Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040126a.jpg" width="353">
Sales of existing single family homes reported by the National Association of Realtors rose 6.9% m/m in December. The rise to 6.47M. erased much of the prior two months&#39; decline from the record high in September. Consensus expectations had been for a smaller increase versus November that was little revised.
The figures reflect closings of home sales in earlier months.
Sales rose across the nation. In the Northeast sales rose 2.9% (+9.1% y/y). In the Midwest sales gained 9.4% (+3.7% y/y). Sales in the South rose 5.3% (+10.7% y/y) and in the West sales added 7.9% (+10.6% y/y).
The median price of an existing home rose 1.9% m/m to $173,200 (+6.7% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/DecEHS04?OpenDocument">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM"> Existing Home Sales (000, AR)</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Existing Single-Family</td>
<td>&nbsp;6,470</td>
<td>&nbsp;6,050</td>
<td>8.9%</td>
<td>6,102</td>
<td>5,595</td>
<td>5,292</td>
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Sales of existing single family homes reported by the National Association of Realtors rose 6.9% m/m in December. The rise to 6.47M. erased much of the prior two months' decline from the record high in September. Consensus [...]

Existing Home Sales Up, 2003 Sets Record

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040123a.jpg" width="353">
Prices of industrial metals surged as industrial activity strengthened recently. During the past year, the JoC-ECRI index of metals prices jumped by one-third reflecting a 90% rise in steel scrap prices, a 46% rise in copper prices, a 27% rise in tin prices and a 15% gain in aluminum prices.
During the last twenty years there has been a 45% correlation between the y/y change in metals prices as measured by the Journal of Commerce/ECRI index and the change in factory sector industrial production.
The overall JoC-ECRI index rose 24% during the past year. Petroleum products prices rose 11% as West Texas Intermediate crude oil briefly topped $36.00/bbl. Prices for textiles rose 12% during the past year as cotton prices surged 41%.
Elsewhere, gold prices briefly topped $425/oz. (+20% y/y) earlier this month before a recent drop. Silver is up nearly one third the past year as is platinum.
Steer prices, which neared $110/cwt, retraced a portion of their earlier strength.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D304/@D304.HTM"> Commodity Prices</a></th>
<th scope="col">1/22/04</th>
<th scope="col">12/31/03</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">Gold: Handy &amp; Harman Base Price ($/oz.)</td>
<td>$409.25</td>
<td>$416.70</td>
<td>12.2%</td>
<td>$363.13</td>
<td>$310.05</td>
<td>$271.06</td>
</tr>
<tr>
<td class="firstcol">Stainless Steel Scrap ($/gross ton)</td>
<td>$1,495.00</td>
<td>$1,265.00</td>
<td>90.4%</td>
<td>$953.75</td>
<td>$717.10</td>
<td>$650.52</td>
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<td class="firstcol">Copper: High Grade (COMEX, $/Lb.)</td>
<td>$1.12</td>
<td>$1.04</td>
<td>45.7%</td>
<td>$0.81</td>
<td>$0.72</td>
<td>$0.73</td>
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<td class="firstcol">Steers: Cash Price: Texas-Oklahoma Avg. ($/cwt)</td>
<td>$85.97</td>
<td>$75.70</td>
<td>28.0%</td>
<td>$83.01</td>
<td>$66.54</td>
<td>$71.86</td>
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Prices of industrial metals surged as industrial activity strengthened recently. During the past year, the JoC-ECRI index of metals prices jumped by one-third reflecting a 90% rise in steel scrap prices, a 46% rise in copper prices, a [...]

Metals Lead Gains in Commodity Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040122a.jpg" width="353">
Initial claims for jobless insurance edged 1,000 lower last week to 341,000. The prior week&#39;s level was revised down slightly. Consensus expectations had been for claims of 340,000.
The latest claims figure covers the survey period for January non-farm payrolls. Claims were down 14,000 (3.9%) from the December survey period.
The four-week moving average of initial claims fell to 344,500 (-11.2% y/y).
Continuing claims for unemployment insurance rose 17,000 but the prior week&#39;s decline was revised deeper to 152,000.
The insured rate of unemployment was stable at 2.5%, the lowest level since September 2001.

