Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070215d.jpg" width="353">
Total U.S. industrial production decreased by 0.5% last month. Revisions to December and November data were mixed, pushing the December total up to a 0.5% gain from 0.4% reported before and holding November at the -0.1% change previously published. Consensus expectations had called for a January production figure unchanged from December rise.
Factory sector output dropped 0.8% after December&#39;s upwardly revised 1.0% gain. November, however, was shaved further to -0.1% from an originally reported 0.3% increase.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070215e.jpg" width="353">
Mining industry output declined 1.2% after a 1.5% increase in December. Utilities, by contrast, saw their output gain 2.3%; temperatures around the country returned to more normal levels after a mild December, so utility output became more seasonal following weakness in November and December. Remarkably, the utility sector has seen production unchanged on balance over the past six months (seasonally adjusted).
Among manufactured products, consumer durables output dropped 2.4%, erasing much of the November and December gain. The automotive sector was largely responsible, losing 4.4%. Among other groups, only computers and video equipment managed an increase.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070215c.jpg" width="353">
Consumer nondurable goods fell 0.6%; their December decrease was revised from 0.2% to 0.4%, but November&#39;s was ameliorated slightly from -0.4% to -0.2%. Food and chemical products both fell, while paper and clothing increased. After two monthly declines totaling 2.3%, energy production rebounded 3.9%. In our second graph here, we call your attention to two trends: the well-known continuing gains in computers and other home electronics and also a perhaps less-noticed stabilization of clothing output. This latter fell from about 185 (2002=100) at the beginning of 1995 to a range of 77 to 80 in late 2004 through 2006. The textile industry as a whole continues to contract, but clothing itself is maintaining its rate of production, albeit at a low level.
Business equipment production, with a drop of 1.7%, gave up half of its November/December increase. Transportation and industrial shared in the decline, while information processing equipment rose 0.9%, a fifth consecutive monthly gain.
With the decline in total output, total industry capacity utilization fell back in January, reaching 81.2% after 81.8% in December, which was unrevised. It has been trending lower now an August peak, and has returned to its level of February 2006. In manufacturing, utilization went down from 80.2% in December to 79.4% in January, the lowest since a similar rate in November 2005.

<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/output.htm">Production &amp; Capacity</a></th>
<th scope="col">Jan 2007</th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</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">Industrial Production</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>4.1%</td>
<td>3.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Manufacturing (NAICS)</td>
<td>-0.8%</td>
<td>1.0%</td>
<td>-0.1%</td>
<td>1.9%</td>
<td>5.0%</td>
<td>4.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>2.8%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Equipment</td>
<td>-1.7%</td>
<td>2.3%</td>
<td>0.7%</td>
<td>8.7%</td>
<td>11.7%</td>
<td>7.9%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>81.2%</td>
<td>81.8%</td>
<td>81.5%</td>
<td>81.1% (01/06)</td>
<td>81.8%</td>
<td>80.2%</td>
<td>78.1%</td>
</tr>
</tbody>
</table>
Japan GDP Gains at 4.8% AR in Q4, Fastest in Almost 3 Years 
by <a href="/comment/Stone.html">Carol Stone</a> February 15, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070215a.jpg" width="353">
Japan&#39;s GDP surged upward 4.84% in Q4 at an annual rate, the Cabinet Office reported early today in Tokyo. Forecasters had looked for 3.8-3.9% growth, according to news service surveys. It was the largest quarterly gain since Q1 2004 at 5.11%.
Domestic final demand was responsible for the strong rise. Consumer spending, which had fallen 4.3% in Q3, rebounded nicely by 4.5% in Q4. Private investment expenditures in plant and equipment grew at a 9.2% rate, following a much more modest 3.4% in Q3. The year&#39;s total nonresidential investment grew 7.3%, the fourth consecutive good gain in real investment outlays and the largest since 2000&#39;s tech boom.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070215b.jpg" width="353">
Other major components slowed: the change in private inventories was &yen;1.15 trillion, less than Q3&#39;s &yen;1.85 trillion. Exports grew at a 4.3% annual rate, easing from the 10.0% pace in Q3. Imports fell by a marginal 0.1% after a 1.8% annualized decline in Q3. The resulting net export figure, &yen;21.84 trillion, was up just &yen;883 billion, well less than half Q3&#39;s &yen;2.20 trillion increase.
This broad-based gain in Q4 GDP growth in Japan has analysts talking in the press today about BoJ interest rate hikes, soon. Possibly, but we can&#39;t help notice interesting downward revisions in the Q3 data. Three months ago here, Louise Curley described the then surprisingly large 2.03% rate of increase in Q3 GDP. Interim revisions put that figure down at 0.84% (still carried in Haver&#39;s OECDNAQ database and several forecast databases) and today&#39;s report has shaved it further to just 0.26%. The same pattern is evident in the household consumption component: an original report of a 2.98% rate of decline in Q3 became -3.80% and now -4.29%. So, yes, the Q4 report looks good now, but we hope it has staying power! The &quot;Second Preliminary&quot; GDP report will be issued by Japan&#39;s Cabinet Office on March 12. Stay tuned. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Japan: SAAR % Chg</th>
<th scope="col">Q4 2006</th>
<th scope="col">Q3 2006</th>
<th scope="col">Q2 2006</th>
<th scope="col">Q1 2006</th>
<th scope="col">Q4 2005</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">Real GDP</td>
<td>4.84</td>
<td>0.26</td>
<td>1.35</td>
<td>2.81</td>
<td>1.65</td>
<td>2.16</td>
<td>1.87</td>
<td>2.72</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Feb 8 OECD*</td>
<td>--</td>
<td>0.84</td>
<td>1.14</td>
<td>2.71</td>
<td>2.06</td>
<td>--</td>
<td>1.88</td>
<td>2.72</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nov 14*</td>
<td>--</td>
<td>2.03</td>
<td>1.51</td>
<td>3.17</td>
<td>4.09</td>
<td>--</td>
<td>2.69</td>
<td>2.13</td>
</tr>
<tr>
<td class="firstcol">Consumption</td>
<td>4.50</td>
<td>-4.29</td>
<td>2.41</td>
<td>0.27</td>
<td>1.06</td>
<td>0.94</td>
<td>1.49</td>
<td>1.55</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Feb 8 OECD*</td>
<td>--</td>
<td>-3.80</td>
<td>2.11</td>
<td>-0.19</td>
<td>1.88</td>
<td>--</td>
<td>1.51</td>
<td>1.55</td>
</tr>
<tr>
<td class="firstcol">Private Nonresidential Investment</td>
<td>9.22</td>
<td>3.41</td>
<td>13.66</td>
<td>14.03</td>
<td>-2.11</td>
<td>7.32</td>
<td>6.61</td>
<td>5.43</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Inven- tories (Bil.&yen;)</td>
<td>1155.5</td>
<td>1845.5</td>
<td>741.1</td>
<td>1639.1</td>
<td>660.4</td>
<td>1345.3</td>
<td>1033.4</td>
<td>1815.8</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>4.30</td>
<td>10.01</td>
<td>2.77</td>
<td>9.65</td>
<td>15.77</td>
<td>9.72</td>
<td>6.94</td>
<td>13.98</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>-0.13</td>
<td>-1.79</td>
<td>5.69</td>
<td>8.12</td>
<td>-1.23</td>
<td>4.63</td>
<td>5.85</td>
<td>8.11</td>
</tr>
</tbody>
</table>
</body>
</html>

