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/060712e.jpg" width="353">
In the April accounting period for the UK labor force survey (3-month average, March through May) employment gave up some of its prior periods&#39; gains. It had done nicely for the five month-to-month readings beginning in November, rising a total of 173,000 through March. But the April period saw employment fall by 38,000. This brought the 3-month change, the gauge used by UK&#39;s Office of National Statistics (ONS), down to 59,000 from 131,000 in March.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712f.jpg" width="353">
These moves leave the employment picture somewhat ambiguous. Unemployment, though, has a clearer picture. It is rising. The number unemployed is up 223,000, or 15.6%, from a year ago. The unemployment rate rose in April to 5.4%, its highest since the same level in September 2000. Similarly, claimants for unemployment benefits, which are published on a single-month basis and were issued today for June, increased 93,300 over a year ago to 956,600. This is the largest number since January 2002. However, the monthly increases have tapered a bit in the last couple of months, so perhaps the greatest erosion has past.
The number of job vacancies has stabilized. They totaled 603,000 in June, up from 583,900 in May. A 3-month moving average of these available jobs has hovered in a range of 593,000 to 603,000 since last October after falling sharply from a peak of 650,500 in December 2004.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712g.jpg" width="353">
Finally, workers&#39; earnings recovered from a period of softness in late 2005, reaching a 12-month growth rate of 4.4% in April, from a recent low of 3.5% in January. Then for May, they slowed a bit to 4.1%.
These conditions in the UK labor market have a cloudy cast. The unemployment data seem to be cause for discomfort, with a rising rate and rising unemployment insurance claims. But employment and wages performed well over the winter into the spring and the number of job vacancies is holding steady. Thus, while the jobs data don&#39;t look vigorous, they are holding up but unemployment is tending higher. A very mixed view.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jun 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">Mar 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">Employment &nbsp; (3Mo Avg, SA, Thous)</td>
<td>--</td>
<td>--</td>
<td>28,899</td>
<td>28,937</td>
<td>28,676</td>
<td>28,743</td>
<td>28,465</td>
<td>28,183</td>
</tr>
<tr>
<td class="firstcol">Chg from 1 &amp; 3 Months Ago</td>
<td>--</td>
<td>--</td>
<td>-38/59</td>
<td>+41/131</td>
<td>+19(MoAvg)&nbsp;</td>
<td>1.0%</td>
<td>1.0%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate &nbsp; (3Mo Avg, SA, %)</td>
<td>--</td>
<td>--</td>
<td>5.4%</td>
<td>5.3%</td>
<td>4.7%</td>
<td>4.8%</td>
<td>4.8%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">Claimant Count &nbsp; (Monthly, Thous)</td>
<td>956.6</td>
<td>950.7</td>
<td>945.1</td>
<td>937.8</td>
<td>863.3</td>
<td>861.1</td>
<td>853.6</td>
<td>933.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Vacancies (Monthly, Thous)</td>
<td>603.0</td>
<td>583.9</td>
<td>604.9</td>
<td>589.9</td>
<td>615.3</td>
<td>618.5</td>
<td>631.9</td>
<td>581.9</td>
</tr>
<tr>
<td class="firstcol">Average Earnings Index inc Bonus (Headline Rate*)</td>
<td>--</td>
<td>4.1%</td>
<td>4.4%</td>
<td>4.2%</td>
<td>4.0%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

In the April accounting period for the UK labor force survey (3-month average, March through May) employment gave up some of its prior periods' gains. It had done nicely for the five month-to-month readings beginning in November, [...]

UK Labor Market Data Show Rising Unemployment But Stable Employment & Firm Wages

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/060712c.jpg" width="353">
The total number of mortgage applications added 1.0% last week to the prior week&#39;s 5.9% gain. The rise lifted applications early in July 2.5% above the June average which fell 1.5% from May.
Purchase applications increased 2.6% and raised the early July level 4.8% above the June average which fell 0.8% from May.
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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712d.jpg" width="353">
Applications to refinance fell 1.6% and the latest level was 1.4% below the June average. Refis during all of June fell 3.1% from the May average.
The effective interest rate on a conventional 30-year mortgage was stable w/w at 7.02% but the rate on 15-year financing ticked higher to 6.70%. 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 accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">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">07/07/06</th>
<th scope="col">06/30/06</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 Market Index</td>
<td>566.8</td>
<td>561.0</td>
<td>-28.4%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>425.0</td>
<td>414.2</td>
<td>-13.1%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,400.5</td>
<td>1,423.9</td>
<td>-45.2%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications added 1.0% last week to the prior week's 5.9% gain. The rise lifted applications early in July 2.5% above the June average which fell 1.5% from May. Purchase applications increased 2.6% and [...]

