Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404e.jpg" width="353">
Announced job cuts fell another 25.7% m/m during March on top of the 15.5% February decline, according to the Challenger, Grey &amp; Christmas survey. The decline was to the lowest level in nearly one year
During the last ten years there has been an 83% (inverse) correlation between the three month moving average level of announced job cuts and the three month change payroll employment.
Layoffs in the auto industry dropped sharply for the second month after the January surge but the three month average remained quite elevated. Cuts in financial (-21.7 y/y, electronics (-37.7% y/y) and government (-72.0% y/y) also fell sharply. Announced job cuts in the apparel and chemical industries, however, surged.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported an increase in announced hiring plans (31.7% y/y) after three months of decline.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Announced Job Cuts</td>
<td>64,975</td>
<td>87,437</td>
<td>-24.8%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
</body>
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Announced job cuts fell another 25.7% m/m during March on top of the 15.5% February decline, according to the Challenger, Grey & Christmas survey. The decline was to the lowest level in nearly one year During the last ten years there [...]

Challenger Layoffs Skid Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404d.jpg" width="353">
Chain store sales tread water last week, according to the International Council of Shopping Centers (ICSC)-UBS survey.The unchanged w/w level of sales followed three consecutive periods of decline. 
Sales began April 1.4% lower than at the start of March but the average level of sales last month did rise 0.7% versus February.
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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404c.jpg" width="353">
The leading indicator of chain store sales rose 0.5% (0.5% /y) after the prior week&#39;s 0.1% up tick. The March rose 0.3% from February.
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.
Retail gasoline prices opened April with a nine cent w/w increase to $2.59 per gallon (16.7% y/y). In yesterday&#39;s spot market trading the price for regular unleaded gasoline of $1.92 per gallon was up another two cents from last week&#39;s average. 
The strength in gasoline prices has been helped by growing U.S. gasoline demand which rose 3.3% last month from the February average and 0.3% y/y.

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<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">04/01/06</th>
<th scope="col">03/25/06</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>462.3</td>
<td>462.4</td>
<td>2.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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Chain store sales tread water last week, according to the International Council of Shopping Centers (ICSC)-UBS survey.The unchanged w/w level of sales followed three consecutive periods of decline. Sales began April 1.4% lower than at [...]

Chain Store Sales Soft as Gasoline Prices Surged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404b.jpg" width="353">
US light vehicle sales during March dipped 0.1% m/m to 16.59M units according to the Autodata Corporation and were slightly softer than Consensus expectations for sales of 16.7M.
Sales of US made vehicles were weak and posted a 1.4% (-4.2% y/y) decline to 12.94M units. Domestic car sales led the decline with a 2.6% (-6.8% y/y) drop while sales of domestic trucks slipped 0.6% (-2.4% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404a.jpg" width="353">
Imported light vehicle sales posted a 4.7% m/m increase (8.2% y/y) to 3.66M as car sales in March rose 6.7% (5.5% y/y) to 2.31M units. Imported truck sales also rose but by a lesser 1.6% (13.1% y/y) to a record high of 1.35M units.
Imports&#39; share of the US light vehicle market surged to a record 22.0%. For the first three months of this year imports&#39; share averaged 20.4% versus 20.3% during all of last year.
Increasing Global Competition and Labor Productivity: Lessons from the U.S. Automotive Industry from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/economics/conferences/0511/4_IncreasingGlobalCompetition.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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</td>
<td>16.59</td>
<td>16.61</td>
<td>-1.7%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.42</td>
<td>7.41</td>
<td>-3.3%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
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<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.17</td>
<td>9.20</td>
<td>-0.4%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
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</tbody>
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US light vehicle sales during March dipped 0.1% m/m to 16.59M units according to the Autodata Corporation and were slightly softer than Consensus expectations for sales of 16.7M. Sales of US made vehicles were weak and posted a 1.4% [...]

