Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925a.jpg" width="353">
 Total existing home sales fell just 0.5% during August to 6.30M according to the National Association of Realtors, and it was the sixth decline this year. Though it lowered sales 13.3% below the peak in June of 2005, the decline compared favorably to Consensus expectations for a deeper drop 6.20M.
The data cover sales closed in the latest and previous months, and contrast to the new home sales data which tally sales at the signing of a contract.
Weakness in home sales perhaps was mitigated by price concessions which lowered the median price of an existing single-family home by 2.3%. The y/y change in prices, at -1.7%, was negative for the first time a modest decline in 1995 and the deepest since a 1.1% drop in early 2003. The price figures are not seasonally adjusted.
Sales of single-family homes were unchanged but have fallen during six months this year and are down 13.0% from the peak in June of 2005. Versus the first eight months of 2005 sales this year are down 6.2%.
Single family home sales were unchanged last month both in the South (-6.5% y/y) and in the Midwest (-12.5% y/y). In the Northeast sales posted a 2.7% rise (-10.5% y/y) which was offset by a 1.7% decline (-22.4% y/y) in the West.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925b.jpg" width="353">
The inventory of unsold existing homes rose another 1.5% (37.9% y/y). The supply of unsold single family homes rose 1.2% (36.2% y/y) and the supply of condos &amp; coops for sale rose 3.1% m/m (49.1% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
Slowdown in housing won&#39;t shut down economic growth from the Federal Reserve Bank of St. Louis can be found <a href="http://stlouisfed.org/publications/re/2006/c/pages/pres_message.html"> here</a>.
Residential mortgage default from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/br_q3-2006-3_residential_mortgage.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>&nbsp;6,300</td>
<td>6,330</td>
<td>-12.6%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>5,510</td>
<td>5,510 </td>
<td>-12.3%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$225.7 </td>
<td>$230.9 </td>
<td>-1.7% </td>
<td>$217.5</td>
<td>$192.8 </td>
<td>$178.3 </td>
</tr>
</tbody>
</table>
China Close to Ousting the United  States as Number One Exporter 
by <a href="/comment/Curley.html">Louise Curley</a> September 25, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925c.jpg" width="353">
China&#39;s total exports in July at $80.3 billion exceeded the seasonally unadjusted exports of the United States at $79.2 billion for the first time. US data for August has not yet been published, but Chinese exports in August took another jump to reach $90.7 billion. As the first chart shows, the growth in China&#39;s exports suggests that it will not be long before China becomes the world&#39;s biggest exporter, ousting the United States from its long standing position.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925d.jpg" width="353">
In all the major geographic areas, Chinese exports are growing faster than those of the US. As an example, the second chart compares China and US exports to Europe. Even in areas where the US is still a dominant supplier, such as Latin America, the year to year growth in China&#39;s export to that region has greatly exceeded that of the US, as shown in the third chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925e.jpg" width="353">
China&#39;s status as the Number One Exporter in the world is not without its problems. As a result of the large current account surplus that has resulted from China&#39;s fast growing exports and slow growing imports, China&#39;s international reserves are close to $1.0 trillion. The management of the reserves has become increasingly burdensome and risky. And China&#39;s reluctance to appreciate its currency is becoming increasingly under attack.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Exports (Billions USD)</th>
<th scope="col">Aug&nbsp; 06</th>
<th scope="col">Jul 06</th>
<th scope="col">Jul 06</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>China</td>
<td>China</td>
<td>US</td>
</tr>
<tr>
<td class="firstcol">Total&nbsp;&nbsp;</td>
<td>90.7</td>
<td>80.3</td>
<td>79.2</td>
</tr>
<tr class="odd">
<td class="firstcol">To Europe</td>
<td>20.7</td>
<td>17.8</td>
<td>18.4</td>
</tr>
<tr>
<td class="firstcol">To Latin America</td>
<td>3.6</td>
<td>3.1</td>
<td>16.9</td>
</tr>
</tbody>
</table>


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Total existing home sales fell just 0.5% during August to 6.30M according to the National Association of Realtors, and it was the sixth decline this year. Though it lowered sales 13.3% below the peak in June of 2005, the decline [...]