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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">01/17/04</th>
<th scope="col">01/10/04</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">Initial Claims</td>
<td>341.0</td>
<td>342.0</td>
<td>-12.1%</td>
<td>403</td>
<td>404</td>
<td>406</td>
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<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,143</td>
<td>-6.5%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
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Leading Indicators Up for Ninth Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 22, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040122b.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board rose an expected 0.2% in December, the ninth consecutive monthly increase. November&#39;s gain was revised to 0.2% from 0.3%. Earlier months&#39; data also were revised modestly.
One month gains amongst the leaders&#39; component series surged to 75% and over a six-month span 90% of the series rose.
Improved vendor performance, higher stock prices and higher building permits had the largest positive contributions to the December gain in the leading index but a lower money supply had a meaningful negative contribution for the fourth consecutive month.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose again with the gain driven by higher real manufacturing &amp; trade sales and higher real income.
The ratio of coincident-to-lagging indicators was unchanged at a record high level. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
Comments on the US economic outlook for 2004 from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=A4B3098B-CAB8-09EC-46849FDE5181D07C&amp;method=display"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM"> Business Cycle Indicators</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Leading</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>-0.8%</td>
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<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.3%</td>
<td>0.4%</td>
<td>-0.5%</td>
<td>-0.5%</td>
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<td class="firstcol">Lagging</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-2.2%</td>
<td>-2.1%</td>
<td>-2.8%</td>
<td>-1.4%</td>
</tr>
</tbody>
</table>
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Initial claims for jobless insurance edged 1,000 lower last week to 341,000. The prior week's level was revised down slightly. Consensus expectations had been for claims of 340,000. The latest claims figure covers the survey period [...]

Jobless Insurance Claims Dip

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040121b.jpg" width="353">
Housing starts added another 1.7% in December, rising to the highest level since February 1984. Consensus forecasts had been for a moderate decline versus November which was revised down.
For the year, 2003 was the strongest for housing starts since 1978.
Single family starts fell a slight 0.6% last month following a downwardly revised gain in November. Single family starts in 2003 were a record 1,501 million, up 10.0% y/y.
Multi-family starts jumped 11.6% in December following a 12.8% gain the prior month. Multi-family starts last year were the highest since 1989.
Housing starts fell m/m in the Northeast (11.1% y/y) and in the Midwest (2.6% y/y). Starts were up m/m in the South (21.3% y/y) and in the West (16.0% y/y).
Building permits rose 3.3% m/m and were up 4.5% for 2003.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col"> Dec</th>
<th scope="col">Nov</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">Total</td>
<td>2,088</td>
<td>2,054</td>
<td>15.0%</td>
<td>1,850</td>
<td>1,711</td>
<td>1,601</td>
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<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,664</td>
<td>1,674</td>
<td>13.8%</td>
<td>1,501</td>
<td>1,364</td>
<td>1,272</td>
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<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>424</td>
<td>389</td>
<td>20.1%</td>
<td>349</td>
<td>347</td>
<td>330</td>
</tr>
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<td class="firstcol">Building Permits</td>
<td>1,924</td>
<td>1,863</td>
<td>0.9%</td>
<td>1,829</td>
<td>1,750</td>
<td>1,637</td>
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</tbody>
</table>
Housing Market Index Down Slightly in January 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 21, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040121a.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index fell moderately in January to 68 (+6.3% y/y).
During the last fifteen years there has been a 79% correlation between the y/y change in the NAHB index and the change in single family housing starts.
The index of current market conditions for home sales fell 3.9% m/m to 74 (+7.2% y/y), the lowest level since September.
The index which measures expected home sales in six months also fell to the lowest level since July.
Traffic of prospective buyers fell moderately.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the National Association of Home Builders using this <a href="http://www.nahb.org">link</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM"> Nat&#39;l Association of Home Builders</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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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</thead>
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<td class="firstcol">Composite Housing Market Index</td>
<td>68</td>
<td>70</td>
<td>64</td>
<td>64</td>
<td>61</td>
<td>56</td>
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</tbody>
</table>
Mortgage Applications Jumped Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 21, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040121c.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association surged 30.4% last week (-16.7% y/y) to the highest level in since early August.
The surge was driven by a 51.5% w/w spike in applications to refinance (-38.8% y/y).
Analysis titled &quot;After the Refinancing Boom: Will Consumers Scale Back Their Spending?&quot; from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci9-12.html">here</a>.
The effective interest rate on a conventional 30-Year mortgage fell slightly to 5.82% from 5.84% the prior week and versus 5.97% averaged last year. The effective rate on a 15-year mortgage fell to 5.17%.
Purchase applications also were strong last week and rose 12.5% (+41.2% y/y).
During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
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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<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">1/16/04</th>
<th scope="col">1/09/03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Total Market Index</td>
<td>916.1</td>
<td>702.6</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>501.6</td>
<td>445.9</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,327.3</td>
<td>2,195.7</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
Chain Store Sales Off For Third Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 21, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040121d.jpg" width="353">
Chain store sales fell 0.7% last week and were down for the third consecutive period according to the ICSC-UBS survey.
Because of a strong end to December, the level of sales so far in January are up 1.6% versus last month.
During the last five years there has been a 61% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto 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.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS</a><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> (SA, 1977=100)</a></th>
<th scope="col">01/17/04</th>
<th scope="col">01/10/04</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">Total Weekly Retail Chain Store Sales</td>
<td>426.4</td>
<td>429.2</td>
<td>3.9%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
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Housing starts added another 1.7% in December, rising to the highest level since February 1984. Consensus forecasts had been for a moderate decline versus November which was revised down. For the year, 2003 was the strongest for [...]

