Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710c.jpg" width="353">
Four counties--France, Greece, Sweden and Turkey--released industrial production data for May this morning. France and Sweden are more highly developed in an economic sense than Greece and Turkey.
In France, where industrial production is only slightly higher than it was in 2000, industrial production rose from 101.7 in April to 103.7 in May. While Sweden showed a smaller increase from 111.8 in April to 112.7 in May, the level of production in Sweden is almost 13% above its 2000 level. The stronger trend in Sweden&#39;s industrial production compared with that of France is shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710d.jpg" width="353">
Industrial production trends in Greece and Turkey show similar trends with Greece showing little growth since 2000 and Turkey, substantial growth. (The reported data for Turkey are based on 1997=100. We have adjusted these data to 2000=100) by changing the index base in the advanced function menu.) Production in Greece increased 4.7% in May from April, but was only 2.5% above May of 2005. Production in Turkey increased only 0.9% in May from April, but was 9.0% above May, 2005. Industrial production data for Greece and Turkey are shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production (2000=100)</th>
<th scope="col">May&nbsp; 06</th>
<th scope="col">Apr 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M%</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">France&nbsp;</td>
<td>103.7</td>
<td>101.7</td>
<td>101.0</td>
<td>1.96</td>
<td>2.67</td>
<td>101.8</td>
<td>101.6</td>
<td>99.6</td>
</tr>
<tr>
<td class="firstcol">Sweden</td>
<td>112.7</td>
<td>111.8</td>
<td>106.3</td>
<td>0.81</td>
<td>6.02</td>
<td>107.9</td>
<td>106.2</td>
<td>103.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece</td>
<td>100.2</td>
<td>95.6</td>
<td>99.7</td>
<td>4.77</td>
<td>0.49</td>
<td>99.4</td>
<td>100.5</td>
<td>99.3</td>
</tr>
<tr>
<td class="firstcol">Turkey</td>
<td>135.7</td>
<td>134.4</td>
<td>124.4</td>
<td>0.94</td>
<td>9.01</td>
<td>125.7</td>
<td>119.3</td>
<td>108.7</td>
</tr>
</tbody>
</table>
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Four counties--France, Greece, Sweden and Turkey--released industrial production data for May this morning. France and Sweden are more highly developed in an economic sense than Greece and Turkey. In France, where industrial [...]

May Industrial Production Up Sharply in France and Greece, Less So in Sweden and Turkey, but the Latter Two Show [...]

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710a.jpg" width="353">
The Leading Index of the major 7 OECD economies slipped 0.1% during May and reversed a downwardly revised 0.1% gain the prior month. It was the first decline in the index since April of last year and it lowered the index&#39;s six month growth rate to 2.6%, the slowest since November.
During the last ten years there has been a 64% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven OECD countries.
A 0.6% decline in the U.S. leaders followed a 0.1% April dip and dropped the six month growth rate to 2.3%, its lowest since October. Consumer sentiment slipped and interest rate spreads remained quite negative. The correlation between the leaders&#39; growth rate and real GDP growth has been a high 73% during the last ten years.
The Canadian leaders fell 0.9%. This fourth consecutive down month dropped the index&#39;s six month growth rate to -1.9%, the worst in year. The correlation of the leaders&#39; growth with Canadian real GDP has been 49% during the last ten years.
The leading index for the European Union (15 countries) improved another 0.4%, about its monthly rate of advance since last Summer. The gain lifted the index&#39;s six month growth rate to 5.0%, the best in two years. During the last ten years there has been a 59% correlation between the change in the leading index and the quarterly change in the European Union GDP volume index.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710b.jpg" width="353">
The German leading index rose 0.6% after an upwardly revised 0.7% April increase. The six month growth rate, consequently, held at a firm 8.0%. During the last ten years there has been a 32% correlation between the change in the German leading index and the quarterly change in GDP volume.
The Italian leading index jumped 0.6%, the third strong monthly increase this year. It lifted the series&#39; six month growth rate to 2.7% as the future tendency of production and new orders rose while consumer confidence was less negative.
A 0.1% increase in the leaders in France left the series&#39; six month growth rate stable at a moderate, but improved, 2.8%.
The UK leaders ticked up 0.1% in May after a downwardly revised no change in April. The six month growth rate slipped to a modest 1.4% as consumer confidence fell.
The leading index in Japan gained 0.2% but April&#39;s previously reported sharp increase was revised down to 0.1%. The index&#39;s six month growth rate held at a moderate 1.7%. The leaders&#39; correlation with Japan&#39;s real economic growth has been a meaningful 40% during the last ten years.
The latest OECD Leading Indicator report is available <a href="http://www.oecd.org/document/35/0,2340,en_2825_293564_37075875_1_1_1_1,00.html">here</a>.
Rising health costs put pressure on public finances, finds OECD can be found <a href="http://www.oecd.org/document/37/0,2340,en_2649_201185_36986213_1_1_1_1,00.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/OECDMEI/OECDMEI.HTM">OECD</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>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>105.27</td>
<td>105.42</td>
<td>3.2%</td>
<td>102.85</td>
<td>102.38</td>
<td>97.99</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>2.6%</td>
<td>3.4%</td>
<td>&nbsp;</td>
<td>0.7%</td>
<td>3.5%</td>
<td>2.6%</td>
</tr>
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The Leading Index of the major 7 OECD economies slipped 0.1% during May and reversed a downwardly revised 0.1% gain the prior month. It was the first decline in the index since April of last year and it lowered the index's six month [...]