U.S. Existing Home Sales Hold Up As Prices Fell

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922d.jpg" width="353">
Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase in total employment in the month, a 2.0% advance over a year ago and following a 42,000 increase in July. Unemployment in Taiwan is declining, and the August rate, 3.8%, is the lowest since February 2001; it peaked at 5.3% in early 2002.
The most distinctive aspect to Taiwan&#39;s labor situation is the uptrend in manufacturing. The number of factory workers has increased by 61,000 over the last year, a gain of 2.2%. After the tech recession in 2001, Taiwan&#39;s manufacturing rebounded promptly and has shown fairly consistent growth since. Its neighbors haven&#39;t fared nearly as well. Until the last few months, South Korea has continued to see job reductions in that sector and Hong Kong&#39;s manufacturing jobs are just managing to hold steady at their cycle low.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922e.jpg" width="353"> 
Clearly too, Taiwan&#39;s manufacturing employment is stronger than in the West. In Taiwan, this key goods-producing sector accounts for just over 27% of all employment. This contrasts with 18.4% recently in the EuroZone (includes mining), about 12% in the US and 11% in the UK. In Europe, too, factory jobs are falling markedly; in the UK, they are also falling, although the rate of decline is easing. In the US, total factory employment has finally stabilized and the number of production workers is actually rising a bit. But by far, Taiwan&#39;s sector is out-performing many other of the world&#39;s markets.

<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/EMERGEPR/@P5/@P55/@P55.HTM">Taiwan: SA*, 000s</a></th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment</td>
<td>10,141</td>
<td>10,120</td>
<td>10,078</td>
<td>9,951</td>
<td>9,942</td>
<td>9,786</td>
<td>9,573</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>21</td>
<td>42</td>
<td>7</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>2,783</td>
<td>2,777</td>
<td>2,765</td>
<td>2,722</td>
<td>2,726</td>
<td>2,672</td>
<td>2,590</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>6</td>
<td>12</td>
<td>9</td>
<td>2.2%</td>
<td>2.0%</td>
<td>3.2%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate, %</td>
<td>3.8%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>5.0%</td>
</tr>
</tbody>
</table>
</body>
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Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase [...]

Taiwan Employment Grows, Even in Factories; Unemployment Lowest in 5-1/2 Years

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922a.jpg" width="353">
At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer&#39;s peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from $2.42 in July.
A lessening of supply concerns seems to more explain the price drop. Demand for gasoline actually has strengthened of late with y/y growth up to 5.4% during mid-September, according to figures from the U.S. Department of Energy.
Natural gas prices similarly have fallen sharply with the spot price down to $4.67/mmbtu, off by nearly one-half from this past July&#39;s high. During September, the Edison Electric Institute reports that growth in U.S. electricity demand was negative 5-11% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922b.jpg" width="353">
Gold prices have followed suit with a 20% decline to $578.75 per ounce versus the May high of $725.00. Reduced concerns about future inflation certainly figure in the price decline. Federal Reserve Board action has left the level of the monetary base virtually unchanged since the Spring with y/y growth down to 3.3%, near the lows of the last four years.An additional indication of reduced inflation risk is the Treasury market interest rate yield curve which remains inverted between the 10 Year and Fed funds.
Other commodity prices similarly have lost steam. The JoC-ECRI index of industrial metals prices has been volatile in a sideways pattern since the Spring though textile prices recently firmed off a low July base. Lower lumber prices reflect the declines in housing starts &amp; sales. The framing lumber composite from FIBER near $300/1000 board ft. is off by nearly one third from last year&#39;s high.During the last twenty years there has been a 35% correlation between the y/y change in factory sector industrial production and the change in the crude goods Producer Price Index less food &amp; energy.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922c.jpg" width="353">
Inflation, Inflation Expectations, and Monetary Policy from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/dsp_showdetail_Speech.cfm?contentId=613&amp;detailId=568"> here</a>.
Monetary Policy in an Interdependent World from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/Research/Com2006/0501.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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/21/06</th>
<th scope="col">12/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.05</td>
<td>$61.04</td>
<td>-8.2%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$578.75</td>
<td>$516.00</td>
<td>24.1%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>


</html>

At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer's peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from [...]

