Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506b.jpg" width="353">
Initial claims for jobless insurance fell 25,000 last week to 315,000, the lowest level since October 2000. Consensus expectations had been for a decline to 338,000 claims. Claims during the prior week were revised up slightly.
The 4-week moving average of initial claims fell slightly to 343,250 (-21.1% y/y).
Continuing claims for unemployment insurance plunged 69,000 (2.3%) and the prior week&#39;s slight increase was revised to a slight decline.
The insured rate of unemployment fell to 2.3% from 2.4%. This unemployment rate averaged 2.8% during 2002 and 2003.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 5/01/04</th>
<th scope="col">4/24/04</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>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 315</td>
<td>340</td>
<td>-25.5%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,945</td>
<td>-19.0%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
1Q04 U.S. Productivity Growth Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506c.jpg" width="353">
Non-farm labor productivity grew 3.5% last quarter, slightly firmer than Consensus expectations for 3.0% growth. Year-to-year growth in productivity of 5.4% remained near the highest level since the early 1960s.
Output rose 4.9% (5.8% y/y) and hours worked by all persons (employment times hours) rose 1.3% (0.4% y/y).
Unit labor costs grew a slight 0.5% as compensation growth rose to 4.0% from 2.5% in 4Q. It was the first rise in unit labor costs since 1Q03.
Productivity in the manufacturing sector grew 3.1% (5.3% y/y), the weakest quarterly growth rate since 2Q03. Unit labor costs in the factory sector rose 2.0% (-0.4% y/y), the first gain since 2Q03.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col"> 1Q &#39;04 (Prelim)</th>
<th scope="col"> 4Q &#39;03 (Final)</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">Output per Hour</td>
<td>3.5%</td>
<td>2.5%</td>
<td>5.4%</td>
<td>4.4%</td>
<td>4.9%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>4.0%</td>
<td>2.5%</td>
<td>4.0%</td>
<td>3.4%</td>
<td>2.3%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-1.3%</td>
<td>-0.9%</td>
<td>-2.5%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Disappointing 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506a.jpg" width="353">
Unit sales of light vehicles fell 1.6% (0.0% y/y) in April to 16.41M following m/m gains during the prior two months. Consensus expectations were for sales of 16.7M.
Car sales slipped 4.7% to 7.36M to the lowest level since January. Sales of light trucks firmed 1.1% following a very slight March gain.
Domestic light vehicle sales fell 1.6% m/m to 13.10M (+0.2% y/y). Imported vehicle sales edged 1.5% lower to 3.31M (-0.6% y/y).
Imports&#39; share of the US market for new vehicles in April held at 20.2% versus 19.7% during 2003.

<table border="0" cellspacing="0" width="100%">
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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"> April</th>
<th scope="col">Mar</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</td>
<td>16.41</td>
<td>16.68</td>
<td>0.0%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.36</td>
<td>7.72</td>
<td>-2.6%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.06</td>
<td>8.96</td>
<td>2.2%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance fell 25,000 last week to 315,000, the lowest level since October 2000. Consensus expectations had been for a decline to 338,000 claims. Claims during the prior week were revised up slightly. The [...]