Mortgage Applications Up, Rates Stable

<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/060712a.jpg" width="353">
The U.S. foreign trade deficit in May again deepened less than expected. The deficit of $63.8B compared to a little revised April gap of $63.3B and Consensus expectations for $64.9B.
During the first five months of 2006 the foreign trade deficit averaged $63.6B versus a $56.4B deficit averaged during the first five months of 2005.
Total exports in May jumped 2.4% after a little revised April slip. A strong 5.2% pop in nonauto consumer goods exports (10.9% y/y) more than recovered the prior month&#39;s decline. Capital goods exports also were strong and posted a 2.4% (15.3% y/y) surge following three months of sideways movement. Exports of advanced technology products rose 0.9% (NSA, 16.6% y/y) while exports of industrial supplies &amp; materials rose 3.4% (16.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712b.jpg" width="353">
Imports rose 1.9% during May as petroleum imports surged 16.9% (49.8% y/y). Adjusted for a higher prices, including an 8.7% (43.4% y/y) spike in crude oil to $61.74 per bbl., constant dollar petroleum imports surged 8.2% (3.3% y/y). Crude oil prices fell in June but have since risen to record highs.
Imports of capital goods increased 0.5% (10.9% y/y) reflecting a 6.3% rise in imports of advanced technology products (NSA, 8.8% y/y) and a 0.1% (+3.9% y/y) slip in imports of nonauto consumer goods.
The US deficit in goods trade with China deepened to $17.7B ($201.6B for 2005) but the trade deficit with Japan improved to $7.1B ($82.7B in 2005). The trade deficit with the Asian NICs more than doubled to $1.7B ($15.9B in 2005) and the deficit with the European Union deepened to $10.8B ($122.4B in 2005).
The Mid-Session Review of the U.S. Government Budget for FY 2007 is available <a href="http://www.whitehouse.gov/omb/budget/fy2007/pdf/07msr.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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Trade Deficit</td>
<td>$63.8B</td>
<td>$63.3B</td>
<td>$56.6B (5/05)</td>
<td>$716.7B</td>
<td>$611.3B</td>
<td>$494.9B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.4%</td>
<td>-0.0%</td>
<td>12.6%</td>
<td>10.7%</td>
<td>13.4%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>1.8%</td>
<td>0.8%</td>
<td>12.7%</td>
<td>13.0%</td>
<td>16.7%</td>
<td>8.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit in May again deepened less than expected. The deficit of $63.8B compared to a little revised April gap of $63.3B and Consensus expectations for $64.9B. During the first five months of 2006 the foreign [...]