Energy & Gold Prices Deflate

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922a.jpg" width="353">
At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer&#39;s peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from $2.42 in July.
A lessening of supply concerns seems to more explain the price drop. Demand for gasoline actually has strengthened of late with y/y growth up to 5.4% during mid-September, according to figures from the U.S. Department of Energy.
Natural gas prices similarly have fallen sharply with the spot price down to $4.67/mmbtu, off by nearly one-half from this past July&#39;s high. During September, the Edison Electric Institute reports that growth in U.S. electricity demand was negative 5-11% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922b.jpg" width="353">
Gold prices have followed suit with a 20% decline to $578.75 per ounce versus the May high of $725.00. Reduced concerns about future inflation certainly figure in the price decline. Federal Reserve Board action has left the level of the monetary base virtually unchanged since the Spring with y/y growth down to 3.3%, near the lows of the last four years.An additional indication of reduced inflation risk is the Treasury market interest rate yield curve which remains inverted between the 10 Year and Fed funds.
Other commodity prices similarly have lost steam. The JoC-ECRI index of industrial metals prices has been volatile in a sideways pattern since the Spring though textile prices recently firmed off a low July base. Lower lumber prices reflect the declines in housing starts &amp; sales. The framing lumber composite from FIBER near $300/1000 board ft. is off by nearly one third from last year&#39;s high.During the last twenty years there has been a 35% correlation between the y/y change in factory sector industrial production and the change in the crude goods Producer Price Index less food &amp; energy.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922c.jpg" width="353">
Inflation, Inflation Expectations, and Monetary Policy from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/dsp_showdetail_Speech.cfm?contentId=613&amp;detailId=568"> here</a>.
Monetary Policy in an Interdependent World from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/Research/Com2006/0501.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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/21/06</th>
<th scope="col">12/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.05</td>
<td>$61.04</td>
<td>-8.2%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$578.75</td>
<td>$516.00</td>
<td>24.1%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>
Taiwan Employment Grows, Even in Factories; Unemployment Lowest in 5-1/2 Years 
by <a href="/comment/Stone.html">Carol Stone</a> September 22, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922d.jpg" width="353">
Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase in total employment in the month, a 2.0% advance over a year ago and following a 42,000 increase in July. Unemployment in Taiwan is declining, and the August rate, 3.8%, is the lowest since February 2001; it peaked at 5.3% in early 2002.
The most distinctive aspect to Taiwan&#39;s labor situation is the uptrend in manufacturing. The number of factory workers has increased by 61,000 over the last year, a gain of 2.2%. After the tech recession in 2001, Taiwan&#39;s manufacturing rebounded promptly and has shown fairly consistent growth since. Its neighbors haven&#39;t fared nearly as well. Until the last few months, South Korea has continued to see job reductions in that sector and Hong Kong&#39;s manufacturing jobs are just managing to hold steady at their cycle low.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922e.jpg" width="353">
Clearly too, Taiwan&#39;s manufacturing employment is stronger than in the West. In Taiwan, this key goods-producing sector accounts for just over 27% of all employment. This contrasts with 18.4% recently in the EuroZone (includes mining), about 12% in the US and 11% in the UK. In Europe, too, factory jobs are falling markedly; in the UK, they are also falling, although the rate of decline is easing. In the US, total factory employment has finally stabilized and the number of production workers is actually rising a bit. But by far, Taiwan&#39;s sector is out-performing many other of the world&#39;s markets.