Jobless Claims Lowest Since October 2000

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/040505e.jpg" width="353">
The Euro-Zone Purchasing Managers Index for the service industries remained basically steady in April at 54.54, compared with March&#39;s 54.40. Employment gained, notably, and new business edged higher. But expectations eroded, perhaps a reflection of rising prices. These international PMI surveys are conducted by NTC-Research for Reuters, Inc.
Among the individual countries, Spain rebounded, although it did not recoup fully from March&#39;s terror attack-related drop. Activity in Germany and Italy showed modest gains, but lost some ground in France.
Separately, the service sector in Russia advanced in April to 59.43 from 58.67 in March. There were modest improvements in all the components: employment, new business, outstanding business and expectations. At the same time, this gain still left the index, which is compiled by Moscow Narodny Bank, well below the mid-60s range that prevailed last autumn.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers Index Percent (&gt;50 = expansion;&nbsp; &lt;50 = contraction)</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Apr 2003</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">Euro Zone Total</td>
<td>54.54</td>
<td>54.40</td>
<td>56.22</td>
<td>47.68</td>
<td>56.36</td>
<td>51.58</td>
<td>51.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>49.53</td>
<td>49.26</td>
<td>48.17</td>
<td>45.75</td>
<td>46.91</td>
<td>49.35</td>
<td>52.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Business</td>
<td>53.60</td>
<td>53.58</td>
<td>55.47</td>
<td>46.38</td>
<td>50.85</td>
<td>51.24</td>
<td>50.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Expectations</td>
<td>64.24</td>
<td>66.07</td>
<td>69.79</td>
<td>62.57</td>
<td>65.09</td>
<td>65.74</td>
<td>62.08</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>53.30</td>
<td>53.16</td>
<td>54.14</td>
<td>44.60</td>
<td>48.49</td>
<td>48.62</td>
<td>48.87</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>55.04</td>
<td>55.86</td>
<td>58.58</td>
<td>51.12</td>
<td>63.99</td>
<td>54.71</td>
<td>54.26</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>55.83</td>
<td>55.18</td>
<td>56.12</td>
<td>49.78</td>
<td>53.34</td>
<td>52.97</td>
<td>53.91</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>55.67</td>
<td>53.90</td>
<td>59.09</td>
<td>46.92</td>
<td>52.51</td>
<td>52.57</td>
<td>51.64</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Russia</td>
<td>59.43</td>
<td>55.84</td>
<td>56.96</td>
<td>58.90</td>
<td>61.84</td>
<td>58.08</td>
<td>61.20</td>
</tr>
</tbody>
</table>
</body>
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The Euro-Zone Purchasing Managers Index for the service industries remained basically steady in April at 54.54, compared with March's 54.40. Employment gained, notably, and new business edged higher. But expectations eroded, perhaps a [...]

Growth Steady in Euro-Zone Service Sector after Slowing in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505d.jpg" width="353">
The Business Activity Index for the non-manufacturing sector reported by the Institute for Supply Management rose to another series&#39; high of 68.4 in April. Consensus expectations had been for a roughly unchanged reading of 65.0 versus 65.8 in March.
Since the series&#39; inception in 1997 there has been a 59% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
The employment index strengthened to 54.5 as 21% of firms reported higher employment in April, up from 12% in 2002 and 17% last year. April was the highest employment reading since October 2000 and the ninth month in ten above 50.
Since the series&#39; inception in 1997 there has been a 62% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing and construction industries.
The new orders index improved to 65.6, near the series&#39; high, versus 62.8 in March.
Business activity for the non-manufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index again was strong and rose to 68.6 from 65.7 in March. It was the second highest reading on record.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>68.4</td>
<td>65.8</td>
<td>53.6</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>68.6</td>
<td>65.7</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>
Mortgage Applications Up As Interest Rates Moved Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 5, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 4.4% (-37.4% y/y) last week as borrowers acted ahead of potentially more significant increases in interest rates.
Purchase applications jumped 4.1% (+16.0% y/y) following a 6.8% rise the week earlier. Purchase applications for the month of April rose 3.3% versus the March average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 4.7% (-58.6% y/y) following five weeks of sharp decline.
The effective interest rate on a conventional 30-Year mortgage rose further to 6.38% from 6.27% the week prior. The average for April was 6.16% versus 5.65% averaged in March. The effective rate on a 15-year mortgage rose to 5.75% from 5.63% the week prior. The average for April was 5.54% versus 5.00% in March.
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>.

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</table>
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<colgroup><col><col><col><col><col></colgroup>
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<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">04/30/04</th>
<th scope="col">04/23/04</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>780.9</td>
<td>748.0</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>482.5</td>
<td>463.5</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,516.0</td>
<td>2,403.0</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>


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The Business Activity Index for the non-manufacturing sector reported by the Institute for Supply Management rose to another series' high of 68.4 in April. Consensus expectations had been for a roughly unchanged reading of 65.0 versus [...]

