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/041215d.jpg" width="353">
In the December TANKAN Survey, released today by the Bank of Japan, large Japanese manufacturers reported their overall business conditions at +22, off from September&#39;s +26 rating, but slightly more than the +21 they had forecast for this quarter. Large non-manufacturing concerns maintained their Q3 conditions, with +11, modestly beating their expectation of +10. All businesses in all size categories edged down to +1 from the +2 last quarter, but did marginally better than their forecast for a 0 rating, or flat business. Medium-sized firms fell moderately short of both their Q3 performance and their forecast for this quarter, but small firms improved, albeit still in negative territory.
Individual industries had really mixed results. Among large manufacturing firms, eight industries saw business soften this quarter, while five are improving and two maintaining their Q3 pace. There seems to be no general classification of strength or weakening: such diverse groups as textiles, nonferrous metals and shipbuilding slowed, while petroleum and several machinery categories picked up. In non-manufacturing industries, retailing was sluggish but did better than expected; wholesale activity was somewhat slower than in Q3, but that sector still had one of the highest growth rates.
Despite the reduced vigor of Japanese business conditions as shown in the TANKAN, the Japanese stock market and currency both firmed following publication of the report. Apparently investors focused on components describing expected profits and business investment. Large manufacturing companies now project that their profits are rising 24.0% this fiscal year (ending March 31), 5.1 percentage points higher than the previous forecast. They also anticipate raising investment outlays by 23.4%, 2.2 points more than forecast before and 18 points more than last year&#39;s growth. Both of these results would likely raise corporate valuations and enhance the health of Japan&#39;s economy.
In the Haver databases, we present the TANKAN data two ways. Owing to the restructuring of the survey classification scheme and new sampling last March, we have segregated the recent detail data into new series in the &quot;Japan&quot; database. In summary data in the &quot;G10&quot; database, we link the all industry-all enterprise data with the history that uses the old methodology. This broad aggregate is less affected by the Bank of Japan&#39;s reorganization of the categories. By this special, linked measure, even though the Q4 result is down a point from Q3, it is still, at +1, only the second positive reading since Q1 of 1992, nearly 13 years ago.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Conditions:&nbsp; % Favorable minus % Unfavorable</th>
December 2004
September 2004
June 2004
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Forecast &nbsp;for Mar</td>
<td>Actual</td>
<td>Forecast for Dec</td>
<td>Actual</td>
<td>Forecast for Sep</td>
<td>Actual</td>
</tr>
<tr>
<td class="firstcol">All Firms</td>
<td>-3</td>
<td>1</td>
<td>0</td>
<td>2</td>
<td>-1</td>
<td>0</td>
</tr>
<tr class="odd">
<td class="firstcol">Large Firms*</td>
<td>12</td>
<td>16</td>
<td>15</td>
<td>19</td>
<td>16</td>
<td>16</td>
</tr>
<tr>
<td class="firstcol">Manufacturing (&quot;Headline Series&quot;)</td>
<td>15</td>
<td>22</td>
<td>21</td>
<td>26</td>
<td>21</td>
<td>22</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-manufacturing</td>
<td>10</td>
<td>11</td>
<td>10</td>
<td>11</td>
<td>11</td>
<td>9</td>
</tr>
<tr>
<td class="firstcol">Medium-sized Firms**</td>
<td>-1</td>
<td>2</td>
<td>3</td>
<td>5</td>
<td>1</td>
<td>3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>2</td>
<td>11</td>
<td>10</td>
<td>14</td>
<td>7</td>
<td>11</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non-manufacturing</td>
<td>-3</td>
<td>-4</td>
<td>-2</td>
<td>-2</td>
<td>-3</td>
<td>-1</td>
</tr>
<tr class="odd">
<td class="firstcol">Small Firms***</td>
<td>-12</td>
<td>-7</td>
<td>-9</td>
<td>-9</td>
<td>-10</td>
<td>-10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-1</td>
<td>5</td>
<td>3</td>
<td>5</td>
<td>2</td>
<td>2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-manufacturing</td>
<td>-18</td>
<td>-14</td>
<td>-16</td>
<td>-17</td>
<td>-18</td>
<td>-18</td>
</tr>
</tbody>
</table>
</body>
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In the December TANKAN Survey, released today by the Bank of Japan, large Japanese manufacturers reported their overall business conditions at +22, off from September's +26 rating, but slightly more than the +21 they had forecast for [...]