<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/EMERGEPR/@P5/@P55/@P55.HTM">Taiwan: SA*, 000s</a></th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment</td>
<td>10,141</td>
<td>10,120</td>
<td>10,078</td>
<td>9,951</td>
<td>9,942</td>
<td>9,786</td>
<td>9,573</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>21</td>
<td>42</td>
<td>7</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>2,783</td>
<td>2,777</td>
<td>2,765</td>
<td>2,722</td>
<td>2,726</td>
<td>2,672</td>
<td>2,590</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>6</td>
<td>12</td>
<td>9</td>
<td>2.2%</td>
<td>2.0%</td>
<td>3.2%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate, %</td>
<td>3.8%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>5.0%</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921h.jpg" width="353">
The Israel&#39;s Central Statistics Bureau today reported its &quot;State of the Economy Index&quot; for August, along with its available components. When we last checked in on the Israeli economy, about six weeks ago, the war in Lebanon was still in full swing and in describing Q2 GDP, we wondered out loud what the war would do to the economy in Q3. Today&#39;s report gives a bit of an indication. The overall index is estimated to have risen 0.3% in each July and August, marginally less than June&#39;s 0.4%, but noticeably less than the 0.6%/month in each of the prior four months. So some slowdown is clearly in process.
The index has five components covering industry, domestic and foreign trade and employment in the business sector (about 70% of total employment). Only exports and imports are published yet for August, and both of these are more than keeping up with their average of the past year. Imports grew 5.2% in August compared with a 12-month average gain of 1.4% and exports were up 3.5% versus an average of 1.1%. Industrial production through July was continuing with some strength as well, with monthly increases well over 1% then and in June, compared with 0.9% monthly for the last 12 months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921i.jpg" width="353">
The slowing is more evident in demand and employment indicators. The employment data lag, with the latest values only covering June and a detailed industrial breakdown only through Q2. But business sector employment by this monthly indicator peaked in March and fell slightly in each of the following months. Since this information is all prior to the Lebanon war, there is no impact evident here. Further, employment had expanded with some vigor since early in 2004. So perhaps there is nothing more in the recent pattern than a pause after a strong uptrend.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921j.jpg" width="353">
Domestic sales, however, seem to be a different story. Revenues from trade and services dropped 2.5% in June and another 2.6% in July, erasing almost all of a nice rise over the nine months beginning last September. People could well hold back purchases or at least take a cautionary stance as political tensions mount. Fortuitously for their welfare, a truce was called quickly, and this likely helps the general economy as well.
In dramatic contrast, the impact of the war showed quickly and distinctly in Lebanon. Data offerings are fairly sparse, but a quick look at imports and exports, which were reported Monday by the Bank of Lebanon, shows a clear picture of significant economic damage. The third graph here tells the whole story.

<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/EMERGEMA/@M7/@M7.HTM">Israel: SA, % Chg</a></th>
<th scope="col">Weight (%)</th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Yr Ago (Mo. Avg)</th>
Yearly % Change
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">Total Index</td>
<td>100</td>
<td>0.3</td>
<td>0.3</td>
<td>0.4</td>
<td>0.5</td>
<td>7.1</td>
<td>6.9</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>28</td>
<td>--</td>
<td>1.3</td>
<td>1.6</td>
<td>0.9</td>
<td>4.6</td>
<td>7.2</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>15</td>
<td>5.2</td>
<td>2.4</td>
<td>-2.3</td>
<td>1.4</td>
<td>2.3</td>
<td>14.6</td>
<td>-4.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade &amp; Services Revenues</td>
<td>28</td>
<td>--</td>
<td>-2.6</td>
<td>-2.5</td>
<td>0.1</td>
<td>8.1</td>
<td>8.0</td>
<td>-0.6</td>
</tr>
<tr>
<td class="firstcol">Employees in Business Sector</td>
<td>19</td>
<td>--</td>
<td>--</td>
<td>-0.3</td>
<td>0.2</td>
<td>4.7</td>
<td>2.4</td>
<td>-0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>10</td>
<td>3.5</td>
<td>-10.2</td>
<td>9.4</td>
<td>1.1</td>
<td>7.1</td>
<td>17.4</td>
<td>4.4</td>
</tr>
</tbody>
</table>
</body>
</html>

The Israel's Central Statistics Bureau today reported its "State of the Economy Index" for August, along with its available components. When we last checked in on the Israeli economy, about six weeks ago, the war in Lebanon was still [...]