U.S. Int'l Trade Deficit Deepened Less Than Expected

<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/060712a.jpg" width="353">
The U.S. foreign trade deficit in May again deepened less than expected. The deficit of $63.8B compared to a little revised April gap of $63.3B and Consensus expectations for $64.9B.
During the first five months of 2006 the foreign trade deficit averaged $63.6B versus a $56.4B deficit averaged during the first five months of 2005.
Total exports in May jumped 2.4% after a little revised April slip. A strong 5.2% pop in nonauto consumer goods exports (10.9% y/y) more than recovered the prior month&#39;s decline. Capital goods exports also were strong and posted a 2.4% (15.3% y/y) surge following three months of sideways movement. Exports of advanced technology products rose 0.9% (NSA, 16.6% y/y) while exports of industrial supplies &amp; materials rose 3.4% (16.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712b.jpg" width="353">
Imports rose 1.9% during May as petroleum imports surged 16.9% (49.8% y/y). Adjusted for a higher prices, including an 8.7% (43.4% y/y) spike in crude oil to $61.74 per bbl., constant dollar petroleum imports surged 8.2% (3.3% y/y). Crude oil prices fell in June but have since risen to record highs.
Imports of capital goods increased 0.5% (10.9% y/y) reflecting a 6.3% rise in imports of advanced technology products (NSA, 8.8% y/y) and a 0.1% (+3.9% y/y) slip in imports of nonauto consumer goods.
The US deficit in goods trade with China deepened to $17.7B ($201.6B for 2005) but the trade deficit with Japan improved to $7.1B ($82.7B in 2005). The trade deficit with the Asian NICs more than doubled to $1.7B ($15.9B in 2005) and the deficit with the European Union deepened to $10.8B ($122.4B in 2005).
The Mid-Session Review of the U.S. Government Budget for FY 2007 is available <a href="http://www.whitehouse.gov/omb/budget/fy2007/pdf/07msr.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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Trade Deficit</td>
<td>$63.8B</td>
<td>$63.3B</td>
<td>$56.6B (5/05)</td>
<td>$716.7B</td>
<td>$611.3B</td>
<td>$494.9B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.4%</td>
<td>-0.0%</td>
<td>12.6%</td>
<td>10.7%</td>
<td>13.4%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>1.8%</td>
<td>0.8%</td>
<td>12.7%</td>
<td>13.0%</td>
<td>16.7%</td>
<td>8.3%</td>
</tr>
</tbody>
</table>
Mortgage Applications Up, Rates Stable 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 12, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712c.jpg" width="353">
The total number of mortgage applications added 1.0% last week to the prior week&#39;s 5.9% gain. The rise lifted applications early in July 2.5% above the June average which fell 1.5% from May.
Purchase applications increased 2.6% and raised the early July level 4.8% above the June average which fell 0.8% from May.
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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712d.jpg" width="353">
Applications to refinance fell 1.6% and the latest level was 1.4% below the June average. Refis during all of June fell 3.1% from the May average.
The effective interest rate on a conventional 30-year mortgage was stable w/w at 7.02% but the rate on 15-year financing ticked higher to 6.70%. 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 accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">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">07/07/06</th>
<th scope="col">06/30/06</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 Market Index</td>
<td>566.8</td>
<td>561.0</td>
<td>-28.4%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>425.0</td>
<td>414.2</td>
<td>-13.1%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,400.5</td>
<td>1,423.9</td>
<td>-45.2%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
</table>
UK Labor Market Data Show Rising Unemployment But Stable Employment & Firm Wages 
by <a href="/comment/Stone.html">Carol Stone</a> July 12, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712e.jpg" width="353">
In the April accounting period for the UK labor force survey (3-month average, March through May) employment gave up some of its prior periods&#39; gains. It had done nicely for the five month-to-month readings beginning in November, rising a total of 173,000 through March. But the April period saw employment fall by 38,000. This brought the 3-month change, the gauge used by UK&#39;s Office of National Statistics (ONS), down to 59,000 from 131,000 in March.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712f.jpg" width="353">
These moves leave the employment picture somewhat ambiguous. Unemployment, though, has a clearer picture. It is rising. The number unemployed is up 223,000, or 15.6%, from a year ago. The unemployment rate rose in April to 5.4%, its highest since the same level in September 2000. Similarly, claimants for unemployment benefits, which are published on a single-month basis and were issued today for June, increased 93,300 over a year ago to 956,600. This is the largest number since January 2002. However, the monthly increases have tapered a bit in the last couple of months, so perhaps the greatest erosion has past.
The number of job vacancies has stabilized. They totaled 603,000 in June, up from 583,900 in May. A 3-month moving average of these available jobs has hovered in a range of 593,000 to 603,000 since last October after falling sharply from a peak of 650,500 in December 2004.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060712g.jpg" width="353">
Finally, workers&#39; earnings recovered from a period of softness in late 2005, reaching a 12-month growth rate of 4.4% in April, from a recent low of 3.5% in January. Then for May, they slowed a bit to 4.1%.