Japan "TANKAN" Eases in Q4, but Still Better Than Forecast

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215c.jpg" width="353">
According to the Mortgage Bankers Association (MBA) Survey, mortgage applications slipped 1.0% last week and so far in December are 3.6% below the November average.
Purchase applications eased 0.4% after the prior week&#39;s 6.6% rise and in December are 3.9% ahead of November. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance slid for the fifth week in the last six, by 2.0%, and are down 13.1% versus November.
The effective interest rate on a conventional 30-year mortgage fell to 5.90% and the effective rate on a 15-year mortgage also fell to 5.35%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/10/04</th>
<th scope="col">12/03/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>689.0</td>
<td>696.2</td>
<td>1.7%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>488.9</td>
<td>490.9</td>
<td>11.8%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,852.4</td>
<td>1,890.6</td>
<td>-10.6%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
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According to the Mortgage Bankers Association (MBA) Survey, mortgage applications slipped 1.0% last week and so far in December are 3.6% below the November average. Purchase applications eased 0.4% after the prior week's 6.6% rise and [...]

Mortgage Applications Slip

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215b.jpg" width="353">
In December, the Empire State Index of General Business Conditions in New York&#39;s manufacturing industries jumped 11.1 points to 29.93, the highest level since July.
The new orders component more than doubled to a record 40.15 while the employment measure also doubled the November reading. In addition, shipments were quite strong rising 17 points. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The prices paid index recovered most of the November decline with a 4.4 point gain.
Expectations for business conditions in six months again fell sharply to the lowest level since April 2003.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html">here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;03</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>29.93</td>
<td>18.86</td>
<td>36.16</td>
<td>28.57</td>
<td>16.30</td>
<td>7.02</td>
</tr>
</tbody>
</table>
</body>
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In December, the Empire State Index of General Business Conditions in New York's manufacturing industries jumped 11.1 points to 29.93, the highest level since July. The new orders component more than doubled to a record 40.15 while [...]

Empire State Index Jumped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215a.jpg" width="353">
In October, the Index of Leading Indicators for the Major Seven OECD Countries fell slightly for the third straight month. The declines pulled the six-month growth rate down to 0.4%, its lowest since May 2003.
During the last ten years there has been a 77% correlation between the leaders&#39; growth rate and the two quarter change in the GDP Volume Index for the Big 7 countries in the OECD.
The leading index in Japan turned negative for the third straight month, with six-month growth falling to -1.5% There has been a 45% correlation during the last ten years between the leaders and real GDP growth in Japan. Net foreign trade has contributed significantly to the leaders&#39; deterioration.
The leaders for the United States fell for the third straight month and six month growth fell to just 0.2% with a tighter yield curve, lower consumer sentiment &amp; a lower business climate indicator offsetting other component gains.
The leading index growth rate for the European Union has held up well relative to other countries, with gains logged during the last four months, though six-month growth fell to 2.5% from a peak of 6.2% late last year. Growth in the German leaders fell to 2.0% in October versus 8.3% in January as a result of a tighter yield curve and a slower orders inflow. Leaders in Italy improved some with the six-month growth rate slightly positive after several months negative; the decline in consumer confidence stabilized. In France, the leading index growth rate decelerated to 3.7% versus 8.2% at the start of the year and growth in the UK leaders improved to 1.1% after two months negative during the summer.
In Canada the leaders went further negative with a tighter yield curve.
Visit the OECD at this <a href="http://www.oecd.org/home/">website</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 Main Economic Indicators</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">6-Mth Chg</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>102.0</td>
<td>102.1</td>
<td>0.4%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>106.1</td>
<td>105.8</td>
<td>2.5%</td>
<td>2.3%</td>
<td>3.5%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>97.4</td>
<td>97.7</td>
<td>-1.5%</td>
<td>1.9%</td>
<td>0.5%</td>
<td>-4.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>102.4</td>
<td>102.5</td>
<td>0.2%</td>
<td>3.7%</td>
<td>2.0%</td>
<td>-3.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

In October, the Index of Leading Indicators for the Major Seven OECD Countries fell slightly for the third straight month. The declines pulled the six-month growth rate down to 0.4%, its lowest since May 2003. During the last ten [...]