OECD Leaders Slip, North America Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710a.jpg" width="353">
The Leading Index of the major 7 OECD economies slipped 0.1% during May and reversed a downwardly revised 0.1% gain the prior month. It was the first decline in the index since April of last year and it lowered the index&#39;s six month growth rate to 2.6%, the slowest since November.
During the last ten years there has been a 64% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven OECD countries.
A 0.6% decline in the U.S. leaders followed a 0.1% April dip and dropped the six month growth rate to 2.3%, its lowest since October. Consumer sentiment slipped and interest rate spreads remained quite negative. The correlation between the leaders&#39; growth rate and real GDP growth has been a high 73% during the last ten years.
The Canadian leaders fell 0.9%. This fourth consecutive down month dropped the index&#39;s six month growth rate to -1.9%, the worst in year. The correlation of the leaders&#39; growth with Canadian real GDP has been 49% during the last ten years.
The leading index for the European Union (15 countries) improved another 0.4%, about its monthly rate of advance since last Summer. The gain lifted the index&#39;s six month growth rate to 5.0%, the best in two years. During the last ten years there has been a 59% correlation between the change in the leading index and the quarterly change in the European Union GDP volume index.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710b.jpg" width="353">
The German leading index rose 0.6% after an upwardly revised 0.7% April increase. The six month growth rate, consequently, held at a firm 8.0%. During the last ten years there has been a 32% correlation between the change in the German leading index and the quarterly change in GDP volume.
The Italian leading index jumped 0.6%, the third strong monthly increase this year. It lifted the series&#39; six month growth rate to 2.7% as the future tendency of production and new orders rose while consumer confidence was less negative.
A 0.1% increase in the leaders in France left the series&#39; six month growth rate stable at a moderate, but improved, 2.8%.
The UK leaders ticked up 0.1% in May after a downwardly revised no change in April. The six month growth rate slipped to a modest 1.4% as consumer confidence fell.
The leading index in Japan gained 0.2% but April&#39;s previously reported sharp increase was revised down to 0.1%. The index&#39;s six month growth rate held at a moderate 1.7%. The leaders&#39; correlation with Japan&#39;s real economic growth has been a meaningful 40% during the last ten years.
The latest OECD Leading Indicator report is available <a href="http://www.oecd.org/document/35/0,2340,en_2825_293564_37075875_1_1_1_1,00.html">here</a>.
Rising health costs put pressure on public finances, finds OECD can be found <a href="http://www.oecd.org/document/37/0,2340,en_2649_201185_36986213_1_1_1_1,00.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/OECDMEI/OECDMEI.HTM">OECD</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>
<td class="firstcol">Composite Leading Index&nbsp;</td>
<td>105.27</td>
<td>105.42</td>
<td>3.2%</td>
<td>102.85</td>
<td>102.38</td>
<td>97.99</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>2.6%</td>
<td>3.4%</td>
<td>&nbsp;</td>
<td>0.7%</td>
<td>3.5%</td>
<td>2.6%</td>
</tr>
</tbody>
</table>
 May Industrial Production Up Sharply in France and Greece, Less So in Sweden and Turkey, but the Latter Two Show Greater Long Term Growth  
by <a href="/comment/Curley.html">Louise Curley</a> July 10, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710c.jpg" width="353">
Four counties--France, Greece, Sweden and Turkey--released industrial production data for May this morning. France and Sweden are more highly developed in an economic sense than Greece and Turkey.
In France, where industrial production is only slightly higher than it was in 2000, industrial production rose from 101.7 in April to 103.7 in May. While Sweden showed a smaller increase from 111.8 in April to 112.7 in May, the level of production in Sweden is almost 13% above its 2000 level. The stronger trend in Sweden&#39;s industrial production compared with that of France is shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060710d.jpg" width="353">
Industrial production trends in Greece and Turkey show similar trends with Greece showing little growth since 2000 and Turkey, substantial growth. (The reported data for Turkey are based on 1997=100. We have adjusted these data to 2000=100) by changing the index base in the advanced function menu.) Production in Greece increased 4.7% in May from April, but was only 2.5% above May of 2005. Production in Turkey increased only 0.9% in May from April, but was 9.0% above May, 2005. Industrial production data for Greece and Turkey are shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production (2000=100)</th>
