Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040112a.jpg">
The Index of Leading Indicators for the Major Seven OECD Countries rose 0.7% (5.3% y/y) in November, the eighth consecutive firm monthly gain. Revisions to the leading indexes for Japan and in North America substantially lowered growth in 2001 and 2002.
Six-month growth in the leading index rose to 7.7%, the strongest in nearly ten years.
Gains amongst the member country leading indexes again were broad and strong. The leading index for the European Union rose 0.5% (4.5% y/y), the strongest y/y growth since 2003.
In France, the leading index jumped 0.9% (3.8% y/y) as the yield curve steepened, factory sector prospects brightened and the future tendency of production rose. The leaders in Germany also jumped 1.1% (6.8% y/y) as a firmer orders inflow led to an improved business climate. In Italy the leaders fell for the second consecutive month (+2.2% y/y).
In Canada the leading index fell slightly in November (3.2% y/y) and in the U.K. the leaders were unchanged (+0.7% y/y), soft for the third consecutive month despite firmer prospects for production. Leading indicators in the United States jumped 1.4% (8.2% y/y).
Leaders in Japan fell 0.2% (1.9% y/y) as share prices eased.
Visit the OECD&#39;s website at this <a href="http://www.oecd.org/home/">website</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM"> OECD Main Economic Indicators</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">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>120.9</td>
<td>120.1</td>
<td>5.3%</td>
<td>2.4%</td>
<td>-3.0%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>122.2</td>
<td>121.6</td>
<td>4.5%</td>
<td>3.3%</td>
<td>-1.6%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>101.5</td>
<td>101.8</td>
<td>1.9%</td>
<td>-0.5%</td>
<td>-4.4%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>132.4</td>
<td>130.5</td>
<td>8.2%</td>
<td>2.9%</td>
<td>-3.4%</td>
<td>2.7%</td>
</tr>
</tbody>
</table>
ECRI Weekly Leading Indicators Flat 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 12, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040112b.jpg">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) was flat in the opening week of 2004.
The six-month growth rate of the weekly leading index also eased to 9.2%, the weakest growth rate in about six months. Slightly higher jobless claims and falling prices of basic materials offset strong stock market gains in the latest week.
During the last ten years there has been a 65% correlation between the six-month growth in the leading index and the two quarter growth in real GDP.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been a 75% correlation between the y/y percent change in the two series over the last 20 years.
The components of the ECRI weekly leading index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.
For more on ECRI and the Weekly Leading Index go to this <a href="http://businesscycle.com">link</a>.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM"> ECRI Leading Index</a></th>
<th scope="col"> 01/02/04</th>
<th scope="col"> 12/26/03</th>
<th scope="col"> Growth Rate</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">Weekly</td>
<td>129.7</td>
<td>129.7</td>
<td>9.2%</td>
<td>6.6%</td>
<td>1.1%</td>
<td>-5.3%</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>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td> Dec</td>
<td> Nov</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Monthly</td>
<td>130.3</td>
<td>130.7</td>
<td>10.8%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
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The Index of Leading Indicators for the Major Seven OECD Countries rose 0.7% (5.3% y/y) in November, the eighth consecutive firm monthly gain. Revisions to the leading indexes for Japan and in North America substantially lowered [...]

OECD Leaders Signal Further Growth

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040109a.jpg" width="353">
Non-farm payrolls rose a weak 1,000 in December and gains in prior months were revised down.Consensus expectations were for a 150,000 December gain. Next month, the payroll figures will undergo an annual benchmark revision.
The index of aggregate hours worked fell 0.6% but for 4Q rose at a 2.2% annual rate versus 3Q. It was the first quarterly gain in hours worked since 4Q 2000.
From the separate household survey, the unemployment rate fell to 5.7% versus expectations for an unchanged 5.9%. The figures reflect benchmark revision.
Household employment fell 54,000 (+1.5% y/y) following strong gains of 438,000 and 451,000 in the prior two months. The labor force also fell by 309,000 (+1.2% y/y) following strong gains in the prior two months.
Manufacturing sector payrolls fell 26,000 (-3.4% y/y) following a like decline in November that was downwardly revised. The one-month diffusion index for factory payrolls fell to 38.1 from 42.9, and thus continued to suggest lower factory payrolls in the near term. Weakness in factory sector jobs was broad based.
Analysis of employment and sales in the computer industry by the Federal Reserve Bank of Dallas can be found <a href="http://www.dallasfed.org/eyi/tech/0306computer.html"> here</a>.
Service producing jobs rose a modest 13,000 (0.3% y/y). Jobs in the retail trade industry fell by 38,000 (-0.5% y/y) and jobs in the financial sector fell for the third consecutive month (+0.8% y/y). Temporary help services jobs were again strong, up 30,000 (7.7% y/y). Education &amp; health services jobs also rose 21,000 (1.8% y/y) but government sector jobs fell for the eighth month of 2003 (-0.4% y/y).
Construction jobs rose 14,000 (2.1% y/y) for the second month.
The one-month diffusion index for private non-farm payrolls fell to 50.4% from 54.3 in November, suggesting minimal employment growth
Average hourly earnings rose 0.2% (2.0% Y/Y). Earnings in the factory sector rose 0.3% (2.3% Y/Y).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM"> Employment</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>
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<td class="firstcol">Payroll Employment</td>
<td>1,000</td>
<td>43,000</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-26,000</td>
<td>-26,000</td>
<td>-3.4%</td>
<td>-3.9%</td>
<td>-6.9%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.9</td>
<td>33.8</td>
<td>33.7</td>
<td>33.9</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
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<td class="firstcol">Unemployment Rate</td>
<td>5.7%</td>
<td>5.9%</td>
<td>6.0%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
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Non-farm payrolls rose a weak 1,000 in December and gains in prior months were revised down.Consensus expectations were for a 150,000 December gain. Next month, the payroll figures will undergo an annual benchmark revision. The index [...]