U.S. Light Vehicle Sales Soft

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404b.jpg" width="353">
US light vehicle sales during March dipped 0.1% m/m to 16.59M units according to the Autodata Corporation and were slightly softer than Consensus expectations for sales of 16.7M.
Sales of US made vehicles were weak and posted a 1.4% (-4.2% y/y) decline to 12.94M units. Domestic car sales led the decline with a 2.6% (-6.8% y/y) drop while sales of domestic trucks slipped 0.6% (-2.4% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404a.jpg" width="353">
Imported light vehicle sales posted a 4.7% m/m increase (8.2% y/y) to 3.66M as car sales in March rose 6.7% (5.5% y/y) to 2.31M units. Imported truck sales also rose but by a lesser 1.6% (13.1% y/y) to a record high of 1.35M units.
Imports&#39; share of the US light vehicle market surged to a record 22.0%. For the first three months of this year imports&#39; share averaged 20.4% versus 20.3% during all of last year.
Increasing Global Competition and Labor Productivity: Lessons from the U.S. Automotive Industry from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/economics/conferences/0511/4_IncreasingGlobalCompetition.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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</td>
<td>16.59</td>
<td>16.61</td>
<td>-1.7%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.42</td>
<td>7.41</td>
<td>-3.3%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.17</td>
<td>9.20</td>
<td>-0.4%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
Chain Store Sales Soft as Gasoline Prices Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 4, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404d.jpg" width="353">
Chain store sales tread water last week, according to the International Council of Shopping Centers (ICSC)-UBS survey.The unchanged w/w level of sales followed three consecutive periods of decline. 
Sales began April 1.4% lower than at the start of March but the average level of sales last month did rise 0.7% versus February.
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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404c.jpg" width="353">
The leading indicator of chain store sales rose 0.5% (0.5% /y) after the prior week&#39;s 0.1% up tick. The March rose 0.3% from February.
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.
Retail gasoline prices opened April with a nine cent w/w increase to $2.59 per gallon (16.7% y/y). In yesterday&#39;s spot market trading the price for regular unleaded gasoline of $1.92 per gallon was up another two cents from last week&#39;s average. 
The strength in gasoline prices has been helped by growing U.S. gasoline demand which rose 3.3% last month from the February average and 0.3% y/y.