Israel's Economy Sees Slower Growth in the Face of War in Lebanon; Lebanon's Economy Falls Dramatically

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921f.jpg" width="353">
The Philadelphia Federal Reserve Bank&#39;s September Index of General Business Conditions in the manufacturing sector was negative for the first month since April 2003. The figure fell to -0.4 from an unrevised, very firm 18.5 in August. Consensus expectations had been for a slight decline to 14.8.
During the last ten years there has been a 65% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 49% correlation with q/q growth in real GDP.
With the exceptions of inventories and employment, each of the sub indexes turned negative in September. The employment index, in fact, rose back into the middle of its range of the last year. During the last ten years there has been a 75% correlation between the employment index and the three month growth in factory payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921g.jpg" width="353">
The business conditions index reflects a separate survey question, not the sub indexes.
The prices paid index dropped further m/m to the lowest level since April. During the last ten years there has been a 76% correlation between the prices paid index and the three month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months also was negative for the first month since January 2001, though expectations for orders, shipments and employment remained positive.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0906.html">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/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Sept &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-0.4</td>
<td>18.5</td>
<td>7.0</td>
<td>12.4</td>
<td>28.0</td>
<td>10.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>38.1</td>
<td>45.3</td>
<td>50.6</td>
<td>43.5</td>
<td>51.2</td>
<td>16.8</td>
</tr>
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The Philadelphia Federal Reserve Bank's September Index of General Business Conditions in the manufacturing sector was negative for the first month since April 2003. The figure fell to -0.4 from an unrevised, very firm 18.5 in August. [...]

Philadelphia Fed Index Negative

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921e.jpg" width="353">
The August National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago at -0.18 was negative for the third month in the last four and that was enough to pull the three-month moving average of the CFNAI fell to 0.05, its lowest level in over a year.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
The latest CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_September2006.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.18</td>
<td>-0.07</td>
<td>0.13</td>
<td>0.20</td>
<td>0.35</td>
<td>-0.15</td>
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</tbody>
</table>
</body>
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The August National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago at -0.18 was negative for the third month in the last four and that was enough to pull the three-month moving average of the CFNAI fell to 0.05, its [...]

Chicago Fed Nat'l Activity Index Negative Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921d.jpg" width="353">
In August, the number of mass layoff events rose for the third consecutive month. The 6.0% m/m increase pulled the y/y comparison positive for the first time since December.
During the last ten years there has been a (negative) 85% correlation between the three month average level of layoff announcements and the y/y change in payroll employment.
The number of persons affected last month by mass layoffs surged 11.4% m/m but were up just 0.3% y/y. The number of persons affected by mass layoffs during the first eight months of this year fell 12.6% from the first eight months of 2005.
Increased layoffs in manufacturing (21.2% y/y) and information (-35.0% y/y) dominated the increase in claimants for unemployment insurance last month. Declines elsewhere were widespread.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period.

<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">Mass Layoffs</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All US Industries (# Events, SA)</td>
<td>1,193</td>
<td>1,125</td>
<td>4.2%</td>
<td>15,699</td>
<td>15,926</td>
<td>19,220</td>
</tr>
<tr>
<td class="firstcol">Total (# Persons, SA)</td>
<td>127,944</td>
<td>114,895</td>
<td>0.3%</td>
<td>1,722,452</td>
<td>1,591,081</td>
<td>1,946,548</td>
</tr>
</tbody>
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In August, the number of mass layoff events rose for the third consecutive month. The 6.0% m/m increase pulled the y/y comparison positive for the first time since December. During the last ten years there has been a (negative) 85% [...]

Mass Layoffs Up

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

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Andrew Cates

**Energy shock lifts inflation, trims growth**
The IMF’s latest WEO revisions for 2026 broadly reflect the classic stagflationary impact of the recent Middle East energy shock, with growth downgraded and inflation revised higher across most major economies. Higher energy prices act as a tax on real incomes while simultaneously pushing up costs. That said, the picture is not uniform: a number of economies—notably the US, China and India—have seen growth upgrades, reflecting stronger-than-expected momentum so far in 2026. By contrast, the UK stands out at the stagflationary extreme, combining one of the largest growth downgrades with a relatively strong inflation uplift—consistent with its weaker underlying momentum, greater energy sensitivity and more persistent domestic inflation dynamics. More broadly, while the global revisions remain modest—pointing to resilience in activity—the message is that disinflation is no longer a smooth glide back to target but increasingly contingent on energy prices and geopolitical developments.