Total U.S. industrial production decreased by 0.5% last month. Revisions to December and November data were mixed, pushing the December total up to a 0.5% gain from 0.4% reported before and holding November at the -0.1% change [...]

Industrial Production Falls Unexpectedly by 0.5% in January

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214d.jpg" width="353">
Employment in the UK rose 7,000 in the November period, a third successive monthly increase in this 3-month moving average. Over the last three months (the style of comparison that the UK&#39;s Office for National Statistics [ONS] generally emphasizes) employment went up by 50,000. The advances were more than accounted for among part-time workers, who increased 80,000 over three months ago, in contrast to a 30,000 decline in full-time workers.
The unemployment rate has held flat at 5.5% since September, and is 0.1% below its August reading. This resulted from an outright decrease in the number unemployed of 24,000 since August, helped by the increase in employment and also by a smaller gain in the number of people &quot;in economic activity&quot; (what the US calls the &quot;labor force&quot;), 26,000, than in the total population over age 16, 92,000. This cut the ratio of the labor force to the population from 63.7% in the August period to 63.6% in November.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214e.jpg" width="353">
The UK&#39;s alternative unemployment measure, the &quot;claimant count&quot;, shows more unambiguous improvement, albeit modestly so; the number of claimants (similar to the US measure of the number of people receiving unemployment insurance) fell 9,300 in December and 13,500 in January. The resulting &quot;claimant rate&quot; was 2.9% in January, down from 3.0% for the previous 10 consecutive months. &quot;Inflows&quot; to this group have had a choppy, but trendless pattern in recent months, while the number of &quot;outflows&quot; has increased consistently over almost the past year, suggesting increased hiring of benefit recipients.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214f.jpg" width="353">
An increase in job vacancies in January hints that the recent hesitant but favorable labor market trend might continue. For January alone, vacancies were 637,700, up almost 35,000 from December. This put them at their highest level since the spring of 2005. The 3-month moving average rose slightly to 607,900, about even with last August and still well below the early-2005 amounts. So signs of improvement remain tentative, but the marginal adjustments in the labor market, new hires and vacancies, show a potential for further advance. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK Labor Force Survey &amp; Related Labor Data</th>
<th scope="col">Jan 2007</th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</th>
<th scope="col">Oct 2006</th>
<th scope="col">Year Ago</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">Employment* &nbsp; (3Mo Avg, SA, Thous)</td>
<td>--</td>
<td>--</td>
<td>29,036</td>
<td>29,029</td>
<td>28,758</td>
<td>28,960</td>
<td>28,730</td>
<td>28,465</td>
</tr>
<tr>
<td class="firstcol">Chg from 1 &amp; 3 Months Ago</td>
<td>--</td>
<td>--</td>
<td>+7/50</td>
<td>+24/14</td>
<td>+23&nbsp;(MoAvg)1% y/y</td>
<td>0.8%</td>
<td>0.9%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate* &nbsp; (3Mo Avg, SA, %)</td>
<td>--</td>
<td>--</td>
<td>5.5%</td>
<td>5.5%</td>
<td>5.1%</td>
<td>5.4%</td>
<td>4.8%</td>
<td>4.8%</td>
</tr>
<tr>
<td class="firstcol">Claimant Count &nbsp; (Monthly, Thous)</td>
<td>925.8</td>
<td>939.3</td>
<td>948.6</td>
<td>956.5</td>
<td>905.1</td>
<td>944.1</td>
<td>861.8</td>
<td>853.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Vacancies (Monthly, Thous)</td>
<td>637.7</td>
<td>602.8</td>
<td>590.7</td>
<td>619.1</td>
<td>598.8</td>
<td>599.4</td>
<td>618.6</td>
<td>631.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Employment in the UK rose 7,000 in the November period, a third successive monthly increase in this 3-month moving average. Over the last three months (the style of comparison that the UK's Office for National Statistics [ONS] [...]