<table border="0" cellspacing="0" width="100%">
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<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">04/01/06</th>
<th scope="col">03/25/06</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>462.3</td>
<td>462.4</td>
<td>2.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Challenger Layoffs Skid Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 4, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404e.jpg" width="353">
Announced job cuts fell another 25.7% m/m during March on top of the 15.5% February decline, according to the Challenger, Grey &amp; Christmas survey. The decline was to the lowest level in nearly one year
During the last ten years there has been an 83% (inverse) correlation between the three month moving average level of announced job cuts and the three month change payroll employment.
Layoffs in the auto industry dropped sharply for the second month after the January surge but the three month average remained quite elevated. Cuts in financial (-21.7 y/y, electronics (-37.7% y/y) and government (-72.0% y/y) also fell sharply. Announced job cuts in the apparel and chemical industries, however, surged.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported an increase in announced hiring plans (31.7% y/y) after three months of decline.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Announced Job Cuts</td>
<td>64,975</td>
<td>87,437</td>
<td>-24.8%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
 Accumulation of Foreign Reserves of Developing Countries in the Far East Slowing:  Shift in Composition of Holdings of All Developing Countries  
by <a href="/comment/Curley.html">Louise Curley</a> April 4, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404f.jpg" width="353">
The accumulation of foreign reserves by the developing countries in the Far East appears to be decelerating. Reserves are still increasing, but much more slowly than the pace of early 2004 when the year-to-year increases in reserves were of the order of 30-50%. Taiwan and South Korea are the latest countries to report. Total foreign reserves in Taiwan were unchanged in March from February and only 2.4% above March 2005, down from year-to-year increases of 35% in early 2004. Total reserves in South Korea were up less than one percent from February and less than 6% from March 2005, compared to year-to-year increases of over 30% in early 2004. The year-to-year increases in reserves in Taiwan and South Korea are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404g.jpg" width="353">
China is much slower to report its reserve holdings. The latest data are for December, but even here a deceleration can be detected. In December the year-over-year increase in reserves was down to 33.7% from 51.1% in August. 2005. The deceleration has been going on longer in India where the year-to-year increase in reserves was 11.5% in February, 2006, down from 52.5% in April, 2004. The year-to-year increases in the reserves of China and India are shown in the second chart.
The International Monetary Fund has recently published information on the composition of total reserves and those held by the industrial countries and developing countries. Data are available in US Dollars, Euros, Pounds Sterling, Japanese Yen, Swiss Francs and a miscellaneous category &quot;other currencies&quot;. (These data are found in the IFS data base.) The data, however, show only the composition of allocated reserves, which, in the case of the developing countries, is only slightly more than half the total. Nevertheless, the changing composition of these allocated reserves gives some indication of the broader shifts that may be taking place in total reserves. Over the period from the first quarter of 1999 when the data began to the fourth quarter of 2005, the proportion of euro claims in the allocated reserves of the developing countries rose from 19% to 29% while the proportion of US$ claims declined from 70% to 60%. (See the third and fourth charts.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404i.jpg" width="353"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060404h.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J5.HTM">International Reserves:&nbsp; Developing Countries in the Far East</a> (Bil US$)</th>
<th scope="col">Mar 06</th>
<th scope="col">Feb 06</th>
<th scope="col">Jan 06</th>
<th scope="col">Dec 05</th>
<th scope="col">Y/Y % Current</th>
<th scope="col">Y/Y % Past Peak&nbsp;</th>
<th scope="col">2004&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">South Korea</td>
<td>217.3</td>
<td>215.9</td>
<td>216.9</td>
<td>210.3</td>
<td>5.8</td>
<td>32.4</td>
<td>April</td>
</tr>
<tr>
<td class="firstcol">Taiwan&nbsp;</td>
<td>257.0</td>
<td>257.0</td>
<td>257.3</td>
<td>253.3</td>
<td>2.4</td>
<td>35.2</td>
<td>February</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td></td>
<td></td>
<td></td>
<td>821.5</td>
<td>33.7</td>
<td>51.1</td>
<td>August</td>
</tr>
<tr>
<td class="firstcol">India</td>
<td></td>
<td>135.9</td>
<td>134.7</td>
<td>131.9</td>
<td>11.5</td>
<td>52.5</td>
<td>April</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403e.jpg" width="353">
Manufacturing PMI&#39;s (Purchasing Manager&#39;s Indexes) were released today by NTC Research, Ltd. The index for the Euro Zone has been in an expansion mode (i.e. above 50) since last July. The March figure released today, 56.07, was the highest since September, 2000 as can be seen in the first chart. All of the Euro Zone members surveyed by NTC Research except the Netherlands, showed increases in March over February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403f.jpg" width="353">
NTC Research also surveys the non Euro Zone countries--Czech Republic, Poland and Russia. In March, the PMI for the Czech Republic showed a small increase while those for Poland and Russia showed decline. All three countries, however, are still in an expansion mode.
Over the next two days, NTC Research will publish diffusion indexes for the service and construction industries. At that time they will produce their Gross Domestic Product Indicator, which is based on a weighted combination of the three industries. The GDP indicator has proved to be a fairly good indicator of the year to year changes in real GDP as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">March 2006</th>
<th scope="col">February 2006</th>
<th scope="col">% Change</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone</td>
<td>56.07</td>
<td>54.47</td>
<td>&nbsp;2.9</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>54.57</td>
<td>52.22</td>
<td>&nbsp;4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>58.09</td>
<td>55.86</td>
<td>&nbsp;4.0</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>55.47</td>
<td>55.11</td>
<td>&nbsp;0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>54.74</td>
<td>52.75</td>
<td>&nbsp;3.8</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>52.64</td>
<td>52.42</td>
<td>&nbsp;0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands</td>
<td>56.18</td>
<td>56.97</td>
<td>-1.4</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>56.52</td>
<td>54.46</td>
<td>&nbsp;3.8</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Other Europe</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>55.74</td>
<td>55.10</td>
<td>&nbsp;1.2</td>
</tr>
<tr>
<td class="firstcol">Poland</td>
<td>51.97</td>
<td>52.93</td>
<td>-1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Russia</td>
<td>52.48</td>
<td>53.63</td>
<td>-2.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Manufacturing PMI's (Purchasing Manager's Indexes) were released today by NTC Research, Ltd. The index for the Euro Zone has been in an expansion mode (i.e. above 50) since last July. The March figure released today, 56.07, was the [...]

Purchasing Managers in Europe Report Good Improvement in the Manufacturing Sector

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403c.jpg" width="353">
After a lackluster performance during January, the February value of construction put in place rose 0.8%, double the upwardly revised gain the prior month. Consensus expectations had been for a 0.5% increase.
Residential building surged 1.3% after an unrevised 0.1% January up tick. New single family building ballooned 1.3% (14.0% y/y) and the value of improvements rose 1.9% (-10.2% y/y), recovering all of the prior month&#39;s decline.
Your House Just Doubled in Value? Don&#39;t Uncork the Champagne Just Yet! from the Federal Reserve Bank of Philadelphia is available <a href="http://www.phil.frb.org/files/br/Q1_06_Housevalue.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403d.jpg" width="353">
Nonresidential building gained 0.8%. Office construction jumped again, by 1.5% (16.1% y/y), and the previously reported slip during January was revised to an increase of 2.1%. Commercial building, however, fell 2.1% (+11.2% y/y) following much strength during the final nine months of 2005.
Public construction spending slipped 0.5%. Construction activity on highways &amp; streets, nearly one third of the value of public construction spending, rose a modest 0.7% (3.8% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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</td>
<td>0.8%</td>
<td>0.4%</td>
<td>7.4%</td>
<td>9.2%</td>
<td>10.9%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.2%</td>
<td>0.4%</td>
<td>7.8%</td>
<td>9.7%</td>
<td>13.6%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>1.3%</td>
<td>0.1%</td>
<td>7.1%</td>
<td>11.5%</td>
<td>18.2%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.8%</td>
<td>1.2%</td>
<td>9.6%</td>
<td>5.4%</td>
<td>3.9%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>6.0%</td>
<td>7.6%</td>
<td>2.5%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

After a lackluster performance during January, the February value of construction put in place rose 0.8%, double the upwardly revised gain the prior month. Consensus expectations had been for a 0.5% increase. Residential building [...]