ISM Non-Manufacturing Index Reached Another New High

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505b.jpg" width="353">
The monthly household survey conducted by the Instiute National de la Statistique et Etudes Economic (INSEE) showed a slight improvement in French consumer confidence in April, with the overall balance of opinion rising from a minus 22 to a minus 20.
The survey, however, gives little encouragement that consumer spending is about to provide stronger support to the economy. In spite of a sharp drop in those expecting an increase in unemployment and improved outlooks for their personal finances and living standards, consumers indicated that they were less likely to make major purchases in April than they were in March.
In its press release INSEE announced a change in methodology, effective January 2004, to harmonize its measure with other European economic surveys. The release provided only six months of data that used the new methodology. These data are shown in the following table and in the attached chart, they data have been linked to data based on the old methodology.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INSEE Household Survey &nbsp;(% balance)</th>
<th scope="col">Apr 04</th>
<th scope="col">Mar 04</th>
<th scope="col">Feb 04</th>
<th scope="col">Jan 04</th>
<th scope="col">Dec 03</th>
<th scope="col">Nov 03</th>
<th scope="col">M/M % chg</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Summary Indicator</td>
<td>-20</td>
<td>-22</td>
<td>-23</td>
<td>-22</td>
<td>-25</td>
<td>-24</td>
<td>2</td>
</tr>
<tr>
<td class="firstcol">Personal Financial Situation Outlook</td>
<td>4</td>
<td>1</td>
<td>0</td>
<td>-2</td>
<td>-5</td>
<td>-3</td>
<td>3</td>
</tr>
<tr class="odd">
<td class="firstcol">Living Standard Outlook</td>
<td>-22</td>
<td>-28</td>
<td>-26</td>
<td>-27</td>
<td>-32</td>
<td>-23</td>
<td>6</td>
</tr>
<tr>
<td class="firstcol">Unemployment</td>
<td>39</td>
<td>50</td>
<td>50</td>
<td>38</td>
<td>52</td>
<td>48&nbsp;</td>
<td>-11</td>
</tr>
<tr class="odd">
<td class="firstcol">Likelihood of Major Purchases</td>
<td>-12</td>
<td>-10</td>
<td>-15</td>
<td>-10</td>
<td>-18</td>
<td>-19&nbsp;</td>
<td>-2</td>
</tr>
<tr>
<td class="firstcol">Prices Outlook</td>
<td>-45</td>
<td>-44</td>
<td>-39</td>
<td>-38</td>
<td>-38</td>
<td>&nbsp;&nbsp;-39</td>
<td>-1</td>
</tr>
</tbody>
</table>
</body>
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The monthly household survey conducted by the Instiute National de la Statistique et Etudes Economic (INSEE) showed a slight improvement in French consumer confidence in April, with the overall balance of opinion rising from a minus [...]

French Consumer Confidence Up Slightly in April

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040504d.jpg" width="353">
As expected, the Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.
The decision was unanimous.
The press release which accompanied the Fed&#39;s action indicated that &quot;output is continuing to expand at a solid rate and hiring appears to have picked up.&quot;
Regarding inflation and future policy action the Fed acknowledged that inflation had &quot;moved somewhat higher&quot; and that future &quot;policy accommodation can be removed at a pace that is likely to be measured.&quot;
<a href="http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040504/default.htm">Here</a> is the complete text of the Fed&#39;s latest press release.
&quot;How Do Data Revisions Affect the Evaluation and Conduct of Monetary Policy?&quot; from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/econrev/Pdf/1Q04kozi.pdf">here</a>.