OECD Leaders Declined For Third Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215a.jpg" width="353">
In October, the Index of Leading Indicators for the Major Seven OECD Countries fell slightly for the third straight month. The declines pulled the six-month growth rate down to 0.4%, its lowest since May 2003.
During the last ten years there has been a 77% correlation between the leaders&#39; growth rate and the two quarter change in the GDP Volume Index for the Big 7 countries in the OECD.
The leading index in Japan turned negative for the third straight month, with six-month growth falling to -1.5% There has been a 45% correlation during the last ten years between the leaders and real GDP growth in Japan. Net foreign trade has contributed significantly to the leaders&#39; deterioration.
The leaders for the United States fell for the third straight month and six month growth fell to just 0.2% with a tighter yield curve, lower consumer sentiment &amp; a lower business climate indicator offsetting other component gains.
The leading index growth rate for the European Union has held up well relative to other countries, with gains logged during the last four months, though six-month growth fell to 2.5% from a peak of 6.2% late last year. Growth in the German leaders fell to 2.0% in October versus 8.3% in January as a result of a tighter yield curve and a slower orders inflow. Leaders in Italy improved some with the six-month growth rate slightly positive after several months negative; the decline in consumer confidence stabilized. In France, the leading index growth rate decelerated to 3.7% versus 8.2% at the start of the year and growth in the UK leaders improved to 1.1% after two months negative during the summer.
In Canada the leaders went further negative with a tighter yield curve.
Visit the OECD at this <a href="http://www.oecd.org/home/">website</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 Main Economic Indicators</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">6-Mth Chg</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>102.0</td>
<td>102.1</td>
<td>0.4%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>106.1</td>
<td>105.8</td>
<td>2.5%</td>
<td>2.3%</td>
<td>3.5%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>97.4</td>
<td>97.7</td>
<td>-1.5%</td>
<td>1.9%</td>
<td>0.5%</td>
<td>-4.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>102.4</td>
<td>102.5</td>
<td>0.2%</td>
<td>3.7%</td>
<td>2.0%</td>
<td>-3.3%</td>
</tr>
</tbody>
</table>
Empire State Index Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215b.jpg" width="353">
In December, the Empire State Index of General Business Conditions in New York&#39;s manufacturing industries jumped 11.1 points to 29.93, the highest level since July.
The new orders component more than doubled to a record 40.15 while the employment measure also doubled the November reading. In addition, shipments were quite strong rising 17 points. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The prices paid index recovered most of the November decline with a 4.4 point gain.
Expectations for business conditions in six months again fell sharply to the lowest level since April 2003.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html">here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;03</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>29.93</td>
<td>18.86</td>
<td>36.16</td>
<td>28.57</td>
<td>16.30</td>
<td>7.02</td>
</tr>
</tbody>
</table>
Mortgage Applications Slip 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041215c.jpg" width="353">
According to the Mortgage Bankers Association (MBA) Survey, mortgage applications slipped 1.0% last week and so far in December are 3.6% below the November average.
Purchase applications eased 0.4% after the prior week&#39;s 6.6% rise and in December are 3.9% ahead of November. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance slid for the fifth week in the last six, by 2.0%, and are down 13.1% versus November.
The effective interest rate on a conventional 30-year mortgage fell to 5.90% and the effective rate on a 15-year mortgage also fell to 5.35%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/10/04</th>
<th scope="col">12/03/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>689.0</td>
<td>696.2</td>
<td>1.7%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>488.9</td>
<td>490.9</td>
<td>11.8%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,852.4</td>
<td>1,890.6</td>
<td>-10.6%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
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The Federal Open Market Committee raised the target rate for federal funds by 25 basis points to 2.25%, as expected. The discount rate also was raised 25 basis points to 3.25%.
The decision was unanimous.
Today&#39;s press release from the Fed continued to contain a comment suggesting that rates could be raised again. &quot;The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity.&quot;
For the complete text of the Fed&#39;s latest press release please <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2004/20041214/default.htm"> click</a>.
&quot;Will the U.S. Productivity Resurgence Continue?&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci10-13.pdf"> here</a>.