<th scope="col">May&nbsp; 06</th>
<th scope="col">Apr 06</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M%</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">France&nbsp;</td>
<td>103.7</td>
<td>101.7</td>
<td>101.0</td>
<td>1.96</td>
<td>2.67</td>
<td>101.8</td>
<td>101.6</td>
<td>99.6</td>
</tr>
<tr>
<td class="firstcol">Sweden</td>
<td>112.7</td>
<td>111.8</td>
<td>106.3</td>
<td>0.81</td>
<td>6.02</td>
<td>107.9</td>
<td>106.2</td>
<td>103.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece</td>
<td>100.2</td>
<td>95.6</td>
<td>99.7</td>
<td>4.77</td>
<td>0.49</td>
<td>99.4</td>
<td>100.5</td>
<td>99.3</td>
</tr>
<tr>
<td class="firstcol">Turkey</td>
<td>135.7</td>
<td>134.4</td>
<td>124.4</td>
<td>0.94</td>
<td>9.01</td>
<td>125.7</td>
<td>119.3</td>
<td>108.7</td>
</tr>
</tbody>
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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/060707c.jpg" width="353">
The recent construction boom in the US and accelerated economic development in China, India and other countries have increased demand for and prices of copper, which is by far the main export of Chile. In trade data reported today and within the last 10 days, it is evident that this has brought much revenue into the Chilean economy. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707d.jpg" width="353">
The trade surplus for June on an fob/fob basis (&quot;freight-on-board&quot;: that is, just the value of the merchandise) was $1,784.3 million, nearly double the $963.3 million of June 2005. The central Bank of Chile reports individual import items on a &quot;cif&quot; basis, that is, including &quot;cost, insurance, and freight&quot;, so imports are always higher on this basis; the latest actual cif import figure for May was $3,125.3 million compared with an fob number of $3,089.7 million. We estimated June&#39;s cif from the recent behavior of the differential ratio that accounts for the insurance and freight components. The resulting fob/cif trade surplus is $1,543.2 million, which compares with $834.3 million a year ago, again, nearly double. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707e.jpg" width="353">
Both exports and imports have grown greatly over the past year. Exports are 40.4% larger and imports 26.4%. In the table below, we see that copper is a substantial portion of Chile&#39;s total exports. From June 2005 through May 2006, the value of copper exports had more than doubled, and copper increased to about 56% of exports. This is obviously related to world prices of copper, which we show in the accompanying chart, using the COMEX spot price. For the month of May alone, when prices spiked above $3.76 a pound, copper was 60.8% of Chile&#39;s exports. Some bit of price decline occurred in June, and while the details are not available, Chile&#39;s total exports fell back by about $430 million.
Among imports, consumer goods are expanding with a strong and consistent uptrend. Intermediate goods other than petroleum are also. Capital goods were gaining sharply, but have fallen back since the beginning of this year. Overall, even as Chile is enjoying its growing trade surplus, it also appears to be spending some of the added revenue on the people and products of the country. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Chile: SA, Millions of US$</th>
<th scope="col">June 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">June 2005</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 Balance, fob/cif</td>
<td>1543.2E*</td>
<td>2199.6</td>
<td>822.5</td>
<td>834.3</td>
<td>8163.0</td>
<td>7490.7</td>
<td>2296.9</td>
</tr>
<tr>
<td class="firstcol">Exports, fob</td>
<td>4894.7</td>
<td>5324.9</td>
<td>3617.5</td>
<td>3485.4</td>
<td>40583.8</td>
<td>32226.6</td>
<td>21660.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Copper</td>
<td>--</td>
<td>3237.9</td>
<td>1844.4</td>
<td>1529.2</td>
<td>18307.7</td>
<td>14887.0</td>
<td>7815.5</td>
</tr>
<tr>
<td class="firstcol">Imports, cif</td>
<td>3351.5E*</td>
<td>3125.3</td>
<td>2795.0</td>
<td>2651.1</td>
<td>32420.8</td>
<td>24735.9</td>
<td>19363.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Petroleum</td>
<td>--</td>
<td>578.9</td>
<td>298.9</td>
<td>332.6</td>
<td>3779.3</td>
<td>2874.6</td>
<td>2125.6</td>
</tr>
<tr>
<td class="firstcol">Copper Price**</td>
<td>3.3963</td>
<td>3.7609</td>
<td>2.9641</td>
<td>1.6219</td>
<td>1.6825</td>
<td>1.2898</td>
<td>0.8105</td>
</tr>
</tbody>
</table>
</body>
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The recent construction boom in the US and accelerated economic development in China, India and other countries have increased demand for and prices of copper, which is by far the main export of Chile. In trade data reported today and [...]