U.S. Construction Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403a.jpg" width="353">
The March Composite Index of activity in the factory sector fell to 55.2. The Institute of Supply Management (ISM) reported that most of the prior month&#39;s increase was reversed and that the 1Q average level was the lowest since the second quarter of last year. Consensus expectations had been for an increase to 57.5 last month.
During the last twenty years there has been a 68% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
The new orders index reversed nearly all of the sharp improvement during February and dropped back into the range of the last nine months. Export orders slipped m/m although the 1Q index was at its highest level in nearly two years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403b.jpg" width="353">
The employment index also fell sharply to its lowest level since last June. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment. Production was roughly stable m/m. The inventory index slipped but the quarterly level sustained its improved 4Q level. The supplier deliveries index rose moderately after a sharp decline during February.
The price index increased 4.0 points to its highest level since November. The Institute reported that the following commodities were up in price; aluminum, aluminum extrusions, aluminum products, carbon black, copper, copper products, corrugated containers, electronic components, flour, freight, natural rubber, paper, particle board, stainless steel, steel, hot rolled steel and sugar but that there were no commodities in short supply. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.
Are We Engineering Ourselves Out of Manufacturing Jobs? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0101.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/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;05</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">Composite Index</td>
<td>55.2</td>
<td>56.7</td>
<td>55.3</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>58.4</td>
<td>61.9</td>
<td>57.2</td>
<td>57.4</td>
<td>63.5</td>
<td>57.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>66.5</td>
<td>62.5</td>
<td>73.0</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The March Composite Index of activity in the factory sector fell to 55.2. The Institute of Supply Management (ISM) reported that most of the prior month's increase was reversed and that the 1Q average level was the lowest since the [...]