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The Federal Open Market Committee raised the target rate for federal funds by 25 basis points to 2.25%, as expected. The discount rate also was raised 25 basis points to 3.25%. The decision was unanimous. Today's press release from [...]

FOMC Raised Funds Rate to 2.25%

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The Small Business Optimism Index for November published by the National Federation of Independent Business (NFIB) surged 3.7% to 107.7 in November, the highest level in twenty years.
During the last ten years there has been a 68% correlation between the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms expecting the economy to improve ballooned to 47%, the highest level since last year and the percent of firms planning to raise employment rose to 19% near last year&#39;s high. During the last ten years there has been a 63% correlation between these hiring plans and the three month growth in nonfarm payrolls.
An elevated 35% of firms expected higher real sales in 6 months. The net of firms expecting higher earnings this quarter was stable at -7 and sustained the recent sharp improvement.
The percentage of firms raising average selling prices fell to 18%, well below the averages for 2Q &amp; 3Q.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>107.7</td>
<td>103.9</td>
<td>2.3%</td>
<td>101.3</td>
<td>101.2</td>
<td>98.4</td>
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The Small Business Optimism Index for November published by the National Federation of Independent Business (NFIB) surged 3.7% to 107.7 in November, the highest level in twenty years. During the last ten years there has been a 68% [...]

Small Business Optimism At 20 Year High

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The Manpower Employment Outlook Survey indicated continued improvement in U.S. hiring intentions in 1Q05. A seasonally adjusted net 21% of 16,000 employers expect to increase hiring activity and that was the highest level in four years.
Not seasonally adjusted, 24% of employers planned to raise employment versus 20% in 1Q04 while 10% planned to decrease the number of jobs versus 13% a year ago.
Since 1980 there has been a 74% correlation between the Manpower index and the y/y change in non-farm payrolls.
The latest press release from Manpower Inc. covering global employment prospects can be viewed <a href="http://man.client.shareholder.com/ReleaseDetail.cfm?ReleaseID=150464"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM">Manpower Employment Survey</a></th>
<th scope="col">1Q &#39;05</th>
<th scope="col">4Q &#39;04</th>
<th scope="col">1Q &#39;04</th>
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<th scope="col">2003</th>
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<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>21</td>
<td>20</td>
<td>14</td>
<td>19</td>
<td>11</td>
<td>11</td>
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The Manpower Employment Outlook Survey indicated continued improvement in U.S. hiring intentions in 1Q05. A seasonally adjusted net 21% of 16,000 employers expect to increase hiring activity and that was the highest level in four [...]

Manpower Index of US Hiring Intentions Remained Firm

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

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

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

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Winnie Tapasanun

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Existing home sales unexpectedly fell 2.4% m/m (+2.8% y/y) to 4.09 million units (SAAR) in June, the first monthly decline since March, following an upwardly revised 3.7% increase to 4.19 million in May (previously +3.2%; 4.17 mil.), according to the National Association of Realtors (NAR). The Action Economics Forecast Survey had expected June sales of 4.20 million units. Sales remained 36.4% below a high of 6.43 million in January 2022 and 38.0% below a peak of 6.60 million in January 2021. The June decline coincided with a rise in the average 30-year fixed mortgage rate to 6.49% in June, the highest since August 2025, after increasing to 6.44% in May, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales fell 2.4% (+3.3% y/y) to 3.73 million units in June, the first m/m fall in three months, following a 4.1% gain to 3.82 million in May, remaining 34.6% below a high of 5.70 million in January 2022. Sales of condos and co-ops decreased 2.7% (-2.7% y/y) to 360,000 in June, the lowest level since May 2025, after being unchanged m/m for the third successive month at 370,000, remaining 50.7% below a high of 730,000 in January 2022.

Regionally, June existing home sales declined m/m in all regions except the Northeast. Sales in the South dropped 3.6% (+3.8% y/y) to 1.89 million in June, a three-month low, after a 3.2% rise in May, and sales in the Midwest slid 3.0% (+2.1% y/y) to 980,000 following a 7.4% May advance; both posted the first m/m decrease in three months. Sales in the West fell 1.3% (+2.8% y/y) to 740,000, the lowest level since January, after being flat m/m at 750,000 in May. In contrast, sales in the Northeast increased 2.1% (0.0% y/y) to 480,000 after a 4.4% May gain. Notably, the South remained the dominant region, accounting for 46.2% of total U.S. existing home sales.

