amounts. The rankings for short-term expectations are stronger for all three countries compared to the ranking on long-term rate expectations. I suppose we can understand that as expectations of anti-inflation medicine.

Stock markets are assessed as higher month-to-month in the EMU and in all three countries. China has a strong ranking for its stock market assessment at its 81st percentile. The U.S. standing is above its median at its 51.5 percentile; the euro area expectation is at its 34.2 percentile, with German stock market expectations still weak at its 23.6 percentile.

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The pending conflict-ending deal in the Middle East should be a catalyst for further improvement. While the U.S.-Iran deal is not yet announced in detail—or even signed—market reactions are clear-cut across the board; there is no sign that this deal is expected to wither so soon. But it still has issues and contentious elements, such as Iran’s nuclear ambitions and the fact that the Israel is not on board with what it regards as a too-early exit from hostilities. Israel wants regime change and warns of a more difficult future without one.

ZEW Shows Mixed Conditions and an Expectations Rebound

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Industrial production (IP) increased a less-than-expected 0.1% m/m in May, the third monthly gain in four months, following an upwardly revised 0.9% rise in April (+0.7% initially) and a 0.3% decline in March (unrevised), according to data from the Federal Reserve Board. A 0.3% m/m May increase had been expected in the Action Economics Forecast Survey. The year-on-year rate accelerated to 1.7% in May, the highest since January, from 1.4% in April (0.3% in May 2025). The May IP index at 102.6 was 3.3% above a low of 99.3 in November 2024 and 3.4% above a low of 99.2 in January 2024.

By **industry groups**, manufacturing production was essentially unchanged m/m (+1.4% y/y) in May after upwardly revised gains of 0.7% in April (+0.6% initially) and 0.2% in March (+0.1% previously). Durable goods production rose 0.8% (3.2% y/y) in May, the fourth m/m rise in five months, after a 1.1% increase in April. Within durables, almost all categories rose m/m in May, led by a 2.3% gain (-2.0% y/y) in wood products, followed by increases of 1.8% (3.1% y/y) in nonmetallic mineral products, 1.3% (4.4% y/y) in primary metals, 1.2% (-1.7% y/y) in motor vehicles & parts, 1.0% (-4.5% y/y) in furniture & related products, 0.9% (10.3% y/y) in computer & electronic products, 0.8% (2.5% y/y) in fabricated metal products, 0.5% (6.9% y/y) in aerospace & miscellaneous transportation equipment, 0.5% (2.7% y/y) in electrical equipment, appliances & components, and 0.2% (4.3% y/y) in machinery. Notably, aircraft & parts production climbed 1.1% (11.7% y/y), the fourth consecutive m/m rise, after a 2.6% April gain. Meanwhile, miscellaneous durable goods were virtually unchanged m/m (+0.9% y/y) in May following a 0.8% decline in April.

Nondurable goods production slid 0.9% (-0.6% y/y) in May, the first m/m slide since January, after a 0.3% increase in April. The May output decline was led by a 3.0% drop (-1.1% y/y) in petroleum & coal products, followed by decreases of 2.4% (-4.1% y/y) in textiles & product mills, 1.6% (-2.3% y/y) in printing & related support activities, 0.8% (0.0% y/y) in chemicals, 0.8% (-3.0% y/y) in paper, 0.5% (-0.4% y/y) in food, beverages & tobacco, and 0.3% (-0.2% y/y) in plastics & rubber products. In contrast, apparel & leather goods—the only rising category—recovered 2.4% (-0.1% y/y) in May following two successive m/m declines.

Mining activity advanced 1.3% (2.0% y/y) in May, the fourth m/m gain in five months, after a 0.2% increase in April (-0.1% initially). Utilities output, however, fell 0.4% (+3.1% y/y) following a 2.2% April rebound (+1.9% initially), reflecting a 1.7% drop (+1.8% y/y) in electric utilities output and an 8.5% rise (12.5% y/y) in natural gas utilities output.

By **market groups**, construction supplies production increased 1.1% (2.3% y/y) in May, up for the second time in three months, reversing a 0.3% decline in April. Business equipment output rose 0.6% (5.7% y/y), the fifth m/m rise in six months, following a 1.8% April gain. Materials production grew 0.3% (1.9% y/y), the third m/m increase in four months, after a 0.7% April rise. In contrast, consumer goods output fell 0.5% (-0.6% y/y) after a 1.2% April rebound, reflecting a 0.5% increase (-3.0% y/y) in durable consumer goods and a 0.8% decrease (+0.1% y/y) in nondurable consumer goods.

In **special classifications**, factory output of selected high-tech industries rose 1.8% (12.6% y/y) in May on top of an upwardly revised 2.2% rise in April (+1.0% initially)—marking the third straight m/m gain and the seventh in eight months. Manufacturing production excluding selected high-tech industries held steady m/m (+1.1% y/y) in May after a 0.7% increase in April, while manufacturing production excluding selected high-tech and motor vehicles & parts dipped 0.1% (+1.3% y/y) following a 0.5% April rise.

Capacity utilization inched up to 76.2% in May, the highest since July 2025, from 76.1% in April (unrevised). The result matched the forecast by the Action Economics Forecast Survey. The May reading was 3.2 percentage points below its long-run (1972–2025) average. Manufacturing capacity utilization held at 75.7% in May and April (75.8% previously), the highest since September 2025; the May rate was 2.5 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

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- May IP +0.1% (+1.7% y/y), third m/m increase in four months, led by a 1.3% gain in mining.
- Manufacturing unchanged (+1.4% y/y), w/ durables +0.8% and nondurables -0.9%.
- Selected high-tech +1.8%, third straight m/m rise; motor vehicles +1.2%, fifth gain in six mths.
- Utilities -0.4%, led by a 1.7% drop in electric utilities output.
- Key categories in market groups mostly up.
- Capacity utilization up to a 10-month-high 76.2%; mfg. capacity utilization steady at 75.7%.

Economy in Brief

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U.S. Pending Home Sales Ticked Higher, Again

German IP Trends Caught in Cross Currents

OECD LEIs Are Sagging

French IP Jumps in October

U.S. Pending Home Sales Ticked Higher, Again

Michigan Consumer Sentiment Down Hard

U.S. Payrolls Increase Light, Unemployment Steady

U.S. Payrolls Increase Light, Unemployment Steady