Housing Starts Strong

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040120b.jpg" width="353">
Business confidence is beginning to falter in Germany and in other countries of the Euro-zone. Earlier this month, it was reported that business confidence in December, while it improved slightly in the construction sector, declined in the industrial and retail sectors of the Euro-zone, as a whole.
The latest indicator of confidence is the ZEW measure of sentiment among German investors and analysts, just released. The measure shows a drop to 72.9 in January from 73.4 in December. The ZEW measure frequently foreshadows movements in the broader business measure of business expectations published by the IFO (Institute for Economic Research, Munich).
The rise in the Euro has, to date, not had much impact on actual economic activity, but it has raised fears of future damage to exports and the recovery itself. It may be these fears that are beginning to erode confidence. It should be noted, however, that business confidence remains strong and is near historical highs.

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<th scope="col" class="firstcol">Measures of Confidence in Germany and the Euro-zone</th>
<th scope="col">Jan 04&nbsp;</th>
<th scope="col">Dec 03</th>
<th scope="col">Nov 03</th>
<th scope="col">Dec 02/ Jan 03</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col"> Y/Y&nbsp; %</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">Germany</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<tr>
<td class="firstcol">&nbsp; ZEW</td>
<td>72.9</td>
<td>73.4</td>
<td>67.2</td>
<td>14.0</td>
<td>-0.5</td>
<td>58.9</td>
<td>38.4</td>
<td>45.3</td>
<td>2.8</td>
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<td class="firstcol">&nbsp; IFO Business&nbsp;expectations</td>
<td>&nbsp;</td>
<td>111.0</td>
<td>108.7</td>
<td>97.7</td>
<td>2.12</td>
<td>13.61</td>
<td>101.7</td>
<td>101.0</td>
<td>94.7</td>
</tr>
<tr>
<td class="firstcol">Euro-zone&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Industrial business</td>
<td>&nbsp;</td>
<td>-8</td>
<td>-6</td>
<td>-10</td>
<td>-2</td>
<td>+2</td>
<td>-10</td>
<td>-11</td>
<td>-9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail business</td>
<td>&nbsp;</td>
<td>-13</td>
<td>-10</td>
<td>-16</td>
<td>-3</td>
<td>+3</td>
<td>-14</td>
<td>-16</td>
<td>-7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction business</td>
<td>&nbsp;</td>
<td>-19</td>
<td>-20</td>
<td>-21</td>
<td>+1</td>
<td>+2</td>
<td>-21</td>
<td>-14</td>
<td>-11</td>
</tr>
</tbody>
</table>
</body>
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Business confidence is beginning to falter in Germany and in other countries of the Euro-zone. Earlier this month, it was reported that business confidence in December, while it improved slightly in the construction sector, declined [...]