Chain Store Sales Jumped Last Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 4, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040504a.jpg" width="353">
Chain store sales jumped 1.5% higher last week following a 0.5% slip the prior period, according to the International Council of Shopping Centers (ICSC)-UBS survey.
For the full month, sales in April rose 0.4% following a 0.1% dip during March.
During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
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<thead>
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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">05/01/04</th>
<th scope="col">04/24/04</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>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>444.7</td>
<td>438.3</td>
<td>6.5%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Factory Orders Surged, Inventories Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 4, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040504c.jpg" width="353">
Factory orders surged 4.3% m/m in March, nearly twice the Consensus expectation for a 2.3% rise. The gain was driven by a 5.0% increase in durable goods orders which was revised up from the advance report of a 3.4% rise.
Strength was quite apparent in the capital good sector. The advance report of a 2.1% rise in nondefense capital goods orders was revised and doubled. Excluding aircraft &amp; parts the rise in advance orders was nearly doubled to 4.5% (12.4% y/y). Much of the upward revision stemmed from orders for computers &amp; electronic products which were revised to show a 2.5% (16.3% y/y) gain versus the advance report of a 0.2% uptick.
Non-durable goods orders (which equal shipments) jumped 3.5% (6.2% y/y) and recouped a 1.8% February decline. Higher petroleum shipments led the March gain but shipments of apparel, paper and chemicals also were quite strong.
Factory inventories rose 0.3% in March and the February increase was revised up. The swing to inventory accumulation from decumulation has been scattered across industries, although the furniture and automobile industries still lag.
Factory shipments jumped 3.8%. Excluding the transportation sector shipments rose 4.2% (9.1% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM"> Factory Survey</a> (NAICS)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Inventories</td>
<td>0.3%</td>
<td>0.6%</td>
<td>-0.2%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>4.3%</td>
<td>1.1%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>-1.9%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>3.8%</td>
<td>-0.1%</td>
<td>9.2%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.2%</td>
<td>0.9%</td>
<td>5.0%</td>
<td>4.2%</td>
<td>-6.1%</td>
<td>-5.9%</td>
</tr>
</tbody>
</table>
Challenger Layoffs Ticked Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 4, 2004


<img align="left" border="0" height="286" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040504b.jpg" width="353">
Challenger, Gray &amp; Christmas reported that announced job cuts rose 6.1% to 72,184 in April following m/m declines of 11.9% and 34.3% during the prior two periods.
The three month moving average of job cut announcements fell to 72,489 (-41.2% y/y). During the last ten years there has been an 83% (inverse) correlation between the three month average level of announced job cuts and the y/y percent change payroll employment.
The m/m increase in layoffs was scattered across industries but notable in the automotive, computer &amp; chemical industries.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.

<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/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">April</th>
<th scope="col">March</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>
<td class="firstcol">Announced Job Cuts</td>
<td>72,184</td>
<td>68,034</td>
<td>-50.7%</td>
<td>1,236,426</td>
<td>1,431,052</td>
<td>1,956,876</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">

</table>
</body>
</html>

As expected, the Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%. The decision was unanimous. The press release which accompanied the Fed's action indicated [...]

FOMC Left Rates Unchanged, Language Altered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040503c.jpg" width="353">
Purchasing managers in the Euro-12 reported continued growth in manufacturing in April. (Diffusion indexes that range from 0% to 100% based on surveys are complied for Reuters Group Plc by NTC Research Ltd. A percentage over 50% indicates expansion while on below 50% indicates a contraction.)
The overall Euro zone index, which began to rise in the last half of 2003, rose 1.3% from March to 54.0% in April, the highest level seen since December, 2000 and above the consensus of 53.3% reported by the Financial Times. Among the individual countries for which data are available, Germany and the Netherlands showed the greatest month-to-month increases of 2.4% and 2.9%, respectively. More modest increases were reported for Spain and Greece, while a decline of 1.4% was reported for Austria.
Much of the strength in manufacturing is due to foreign demand as shown in the attached chart. (Since data on export orders for the Euro zone are not available, we have used export orders for Germany as a proxy for the total Euro Zone.) Export orders in the individual countries have been rising sharply, reflecting growth in demand from the U. S. and Asia, particularly China. The decline in the euro since its high on February 18, has also contributed to the rise in export orders.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers &nbsp;Survey (%)</th>
<th scope="col">Apr 04</th>
<th scope="col">Mar 04</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro zone</td>
<td>53.95</td>
<td>53.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>53.53</td>
<td>53.24</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>55.34</td>
<td>54.07</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Italy</td>
<td>52.48</td>
<td>52.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Netherlands</td>
<td>53.35</td>
<td>51.85</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Spain</td>
<td>53.59</td>
<td>52.92</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Greece</td>
<td>54.48</td>
<td>53.83</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Austria</td>
<td>53.92</td>
<td>54.70</td>
</tr>
</tbody>
</table>
</body>
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Purchasing managers in the Euro-12 reported continued growth in manufacturing in April. (Diffusion indexes that range from 0% to 100% based on surveys are complied for Reuters Group Plc by NTC Research Ltd. A percentage over 50% [...]