These conditions in the UK labor market have a cloudy cast. The unemployment data seem to be cause for discomfort, with a rising rate and rising unemployment insurance claims. But employment and wages performed well over the winter into the spring and the number of job vacancies is holding steady. Thus, while the jobs data don&#39;t look vigorous, they are holding up but unemployment is tending higher. A very mixed view.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jun 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">Mar 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">Employment &nbsp; (3Mo Avg, SA, Thous)</td>
<td>--</td>
<td>--</td>
<td>28,899</td>
<td>28,937</td>
<td>28,676</td>
<td>28,743</td>
<td>28,465</td>
<td>28,183</td>
</tr>
<tr>
<td class="firstcol">Chg from 1 &amp; 3 Months Ago</td>
<td>--</td>
<td>--</td>
<td>-38/59</td>
<td>+41/131</td>
<td>+19(MoAvg)&nbsp;</td>
<td>1.0%</td>
<td>1.0%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate &nbsp; (3Mo Avg, SA, %)</td>
<td>--</td>
<td>--</td>
<td>5.4%</td>
<td>5.3%</td>
<td>4.7%</td>
<td>4.8%</td>
<td>4.8%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">Claimant Count &nbsp; (Monthly, Thous)</td>
<td>956.6</td>
<td>950.7</td>
<td>945.1</td>
<td>937.8</td>
<td>863.3</td>
<td>861.1</td>
<td>853.6</td>
<td>933.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Vacancies (Monthly, Thous)</td>
<td>603.0</td>
<td>583.9</td>
<td>604.9</td>
<td>589.9</td>
<td>615.3</td>
<td>618.5</td>
<td>631.9</td>
<td>581.9</td>
</tr>
<tr>
<td class="firstcol">Average Earnings Index inc Bonus (Headline Rate*)</td>
<td>--</td>
<td>4.1%</td>
<td>4.4%</td>
<td>4.2%</td>
<td>4.0%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</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/060711f.jpg" width="353">
Consumer sentiment among Japanese households with two or more persons declined to 47.2 from 49.8 in May according to the Cabinet Office&#39;s diffusion index. The decline was greater than expected and resulted in the lowest value of the index so far this year. To illustrate the weakening of consumer confidence, we have plotted the index of consumer confidence and its year over year increase in the first chart. (Since the monthly data are available only from Jan 2004, there are only two and a half years of data.) The year over year percentage change in the diffusion index is an indicator of the trend in the diffusion index. In recent months the year over year percentage change has declined from a peak of almost 6% in March to 1.3% in June. The erosion of consumer confidence contrasts with strengthening of confidence in the business community. (See the commentary by Carol Stone on July 3rd, reporting on the June Tankan Survey.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060711g.jpg" width="353">
In spite of the recent trend, sentiment among Japanese consumers has improved over the period of the survey. The biggest improvement is seen in consumers&#39; attitude toward employment prospects. The index for this component has risen to 51.7 in June, 2000 from 45.6 in June, 2004. The other components--Overall Livelihood and Income Growth have shown more moderate gains but the Willingness to Buy component, while slightly above June 2004, is at 48.8, almost a full point below the 49.7 of June 2005.
Price expectations of consumers in all Households in June show substantial increases in the numbers expecting prices to rise. 23.5% expect prices to rise between 2 and 5% in the next year, almost double the percent that expected such increases in June, 2004. Current price expectations are shown in the following table compared with those for June 2005 and 2004. As an indication of the shift in consumers&#39; concern from one of deflation to one of inflation, we show, in the second chard, the decline in the percent of consumers expecting prices to stay the same or decline by two percent with the rise of those consumers expecting price to rise by less than two percent. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J8/@J806/@J806.HTM">Japan: Consumer Confidence: &nbsp; Two Person Households</a></th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">Jun 05</th>
<th scope="col">Jun 04</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Confidence Index&nbsp;</td>
<td>47.2</td>
<td>46.6</td>
<td>44.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Overall Livelihood</td>
<td>44.8</td>
<td>45.0</td>
<td>43.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Income Growth</td>
<td>43.3</td>
<td>43.2</td>
<td>41.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Employment</td>
<td>51.7</td>
<td>48.3</td>
<td>45.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Willingness to Buy Durable Goods</td>
<td>48.8</td>
<td>49.7</td>
<td>48.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Price Expectations: All Households</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;No Change&nbsp;</td>
<td>24.1</td>
<td>40.3</td>
<td>35.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Up by Less than 2%</td>
<td>33.5</td>
<td>27.3</td>
<td>27.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Up between 2 and 5%</td>
<td>23.7</td>
<td>12.2</td>
<td>17.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Down between 2 and 5%&nbsp;</td>
<td>1.0</td>
<td>1.3</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Down by less than 2%&nbsp;</td>
<td>3.4</td>
<td>6.5</td>
<td>5.7</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer sentiment among Japanese households with two or more persons declined to 47.2 from 49.8 in May according to the Cabinet Office's diffusion index. The decline was greater than expected and resulted in the lowest value of the [...]