The median price of all existing homes (NSA) rose 2.2% (1.8% y/y) to $440,600 in June, the fifth consecutive m/m rise, on top of an upwardly revised 3.3% increase to $431,200 in May ($429,300 previously). Prices were 22.1% above a low of $360,800 in January 2023. The median price of an existing single-family home climbed 2.3% (1.8% y/y) to $446,400 in June, the fifth straight m/m increase, after a 3.4% advance to $436,400 in May. The median price of condos and co-ops, up for the sixth time in seven months, grew 0.6% (1.6% y/y) to $380,000 following a 1.0% May gain to $377,800. Regionally, overall prices rose m/m and y/y in June in the Northeast (+5.6%; +3.9% y/y), Midwest (+2.1%; +2.7% y/y), South (+1.0%; +0.9% y/y), and West (+0.8%; +0.9% y/y). All these price series were at their record highs.

Inventories of homes for sale fell m/m in June for the first time since December. The number of existing homes for sale (NSA) declined 0.6% (+1.3% y/y) to 1.56 million units following an upwardly revised 4.7% May rise to 1.57 million (the highest level since November 2019). The supply of homes on the market at the current selling rate (NSA) increased to 4.6 months in June from 4.5 months in May and April, matching the highest level since August 2025. A record low in supply of 1.6 months was in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

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- June sales -2.4% m/m to 4.09 mil., first drop in three mths.; +2.8% y/y, third straight y/y rise.
- Sales m/m down in the South (-3.6%), Midwest (-3.0%), and West (-1.3%); up in the Northeast (+2.1%).
- Sales y/y up in all regions except the Northeast w/ a flat reading.
- Median sales price +2.2% (+1.8% y/y) to $440,600, a record high.
- Unsold inventory -0.6% (+1.3% y/y) to 1.56 mil. units, first m/m decline since Dec.; 4.6 months' supply, highest since Aug. ’25.

U.S. Existing Home Sales Unexpectedly Fall in June from a Five-Month High

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined 2,000 to 215,000 in the week ending July 4, from 217,000 in the week ending June 27, revised from 215,000. The four-week average was 218,750 in the July 4 week, down from 222,500 in the week ending June 27. The Action Economics/Haver Analytics Survey looked for 218,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 8,000 to 1.814 million in the week ending June 27, from 1.806 million in the week ending June 20, revised from 1.814 million. The four-week moving average rose to 1.808 million in the June 27 week from 1.801 million in the June 20 week. The insured unemployment rate was unchanged at 1.2% in the week of June 27. Except for a one-week dip to 1.1% in the week of April 25, the insured unemployment rate has been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending June 20, the highest unemployment rates were in Washington (2.03%), New Jersey (2.11%), Minnesota (2.15%), and Puerto Rico (2.45%). The lowest rates were in South Dakota (0.28%), Florida (0.35%), Alabama and North Carolina (both 0.41%), Louisiana (0.42%), and Arkansas (0.49%). Rates in other notable states include California (1.88%), Pennsylvania (1.63%), Illinois (1.58%), New York (1.52%), and Texas (1.12%). 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 declined by 2,000 to 215,000 in the week ending July 4.
- Continuing claims rose by 8,000 to 1.814 million in the week ending June 27.
- The insured unemployment rate was unchanged at 1.2% in the week of June 27.

U.S. Initial Unemployment Claims Declined in the Week of July 4

Robert Brusca

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The German trade surplus surged in May to €19.1 billion from €14.7 billion in April. Exports rose by 0.9% in May while imports fell by 2.5%, creating a jump in the surplus month-to-month. In April, exports increased by 0.8% while imports rose by 1.1%.

Details on exports and imports lag by one month. In April, exports for motor vehicles and consumer goods declined, while exports of capital goods and other exports rose. On the import side, there were increases in imports ranging from 2.8% to 4.3% month-to-month across capital goods, motor vehicles, and consumer goods, but for the catch-all category ‘other’ imports fell by 2.7% month-to-month.