Rise in Manufacturing in the Euro Zone Beats Consensus as Export Orders Climb

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040503b.jpg" width="353">
The Purchasing Managers&#146; Composite Index (PMI) for April released by the Institute of Supply Management was little changed at 62.4 versus 62.5 in March. Consensus expectations were for 62.5.
During the last twenty years there has been a 71% correlation between the level of the Composite Index and the three month growth in factory sector industrial production. There has been a 56% correlation between the level of the Composite Index and quarterly growth in real GDP.
Patterns amongst the component series were mixed. Production jumped to 67.0 vs. 65.5 in March and from 48.8 a year ago while employment rose to 57.8, the highest level since December of 1987. These gains were offset by a lower orders index (65.0 vs. 65.7), a slightly quicker pace of vendor deliveries (67.1 vs. 67.9) and a lower inventory index which fell to the lowest level since October (44.8 vs.48.3).
The prices paid index strengthened further to 88.0, the highest level since July 1979.

<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"> April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;03</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">Composite Index</td>
<td>62.4</td>
<td>62.5</td>
<td>46.2</td>
<td>53.3</td>
<td>52.4</td>
<td>43.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>65.0</td>
<td>65.7</td>
<td>45.9</td>
<td>58.1</td>
<td>56.6</td>
<td>46.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>88.0</td>
<td>86.0</td>
<td>63.5</td>
<td>59.6</td>
<td>57.6</td>
<td>42.9</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Jumped on Public Sector Surge 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 3, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040503a.jpg" width="353">
The total value of construction put in place jumped 1.5% in March following an upwardly revised 0.4% gain in February. A 0.5% rise had been the Consensus expectation.
A 5.2% jump in public construction led the March gain as spending on highways &amp; streets (nearly one third of the value of public constructions spending) surged 9.8% (13.7% y/y).Transportation spending also surged 8.5% (6.0% y/y) and spending on power ballooned 15.6% (63.8% y/y).
Private residential building activity rose 0.7% following a modest decline in February as multi-family home building jumped 2.7% (8.2% y/y) and prior months&#39; figures were revised up. New single family building rose 1.1% (19.9% y/y).
Nonresidential building fell 0.2% (-2.9% y/y) following a 1.4% gain in February.
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"> Mar</th>
<th scope="col">Feb</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</td>
<td>1.5%</td>
<td>0.4%</td>
<td>7.9%</td>
<td>4.0%</td>
<td>1.1%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.4%</td>
<td>0.4%</td>
<td>8.0%</td>
<td>4.6%</td>
<td>-0.2%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>0.7%</td>
<td>-0.0%</td>
<td>13.4%</td>
<td>10.1%</td>
<td>8.6%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>-2.9%</td>
<td>-5.5%</td>
<td>-13.0%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>5.2%</td>
<td>0.4%</td>
<td>7.4%</td>
<td>2.1%</td>
<td>5.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Purchasing Managers Composite Index (PMI) for April released by the Institute of Supply Management was little changed at 62.4 versus 62.5 in March. Consensus expectations were for 62.5. During the last twenty years there has been [...]