Business Sentiment in Germany Falls: Euro the Culprit?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040120a.jpg" width="353">
The Empire State Index of General Business Conditions for January rose three points to 39.22, a record high, and confirmed the indication of strength in the factory sector from the Philadelphia Fed&#39;s Business Outlook Survey.
The new orders index rose modestly to 36.13, continuing an uptrend. The shipments index soared five points to 41.73, another record level. The employment index slipped from December to 24.71 but remained near the series&#39; record level.
The index of prices paid more than doubled versus December, rising to 28.16.
The survey includes measures of expectations for business conditions six months ahead. The January index slipped to 62.16, the lowest level since September. Expectations for capital expenditures also fell sharply.
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.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
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%">
<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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y (1/03)</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>39.22</td>
<td>36.16</td>
<td>14.56</td>
<td>16.30</td>
<td>7.02</td>
<td>-13.57</td>
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The Empire State Index of General Business Conditions for January rose three points to 39.22, a record high, and confirmed the indication of strength in the factory sector from the Philadelphia Fed's Business Outlook Survey. The new [...]

Empire State Index At A New High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040119a.jpg" width="353">
Exports from the Euro-zone declined 0.77% in November, bringing the level of exports 4.48% below a year ago. The trend in exports has been negative since early 2002 when the euro began its rise but the extent of the decline has so far been moderate. It was not until November 18th, that euro exceeded 1.1812 to the dollar, the value at which it was launched on January 4, 1999. Through November, increased demand for Euro-zone goods from the U. S. and Japan has overcome some of the price effects of the higher Euro.
However, the euro has continued its climb and in December alone, increased 5%. When the euro reached 1.2853 vs. the dollar on January 9, 2004, the president of the ECB (European Central Bank), Jean-Claude Trichet, and Chief Economist, Otmar Issing, issued warnings that the continued rise in the exchange rate could sabotage the incipient economic recovery. A week later, the euro was down to 1.2395 vs. the dollar.
Any further significant declines in the euro are dependent not only on actions the ECB might take, but also on the willingness of China and other Pacific Rim countries to appreciate their currencies.The Japanese Yen has appreciated 12% since June 30, 2003, but most other Pacific Rim countries have kept their currencies pegged to the dollar.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Euro-Zone</th>
<th scope="col">Nov 03</th>
<th scope="col">Oct 03</th>
<th scope="col">Nov02</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports (Bils of euros)</td>
<td>87.4</td>
<td>88.03</td>
<td>91.5</td>
<td>-0.77</td>
<td>-4.48</td>
<td>1,085..6</td>
<td>1,063.7</td>
<td>1,001.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro/ US$ (average)</td>
<td>1.0171</td>
<td>1.1714</td>
<td>1.001</td>
<td>-0.03</td>
<td>16.95</td>
<td>0.9453</td>
<td>0.8953</td>
<td>0.9234</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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Exports from the Euro-zone declined 0.77% in November, bringing the level of exports 4.48% below a year ago. The trend in exports has been negative since early 2002 when the euro began its rise but the extent of the decline has so far [...]

November Exports in the Euro-zone Falter: Will the Euro Continue to rise?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040116b.jpg" width="353">
Industrial production edged up 0.1% in December, quite a bit less than Consensus expectations for a 0.7% rise.
Utility output fell 1.3% (-0.7% y/y).
The factory sector faired better last month and added 0.3% to the upwardly revised 1.1% surge in November (2.9% y/y).
Output in selected high-technology industries again led output higher in December and jumped 1.9% (24.5% y/y). Prior months&#39; gains were revised lower. Output of computers and peripheral equipment rose 2.6%, about the average monthly gain during the last six months (15.5% y/y). Output of semiconductors &amp; related equipment jumped 3.6% (41.8% y/y) though prior months&#39; strength was lessened. Output of communications equipment fell 2.2% (+4.2% y/y).
Excluding high-tech, factory output inched 0.1% higher (1.6% y/y) but the 0.7% increase originally reported for November was revised to a 1.1% jump. The revision stemmed from a raised estimate of motor vehicle output (+5.1% y/y). Electrical equipment &amp; appliance outputrose 0.8% (0.4% y/y) but the originally reported 1.1% November increase was revised to 0.1%. Furniture output fell 0.1% (-1.1% y/y) and November was revised to 0.7% from 1.7%.
Total capacity utilization held steady at 75.8%.