Flows adjusted for inflation showed an increase in exports of 0.4% in May while real imports fell by 3.3%. In April, real exports were flat while real imports fell by 0.2%.

The sequential behavior of real exports and real imports show independent activity. Imports log a clear weakening, rising 0.1% over 12 months, falling at a 5% annual rate over six months, and then falling at a 10.3% annual rate over three months. On the export side, real exports rose by 2.6% over 12 months, accelerated to a 7.2% annual rate over six months, but over three months have pulled back and fallen at a 1.6% annual rate. However, export growth still exceeds import growth over each of these horizons: 12 months, six months, and three months.

Trade trends paint a darkening picture of the German economy, with imports weak in real terms and trending even weaker, while activity on the export side of the equation pops over 12 months and six months but takes a hit over three months.

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The situation in the Strait of Hormuz continues to muddy the waters for the future. Passage through the strait has been sharply stopped, stabilized, revived, and now is back to being destabilized. That makes the strait a major uncertainty zone; it's hard to tell how these effects are going to play out over the coming months for German trade results and everyone else's. The deterioration of conditions in the Strait of Hormuz is now unknowable because Iran has decided to start shooting at ships, further destabilizing the outlook.

Germany

German Trades Surplus Balloons

Andrew Cates

**Growth Surprises Continue to Underpin Equity Resilience**
Global equity markets have proved remarkably resilient in recent weeks, shrugging off intermittent bouts of geopolitical and policy uncertainty to grind higher. Chart 1 below helps explain why: it tracks the relationship between global growth-versus-inflation surprises and world equity markets, and on that measure the recent run of global growth data has continued to surprise on the upside relative to inflation outturns — a combination that has historically been supportive for risk assets. Whether that resilience persists will depend on whether the growth-surprise advantage evident in the chart below can be sustained in the face of the inflationary pressures explored below.

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**PMIs Confirm a Broadly Solid Global Expansion**
This week's final composite PMI readings for June reinforced the broader impression of resilient global growth. As chart 2 below shows, most major economies posted readings comfortably in expansionary territory, with India continuing to lead the pack and the US not far behind. Even the laggards in the sample are hovering close to the expansion threshold rather than falling decisively below it, suggesting stabilisation rather than outright contraction (and with the UK a notable exception).

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**Inflation Surprises Are Creeping Back, and Bond Yields Are Taking Notice**
The US growth picture painted by Haver's surprise indices broadly echoes the message from the global PMI data. Chart 3 below shows the combined growth-and-inflation surprise index drifting higher this week, and closer inspection suggests growth is doing most of that work, with activity data continuing to outperform expectations. That is, on the face of it, good news. But it has not stopped bond markets from taking notice: short-dated Treasury yields have remained elevated in recent weeks, as stronger growth keeps alive the possibility that the Federal Reserve holds rates higher for longer or even lifts them in coming weeks.

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**Supply Chains Are Tightening** 
Latest data show that global supply chain pressures tightened by less in June than they had the month before, likely reflecting the easing of Middle East tensions through much of the period. Chart 4 below shows that pressures troughed in the middle of last year and have been building gradually since, though June's slower pace of tightening suggests that easing had started to feed through. Still, today's flare-up threatens to undo that improvement, particularly if it affects shipping routes or energy flows through the region once again.

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**Extreme Weather: An Old Supply-Side Risk Returns**
Geopolitics is not the only source of supply-side risk currently in play. Large parts of Europe have been gripped this week by another intense and prolonged heatwave, with temperatures in several major cities running well above seasonal norms. Extreme heat of this kind carries real economic costs: it depresses labour productivity, particularly in outdoor and manufacturing-adjacent sectors, strains electricity grids as air-conditioning demand spikes, and can disrupt agricultural output and river-based transport when water levels fall. Episodes like this have become more frequent in recent years, and while any single heatwave rarely shifts the macro picture on its own, the cumulative effect of more frequent and more severe weather events could start showing up in productivity and inflation data across the advanced economies. It is a reminder that the supply side of the global economy faces structural as well as cyclical challenges, and that climate-related disruption deserves a permanent place alongside geopolitics and demographics in any assessment of medium-term inflation risk.