260423Z1.jpg

**Markets largely shrug off rising economic pessimism**
Notwithstanding a more downbeat assessment from economists—including the IMF’s stagflationary tilt to the outlook—there has been remarkably little follow-through into financial markets. Measures of systemic stress in both the US and UK remain low by historical standards, suggesting that investors are, for now, largely looking through the Middle East conflict. There are several possible explanations: corporate profits remain resilient, the AI-driven investment narrative continues to dominate market thinking, and markets may be assuming that any energy shock will be temporary and contained. In effect, investors appear to be pricing a benign baseline in which geopolitical risks do not materially disrupt growth, inflation expectations or policy. The UK is a partial exception, with a somewhat more visible uptick in stress, which aligns more closely with the IMF’s more challenging growth-inflation trade-off and the economy’s greater sensitivity to energy prices.

260423Z2.jpg

**Volatility falls despite deteriorating growth surprises**
Market optimism is also increasingly at odds with the incoming data flow. Typically, equity volatility declines when growth surprises are positive and inflation surprises are benign. However, the recent pattern has broken that relationship. Growth surprises across the G10 have turned increasingly negative (our series is inverted in the chart below), yet volatility has continued to fall. In other words, markets are becoming less sensitive to weakening macro data, continuing to price a benign outlook even as the data deteriorate. This divergence reinforces the broader theme: investors are, for now, looking through both geopolitical risks and softer economic momentum, placing greater weight on resilience in earnings, the AI-driven narrative and the assumption that policy will remain supportive.

260423Z3.jpg

**Inflation Nowcasts Have Jumped**
Incoming data suggest that headline inflation has moved higher in recent weeks, broadly in line with expectations given the rise in energy prices following the Middle East shock. Nowcasts for CPI across the major economies show a clear rebound in March and April from the lows seen at the start of 2026, with the move occurring in a relatively synchronised fashion. This reinforces the view that the recent pickup in inflation is being driven primarily by a common external factor—energy.

260423Z4.jpg

**Energy shock not yet feeding into underlying inflation**
However, the detailed breakdown of March inflation outcomes suggests that this remains, for now, a largely headline-driven phenomenon. While headline CPI prints were firm across most economies, core inflation—stripping out energy and food—was more subdued and in some cases weaker. This indicates that there has been very limited pass-through from higher energy prices into broader goods and services inflation at this early stage. In other words, the shock is still being absorbed rather than propagated. That distinction is critical for policy and markets alike: as long as second-round effects remain contained, central banks may be able to look through the near-term rise in inflation, even as headline rates move higher.

260423Z5.jpg

**Inflation Expectations Rising as Growth Sentiment Falters**
It remains early days, and much will hinge on how inflation expectations evolve from here. The latest ZEW survey for Germany already conveys the hallmarks of a classic stagflationary shock, with macroeconomic expectations weakening even as inflation expectations have ratcheted sharply higher. This shift is important: while the recent rise in headline inflation has so far shown limited pass-through into core, a sustained increase in expectations would raise the risk of second-round effects and make the inflation process more persistent. In that sense, the ZEW data highlight the key fault line in the current environment—whether the energy-driven shock remains contained, or begins to embed itself more broadly through expectations and pricing behaviour.

260423Z6.jpg

Financial markets have remained notably calm in recent weeks despite rising geopolitical tensions in the Middle East, a more downbeat macroeconomic narrative and elevated uncertainty. Measures of financial stress and volatility remain low, and equity markets continue to look through both the conflict and softer data. That resilience sits alongside a more nuanced macro backdrop. The IMF’s latest WEO revisions point to a classic stagflationary energy shock—growth downgraded and inflation revised higher—although the global impact remains modest and uneven, with some economies still benefiting from stronger momentum (chart 1). At the same time, market pricing appears increasingly detached from the data flow, with volatility declining even as growth surprises have turned more negative relative to inflation (charts 2 and 3). Incoming inflation data reinforce the idea of a largely headline-driven shock, with nowcasts rising in line with higher energy prices but only limited pass-through into core inflation so far (charts 4 and 5). However, it remains early days. Survey evidence, such as the latest ZEW release, suggests that inflation expectations may already be responding in a more concerning way, with a marked rise alongside weakening growth sentiment (chart 6). Taken together, the key question for markets is whether this remains a contained, energy-driven shock that can be looked through—or whether it begins to embed more persistently via expectations, forcing a reassessment of the currently benign outlook.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/44A12ktUaoJGHZG7pEVcul?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Risks Build, Markets Shrug

Robert Brusca

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.