Japanese Consumer Sentiment Wavers: Price Expectations Suggest that Concern over Inflation Is Replacing that over [...]

<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/060711a.jpg" width="353">
Retail gasoline prices rose another four cents last week to an average $2.97 per gallon (27.7% y/y).
Demand for motor gasoline was quite strong during June. According to the Oil and Gas Journal&#39;s estimates, demand rose 5.6% from the May average and rose 6.5% from June of 2005. The US Dept. of Energy&#39;s figures peg demand up as well but to a lesser degree
Yesterday, in spot market trading the price for a gallon of regular unleaded gasoline fell seven cents to $2.13. 
In 2005 petroleum companies began eliminating MTBE from reformulated gasoline (RFG) and have replaced it with ethanol. The last remaining markets for MTBE RFG are in the final stages of switching to RBOB (Reformulated Blendstock for Oxygenate Blending). As a consequence, prices for RFG in the Haver databases are being discontinued and new regular and premium RBOB prices are being added.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060711c.jpg" width="353">
The New York Mercantile Exchange introduced a RBOB futures contract in January and traders are gradually migrating to the new RBOB contracts. RFG contracts will end with the January 2007 contract. While these changes are important, two-thirds of all gasoline consumed in the US is still conventional and not impacted by these changes.
The domestic spot price for a barrel of West Texas Intermediate fell for the third straight day on Monday. Nevertheless, at $73.63 per bbl. the price was nearly 4% higher than last month&#39;s average.
What the Fifth District&#39;s only major oil refinery explains about high gas prices in the wake of Hurricanes Katrina and Rita from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/economic_research/region_focus/winter_2006/feature4.cfm"> here</a>.



</html>

Retail gasoline prices rose another four cents last week to an average $2.97 per gallon (27.7% y/y). Demand for motor gasoline was quite strong during June. According to the Oil and Gas Journal's estimates, demand rose 5.6% from the [...]

Gasoline Prices Up With Demand

<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/060711b.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS indicated that chain store sales ticked 0.2% higher during the opening week of July following two consecutive weeks of decline.
As a result, sales began the month 0.4% below the June average which fell 0.4% from May. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose 0.4% (-2.1% y/y) following two consecutive weeks of 0.3% decline.

<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">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">07/08/06</th>
<th scope="col">07/01/06</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">Total Weekly Chain Store Sales</td>
<td>469.2</td>
<td>468.3</td>
<td>3.0%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

The International Council of Shopping Centers (ICSC)-UBS indicated that chain store sales ticked 0.2% higher during the opening week of July following two consecutive weeks of decline. As a result, sales began the month 0.4% below the [...]

Chain Store Sales Rose Slightly

<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/060711d.jpg" width="353">
Small business optimism in June fell another 1.8%, according to the National Federation of Independent Business (NFIB). It was the fourth m/m decline this year.
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 rose slightly m/m but remained near the lowest level since early 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060711e.jpg" width="353">
The percentage of firms planning to increase employment slipped back to the lowest level since 2003. The number of firms currently with one or more job openings remained stable but off from the April high. During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.
The percent planning to raise capital expenditures fell moderately to a new low (27%) since 2003..The percentage of firms planning to raise average selling prices slipped to 29%. The percentage of firms actually raising prices also fell m/m to 23% but remained up versus a 22% average last year. 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.