Chile & Copper: Higher Prices Boost Exports & Trade Balance

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707a.jpg" width="353">
A 121,000 gain in June nonfarm payrolls fell short of Consensus expectations for a 155,000 increase. Disappointment should be mitigated, however, by details within the jobs report that indicate continuing, moderate expansion of the U.S. labor market.
Revisions raised the gain in May payrolls to 92,000 and a 15,000 worker June gain factory sector payrolls pulled the y/y growth positive (barely) for the first time since 2000.
From the household survey, the unemployment rate remained low at an expected 4.6% due to a whopping 387,000 (1.8% y/y) gain in employment while the labor force rose 330,000 (1.4% y/y). The labor force participation rate rose to 66.2%, its highest level in three years, though the rate for males over 20 dropped to a low 75.7%. That decline was offset by a rise in the participation rate for females over 20 to 60.6%.
Lengthening of the workweek to an average 33.9 hours raised aggregate weekly hours worked in private industry by 0.4%. That was enough to raise the 2Q level 2.3% (AR) versus a 1Q increase of 3.0%. Both figures are improved versus 2.2% average growth during the second half of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707b.jpg" width="353">
Average hourly earnings jumped 0.5% versus an expected 0.3% increase and an unrevised 0.1% May up tick. The 3.9% y/y gain is the strongest since 2001. Private service-producing wages rose 0.4% (4.3% y/y) while factory sector earnings rose 0.2% (1.6% y/y).
The breadth of one month gain in private payrolls fell to 55.4% in June versus a high 61% in January and 61.7% last November. For the factory sector, a 54.8% one month breadth of gain was improved from 42.7% during all of last year.
Factory sector payrolls advanced for the second month in the last three due to growth in the electrical equipment &amp; appliance (2.6% y/y) industry as well as in computer &amp; electronic products (0.7% y/y), machinery (1.8% y/y) and chemical (1.3% y/y) sectors. Growth in most other nondurable goods industries continued negative.
Private service-producing jobs rose a modest 75,000 (1.5% y/y) last month, about the same as in May. The per month average gain of 69,000 during 2Q was the weakest since 3Q 2004. Retail trade sector jobs fell 6,600 (-0.2% y/y), the third decline in the last four months. Financial sector jobs rose 3,000 (2.5% y/y) and professional &amp; business services employment rose 25,000 (2.6% y/y). Temporary help services jobs fell by 7,900 (+3.2% y/y). It was the fourth m/m decline this year though May was revised to show an increase. Jobs in education &amp; health services rose 26,000 (2.2% y/y).
Construction employment reversed all of an upwardly revised 4,000 May increase (3.1% y/y).
Is the United States Bankrupt? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf"> here</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</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 class="odd">
<td class="firstcol">Payroll Employment</td>
<td>121,000</td>
<td>92,000</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>15,000</td>
<td>-8,000</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.8</td>
<td>33.7 (June &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.5%</td>
<td>0.1%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.0% (June &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

A 121,000 gain in June nonfarm payrolls fell short of Consensus expectations for a 155,000 increase. Disappointment should be mitigated, however, by details within the jobs report that indicate continuing, moderate expansion of the [...]