260424.jpg

Germany

German Ifo Plunges Everywhere

Sandy Batten

260423F8.jpg

260423G8.jpg

The National Activity Index published by the Federal Reserve Bank of Chicago (CFNAI) slipped to -0.20 in March from an upwardly revised +0.03 in February (previously (-0.11). This is the lowest monthly reading since last November. Smoothing out the monthly volatility, the index's three-month moving average (CFNAI-MA3) declined to -0.03 in March from an upwardly revised +0.03 in February (previously -0.01).

This index is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the FRB Chicago indicates that readings on the 3-month average of -0.70 or below are consistent with the economy being in a recession. Therefore, even though the March reading on the 3-month average was negative, it indicates that the US economy is still growing, just slightly slower than trend, and is well away from recessionary conditions. The 3-month average would be much deeper in negative territory if the economy was at risk of contracting.

The National Activity Index is a composite of 85 economic indicators, grouped into four major categories: production and income; employment, unemployment, and hours worked; personal consumption and housing; sales, orders, and inventories. Three of the four broad categories of indicators used to construct the index decreased from February, and three categories made negative contributions in March. Production-related indicators contributed –0.20 to the CFNAI in March, down from +0.13 in February. The sales, orders, and inventories category's contribution to the CFNAI was –0.01 in March, down from +0.05 in February. Employment-related indicators contributed +0.02 to the CFNAI in March, up from –0.15 in February. The personal consumption and housing category's contribution to the CFNAI was –0.01 in March, down from a neutral value in February.

The CFNAI Diffusion Index, which measures the breadth of the change in the component series and is also a three-month moving average, increased to –0.04 in March from –0.08 in February. This is the highest reading since February 2025. A reading of zero indicates that all of the indicators are growing at their long-term average. If all of the underlying indicators in a given month are below their long-run averages, the diffusion index will equal -1. If all of the indicators are above their long-run averages, it will equal +1. Thirty-four of the 85 individual indicators made positive contributions to the CFNAI in March, while 51 made negative contributions. Forty-three indicators improved from February to March, while 40 indicators deteriorated and two were unchanged. Of the indicators that improved, 16 made negative contributions.

These figures are available in Haver's **SURVEYS** database.

- The monthly reading fell to -0.20 in March from an upwardly revised +0.03 in February.
- The three-month average slipped from +0.03 to -0.03.
- Despite the slip in March, the index points to near-trend economic growth and is well above recession territory.

Chicago Fed National Activity Index Slipped in March

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance rose by 6,000 to 214,000 in the week ending April 18, from 208,000 in the week ending April 11, revised from 207,000. The four-week average rose 750 to 210,750 in the week ending April 18, from 210,000 the April 11 week, revised from 209,750. The Action Economics/Haver Analytics Survey looked for 210,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 12,000 to 1.821 million in the week ending April 11, from 1.809 million in the week ending April 4. The four-week moving average rose to 1.812 million in the latest week from 1.811 million in the March 28 week. The insured unemployment rate remained at 1.2% in the week of April 11. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 4, the highest unemployment rates were in New Jersey (2.51%), Massachusetts (2.37%), Rhode Island (2.31%), Washington (2.25%), Minnesota (2.11%), and California (2.02%). The lowest rates were in Florida (0.30%), Louisiana (0.31%), Arkansas (0.35%), Alabama (0.36%), North Carolina (0.39%), Tennessee (0.46%), South Dakota (0.47%), Kansas and Virginia (both 0.49%). Rates in other notable states include New York (1.92%), Illinois (1.82%), Pennsylvania (1.52%), and Texas (1.04%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims rose by 6,000 to 214,000.
- Continuing claims rose by 12,000 to 1.821 million.
- The insured unemployment rate remained at 1.2%.