<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">June</th>
<th scope="col">May</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">Small Business Optimism Index (1986=100)</td>
<td>96.7</td>
<td>98.5</td>
<td>-4.1%</td>
<td>101.6</td>
<td>104.6</td>
<td>101.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Small business optimism in June fell another 1.8%, according to the National Federation of Independent Business (NFIB). It was the fourth m/m decline this year. During the last ten years there has been a 70% correlation between the [...]

Small Business Optimism Continued Lower

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

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

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

260423A1.jpg

260423B1.jpg

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.

260423C1.jpg

260423D1.jpg

- 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

Robert Brusca

260423E.jpg

**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.

260423.jpg

**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.

S&P PMIs Show Mixed Fortunes

Winnie Tapasanun

260422A17.jpg

260422B17.jpg

Mortgage applications rose 7.9% w/w (29.9% y/y) in the week ending April 17 following a 1.8% rebound in the week ending April 10, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the second successive w/w gain and the largest since the February 27 week, lifting the index to 303.3, its highest level since the March 20 week. Applications for loans to purchase a house jumped 10.1% (14.5% y/y) in the April 17 week, the biggest w/w increase since the January 9 week, after a 1.0% decline in the previous week. Applications for loan refinancing rose 5.8% (51.9% y/y) in the April 17 week following a 5.1% rebound in the April 10 week.

The effective interest rate on a 30-year fixed-rate loan fell 7bps to 6.53% in the week ending April 17 from 6.60% in the week ending April 10; it was above a low of 6.29% in the week of September 20, 2024 but below a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages dropped 12bps to 5.92% in the April 17 week from 6.04% in the previous week; it was up from a low of 5.60% in the week of September 20, 2024 but down from a high of 7.44% in the week of October 27, 2023. The rate on 30-year jumbo loans declined 5bps to 6.56% in the April 17 week from 6.61% in the prior week; it was above its most recent low of 6.25% in the February 27 week but below a high of 7.99% in the week of October 27, 2023. These three rates hit their lowest levels since the March 13 week. Meanwhile, the rate on a 5-year ARM edged up to 5.81% in the April 17 week, the first w/w increase in four weeks, from 5.80% in the previous week (the lowest since the March 6 week); it was above its most recent low of 5.38% in the February 20 week but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan fell to 44.2% of total applications in the week ending April 17—the sixth w/w fall in seven weeks and the lowest level since the week of August 1, 2025—after rising to 45.5% in the week ending April 10; those numbers remained below a peak of 61.9% in the January 16 week. The adjustable-rate mortgage (ARM) share of activity declined to a three-week-low 8.0% in the April 17 week from 8.4% in the prior week; it was below a peak of 12.9% in the week of September 12, 2025 but above a low of 4.7% in the week of January 3, 2025.

The average size of a mortgage loan, up for the third consecutive week, rose 1.2% w/w (3.4% y/y) to $399,900 in the April 17 week, the highest level since the March 13 week, after a 1.3% increase to $395,000 in the April 10 week. The average size of a purchase loan eased 0.1% (+3.6% y/y) to $455,600 in the April 17 week, the fourth w/w decline in five weeks, following a 1.8% rebound to $456,100 in the prior week. The average size of a loan to refinance a mortgage climbed 2.4% (10.7% y/y) to $329,500 in the April 17 week after a 1.5% rise to $321,800 in the previous week, marking the third successive w/w increase and the highest level since the March 20 week.

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

- Purchase applications +10.1% w/w, biggest increase since the Jan. 9 week; refinancing loan applications +5.8% w/w, second consecutive rise.
- Effective interest rate on 30-year fixed loans down 7bps to 6.53%, a five-week low.
- Average loan size up for the third straight week, highest level since the March 13 week.

Economy in Brief

Jump to:

UK Labor Market Data Show Rising Unemployment But Stable Employment & Firm Wages

Mortgage Applications Up, Rates Stable

U.S. Int'l Trade Deficit Deepened Less Than Expected

U.S. Int'l Trade Deficit Deepened Less Than Expected

Japanese Consumer Sentiment Wavers: Price Expectations Suggest that Concern over Inflation Is Replacing that over [...]

Gasoline Prices Up With Demand

Chain Store Sales Rose Slightly

Small Business Optimism Continued Lower