U.S. Non-farm Payrolls Disappoint

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040108a.jpg" width="353">
Initial claims for jobless insurance rose a moderate 14,000 last week to 353,000 and reversed virtually all of the prior week&#39;s decline which was unrevised. Consensus expectations had been for claims of 350,000.
The four-week moving average of initial claims fell to 350,250 (-12.9% y/y).
Continuing claims for unemployment insurance fell 12,000 and the prior week&#39;s increase was revised lower to 51,000.
The insured rate of unemployment was unchanged at 2.6% for the seventh consecutive week.

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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">01/03/04</th>
<th scope="col">12/27/03</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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</thead>
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<td class="firstcol">Initial Claims</td>
<td>353.0</td>
<td>339.0</td>
<td>-10.9%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,273</td>
<td>-5.6%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
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Initial claims for jobless insurance rose a moderate 14,000 last week to 353,000 and reversed virtually all of the prior week's decline which was unrevised. Consensus expectations had been for claims of 350,000. The four-week moving [...]

Jobless Insurance Claims Ticked Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040107a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association last week recovered half of the prior week&#39;s 9.0% drop (-49.3% y/y).
Purchase applications rose 2.9% w/w (+6.7% y/y) following two weeks of sharp decline. Purchase applications started 2004 2.1% below the December average which fell 3.8% versus November.
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.
Applications to refinance rose 6.8% w/w and gained back half of the prior week&#39;s decline (-70.1% y/y). Refis started 2004 5.1% below the December average which fell 16.3% versus November.
The effective interest rate on a conventional 30-Year mortgage rose to 6.10% versus 5.97% averaged last year. The effective rate on a 15-year mortgage also rose to 5.48% from 5.38% averaged during 2003.
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">1/02/04</th>
<th scope="col">12/26/03</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">Total Market Index</td>
<td>599.9</td>
<td>574.1</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>401.3</td>
<td>390.1</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,755.4</td>
<td>1,644.3</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
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</tbody>
</table>
</body>
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The index of mortgage applications compiled by the Mortgage Bankers Association last week recovered half of the prior week's 9.0% drop (-49.3% y/y). Purchase applications rose 2.9% w/w (+6.7% y/y) following two weeks of sharp decline. [...]

Mortgage Applications Up Modestly

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040107b.jpg" width="353">
The Russian economy continues to show good growth. Although slightly below the pace of the first two quarters, gross domestic product in the third quarter of last year was 6.2% above the third quarter of 2002. Moreover, current indicators in October and November suggest the fourth quarter will be strong.
Russia publishes the monthly changes and the year over year changes in the output of five basic indicators: Agriculture, Construction, Industry, Retail Trade and Transportation Services. These indicators and industrial production frequently foreshadow changes in GDP. The sharp turn around in the increase in agriculture output, which went to positive changes in October and November from negative ones in two of the months of the third quarter, is significant. 