U.S. Initial Unemployment Claims Rose in the Week of April 18

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**Manufacturing looks strong while service sectors weaken**
S&P's April flash PMI readings show some very mixed results. For the United States, India, Australia, and the United Kingdom, there is a strengthening in the readings month-to-month for services, manufacturing, and the composite.

For Japan, France, and the European Monetary Union as a whole, there is improvement in the manufacturing sector on the month but a weaker services reading and a weaker composite overall.

Germany is the only responding area in the table showing weakness all around—in all three sectors—a weaker composite, a weaker manufacturing sector, and a weaker services sector in April. For Germany, this follows a weaker composite and service sector in March as well.

Most reporters—France, the United Kingdom, Japan, Australia, and India—had weaker readings for all three metrics in March: the composite, services, and manufacturing. The March exceptions were the United States, Germany, and the European Monetary Union; in each case, the exception was that the manufacturing sector improved month-to-month, while the composite and services both weakened.

This has been a period of weakening—in March and April—since the war in Iran began. The 48 separate sector readings produced 30 readings that were weaker month-to-month in March and April. Among the 16 composite readings, 12 reported weaker conditions month-to-month. In March, the immediate aftermath of the outbreak of war brought instantaneous step backs across the PMI readings, while April, responding to at least a military success in the area, has shown a significant bounce back that is now more common than further weakness.

The sequential data over three months, six months, and 12 months are based only on completed data; therefore, they're up to date through March. On that basis, we have triple sector weakness in the U.S., India, and Australia, with only Japan and the United Kingdom showing triple-sector improvement over three months. However, if we look at six months compared to 12 months, we have triple sector strength in the Monetary Union, Germany, France, the United Kingdom, Japan, and Australia. India and the U.S. each show only one stronger sector over that comparison—services in India’s case and manufacturing in the U.S. case.

**Ranking Peculiarity**
The ranking data take the current flash data and compare them to the history of observations back to January 2022. What is quite surprising is that, on that timeline, the manufacturing sectors of all the countries in the table—except for Australia and India—show manufacturing standings in their respective 80th to 90th percentiles. Meanwhile, services standings are typically in the 30th percentile or lower.

**Odd Impact of War**
If the war in Iran has an impact on something, we would expect that to fall on the goods trade sector. We would expect this to have an impact on manufacturing although it's the opposite thing that's happening. Manufacturing is showing a revival, while services sectors are showing weaker performance across these countries generally. India is an interesting case, with manufacturing only in its 32nd percentile; however, India’s raw diffusion reading for manufacturing is the strongest raw diffusion reading in the table. What India's ranking is telling us is that India had been extremely strong over the period since 2022, and now compared to that past standard, it's relatively weaker. However, it's still strong in absolute terms, showing a great deal of strength based on its pure diffusion value, just not in comparison to historic performance.

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**Next?**
At this point, it's not clear to me at least what these PMI data are telling us since the strength in manufacturing is a curiosity as is the weakness in the services sector. You see these two phenomena displayed in the chart above, in the case of the European Monetary Union’s flash readings as well.

**War breeds negative effects**
It's not a surprise that war would take some toll on consumer confidence or that it would be reflected in the services sector. However, seeing the kind of weakness being portrayed now in services against the strength in manufacturing is simply a bit hard to rationalize and understand. So, I think we're going to have to keep an eye on these readings as well as other readings in the months ahead to try to discern how global events, the war, conditions in the Strait of Hormuz, inflation currency shifts, and central bank policy are playing out across these various countries. None of what is happening is obvious to me. Japan clearly continues to benefit from a weak yen as its manufacturing sector is flying high, at its best reading since January 2022.

Economy in Brief

Jump to:

U.S. Existing Home Sales Hold Up As Prices Fell

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Energy & Gold Prices Deflate

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Philadelphia Fed Index Negative

Chicago Fed Nat'l Activity Index Negative Again

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