ISM Index Off Unexpectedly, Pricing Pressure Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403a.jpg" width="353">
The March Composite Index of activity in the factory sector fell to 55.2. The Institute of Supply Management (ISM) reported that most of the prior month&#39;s increase was reversed and that the 1Q average level was the lowest since the second quarter of last year. Consensus expectations had been for an increase to 57.5 last month.
During the last twenty years there has been a 68% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
The new orders index reversed nearly all of the sharp improvement during February and dropped back into the range of the last nine months. Export orders slipped m/m although the 1Q index was at its highest level in nearly two years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403b.jpg" width="353">
The employment index also fell sharply to its lowest level since last June. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment. Production was roughly stable m/m. The inventory index slipped but the quarterly level sustained its improved 4Q level. The supplier deliveries index rose moderately after a sharp decline during February.
The price index increased 4.0 points to its highest level since November. The Institute reported that the following commodities were up in price; aluminum, aluminum extrusions, aluminum products, carbon black, copper, copper products, corrugated containers, electronic components, flour, freight, natural rubber, paper, particle board, stainless steel, steel, hot rolled steel and sugar but that there were no commodities in short supply. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.
Are We Engineering Ourselves Out of Manufacturing Jobs? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0101.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/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;05</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">Composite Index</td>
<td>55.2</td>
<td>56.7</td>
<td>55.3</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>58.4</td>
<td>61.9</td>
<td>57.2</td>
<td>57.4</td>
<td>63.5</td>
<td>57.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>66.5</td>
<td>62.5</td>
<td>73.0</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
U.S. Construction Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403c.jpg" width="353">
After a lackluster performance during January, the February value of construction put in place rose 0.8%, double the upwardly revised gain the prior month. Consensus expectations had been for a 0.5% increase.
Residential building surged 1.3% after an unrevised 0.1% January up tick. New single family building ballooned 1.3% (14.0% y/y) and the value of improvements rose 1.9% (-10.2% y/y), recovering all of the prior month&#39;s decline.
Your House Just Doubled in Value? Don&#39;t Uncork the Champagne Just Yet! from the Federal Reserve Bank of Philadelphia is available <a href="http://www.phil.frb.org/files/br/Q1_06_Housevalue.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403d.jpg" width="353">
Nonresidential building gained 0.8%. Office construction jumped again, by 1.5% (16.1% y/y), and the previously reported slip during January was revised to an increase of 2.1%. Commercial building, however, fell 2.1% (+11.2% y/y) following much strength during the final nine months of 2005.
Public construction spending slipped 0.5%. Construction activity on highways &amp; streets, nearly one third of the value of public construction spending, rose a modest 0.7% (3.8% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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</td>
<td>0.8%</td>
<td>0.4%</td>
<td>7.4%</td>
<td>9.2%</td>
<td>10.9%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.2%</td>
<td>0.4%</td>
<td>7.8%</td>
<td>9.7%</td>
<td>13.6%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>1.3%</td>
<td>0.1%</td>
<td>7.1%</td>
<td>11.5%</td>
<td>18.2%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.8%</td>
<td>1.2%</td>
<td>9.6%</td>
<td>5.4%</td>
<td>3.9%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>6.0%</td>
<td>7.6%</td>
<td>2.5%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
 Purchasing Managers in Europe Report Good Improvement in the Manufacturing Sector 
by <a href="/comment/Curley.html">Louise Curley</a> April 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403e.jpg" width="353">
Manufacturing PMI&#39;s (Purchasing Manager&#39;s Indexes) were released today by NTC Research, Ltd. The index for the Euro Zone has been in an expansion mode (i.e. above 50) since last July. The March figure released today, 56.07, was the highest since September, 2000 as can be seen in the first chart. All of the Euro Zone members surveyed by NTC Research except the Netherlands, showed increases in March over February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060403f.jpg" width="353">
NTC Research also surveys the non Euro Zone countries--Czech Republic, Poland and Russia. In March, the PMI for the Czech Republic showed a small increase while those for Poland and Russia showed decline. All three countries, however, are still in an expansion mode.
Over the next two days, NTC Research will publish diffusion indexes for the service and construction industries. At that time they will produce their Gross Domestic Product Indicator, which is based on a weighted combination of the three industries. The GDP indicator has proved to be a fairly good indicator of the year to year changes in real GDP as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">March 2006</th>
<th scope="col">February 2006</th>
<th scope="col">% Change</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone</td>
<td>56.07</td>
<td>54.47</td>
<td>&nbsp;2.9</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>54.57</td>
<td>52.22</td>
<td>&nbsp;4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>58.09</td>
<td>55.86</td>
<td>&nbsp;4.0</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>55.47</td>
<td>55.11</td>
<td>&nbsp;0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>54.74</td>
<td>52.75</td>
<td>&nbsp;3.8</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>52.64</td>
<td>52.42</td>
<td>&nbsp;0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands</td>
<td>56.18</td>
<td>56.97</td>
<td>-1.4</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>56.52</td>
<td>54.46</td>
<td>&nbsp;3.8</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Other Europe</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>55.74</td>
<td>55.10</td>
<td>&nbsp;1.2</td>
</tr>
<tr>
<td class="firstcol">Poland</td>
<td>51.97</td>
<td>52.93</td>
<td>-1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Russia</td>
<td>52.48</td>
<td>53.63</td>
<td>-2.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

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The ISM U.S. manufacturing PMI fell to a lower-than-expected 53.3 in June, the first m/m fall since February, following a 1.3-point increase to 54.0 in May, according to data from the Institute for Supply Management. The June reading, above the 50 expansion-contraction threshold, indicated the U.S. manufacturing sector expanded for the sixth straight month, albeit at a slightly slower pace. A reading of 53.8 for June had been expected in the Action Economics Forecast Survey. The June manufacturing PMI, while above a contraction-level 49.0 in June 2025 and a low of 47.0 in October 2024, remained below a peak of 63.8 in March 2021.

The production index declined to 52.2 in June from 54.3 in May, indicating production expanded for the eighth consecutive month but at the slowest pace since December. The index was above a low of 44.8 in April 2025 but below a peak of 66.5 in March 2021. In June, 19.0% (NSA) of respondents reported higher production while 13.0% reported lower production. The new orders index slipped to 56.0 in June from 56.8 in May, signaling new orders grew for the sixth straight month following four successive months of contraction. The index remained well above a low of 41.8 in January 2023 but below a high of 67.0 in May 2021. In June, 22.3% (NSA) of respondents reported higher new orders while 13.4% reported declines. The inventories index climbed to 51.4 in June from 49.9 in May, marking the first expansion since April 2025. The index was slightly below a high of 52.7 in March 2025 but above a low of 43.8 in October 2024. Meanwhile, the supplier deliveries index fell to 57.4 in June from 60.6 in May and April, indicating slowing delivery performance for the seventh consecutive month after faster deliveries in November. In June, 18.1% (NSA) of respondents reported slower delivery speeds while 3.4% reported faster speeds.