Growth in U.S. Payrolls Moderate, Wages Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707a.jpg" width="353">
A 121,000 gain in June nonfarm payrolls fell short of Consensus expectations for a 155,000 increase. Disappointment should be mitigated, however, by details within the jobs report that indicate continuing, moderate expansion of the U.S. labor market.
Revisions raised the gain in May payrolls to 92,000 and a 15,000 worker June gain factory sector payrolls pulled the y/y growth positive (barely) for the first time since 2000.
From the household survey, the unemployment rate remained low at an expected 4.6% due to a whopping 387,000 (1.8% y/y) gain in employment while the labor force rose 330,000 (1.4% y/y). The labor force participation rate rose to 66.2%, its highest level in three years, though the rate for males over 20 dropped to a low 75.7%. That decline was offset by a rise in the participation rate for females over 20 to 60.6%.
Lengthening of the workweek to an average 33.9 hours raised aggregate weekly hours worked in private industry by 0.4%. That was enough to raise the 2Q level 2.3% (AR) versus a 1Q increase of 3.0%. Both figures are improved versus 2.2% average growth during the second half of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707b.jpg" width="353">
Average hourly earnings jumped 0.5% versus an expected 0.3% increase and an unrevised 0.1% May up tick. The 3.9% y/y gain is the strongest since 2001. Private service-producing wages rose 0.4% (4.3% y/y) while factory sector earnings rose 0.2% (1.6% y/y).
The breadth of one month gain in private payrolls fell to 55.4% in June versus a high 61% in January and 61.7% last November. For the factory sector, a 54.8% one month breadth of gain was improved from 42.7% during all of last year.
Factory sector payrolls advanced for the second month in the last three due to growth in the electrical equipment &amp; appliance (2.6% y/y) industry as well as in computer &amp; electronic products (0.7% y/y), machinery (1.8% y/y) and chemical (1.3% y/y) sectors. Growth in most other nondurable goods industries continued negative.
Private service-producing jobs rose a modest 75,000 (1.5% y/y) last month, about the same as in May. The per month average gain of 69,000 during 2Q was the weakest since 3Q 2004. Retail trade sector jobs fell 6,600 (-0.2% y/y), the third decline in the last four months. Financial sector jobs rose 3,000 (2.5% y/y) and professional &amp; business services employment rose 25,000 (2.6% y/y). Temporary help services jobs fell by 7,900 (+3.2% y/y). It was the fourth m/m decline this year though May was revised to show an increase. Jobs in education &amp; health services rose 26,000 (2.2% y/y).
Construction employment reversed all of an upwardly revised 4,000 May increase (3.1% y/y).
Is the United States Bankrupt? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.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/@EB/@EB01/@EB01.HTM">Employment</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 class="odd">
<td class="firstcol">Payroll Employment</td>
<td>121,000</td>
<td>92,000</td>
<td>1.4%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>15,000</td>
<td>-8,000</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.9</td>
<td>33.8</td>
<td>33.7 (June &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.5%</td>
<td>0.1%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.0% (June &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
Chile & Copper: Higher Prices Boost Exports & Trade Balance 
by <a href="/comment/Stone.html">Carol Stone</a> July 7, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707c.jpg" width="353">
The recent construction boom in the US and accelerated economic development in China, India and other countries have increased demand for and prices of copper, which is by far the main export of Chile. In trade data reported today and within the last 10 days, it is evident that this has brought much revenue into the Chilean economy. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707d.jpg" width="353">
The trade surplus for June on an fob/fob basis (&quot;freight-on-board&quot;: that is, just the value of the merchandise) was $1,784.3 million, nearly double the $963.3 million of June 2005. The central Bank of Chile reports individual import items on a &quot;cif&quot; basis, that is, including &quot;cost, insurance, and freight&quot;, so imports are always higher on this basis; the latest actual cif import figure for May was $3,125.3 million compared with an fob number of $3,089.7 million. We estimated June&#39;s cif from the recent behavior of the differential ratio that accounts for the insurance and freight components. The resulting fob/cif trade surplus is $1,543.2 million, which compares with $834.3 million a year ago, again, nearly double. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060707e.jpg" width="353">
Both exports and imports have grown greatly over the past year. Exports are 40.4% larger and imports 26.4%. In the table below, we see that copper is a substantial portion of Chile&#39;s total exports. From June 2005 through May 2006, the value of copper exports had more than doubled, and copper increased to about 56% of exports. This is obviously related to world prices of copper, which we show in the accompanying chart, using the COMEX spot price. For the month of May alone, when prices spiked above $3.76 a pound, copper was 60.8% of Chile&#39;s exports. Some bit of price decline occurred in June, and while the details are not available, Chile&#39;s total exports fell back by about $430 million.
Among imports, consumer goods are expanding with a strong and consistent uptrend. Intermediate goods other than petroleum are also. Capital goods were gaining sharply, but have fallen back since the beginning of this year. Overall, even as Chile is enjoying its growing trade surplus, it also appears to be spending some of the added revenue on the people and products of the country. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Chile: SA, Millions of US$</th>