UK Unemployment Steadies; Modest Employment Growth

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214c.jpg" width="353">
The total number of mortgage applications increased 1.5% last week after a slight 0.2% decline to start the month, according to the Mortgage Bankers Association.
The gain was wholly due to a 4.5% rise in applications to refinance after the 0.2% uptick during the prior week.
Purchase applications fell 1.0% after a 0.8% decline during the prior week.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage ticked up two basis points to 6.46%. Rates averaged 6.40% last month and 6.28% in December. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing dipped slightly to 6.22%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
Monetary Policy Inertia and Recent Fed Actions from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-03.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">02/09/07</th>
<th scope="col">02/02/07</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">Total Market Index</td>
<td>639.8</td>
<td>630.1</td>
<td>11.4%</td>
<td>584.2</td>
<td>708.6</td>
<td>735.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>400.7</td>
<td>404.7</td>
<td>2.3%</td>
<td>406.9</td>
<td>470.9</td>
<td>454.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,031.7</td>
<td>1,943.4</td>
<td>24.1%</td>
<td>1,634.0</td>
<td>2,092.3</td>
<td>2,366.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications increased 1.5% last week after a slight 0.2% decline to start the month, according to the Mortgage Bankers Association. The gain was wholly due to a 4.5% rise in applications to refinance [...]

Mortgage Applications Up

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214a.jpg" width="353">
In January, US retail sales slipped marginally after a December gain that was revised up to 1.2% from 0.9% reported initially. The figure for last month fell short of Consensus expectations for a modest 0.3% rise.
Excluding autos, retail sales added 0.3% to an upwardly revised 1.3% December gain, revised from 1.0%.
Sales by motor vehicle &amp; parts dealers reversed all of the December increase with a 1.3% (-1.7% y/y) decline, helped by a 0.1% slip in new unit vehicle sales.
Gasoline service station sales fell 0.7% after the 3.6% jump during December reflecting the 3.2% drop in gasoline prices to an average $2.24 per gallon.
Nonauto retail sales less gasoline rose 0.5% (4.3% y/y) last month after an upwardly revised 1.0% spurt during December.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214b.jpg" width="353">
Sales of discretionary items were generally firm last month. Sales at general merchandise stores rose 1.3% (5.6% y/y) after an upwardly revised 1.2% December increase.Apparel store sales also were firm with a 1.0% (4.6% y/y) after a December spurt that was about doubled to 1.1%. Furniture, home furnishings &amp; appliance stores, however, slipped after a December increase that was halved to 0.8%. The huge December gain in sales at electronics &amp; appliance stores was lowered to 1.8% from 3.0%, then sales fell 1.2% last month.
Building material sales rose 0.8% (-3.1% y/y) after a very much upwardly revised 0.7% December increase. Sales of nonstore retailers (internet &amp; catalogue) rose a moderate 0.5% (8.4% y/y) but restaurant and bar sales fell 0.7% (5.3% y/y) after a firm December gain that was upwardly revised a 3.1%.
Chairman Ben S. Bernanke&#39;s Senate Testimony, The Semiannual Monetary Policy Report to the Congress, can be found <a href="http://www.federalreserve.gov/boarddocs/hh/2007/february/testimony.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">&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</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>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-0.0%</td>
<td>1.2%</td>
<td>2.3%</td>
<td>6.3%</td>
<td>7.2%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.3%</td>
<td>1.3%</td>
<td>3.4%</td>
<td>7.5%</td>
<td>8.3%</td>
<td>7.2%</td>
</tr>
</tbody>
</table>


</html>

In January, US retail sales slipped marginally after a December gain that was revised up to 1.2% from 0.9% reported initially. The figure for last month fell short of Consensus expectations for a modest 0.3% rise. Excluding autos, [...]