<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/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Industrial Production</td>
<td>0.1%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>0.4%</td>
<td>-0.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.8%</td>
<td>75.8%</td>
<td>74.9%(12/02)</td>
<td>74.9%</td>
<td>75.6%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Accumulate 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040116a.jpg" width="353">
Total business inventories, up 0.3% in November, rose for the third consecutive month. The rise was in line with Consensus expectations for a 0.2% increase.
Retail inventories rose 0.7% in November for the second consecutive month. Higher inventories of motor vehicles &amp; parts, up 1.2%, again led the gain.
Excluding autos, retail inventories rose 0.5%, the third firm increase in as many months. Inventories of furniture again rose strongly, up 0.9% (7.9% y/y). In addition, inventories of apparel rose for only the second month in the last eight (+3.0% y/y). Inventories at general merchandise stores fell 0.3% (+0.9% y/y).
Overall business sales rose 0.5% (5.4% y/y). Factory shipments and wholesale sales were modest in both months.
The inventory-to-sales ratio was stable at the record low 1.35.
&quot;Has Inventory Volatility Returned? A Look at the Current Cycle&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci8-5.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM"> Business Inventories</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.1%</td>
<td>2.1%</td>
<td>-4.7%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.7%</td>
<td>0.7%</td>
<td>5.1%</td>
<td>7.6%</td>
<td>-2.9%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.5%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.5%</td>
<td>0.5%</td>
<td>2.2%</td>
<td>0.4%</td>
<td>-4.9%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>-1.0%</td>
<td>-1.8%</td>
<td>-6.1%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Spiked Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040116c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index spiked 11.4% higher m/m to 103.2, the highest level since December 2000. That was considerably better than Consensus expectations for a slight rise to 94.0.
During the last ten years there has been an 75% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 84% during the last five years.
The current conditions index jumped 12.3% m/m to 108.9 and the expectations index added 10.8% m/m to 99.5.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<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/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Mid-Jan</th>
<th scope="col"> Dec</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">Consumer Sentiment</td>
<td>103.2</td>
<td>92.6</td>
<td>25.2%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>108.9</td>
<td>97.0</td>
<td>12.0%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>99.5</td>
<td>89.8</td>
<td>36.7%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Industrial production edged up 0.1% in December, quite a bit less than Consensus expectations for a 0.7% rise. Utility output fell 1.3% (-0.7% y/y). The factory sector faired better last month and added 0.3% to the upwardly revised [...]

U.S. Industrial Production Edged Up

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.

260709Z5.jpg

**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.

260709Z6.jpg

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).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/0dl4LKZaL1oTC5UPIaqrA9?utm_source=generator&si=7aa69345dbfd4ac4" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Growth Holds Firm

Tian Yong Woon

In this week's Letter, we examine the underbelly of the AI boom, the risks that sit beneath its optimism. Start with the public mood: American concern about AI has grown alongside adoption over the past three to four years (chart 1). Those worries span mass job displacement, misuse of top-end models by bad actors, and fears of being left behind. The first of these is already surfacing: in June, AI was again the most cited reason for announced US layoffs, with year-to-date AI-linked cuts above 100,000 (chart 2). Technology led all sectors in overall cuts, though the data do not isolate how many were AI-driven. Among those hit, the young are arguably the most exposed to these labour effects. They enter a labour pool swollen by displaced professionals, just as AI masters the entry-level tasks where they would start. India and Indonesia illustrate the stakes on youth NEET, the share not in education, employment, or training, both above 20% and among Asia's highest (chart 3). Beyond the labour market, the same optimism reshapes asset prices. The rally has lifted AI-related valuations to historic highs and concentrated a few names in cap-weighted indexes (chart 4). That raises correlation and the risk of a sharper index fall should the rally unravel. The same concentration runs through economies via exports, from Taiwan's advanced chips to South Korea's memory (chart 5). Its footprint is physical too, and cuts both ways: data-centre investment has lifted growth in Johor, Malaysia (chart 6) while straining local power and water. None of this argues against riding the AI wave, which still promises real productivity and welfare gains. Rather, these are caveats that investors and policymakers must keep in view, since the story is not all upside.