<th scope="col">June 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">June 2005</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 Balance, fob/cif</td>
<td>1543.2E*</td>
<td>2199.6</td>
<td>822.5</td>
<td>834.3</td>
<td>8163.0</td>
<td>7490.7</td>
<td>2296.9</td>
</tr>
<tr>
<td class="firstcol">Exports, fob</td>
<td>4894.7</td>
<td>5324.9</td>
<td>3617.5</td>
<td>3485.4</td>
<td>40583.8</td>
<td>32226.6</td>
<td>21660.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Copper</td>
<td>--</td>
<td>3237.9</td>
<td>1844.4</td>
<td>1529.2</td>
<td>18307.7</td>
<td>14887.0</td>
<td>7815.5</td>
</tr>
<tr>
<td class="firstcol">Imports, cif</td>
<td>3351.5E*</td>
<td>3125.3</td>
<td>2795.0</td>
<td>2651.1</td>
<td>32420.8</td>
<td>24735.9</td>
<td>19363.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Petroleum</td>
<td>--</td>
<td>578.9</td>
<td>298.9</td>
<td>332.6</td>
<td>3779.3</td>
<td>2874.6</td>
<td>2125.6</td>
</tr>
<tr>
<td class="firstcol">Copper Price**</td>
<td>3.3963</td>
<td>3.7609</td>
<td>2.9641</td>
<td>1.6219</td>
<td>1.6825</td>
<td>1.2898</td>
<td>0.8105</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060706i.jpg" width="353">
Mortgage equity withdrawal in the UK picked up in Q1, according to data reported today by the Bank of England. It came to &pound;12,509 million, up from &pound;12,121 million in Q4 and &pound;6,478 million in the year-ago period. The Bank of England originated this concept about five years ago and gave it the name &quot;mortgage equity withdrawal&quot;. It represents the borrowing by consumers on their homes which exceeds the amount necessary to finance the investment in the house itself. Because of recent strength in home prices over construction values, homeowners have considerable equity, and they have been leveraging that toward any number of unrelated purchases. This borrowing in the UK was equivalent to 5.8% of consumers&#39; post-tax income in Q1. In 2003 and 2004, house prices were stronger and mortgage equity withdrawal was greater; 2003 was the peak year, with a total of &pound;57,233 million, a quarterly average of &pound;14,308 million and 7.5% of consumer income. [The relationship of MEW to HBOS (Halifax) house prices, which were also reported today through June, can be seen in the first graph.]<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060706j.jpg" width="353">
As we have discussed here previously, the same phenomenon has been occurring in the US, and we are struck by -- indeed, amazed -- at the similarity in the trends of this practice in each country. The volume of what we prefer to call &quot;home equity withdrawal&quot; also increased in Q1, recovering to $664.3 billion after falling in Q4 2005 to $619.3 billion. The peak quarter was $712.0 billion in Q3 2005. The series we cite is calculated by Haver, based on the value of residential investment by households, including improvements. [The Fed calculates a series based on the value of home sales and does not cover funding of improvements.] The Haver data, our series MEW1, equaled 7.2% of disposable income in Q1, compared with 6.7% in Q4 and 7.9% in Q3. 2005 was the big year for home equity withdrawal in the US, as easily noted in the accompanying graphs.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060706k.jpg" width="353">
Comparing the trends in the UK and the US, we see in the second graph, there is an extraordinary 87% correlation between equity withdrawal in the two countries. The period of softness in the mid-1990s, with modest equity buildup (that is, negative MEW), was repeated in both economies. But MEW grew rapidly in both places in the late 1990s. The patterns diverge a bit in 2003, but continue to tell essentially the same story of homeowners&#39; significant borrowing on their homes to finance other activity. The final graph shows a 66% correlation in the ratios of this borrowing to disposable income in each country, augmenting income resources by some 6% in recent years. Now housing markets are moderating in both countries, with a flattening or notable slowing of price gains and some hesitancy in sales. So it remains to be seen how MEW will behave in both the UK and the US and what the implications of that will be for consumer spending.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q1 2006</th>
<th scope="col">Q4 2005</th>
<th scope="col">Q3 2005</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">UK: Mortgage Equity Withdrawal(Bil. &pound;)</td>
<td>&pound;12.5</td>
<td>&pound;12.1</td>
<td>&pound;9.2</td>
<td>&pound;6.5</td>
<td>&pound;9.5</td>
<td>&pound;12.4</td>
<td>&pound;14.3</td>
</tr>
<tr>
<td class="firstcol">% of Post-Tax Income</td>
<td>5.8%</td>
<td>5.7%</td>
<td>4.4%</td>
<td>3.2%</td>
<td>4.6%</td>
<td>6.3%</td>
<td>7.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">HBOS House Price (000s &pound;)</td>
<td>June 2006</td>
<td>May 2006</td>
<td>Apr 2006</td>
<td>&pound;163.0</td>
<td>&pound;165.4</td>
<td>&pound;157.0</td>
<td>&pound;132.2</td>
</tr>
<tr>
<td class="firstcol">&pound;176.5</td>
<td>&pound;178.7</td>
<td>&pound;178.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Yr/Yr % Change</td>
<td>8.2%</td>
<td>10.0%</td>
<td>9.9%</td>
<td>--</td>
<td>5.3%</td>
<td>18.8%</td>
<td>19.0%</td>
</tr>
<tr>
<td class="firstcol">US: Home Equity Withdrawal(Bil. $)</td>
<td>Q1 2006</td>
<td>Q4 2005</td>
<td>Q3 2005</td>
<td>$429.1</td>
<td>$591.3</td>
<td>$475.2</td>
<td>$451.8</td>
</tr>
<tr class="odd">
<td class="firstcol">$664.3</td>
<td>$619.3</td>
<td>$712.0</td>
</tr>
<tr>
<td class="firstcol">% of Disp. Income</td>
<td>7.2%</td>
<td>6.7%</td>
<td>7.9%</td>
<td>4.8%</td>
<td>6.5%</td>
<td>5.5%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Mortgage equity withdrawal in the UK picked up in Q1, according to data reported today by the Bank of England. It came to £12,509 million, up from £12,121 million in Q4 and £6,478 million in the year-ago period. The Bank of England [...]