U.S. Retail Sales Eased After Firmed December

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214a.jpg" width="353">
In January, US retail sales slipped marginally after a December gain that was revised up to 1.2% from 0.9% reported initially. The figure for last month fell short of Consensus expectations for a modest 0.3% rise.
Excluding autos, retail sales added 0.3% to an upwardly revised 1.3% December gain, revised from 1.0%.
Sales by motor vehicle &amp; parts dealers reversed all of the December increase with a 1.3% (-1.7% y/y) decline, helped by a 0.1% slip in new unit vehicle sales.
Gasoline service station sales fell 0.7% after the 3.6% jump during December reflecting the 3.2% drop in gasoline prices to an average $2.24 per gallon.
Nonauto retail sales less gasoline rose 0.5% (4.3% y/y) last month after an upwardly revised 1.0% spurt during December.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214b.jpg" width="353">
Sales of discretionary items were generally firm last month. Sales at general merchandise stores rose 1.3% (5.6% y/y) after an upwardly revised 1.2% December increase.Apparel store sales also were firm with a 1.0% (4.6% y/y) after a December spurt that was about doubled to 1.1%. Furniture, home furnishings &amp; appliance stores, however, slipped after a December increase that was halved to 0.8%. The huge December gain in sales at electronics &amp; appliance stores was lowered to 1.8% from 3.0%, then sales fell 1.2% last month.
Building material sales rose 0.8% (-3.1% y/y) after a very much upwardly revised 0.7% December increase. Sales of nonstore retailers (internet &amp; catalogue) rose a moderate 0.5% (8.4% y/y) but restaurant and bar sales fell 0.7% (5.3% y/y) after a firm December gain that was upwardly revised a 3.1%.
Chairman Ben S. Bernanke&#39;s Senate Testimony, The Semiannual Monetary Policy Report to the Congress, can be found <a href="http://www.federalreserve.gov/boarddocs/hh/2007/february/testimony.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">&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</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>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-0.0%</td>
<td>1.2%</td>
<td>2.3%</td>
<td>6.3%</td>
<td>7.2%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.3%</td>
<td>1.3%</td>
<td>3.4%</td>
<td>7.5%</td>
<td>8.3%</td>
<td>7.2%</td>
</tr>
</tbody>
</table>
Mortgage Applications Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214c.jpg" width="353">
The total number of mortgage applications increased 1.5% last week after a slight 0.2% decline to start the month, according to the Mortgage Bankers Association.
The gain was wholly due to a 4.5% rise in applications to refinance after the 0.2% uptick during the prior week.
Purchase applications fell 1.0% after a 0.8% decline during the prior week.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage ticked up two basis points to 6.46%. Rates averaged 6.40% last month and 6.28% in December. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing dipped slightly to 6.22%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
Monetary Policy Inertia and Recent Fed Actions from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-03.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">02/09/07</th>
<th scope="col">02/02/07</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">Total Market Index</td>
<td>639.8</td>
<td>630.1</td>
<td>11.4%</td>
<td>584.2</td>
<td>708.6</td>
<td>735.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>400.7</td>
<td>404.7</td>
<td>2.3%</td>
<td>406.9</td>
<td>470.9</td>
<td>454.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,031.7</td>
<td>1,943.4</td>
<td>24.1%</td>
<td>1,634.0</td>
<td>2,092.3</td>
<td>2,366.8</td>
</tr>
</tbody>
</table>
UK Unemployment Steadies; Modest Employment Growth 
by <a href="/comment/Stone.html">Carol Stone</a> February 14, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214d.jpg" width="353">
Employment in the UK rose 7,000 in the November period, a third successive monthly increase in this 3-month moving average. Over the last three months (the style of comparison that the UK&#39;s Office for National Statistics [ONS] generally emphasizes) employment went up by 50,000. The advances were more than accounted for among part-time workers, who increased 80,000 over three months ago, in contrast to a 30,000 decline in full-time workers.
The unemployment rate has held flat at 5.5% since September, and is 0.1% below its August reading. This resulted from an outright decrease in the number unemployed of 24,000 since August, helped by the increase in employment and also by a smaller gain in the number of people &quot;in economic activity&quot; (what the US calls the &quot;labor force&quot;), 26,000, than in the total population over age 16, 92,000. This cut the ratio of the labor force to the population from 63.7% in the August period to 63.6% in November.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214e.jpg" width="353">
The UK&#39;s alternative unemployment measure, the &quot;claimant count&quot;, shows more unambiguous improvement, albeit modestly so; the number of claimants (similar to the US measure of the number of people receiving unemployment insurance) fell 9,300 in December and 13,500 in January. The resulting &quot;claimant rate&quot; was 2.9% in January, down from 3.0% for the previous 10 consecutive months. &quot;Inflows&quot; to this group have had a choppy, but trendless pattern in recent months, while the number of &quot;outflows&quot; has increased consistently over almost the past year, suggesting increased hiring of benefit recipients.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070214f.jpg" width="353">
An increase in job vacancies in January hints that the recent hesitant but favorable labor market trend might continue. For January alone, vacancies were 637,700, up almost 35,000 from December. This put them at their highest level since the spring of 2005. The 3-month moving average rose slightly to 607,900, about even with last August and still well below the early-2005 amounts. So signs of improvement remain tentative, but the marginal adjustments in the labor market, new hires and vacancies, show a potential for further advance. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK Labor Force Survey &amp; Related Labor Data</th>
<th scope="col">Jan 2007</th>
<th scope="col">Dec 2006</th>
<th scope="col">Nov 2006</th>
<th scope="col">Oct 2006</th>
<th scope="col">Year Ago</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">Employment* &nbsp; (3Mo Avg, SA, Thous)</td>
<td>--</td>
<td>--</td>
<td>29,036</td>
<td>29,029</td>
<td>28,758</td>
<td>28,960</td>
<td>28,730</td>
<td>28,465</td>
</tr>
<tr>
<td class="firstcol">Chg from 1 &amp; 3 Months Ago</td>
<td>--</td>
<td>--</td>
<td>+7/50</td>
<td>+24/14</td>
<td>+23&nbsp;(MoAvg)1% y/y</td>
<td>0.8%</td>
<td>0.9%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate* &nbsp; (3Mo Avg, SA, %)</td>
<td>--</td>
<td>--</td>
<td>5.5%</td>
<td>5.5%</td>
<td>5.1%</td>
<td>5.4%</td>
<td>4.8%</td>
<td>4.8%</td>
</tr>
<tr>
<td class="firstcol">Claimant Count &nbsp; (Monthly, Thous)</td>
<td>925.8</td>
<td>939.3</td>
<td>948.6</td>
<td>956.5</td>
<td>905.1</td>
<td>944.1</td>
<td>861.8</td>
<td>853.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Vacancies (Monthly, Thous)</td>
<td>637.7</td>
<td>602.8</td>
<td>590.7</td>
<td>619.1</td>
<td>598.8</td>
<td>599.4</td>
<td>618.6</td>
<td>631.9</td>
</tr>
</tbody>
</table>