On the labor front, the employment index improved to 49.7 in June from 48.6 in May, showing employment contracted for the 33rd straight month but at the slowest contraction pace since January 2025. The index was above a low of 44.1 in November 2025 but below a high of 56.5 in March 2022. In June, 16.2% (NSA) of respondents reported higher employment while 13.8% reported lower hiring.

On the pricing front, the prices paid index fell to a still-high 73.0 (NSA) in June, a 9.1-point drop—the largest decline since July 2022—from 82.1 in May, indicating raw materials prices rose for the 21st straight month but at the slowest rising pace since February. The index remained well above a low of 39.4 in December 2022 but below a high of 87.1 in March 2022 and a peak of 92.1 in June 2021. In June, 55.1% (NSA) of respondents reported higher prices while 9.2% reported price declines.

In other ISM series not included in the composite index, the new export orders index fell to 48.5 in June from 50.6 in May, indicating new export orders contracted for the third time in four months. The index was up from a low of 40.1 in May 2025 but down from a high of 52.4 in January 2025 and a peak of 57.1 in February 2022. The imports index edged down to 52.9 in June from 53.0 in May, suggesting imports expanded for the fifth successive month. The index was below its recent high of 54.9 in February but above a low of 39.9 in May 2025. The order backlog index decreased to 50.5 (NSA) in June from 52.2 in May, showing backlog levels grew at the slowest pace in six months. The index was below a high of 56.6 in February and a peak of 70.6 in May 2021 but well above a low of 37.5 in May 2023.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- ISM Mfg. PMI down slightly to 53.3 in June; sixth straight month above 50.
- Production (52.2) expands for the eighth consecutive mth.; new orders (56.0) for the sixth successive mth.
- Employment (49.7) contracts for the 33rd straight mth.; at the slowest contraction pace since Jan. ’25.
- Prices Index (73.0) at a four-month low, still indicating prices rising for the 21st consecutive mth.
- Exports (48.5) contract for the third time in four mths.; imports (52.9) continue to grow.

U.S. ISM Manufacturing PMI Still Expansionary in June; New Orders and Production Growing at a Slower Pace; Employment Contracting

Michael J. Moran

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The monthly report on construction activity receives scant attention in the financial press, and investors and traders in financial markets typically pay little heed. However, it is a valuable report for economists, as it provides a broad-based view of building activity, covering private residential and business construction, as well as government-related activity. The figures feed into the calculation of GDP. Unfortunately, results have been soft since early 2025.

Total construction activity rose 0.1 percent in May, marking the third consecutive increase. However, the gains have not been especially large, averaging 0.3%, and they have barely dented the string of weak readings in the preceding 17 months. The year-over-year change in May totaled -1.5%.

Private residential construction, the largest component of the total (41% share), rose 0.3% in May, adding to an average gain of 1.1% in the prior two months and leaving a year-over-year increase of 1.8% (chart, upper left). Most of the advance in the past year was the result of improvements to existing homes (up 8.1%). Construction of new multi-family units has shown little net change in the past year or so, while new single-family building has traced a mild downward trend (off 4.0% in the past year). Public construction has been flat in the past year, with both the federal government and state and local governments showing little net change (chart, upper right).

Private nonresidential construction (34% of the total) has received considerable press attention in the past few years because of explosive growth in the building of data centers. Growth has indeed been vigorous. Building started in 2020 and grew moderately at first, but this sector took off in 2022, about the time when artificial intelligence models became publicly available (chart, lower left, in levels to show the strong trend more clearly). Average annual growth for the three years ended 2025 totaled 48%.

Interestingly, despite the rapid growth in the building of data centers, the private nonresidential sector has been the weakest area of the construction report, with activity trending lower since early 2025 (chart, lower right). Some components of private nonresidential construction have held steady or improved (e.g. amusement & recreation, electric power), but three areas stand out on the soft side: general office, commercial, and manufacturing.

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- Building activity in the US was firm in 2023 and 2024, but it has lost ground since then.
- Government-related construction and private residential building have been little changed in the past year or so.
- Private nonresidential construction has been notably weak, despite robust activity in the building of data centers.

Construction in May: Another Soft Reading

Robert Brusca

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The manufacturing PMI values for June showed more worsening than improving, with 10 of 18 reporters showing conditions unchanged or getting worse on a month-to-month basis. However, taking into account the size of the changes across the various reporters, the median PMI rating for manufacturing in June improved to 51.4, an increase of 0.5 points from the month before. The month-to-month deterioration is relatively broad; however, it's also relatively mixed, and when taking the size of the changes into account, there's actually a monthly improvement.