Mortgage Equity Withdrawal Stages Partial Recovery in Both US and UK; UK House Prices Moderating

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060706h.jpg" width="353">
Factory inventory accumulation stalled during May but that followed an upwardly revised 1.0% April increase. Despite the latest stall, the running rate of inventory accumulation this year matches the gains in 2005.
Inventories of computers &amp; electronic products fell 0.5% (+6.1% y/y) while inventories of electrical equipment dropped 0.3% (+6.5% y/y). Inventories of furniture &amp; related products fell 0.3% (+4.6% y/y), the second down month, and primary metals inventories jumped 2.3% (4.0% y/y).
Total factory orders rose 0.7%, a gain led by a 1.6% jump in nondurables which reflected a 2.3% rise petroleum &amp; coal. Less petroleum, nondurable goods orders (which equal shipments) rose 1.4% (3.1% y/y). Durable goods orders fell 0.2%, little revised from the advance report of a 0.3% slip.
Factory shipments surged 2.2% led higher by a 5.1% jump in transportation. Civilian aircraft shipments rose 19.8% (33.0% y/y). Less transportation shipments also were strong and rose 1.7% (7.7% y/y).
Unfilled orders rose another 0.6% led by a 1.5% (59.4% y/y) jump in civilian aircraft. Less the transportation sector altogether backlogs rose 0.9% (14.3% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</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">Inventories</td>
<td>-0.0%</td>
<td>1.0%</td>
<td>3.9%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.7%</td>
<td>-2.0%</td>
<td>4.9%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>2.2%</td>
<td>-0.1%</td>
<td>7.2%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.6%</td>
<td>1.5%</td>
<td>20.7%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventory accumulation stalled during May but that followed an upwardly revised 1.0% April increase. Despite the latest stall, the running rate of inventory accumulation this year matches the gains in 2005. Inventories of [...]

U.S. Factory Inventory Accumulation Stalled in May

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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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.

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Charts of the Week: Risks Build, Markets Shrug

Sandy Batten

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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

Winnie Tapasanun

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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.

U.S. Mortgage Applications Up 7.9% in the April 17 Week, Largest Gain Since Late February

Robert Brusca

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The National Bank of Belgium consumer survey for April registered -9, compared to a reading of -6 in March and +1 in February. Since the war in the Middle East began, confidence readings have declined steadily. However, the April consumer confidence reading of -9 still shows improvement from its level of -14 recorded 2 months ago. The index has a 37.8 percentile standing based on data back to 1991, which places it below its historic median: the median ranking occurs at a percentile standing of 50.

The responses to the survey are mixed and some of them are quite negative; however, a few also are quite upbeat. For now, the main message is that the survey is mixed. While most confidence readings tend to the weak side, there are a few that are actually quite encouraging.