</html>

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213h.jpg" width="353">
2006 was a good year for the euro area. Eurostat estimates that the Euro Area&#39;s Gross Domestic Product in real terms grew 0.9% in the fourth quarter of the year over the third quarter and was 3.3 above the fourth quarter of 2005. These figures suggest that growth in 2006 was 2.8%, the highest rate for the area since 2000.
The four largest members of the euro area--Germany, France, Italy and Spain--as well as the Netherlands released fourth quarter data on GDP growth today. Among these countries, Germany was the big standout. Its GDP grew 0.87% in the fourth quarter and was 3.72% over the fourth quarter of 2005. Growth for all of 2006 was 2.79%. GDP growth in Italy in the fourth quarter increased sharply to 1.13% from 0.33% in the third quarter and was 2.87% over the fourth quarter of 2005. However, because of slow growth earlier in the year, the annual rate of growth was barely 2.0%. The year over year increases in GDP in Italy are compared to those in Germany in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213g.jpg" width="353">
France also increased its GDP growth rate sharply in the fourth quarter of 2006 to 0.65% from 0.01%in the third quarter and was 2.27% above the fourth quarter of 2005. But GDP growth in France, like that in Italy was slow earlier in the year, as a result, growth for the year was just over 2.0%. Spain continued to be one of the high growers in the area. GDP in Spain was up 1.1% in the fourth quarter from the third and was 4% over the fourth quarter of 2005. For the year, Spain&#39;s GDP grew 3.79%. GDP growth in the Netherlands fell slightly in the fourth quarter to 0.64% from 0.72% in the third quarter and the year over year growth rate fell from 2.96 to 2.91%. For the year as a whole, GDP growth was 2.85%. The quarter to quarter and year to year growth rates of GDP are shown in the table below together with the annual growth rates of the past three years.Note: Eurostat and several euro area countries release flash estimates of Gross Domestic Product growth about a month and a half after the close of the quarter. Other countries within the euro area release preliminary estimates of GDP and its composition. Today France, Spain and Eurostat for the whole Euro Area released flash estimates of growth in the fourth quarter of 2006. France provides estimates of quarter to quarter growth only while Spain and Eurostat provide both quarter to quarter and year to year growth rates. The flash estimates have been good indicators of the actual growth rates as can be seen in the second chart that compares the flash estimates of the year over year changes in Euro Area growth and the actual changes.
Germany, Italy and the Netherlands released preliminary estimates of GDP and its composition..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GROWTH RATES OF REAL GDP&nbsp;&nbsp;</th>
<th scope="col">Q4&nbsp; 06 (%)</th>
<th scope="col">3Q 06 (%)</th>
<th scope="col">2Q 06 (%)</th>
<th scope="col">1Q 06 (%)</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">Y/Y Change</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Euro Zone)</td>
<td>3.3</td>
<td>2.7</td>
<td>2.9</td>
<td>2.2</td>
<td>2.79*</td>
<td>1.46</td>
<td>1.74</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>3.72</td>
<td>3.11</td>
<td>2.82</td>
<td>1.90</td>
<td>2.89</td>
<td>1.10</td>
<td>0.77</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>2.27#</td>
<td>1.85</td>
<td>2.58</td>
<td>1.33</td>
<td>2.01*</td>
<td>1.21</td>
<td>2.03</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp; Italy </td>
<td>2.87</td>
<td>1.66</td>
<td>1.70</td>
<td>1.73</td>
<td>1.99</td>
<td>0.11</td>
<td>0.88</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Spain</td>
<td>4.0</td>
<td>3.82</td>
<td>3.72</td>
<td>3.61</td>
<td>3.79*</td>
<td>3.53</td>
<td>3.26</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Netherlands</td>
<td>2.91</td>
<td>2.96</td>
<td>2.96</td>
<td>2.59</td>
<td>2.85</td>
<td>1.53</td>
<td>1.95</td>
</tr>
<tr>
<td class="firstcol">Q/Q Change</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Zone</td>
<td>0.90</td>
<td>0.53</td>
<td>0.99</td>
<td>0.82</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>0.87</td>
<td>0.79</td>
<td>1.18</td>
<td>0.84</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; France</td>
<td>1.65</td>
<td>0.01</td>
<td>1.13</td>
<td>0.46</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Italy </td>
<td>1.13</td>
<td>0.33</td>
<td>0.61</td>
<td>0.78</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Spain</td>
<td>1.1</td>
<td>0.93</td>
<td>0.93</td>
<td>0.95</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Netherlands</td>
<td>0.69</td>
<td>0.72</td>
<td>1.21</td>
<td>0.30</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
</html>