The chart shows that manufacturing has been undergoing improvements generally since late last year, although in the last few months, there has been a topping, a capping, and in some cases a backtracking from the recent high readings. That action reflects the onset of hostilities between the United States and Iran and the on-again, off-again situation with the Strait of Hormuz being open or closed.

Over three months compared to six months ago, the average readings show deterioration in only 5 of 18 reporters. This clearly reflects what we see in the chart, which is a recent improvement over three months compared to six months. The next comparison of 6-month averages to 12-month averages finds that only four reporters are worse off over six months than they were over 12 months. Those four are Mexico, India, Indonesia, and Vietnam. Over 12 months compared to 12 months ago, conditions are better everywhere except in India.

In addition, we can evaluate the manufacturing performance by ranking the current month's observation in a queue of data back to January 2022, a period of about 4½ years. Viewed over that span, only four countries have readings in June below their period medians. Those are Indonesia, India, Turkey, and Russia. All the rest have readings above the 50th percentile, putting them above their historic medians. Japan has an exceptionally strong reading in June relative to its history, posting a 95.4 percentile standing. Mexico, China, Malaysia, and Taiwan also post strong standings, in their 80th percentile.

The median queue standing for the entire group is a 69.2 percentile standing, which is still quite strong. Other summary measures of sequential diffusion show that the proportion of reporters improving over 12 months is 94.4%, compared to 72.2% over 6 months and 61.1% over 3 months. The breadth of this improvement is shrinking over the near-term horizons; however, the tendency for improvement is unmistakable.

Average readings for certain groups at the bottom of the table show that the United States, the United Kingdom, EMU countries, Canada, and Japan, on an unweighted basis, have steady improvements in place from 12 months to six months to three months, with a one-month reading even stronger. The BRIC countries have readings that are marginally stronger but are staying in a tight low range around 50.8 to 51.5. The Asian average shows an improvement from 12 months to 6 months and then backtracking, with the current 3-month diffusion values just slightly above 51, around 51.5.

The global economy has shown some significant improvement recently in the manufacturing sector, and this has occurred despite the ongoing war in Ukraine and stepped-up hostilities involving Iran, including the on-again, off-again closure of the Strait of Hormuz. Oil prices have spiked and have since come down substantially. However, the outlook for peace remains clouded as both sides continue to talk positively about an agreement and a ceasefire, then turn around and violate near-term conditions they have set. This makes it very difficult to handicap the future.

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Mixed but Broad Backtrack in Global Manufacturing in June 

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The Conference Board U.S. Consumer Confidence Index rose 0.7% m/m (-4.2% y/y) to a lower-than-expected 91.2 in June, the fourth monthly rise in five months, after a downwardly revised 3.4% decline to a four-month-low 90.6 in May (-0.7%; 93.1 initially). A reading of 94.3 had been expected in the Action Economics Forecast Survey. The June reading was 6.4% above a low of 85.7 in April 2025 but down from 95.2 in June 2025 and 19.1% below a high of 112.8 in November 2024.

Consumers' views of present economic conditions weakened for the second consecutive month in June, while the views of future economic conditions improved m/m. The Present Situation Index—which assesses current business and labor market conditions—fell 2.5% m/m (-12.5% y/y) to 116.4 in June, the lowest level since February 2021, following a 4.0% drop to 119.4 in May and two successive m/m increases. The index was lower than 133.0 in June 2025 and 25.0% below a high of 155.3 in June 2023. The Expectations Index—which measures the short-term outlook for income, business, and labor market conditions—rose 4.2% m/m (6.4% y/y) to 74.4 this month, the highest level since December and the second increase in three months, after a 2.7% decline to 71.4 in May. The index was higher than 69.9 in June 2025, while 20.6% below a high of 93.7 in November 2024.

Labor market readings showed less optimism this month. The jobs gap—representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get—dropped to 2.4% in June, the lowest reading since February 2021, from 5.0% in May. Calculated by Haver Analytics, this series had an 85% correlation with the unemployment rate over the last 20 years. The jobs plentiful measure inched up to 24.9% of respondents in June from 24.8% in May (the lowest since February 2021). Perceptions of the current labor market weakened, with the jobs hard-to-get measure rising to 22.5% this month, the highest level since January 2021, from 19.8% in May.

Consumers generally viewed business conditions as slightly more favorable compared to last month. Current business conditions were perceived as good by 20.0% of respondents in June, up from 19.2% in May but below a high of 23.4% in June 2023. Expectations that business conditions would improve in six months were 19.0% of respondents, up from 18.8% in May but below a high of 24.7% in November 2024. More jobs were expected in six months by 15.2% of respondents, slightly down from 16.6% in May and below a high of 22.8% in November 2024. The percentage expecting rising income rose to 20.8% in June from 19.2% in May, the highest since February 2020 and above a low of 14.4% in February 2023.