**Economic Situation**
A survey on the economic situation shows improvement for the next 12 months; its April reading rose to -43 in April from -45 in March. However, with the onset of war, the March reading had fallen to -45 from -25 in February, so the month-to-month uptick in April is really small potatoes. The 12-month change in the outlook for the economic situation over the next 12 months is a tick better in April 2026 than it was in April 2025. Continuing the back and forth on its “bad but not that bad” swing, the queue reading of the index on data back to 1991 has only a 1.8 percentile standing, marking it as weaker than its current level less than 2% of the time and ending the back-and-forth on whether the reading is poor or not. It is very weak.

The assessment of the economic situation over the last 12 months deteriorated to -57 in April from -42 in March, and it also worsened compared to its level of a year ago. In addition, its standing is in the bottom 8% of its historic queue data.

**Prices**
Price trends give us some of the clearest and most negative views. Prices over the next 12 months improved slightly from March, moving to a reading of 50 in April from 53 in March. Still, the April reading of 50 is higher than its reading of 35 one year ago, and its standing is in the top 1% of all observations on data back to 1991. Those are dismal statistics. Price trends for the last 12 months are shown to have been slightly more stable but still with readings that had been historically worse, only about 15% of the time, marking the past inflation environment as having been poor as well.

**Unemployment**
The consumers’ unemployment forecast went up in April to a reading of +6 from -3 in March; it had deteriorated to -3 in March from -11 in February. A rising unemployment response reflects deterioration. People are assessing the possibility of unemployment as getting higher, although at +6 the April reading is substantially reduced compared to what it was a year ago at +21. The standing for the unemployment forecast is only in its 16.7 percentile of its historic queue of data, meaning that the likelihood of unemployment has been lower than this, only about 16% to 17% of the time.

**Major Household Purchases**
If you look at the environment to make major household purchases, the responses of consumers become slightly more convoluted since the question as to whether it's favorable to buy at present deteriorated sharply in April to -44 from -23 in March; that was a sharp deterioration from -20 a year ago. Ranking the current -44 reading on data back to 1991, this is the weakest or the worst favorability for spending on this timeline. So that particular sequence of data doesn't fit really well with the unemployment responses, although being unemployed and finding it's a favorable time to buy goods are different things; both do speak to the economic environment which we can see is somewhat touch and go.

The outlook for making major purchases over the next 12 months deteriorated slightly over the last few months, with a reading of -19 compared to -17 a year ago. That current reading has a 24.3 percentile standing, placing it in the lower quartile of its historic queue of data. This underlines that the spending environment has been poor throughout the last year compared to historic experience since the 1990s.

**The Financial Situation of Households**
The financial situation of households over the next 12 months deteriorated slightly in April to -5 from -3, and it had deteriorated in March to -3 from -2 in February. Even so, the April reading of  5 was stronger than -8 recorded one year ago. Still, if we let the ranking on data back to 1991 be the arbiter of whether the assessment of conditions is weak, the 10.6 percentile standing for the financial situation ahead and the 12.2 percentile standing for the financial situation of households over the last 12 months both indicate decisive weakness.

**The Current Situation**
The next reading is a bit of a surprise given the drumbeat of weakness that we see from the data above. The current situation appraisal did backtrack in April to 21 from 25 in March, but it's only slightly weaker than a reading of 22 in February. The April 2026 reading of 21 is slightly weaker than a reading of 25 one year ago. However, the April reading has a percentile standing on data back to 1991 at its 74.5 percentile, putting it right at the border of its top 25th percentile.

So, the current situation is appraised as a top 25-percentile standing, but the environment for making purchases over the next 12 months has a lower 24-percentile standing; and the current situation has a favorability for buying which is the worst that we've seen in the entire period. However, expectations of unemployment remain low. To round out this situation, the favorability to save over the next 12 months has a ranking in its 86-percentile, making it a top 15-percentile reading. The favorability to save at present has a 58-percentile standing, placing it above its historic median and slightly better than average. What we have are crosscurrents.

On balance, you see the consumers view their situation as having a lot of crosscurrents. In terms of the thing they fear the most, unemployment conditions are not considered to be at risk and the economic situation is appraised to be in the upper tier of where it has been since the 1990s even though the favorability of spending is the worst experience for consumers on that same timeline. But the inflation readings are unambiguously bad—and worsening.

It would appear from these crosscurrents that the Belgian consumer is ripe for being pushed one way or the other if events were to markedly either improve or to deteriorate.

Economy in Brief

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