ISM Factory Index About Unchanged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040430d.jpg" width="353">
A couple of weeks ago, we commented on Japanese industry employment data that showed some improvement through February, although the gain was narrowly focused on the service sector. Today, the comprehensive labor force survey for March, along with separate wage and hour data, shows a similar pattern of scattered advance.
Improvement in the unemployment picture is unequivocal. The rate dropped from 5.0% in February to 4.7% in March, the lowest since March 2001. This accompanied a rise in total employment of 0.3% from February. However, while unemployment rate is well down from its peak of 5.5% in early 2003, employment seems not to have much of a growth trend in place yet.
A good sign of promise is contained in the hours data. This is a separate survey of companies with 5 or more employees conducted by the Ministry of Health, Labor and Welfare. Hours worked at these companies surged in March by 4.2% to 102.2, the highest level since May 1997, nearly seven years ago. But other results of that survey are not as strong, as cash earnings for March actually fell. This could suggest that jobs growth is in lower-paying sectors or positions.
Thus, despite the better look of some of the labor market data, household spending has yet to respond definitively. In data for March also released today, workers&#39; household expenditures decreased 6.7%, more than erasing the gains in January and February. Several of these measures, then -- employment, earnings and spending -- look to be forming a base toward expansion, but are not yet climbing with any resolve.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Selected Indicators for Japan</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Jan 2004</th>
<th scope="col">Year Ago</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">Employment* (millions)&nbsp;</td>
<td>63.40</td>
<td>63.21</td>
<td>63.22</td>
<td>63.28</td>
<td>63.17</td>
<td>63.30</td>
<td>64.10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>+0.3</td>
<td>-0.0</td>
<td>+0.1</td>
<td>+0.2</td>
<td>-0.2</td>
<td>-1.2</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate* (%)</td>
<td>4.7</td>
<td>5.0</td>
<td>5.0</td>
<td>5.4</td>
<td>5.3</td>
<td>5.4</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">Hours Worked** (2000=100)</td>
<td>102.2</td>
<td>98.1</td>
<td>99.4</td>
<td>97.8</td>
<td>98.0</td>
<td>98.0</td>
<td>99.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Cash Earnings** (2000=100)</td>
<td>93.5</td>
<td>96.5</td>
<td>96.2</td>
<td>96.0</td>
<td>95.2</td>
<td>96.0</td>
<td>98.7</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Workers&#39; Household Spending* (2000=100)</td>
<td>94.4</td>
<td>101.2</td>
<td>98.4</td>
<td>95.0</td>
<td>95.6</td>
<td>97.0</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-6.7</td>
<td>2.8</td>
<td>4.1</td>
<td>-0.6</td>
<td>-1.5</td>
<td>-1.3</td>
<td>-1.7</td>
</tr>
</tbody>
</table>
</body>
</html>

A couple of weeks ago, we commented on Japanese industry employment data that showed some improvement through February, although the gain was narrowly focused on the service sector. Today, the comprehensive labor force survey for [...]

More Japanese Labor Data Extend Mixed Improvement

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

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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.

260709Z1.jpg

**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).

260709Z2.jpg

**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.

260709Z3.jpg

**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.

260709Z4.jpg

**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

Robert Brusca

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Manufacturing output in the countries of the European Monetary Union continues to underperform. The median change for the 11 countries reporting on the table is a 0.5% decline in May following a 0.3% increase in April. However, only 41.7% of the reporters are accelerating in May, compared to 25% in April, although in March over half of the reporters had showed some acceleration, with output at 61.5%.

In May, of these eleven early reporters, seven showed month-to-month declines in output. This compares to four showing declines in April and four showing declines in March.

**Sequential trends**
Over 12 months, output is declining in four of these eleven countries: Germany, Luxembourg, Ireland, and Portugal. Over six months, output declines in five of the eleven countries. Over three months, output declines in four of the eleven countries. Over these broader sequential periods, output is increasing in most cases; only one country, Ireland, shows consistent declines in output over three months, six months, and 12 months. However, among EMU countries, only Italy shows output expanding on all three timelines, although Sweden, an EU member country, also shows output increasing in all three periods.

Amid the output weakness in May, the quarter-to-date calculation for industrial production growth is also broadly weak. In May, seven of the eleven quarter-to-date changes in industrial production are negative. Positive results, increases in the quarter-to-date, are registered by Germany, Luxembourg, Greece, and Portugal.

The ranking of the year-over-year growth rates shows seven countries with output growth rate rankings below 50%, marking them as below their respective medians. The comparisons for output growth are taken back to 2006, a period of about 20 years.

Four EMU countries rank above their twenty-year medians: France, Italy, Luxembourg, and Greece.

The snapshot of industry in the monetary union is consistent, showing little momentum, little strength, and relatively low rankings for current growth rates; only a minority of reporters show an acceleration in growth in May compared to April. With the situation in the Strait of Hormuz deteriorating again, the outlook for industrial production has to remain guarded.

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Europe

Industrial Sector Remains Under Pressure in EMU

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

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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.