2006 was a good year for the euro area. Eurostat estimates that the Euro Area's Gross Domestic Product in real terms grew 0.9% in the fourth quarter of the year over the third quarter and was 3.3 above the fourth quarter of 2005. [...]

GDP Growth in the Euro Area, Germany, France, Italy, Spain and the Netherlands

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213e.jpg" width="353">
Unleaded gasoline prices at the pump rose for the second straight week and the nickel increase to an average $2.24 per gallon was to the highest level in a month.
Colder temperatures have lent strength both to crude oil prices which rose to $59.00 per barrel yesterday and to natural gas prices which rose yesterday to $8.25 mmbtu (5.9 y/y).
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213f.jpg" width="353">
The Daily and Policy-relevant Liquidity Effects from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/wp/2007/2007-001.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/surveyw/@S2/@S2.HTM">Weekly Energy Prices</a></th>
<th scope="col">02/12/07</th>
<th scope="col">02/05/07</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>
<td class="firstcol">US Retail Gasoline Price, Regular</td>
<td>$2.24</td>
<td>$2.19</td>
<td>-1.9%</td>
<td>$2.57</td>
<td>$2.27</td>
<td>$1.85</td>
</tr>
</tbody>
</table>


</html>

Unleaded gasoline prices at the pump rose for the second straight week and the nickel increase to an average $2.24 per gallon was to the highest level in a month. Colder temperatures have lent strength both to crude oil prices which [...]

Gasoline Prices Rose Again

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213c.jpg" width="353">
Small business optimism in January rose for the first month in three. The 2.5% increase recouped only a piece of the 3.2% December decline, according to the National Federation of Independent Business (NFIB).
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.
Respondents expecting the economy to improve improved after December&#39;s sharp deterioration. The percentage of firms with job openings also improved to the highest level since last April.
During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070213d.jpg" width="353">
The percent planning to raise capital expenditures also improved and more than made up the sharp deterioration during December.
The percentage of firms actually raising prices recovered about half of the December decline. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
Globalization and the Benefits of Trade from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmarch2007_236.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/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">January</th>
<th scope="col">December</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>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>98.9</td>
<td>96.5</td>
<td>-2.2%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Small business optimism in January rose for the first month in three. The 2.5% increase recouped only a piece of the 3.2% December decline, according to the National Federation of Independent Business (NFIB). During the last ten years [...]

Small Business Optimism Improved

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

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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

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


Privacy Policy

Disclaimer

Contact us

Service Health

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

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Michael J. Moran

260428N.jpg

260428O.jpg

The Conference Board’s index of Consumer Confidence inched higher in April from an upwardly revised reading in March. The combined changes left the measure 1.1% higher than the preliminary tally in March. Despite the improvement, the index remained in the low end of the range for the current expansion. The index in April totaled 92.8, down from an average of 96.1 in 2025 and an annual cyclical high of 105.4 in 2023.