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<colgroup><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Year over Year % Change</th>
<th scope="col">Nov 03&nbsp;</th>
<th scope="col">Oct 03</th>
<th scope="col">Sep 03</th>
<th scope="col">Aug 03</th>
<th scope="col"> July 03 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>7.08</td>
<td>7.09</td>
<td>7.75</td>
<td>5.19</td>
<td>6.87</td>
</tr>
<tr>
<td class="firstcol">Agriculture</td>
<td>8.0</td>
<td>13.1</td>
<td>7.9</td>
<td>-16.2</td>
<td>-11.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>11.6</td>
<td>14.6</td>
<td>14.7</td>
<td>14.3</td>
<td>15.0</td>
</tr>
<tr>
<td class="firstcol">Industry</td>
<td>7.1</td>
<td>7.2</td>
<td>8.0</td>
<td>5.5</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Sales</td>
<td>7.0</td>
<td>7.1</td>
<td>7.0</td>
<td>6.1</td>
<td>7.9</td>
</tr>
<tr>
<td class="firstcol">Transportation Services</td>
<td>7.0</td>
<td>7.0</td>
<td>6.0</td>
<td>8.3</td>
<td>7.6</td>
</tr>
</tbody>
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The Russian economy continues to show good growth. Although slightly below the pace of the first two quarters, gross domestic product in the third quarter of last year was 6.2% above the third quarter of 2002. Moreover, current [...]

Russian Third Quarter 2003 Gross Domestic Product Is Up 6.2% 0ver a Year Ago

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040106a.jpg">
Light vehicle sales added 7.2% in December to the 7.7% November gain and rose to 18.06M, the second highest monthly selling rate for the year. Consensus expectations had been for sales of 17.0M.
For the year, light vehicle sales fell 0.6% versus 2002 to 16.71M. The peak for annual sales was in 2000 at 17.40M.
Cash rebates of up to $5,000 were successful in lifting sales of light trucks to 10.24M, up 12.9% m/m.
Car sales rose slightly in December to 7.82M. For 2003, sales fell for the third straight year to 7.64M. The peak for car sales was in 1986 at 11.41M.
Domestic light vehicle sales rose 10.3% m/m to 14.89M as truck sales jumped 15.4% m/m (3.8% y/y).
Imported vehicle sales fell 5.3% m/m to 3.16M (-6.4% y/y). Imports captured 17.5% of the US market for new vehicles in December and 19.8% for the year.

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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"> 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>18.06</td>
<td>16.84</td>
<td>-1.4%</td>
<td>16.71</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.82</td>
<td>7.77</td>
<td>-7.1%</td>
<td>7.64</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>10.24</td>
<td>9.07</td>
<td>3.4%</td>
<td>9.07</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
ISM Non-Manufacturing Index Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 6, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040106c.jpg">
The Business Activity Index for the non-manufacturing sector, reported by the Institute for Supply Management, fell in December to 58.6 versus 60.1 in November and 64.7 in October. Consensus expectations had been for little change at 60.5.
Since the series&#39; inception in 1997 there has been a 58% correlation between the level of the ISM non-manufacturing business activity index and the quarterly change in real GDP for services plus construction.
The employment index dipped modestly to 54.0 versus the strong reading of 54.9 in November.
Since the series&#39; inception in 1997 there has been a 64% 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.
New orders improved to a reading of 61.2 versus 60.1 the prior month.
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 rose to 60.0 in December and for the year stood at the highest level since 2000.
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%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<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">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">Business Activity Index</td>
<td>58.6</td>
<td>60.1</td>
<td>54.2</td>
<td>58.3</td>
<td>55.1</td>
<td>49.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>60.0</td>
<td>58.0</td>
<td>55.3</td>
<td>56.7</td>
<td>53.9</td>
<td>51.6</td>
</tr>
</tbody>
</table>
Challenger Layoffs Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 6, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040106d.jpg">
Announced job cuts in December fell 6.5% m/m and pulled the full year figure down 13.6% versus 2003 according to Challenger, Gray &amp; Christmas.
The three month moving average of job cut announcements again rose (-14.6% y/y) due to a spike in layoffs in October.
Announced layoffs fell the services (-16.0% in 2003), electronics (-18.5% in 2003), telecommunications (-58.6% in 2003) and transportation (-32.2% in 2003) industries. Job cut announcements rose m/m in the aerospace (-36.1% in 2003), apparel (+69.6% in 2003), automotive (-33.1% in 2003), chemical (+1.5% in 2003), computer (-52.6% in 2003), financial (-42.0% in 2003) and pharmaceutical (+148.3% in 2003) industries.
Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.
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.