Inflation expectations eased this month but remained elevated. The expected inflation rate in twelve months slipped to 6.0% in June, the lowest since February, after holding at 6.2% for three straight months. The latest reading was below a high of 7.0% in April 2025 but above a low of 5.0% in November 2024. In June, 61.5% of respondents expected that interest rates would rise over the next twelve months, down from 62.4% in May but up from 42.1% in January 2024.

The share of respondents planning to buy a home within six months rebounded to 6.6% in June from 6.5% in May. It was below its most recent high of 7.0% in April but above a low of 4.6% in February 2024. Those planning to buy automobiles rose to 13.3% of respondents this month from 12.6% in May; it was up from a low of 10.6% in April 2025. Meanwhile, the share of respondents planning a vacation within six months declined to 39.1%, the lowest since April 2021, from 41.4% in May.

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

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- Headline up 0.6 pts. to 91.2 in June, below expectations; fourth m/m increase in five mths.
- Present Situation Index down 3.0 pts. to 116.4, lowest since Feb. ’21.
- Expectations Index up 3.0 pts. to 74.4, a six-month high.
- Consumers less optimistic about current business & labor market conditions; more upbeat about future business & financial conditions.
- Inflation expectations down to 6.0%, lowest since Feb., as lower oil prices in recent weeks eased consumer inflation fears.

U.S. Consumer Confidence Rebounds in June from a Four-Month Low

Sandy Batten

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Total job openings edged up 0.1% m/m (+3.9% y/y) to 7.594 million in May from a downwardly revised 7.585 million in April (previously 7.618 million), according to the Job Openings and Labor Turnover Survey. Even with only a small rise, the level of openings in May was the highest since May 2024. Accordingly, the job openings rate (the ratio of openings to nonfarm employment plus openings) was unchanged at 4.6% in May. The April and May readings for the job openings rate were the highest since November 2024. In May, the number of unemployed fell while the number of openings edged up. Consequently, the number of openings rose further above the number of unemployed for the second consecutive month, another sign that previously observed softening in labor market conditions may be reversing.

Private sector openings were essentially unchanged in May from April, edging up 2,000 (+4.3% y/y) with the private job openings rate unchanged at 4.8%. The sluggishness in private openings in May was due entirely to a 119,000 decline in private education and health care openings. However, this followed a total increase of 298,000 in March and April. Openings increased in all other major sectors, led by a 95,000 increase in openings in leisure and hospitality. Openings were up 32,000 in construction, 33,000 in manufacturing, and 37,000 in trade and transportation. Total government openings rose 7,000 in May after an upwardly revised 63,000 jump in April (previously +47,000).

Total hiring slipped 0.9% m/m (-3.0% y/y) to 5.170 million in May from an upwardly revised 5.215 million in April (previously 5.116 million). This was the third monthly decline in hiring in the past four months. The hiring rate was unchanged in May at 3.3%. Private sector hiring fell 1.6% m/m (-3.5% y/y) in May, also the third monthly decline in the past four months. The weakness in hiring in May was concentrated in trade and transportation (-56,000) and in construction (-24,000). Manufacturing posted a small decline while professional and business services, and private education and health care posted small increases. Leisure and hospitality hiring rose 15,000, the second monthly increase in the past three months. Total government hiring increased 32,000 in May.

Total separations increased 1.3% (-3.5% y/y) to 5.101 million in May from an upwardly revised 5.038 million in April (previously 4.978 million). Both quits (+22,000) and layoffs (+41,000) increased in May with no change in other separations. The separation rate in May was unchanged at 3.2%. Private separations also rose 1.3% m/m (+62,000, -2.9% y/y) in May. Private quits increased 37,000, private layoffs rose 27,000, while other private separations declined 2,000. The rise in private layoffs was concentrated in construction (+47,000), trade and transportation (+52,000), and private education and healthcare (+52,000). Layoffs declined 18,000 in manufacturing, fell 37,000 in professional and business services, and decreased 50,000 in leisure and hospitality. Even with the rise in private quits in May, they have been trending down in 2026, implying that workers are feeling less comfortable with their employment prospects and hence are choosing to remain in their current jobs.

On the whole, employers remain cautious in hiring. Furthermore, workers are sufficiently unsure of their alternative employment prospects that they are refraining from leaving their current position. Still, openings have gradually risen since the end of last year after having gradually fallen throughout 202 and once again exceed the number of unemployed.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

- Openings edged up 9,000 but to the highest level since May 2024.
- However, hiring fell 45,000 for the third monthly decline in the past four months.
- Separations rose 63,000 with increases in both quits and layoffs.

Economy in Brief

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