The Improvement in April reflected a pickup in the expectations component, which rose 1.7%. The current conditions component inched 0.2% lower. Overall views on current conditions slipped despite more favorable assessments of the labor market. The so-called measure of the jobs gap (share of respondents indicating that jobs are plentiful less the share saying that jobs are hard to get) rose 1.4 percentage points higher to 7.5%. The pickup reflected a drop in the share indicating that jobs are hard to get (down 1.5 percentage points to 19.8%). The share indicating that jobs are plentiful eased 0.1 percentage point to 27.3%.

Although expectations improved in April, from a long-term perspective they could be viewed as the more important factor restraining the headline measure of confidence. As shown in the left chart below, the expectations component of confidence shows considerably less volatility than the current conditions component does. The contrasting patterns suggest that individuals realize that the economy will undergo possibly sharp cyclical swings, but they expect conditions at some point to return to an underlying norm.

The current conditions index in the current cycle has indeed dropped noticeably, but it is still above the long run average (123.8 in April versus the average of approximately 108 from 1990 to 2025). The expectations component, as usual, has eased less than the current conditions component, but its shift has pushed the measure to the low end of its long-run range (72.2 in April versus an average of approximately 88).

Interestingly, concern about the labor market seems to be a factor affecting expectations. While current views on the labor market are favorable (plentiful less hard to get jobs gap of 7.5%), Individual are concerned about the future. The survey asks respondents if they expect more jobs or fewer jobs six months hence. The share indicating fewer jobs has moved well into the upper end of the historical range. Such observations in the past were typically seen only during recession (chart, below right). An unfavorable view on interest rates also seems to be playing a role in depressing the expectations component. More than 60% of respondents to the current survey expect higher interest rates 12 months from now.

The results from the Conference Board survey of consumers differ markedly from those of the University of Michigan Survey Research Center. The Michigan results show consumer sentiment at a record low, while the Conference Board index is only slightly below its long-run average. The difference most likely reflects the nature of the questions in the surveys. The Conference Board focuses on business and employment conditions, while Michigan emphasizes personal finances. The focus on finances, along with questions on inflation, probably picks up concerns about affordability.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

260428P.jpg

260428Q.jpg

- Expectations improved slightly in April, but are still subdued relative to norms.
- Moderately favorable view of current conditions.

Consumer Confidence: Modest Change in April

Winnie Tapasanun

260428J35.jpg

260428K35.jpg

U.S. house prices were essentially unchanged m/m in February after rises of 0.2% in January (+0.1% initially) and 0.3% in December (unrevised), according to the Federal Housing Finance Agency (FHFA) House Price Index. February marked the first flat reading since September following four consecutive m/m increases. The HPI was at 441.43 in February, up 14.8% from its August 2022 low of 384.59. The year-on-year growth rate eased to 1.7% in February—the lowest since March 2012—from 1.8% in January (+4.1% in February 2025), down from a high of 6.9% in February 2024 and well below a peak of 18.5% in February 2022.

By region, February FHFA house prices showed a mixed performance. House prices fell m/m in February (vs. January) in four of the nine census divisions. Declines were led by Mountain (-1.1% vs. +0.4%), followed by Pacific (-0.5% vs. +0.6%), West North Central (-0.4% vs. +0.3%), and Middle Atlantic (-0.1% vs. +0.3%). To the upside, house prices rose m/m in four census divisions in February (vs. January): South Atlantic (+0.6% vs. -0.2%), East South Central (+0.2% vs. +1.2%), New England (+0.2% vs. +0.6%), and West South Central (+0.2% vs. -0.3%). Meanwhile, house prices in East North Central were virtually unchanged m/m for the second successive month in February following seven straight m/m gains.

Year-on-year house prices continued to rise in February in most regions, except Mountain, Pacific, and West South Central. The y/y growth rate accelerated in February (vs. January) in only two of the nine census divisions: East South Central (+4.0% vs. +3.2%) and South Atlantic (+0.9% vs. +0.4%). Meanwhile, house price growth decelerated y/y in February (vs. January) in four regions: New England (+3.1% vs. +3.9%), West North Central (+3.1% vs. +3.6%), East North Central (+3.8% vs. +4.5%), and Middle Atlantic (+4.2% vs. +4.5%). To the downside, Mountain (-0.7% vs. 0.0%), Pacific (-0.4% vs. -0.3%), and West South Central (-0.1% vs. -0.4%) posted y/y declines in February.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

260428L35.jpg

260428M35.jpg

- February FHFA HPI 0.0% m/m; +1.7% y/y, lowest since Mar. ’12.
- House prices down m/m in four of nine census divisions, led by Mountain (-1.1%); up in four, driven by South Atlantic (+0.6%); flat in East North Central.
- House prices up y/y in six of nine regions, led by Middle Atlantic (+4.2%), but down in Mountain (-0.7%), Pacific (-0.4%), and West South Central (-0.1%).