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**AI Investment: The Other Side of the Supply Equation**
Set against these supply-side headwinds is a genuinely positive structural development: the extraordinary scale of private investment now flowing into artificial intelligence. Chart 6 below shows just how sharply that investment has grown in recent years, reaching a fresh high last year. If even a fraction of that investment translates into genuine productivity gains, it could provide a meaningful long-run offset to the energy, climate and geopolitical constraints highlighted elsewhere in this week's charts. The scale of the bet now being placed on AI is large enough that it is beginning to show up in aggregate investment and capital expenditure data across the advanced economies, and it is likely to remain one of the defining structural themes shaping the global growth outlook over the remainder of this decade.

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Global markets head into this week’s closing stages digesting a mixed set of signals. Last week's US non-farm payrolls report undershot expectations, adding to questions about the durability of the US labour market even as broader activity data have continued to hold up well. Compounding that picture, news broke today of renewed instability in the Middle East, reintroducing a geopolitical risk premium into markets just as investors had begun to look past it. Global equity markets have nonetheless remained resilient, continuing to track the broadly encouraging tone of incoming activity data (chart 1). That resilience was reinforced by a solid set of global PMIs across most major economies over the past few days (chart 2). Haver's surprise indices tell a similar story of positive growth momentum in the US, but with an important caveat: incoming inflation data have also been surprising to the upside, driven largely by higher oil prices (chart 3). These inflation risks could persist moreover, as global supply chain pressures have picked up in recent months and today's flare-up in the Middle East threatens to add further strain (chart 4). The world economy remains vulnerable to other supply-side shocks too, such as the extreme heat gripping much of Europe this week (chart 5). Still, on the other side of the ledger the enormous scale of investment now flowing into artificial intelligence could be a genuine source of supply-side potential (chart 6).

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Charts of the Week: Growth Holds Firm

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Mortgage applications dropped 2.2% w/w (-5.4% y/y) in the week ending July 3, following no change in the week ending June 26, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house edged down 0.6% w/w (-6.3% y/y) in the latest week, after rising 0.5% w/w (3.2% y/y) in the June 26 week.  Applications for loan refinancing dropped 4.1% w/w (-4.2% y/y) in the week ending July 3, after declining 0.7% w/w (+9.1% y/y) in the June 26 week.

The effective interest rate on a 30-year fixed-rate loan rose 1bp to 6.77% in the week ending July 3 from 6.76% in the week ending June 26. The rate on 15-year fixed-rate mortgages edged down 2bps to 6.17% in the July 3 week from 6.19% in the June 26 week. The 30-year Jumbo rate edged down 1bp to 6.62% in the latest week from 6.63% in the June 26 week. The rate on a 5-year ARM rose 5bps to 6.19% in the July 3 week from 6.14% in the June 26 week.

The share of applications for refinancing an existing loan declined to 40.6% of total applications in the week of July 3 from 41.4% in the June 26 week. The adjustable-rate mortgage (ARM) share of activity edged up to 7.8% in the July 3 week from 7.6% in the June 26 week.

The average size of a mortgage declined 0.4% w/w (+1.3% y/y) to $391,500 in the week ending July 3, after rising 1.1% w/w (0.4% y/y) to $393,200 in the week ending June 26. The average size of a purchase loan declined 1.0% w/w (+4.3% y/y) to $451,000 in the latest week, after rising 1.2% w/w (2.7% y/y) to $455,600 in the June 26 week. The average size of a loan to refinance a mortgage edged down 0.1% w/w (-3.9% y/y) to $304,600 in the week ending July 3, after rising 0.5% w/w (-2.8% y/y) to $304,900 in the June 26 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.

- Both applications for loans to purchase and applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 1bp to 6.77%. 
- Average loan size edged down.

Economy in Brief

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Japan "TANKAN" Eases in Q4, but Still Better Than Forecast

Mortgage Applications Slip

Empire State Index Jumped

OECD Leaders Declined For Third Month

OECD Leaders Declined For Third Month

FOMC Raised Funds Rate to 2.25%

Small Business Optimism At 20 Year High

Manpower Index of US Hiring Intentions Remained Firm