**AI-related concerns**
AI adoption has exploded over the past three to four years, and Americans' concerns have risen alongside it (chart 1). That is understandable, given how advanced and broad AI's proven applications have become. They now span everyday tasks and subject-specific work across fields such as finance and production, as well as tech and development, the sector AI was born in. Major concerns run from mass AI-induced job displacement to a more recent fear, that top-end models fall into the wrong hands and are used by bad actors. A further worry is distributional: AI advances are powerful and could deliver leaps in productivity, yet they may also leave many people behind. Those most exposed include workers already displaced from their jobs and people facing scarcer basic resources as AI demand competes for them. Others simply lack equitable access to AI tools or their benefits.

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**AI-driven job displacement**
Some of the fears US workers first had about AI-driven job displacement are already playing out. In June, AI was again the most cited reason for announced job cuts in the US (chart 2). That pushed year-to-date job cuts attributed to AI above 100,000, more than half of all AI-tagged cuts since AI became a selectable reason in 2023. The data come from the latest survey by Challenger, Gray & Christmas. This likely reflects AI's disproportionately heavy impact on certain industries such as technology, which again led all sectors in cuts. At the same time, announced hiring plans stayed subdued, leaving laid-off workers with limited opportunities to find new roles. All of this is occurring even as market valuations remain elevated on the broader wave of AI optimism.

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**AI and youth unemployment**
Arguably among those bearing the brunt of these labour-related effects are the youth. Many have graduated on a curriculum built largely for a pre-AI era. They now enter a labour pool swollen by experienced professionals whom AI has displaced. At the same time, AI is proving especially capable at the entry-level tasks on which young workers usually start. An elevated youth unemployment rate only intensifies the competition young people face for gainful employment. On the broader NEET measure, which also captures youth who are neither working nor studying, India and Indonesia stand out. On the latest available WDI data, both have youth NEET rates above 20%, among the highest in Asia and above the global average (chart 3). Should employers in these economies adopt AI aggressively across processes and production, including physical AI such as humanoid robots, the problem could worsen. Yet firms that stay purely labour-intensive risk losing out to rivals using more efficient, and perhaps cheaper, AI-driven methods.

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**Concentration risk**
The recent wave of AI optimism has pushed the equity valuations of major AI developers and AI-related goods producers to historically high levels. These gains are partly backed by strong earnings and upbeat forward guidance. Most major indexes are weighted by market capitalisation, so a counter's weight tracks its price. As these counters have outperformed their peers (chart 4), their index weight has risen close to mechanically, when holding the number of shares constant. This raises concentration risk, since a small group of counters now carries more of the index and moves it more closely. So, if the rally in these counters were to unravel deeply, it would drag the broader index down more heavily with it.

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AI-related concentration risk is not confined to equity indexes; it also shows up in the growth of major economies. In Asia, that risk usually runs through a country's exports. Take Taiwan, the world's largest advanced semiconductor exporter, as an example. As chart 5 shows, its recent export growth has come more than entirely from integrated circuits and from infocomm and audiovisual equipment. Other goods categories have often contributed negatively in recent months. This is good news for the Taiwanese economy, which sits right at the centre of the global AI boom. Yet it is also a source of concentration risk, should AI-related goods demand collapse or substantial alternative supply emerge elsewhere. A similar story applies to South Korea, through its role in supplying high-end memory chips.

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**Data centres, energy, and water**
Finally, rapidly advancing AI promises major productivity gains and broad improvements to daily life. Yet AI infrastructure rests on resource-intensive inputs: the energy needed for data centre compute, and the water needed to cool those centres. Both may deprive real people of the very resources they need to survive. One recent hotspot is Malaysia, which has courted a wave of foreign direct investment to expand its data centre footprint in the state of Johor. These capital inflows are welcome, and have lifted state-level growth through the construction sector (chart 6). But they have also raised concerns about straining local grids and water supplies, possibly leaving less for residents. Among estimates, a recent one puts data centres at around 40% of Johor's electricity demand by 2035. That is pressuring the state to expand generation capacity and grid access to match the data centre pipeline already in place. Its neighbour Singapore faced similar strains earlier, and has since repositioned itself as a hub for the most advanced and efficient data centres, partly because of its severe land constraints. 

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Asia

Economic Letter from Asia: The AI Underbelly

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.