U.S. FHFA House Prices Flat in February After Four Straight M/M Gains

Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

260427T1.jpg

**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

260427T3.jpg

**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

260427T4.jpg

The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

260427T5.jpg

**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

260427T6.jpg

Asia

Economic Letter from Asia: Not Just About the Strait

Robert Brusca

260427E.jpg

**The Distributive Trades Survey**

The U.K. Distributive Trades Survey for April 2026 and the look-ahead expectation readings for May paint an extremely soured outlook for the U.K. economy.

**Retail ranking**: Surveys for retail sales compared to a year ago, orders compared to a year ago, and sales evaluated for the time of year all have rankings near zero, which is the worst result on this timeline. This zero distinction applies to retail sales compared to a year ago. The best ranking is 11.6%; that is for sales evaluated for the time of year. Orders compared to a year ago have a 4.2 percentile standing. The stock-to-sales ratio—which is a completely different concept—shows that the inventory-to-sales ratio has a 29.9 percentile standing.

**Retail diffusion**: The raw April diffusion readings (up minus down diffusion) show that sales compared to a year ago slipped to a reading of -68 in April from -52 in March. Orders fell to -46 in April from -26 in March. Sales evaluated for the time of year fell to -32 April from -23 in March. All three measures weakened, and all three weakened decisively, resulting in extremely weak rankings. All of the rankings are executed on data back to 2002.

**Expectations for retailing**: The expectations readings for May show slippage again across all three metrics: expected sales compared to a year ago, expected orders compared to a year ago, and expected sales for the time of year. Expected sales compared to a year ago fell to -60 in May from -49 in April. Orders compared to a year ago declined to -45 in May from -30 in April, and sales for the time of year slipped to -43 from -19. In May, these readings have rankings in a 0.4 percentile standing for sales compared to a year ago, a 1.8 percentile standing for sales evaluated relative to the time of year, and a 4.6 percentile standing for orders compared to a year ago. These two panels on current and expected retail sales volumes are just simply terrible: weak monthly, weak in ranking terms, and showing slipping momentum.

The distributor trade series also provides data on the wholesale sector. While the wholesale sector is not quite as beat up as the retail sector, it's still extremely weak. There is no cause for any kind of hope that things are getting better based on wholesaling trends.

**Wholesaling**: The wholesale survey for sales compared to a year ago edged lower to -32 in April from -31 in March. Orders compared to a year ago remained at a reading of -41 in April. Sales evaluated for the time of year improved to a reading of -20 in April from -39 in March—a significant step up, but still very weak. The percentile standings for these three categories show sales compared to a year ago at the 8.8 percentile, orders compared to a year ago at the 5.6 percentile, and sales evaluated for the time of year at the 14.8 percentile.

**Wholesale Expectations**: The look-ahead observations, which provide expectations for wholesaling in May, show a similar constellation of readings, with sales compared to a year ago falling to -37 in May from -27 in April and orders compared to a year ago falling to -42 from -38, while sales evaluated for the time of year improved to  16 from  37. That category for wholesale sales improved both in April in real time and in May for expectations; however, it continues to have a very weak percentile standing, at the 17.9 percentile in May, while sales for a year ago have a 6.7 percentile standing and orders for a year ago have a 6.0 percentile standing.

260427.jpg

While some of the global PMI data have improved, these survey data for the U.K. are particularly dour. The war in Ukraine drags on, and there's a new conflict in Iran that has shut the Strait of Hormuz, creating energy problems for much of Europe. More broadly, supply chains have been harmed. In addition, the U.K. is undergoing a bout of political instability, as its Prime Minister is under pressure and a good deal of political uncertainty is being worsened by deteriorating economic performance.

Both the U.K. and the European Monetary Union had been showing some progress on inflation until the Iran war hit. Now, as the oil prices are up so sharply, headline inflation is going to be worse everywhere and there will probably be a bit more attention directed to the core inflation rate. However, the U.K. has had inflation too hot for a while, and it has failed to settle down. At its last meeting, the Bank of England’s Monetary Policy Committee warned that if the war was still ongoing at the next meeting, there would be a risk of a rate hike. So, it would seem that a rate hike is going to be in play unless the economy falls off a cliff first, which, based on the distributive trades data, is also something that could happen. The U.K. economy appears to be on very unsound footing, and what happens next is just about anybody's guess.

United Kingdom

U.K. Retail Sales: Worse Than During Covid

260424E.jpg

The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.

Economy in Brief

Jump to:

Industrial Production Falls Unexpectedly by 0.5% in January

UK Unemployment Steadies; Modest Employment Growth

Mortgage Applications Up

U.S. Retail Sales Eased After Firmed December

U.S. Retail Sales Eased After Firmed December

GDP Growth in the Euro Area, Germany, France, Italy, Spain and the Netherlands

Gasoline Prices Rose Again

Small Business Optimism Improved