<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">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">Announced Job Cuts</td>
<td>93,020</td>
<td>99,452</td>
<td>0.1%</td>
<td>1,236,426</td>
<td>1,431,052</td>
<td>1,956,876</td>
</tr>
</tbody>
</table>
Chain Store Sales Slip 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 6, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040106b.jpg">
Chain store sales slipped 0.1% the opening week of the New Year, according to the ICSC-UBS survey. The dip followed strong gains in the prior three weeks. For the year, weak pricing power pulled the rise in sales down to 2.9% versus a 3.6% gain in 2002.
December sales fell 0.3% versus the November average. In November, sales rose 0.5% versus the prior 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.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@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">01/03/04</th>
<th scope="col">12/27/03</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>430.9</td>
<td>431.4</td>
<td>5.6%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Factory Orders and Inventories Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 6, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040106e.jpg">
Factory orders fell an expected 1.4% in November. The advance report of a 3.1% drop in durable goods orders was revised shallower to a 2.5% decline. Orders for computers fell 1.2% (+31.0% y/y) Non-durable goods orders fell 0.2% (+4.5% y/y).
A report titled &quot;Computer Use and Productivity Growth&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20031201/cover.pdf"> here</a>.
Manufacturing inventories fell 0.2% following the slight increase in October. Excluding the defense industry inventories fell 0.2% (-1.7% y/y) and have fallen in each of the last nine months.
Factory shipments were unchanged. Shipments excluding transportation fell 0.3% (4.2% 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">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">Inventories</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>
<tr>
<td class="firstcol">New Orders</td>
<td>-1.4%</td>
<td>2.4%</td>
<td>6.0%</td>
<td>-1.9%</td>
<td>-6.7%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>0.7%</td>
<td>4.1%</td>
<td>-2.0%</td>
<td>-5.4%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.7%</td>
<td>1.7%</td>
<td>3.4%</td>
<td>-6.1%</td>
<td>-5.9%</td>
<td>8.7%</td>
</tr>
</tbody>
</table>


</html>

Light vehicle sales added 7.2% in December to the 7.7% November gain and rose to 18.06M, the second highest monthly selling rate for the year. Consensus expectations had been for sales of 17.0M. For the year, light vehicle sales fell [...]

Incentives Spur U.S. Light Vehicle Sales

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040105b.jpg" width="353">
Activity in German manufacturing showed a surprisingly large month-to-month increase in December according to the NTC Research Purchasing Managers Survey. ( NTC publishes diffusion indexes for purchasing managers surveys of manufacturing, service industries and construction for a number of countries. These diffusion indexes represent a balance that ranges from 0% to 100%, with numbers above 50 representing expansion and those below, representing contraction.)
The 3.58% rise in the German manufacturing index in December brought the index to 52.97, marking the fourth month the index was above the 50 mark and its highest level since early 2001. The level of the German index is now above those of the other major economies - France, Italy and Spain - economies that had preceded Germany into the expansionary phase.
Because of decline in the indexes for these three countries, the overall index for the Eurozone rose less than one-half of one percent in December.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Manufacturing PMI</th>
<th scope="col">Dec 03</th>
<th scope="col">Nov 03</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Eurozone</td>
<td>52.40</td>
<td>52.15</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>52.97</td>
<td>51.14</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>51.90</td>
<td>52.70</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>51.88</td>
<td>52.34</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>51.83</td>
<td>52.63</td>
</tr>
</tbody>
</table>
</body>
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Activity in German manufacturing showed a surprisingly large month-to-month increase in December according to the NTC Research Purchasing Managers Survey. ( NTC publishes diffusion indexes for purchasing managers surveys of [...]

Activity in German Manufacturing Shows Strength

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040105a.jpg" width="353">
The value of total construction put in place jumped 1.2% (7.4% y/y) in November. A 0.5% rise was expected. On average, construction spending has risen 1.2% in each of the last six months.
Private residential building activity surged 2.0%. Single family home building spurted 2.9% in November (20.0% y/y).
Commercial construction managed a 0.4% gain following two months of sharp decline (+1.4% y/y but education spending fell 0.8% (-2.1% y/y). Office construction, up 1.3%, posted the fourth strong consecutive monthly gain (-4.2% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM"> Construction Put-in-place</a></th>
<th scope="col"> 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>1.2%</td>
<td>1.1%</td>
<td>7.4%</td>
<td>1.1%</td>
<td>2.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.2%</td>
<td>1.4%</td>
<td>8.3%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>2.0%</td>
<td>2.2%</td>
<td>14.1%</td>
<td>8.6%</td>
<td>3.3%</td>
<td>7.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-2.1%</td>
<td>1.6%</td>
<td>-3.6%</td>
<td>-13.0%</td>
<td>-1.3%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>1.2%</td>
<td>0.8%</td>
<td>6.6%</td>
<td>5.3%</td>
<td>7.4%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>
</body>
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The value of total construction put in place jumped 1.2% (7.4% y/y) in November. A 0.5% rise was expected. On average, construction spending has risen 1.2% in each of the last six months. Private residential building activity surged [...]

U.S. Construction Spending Strong

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.

260713T1.jpg

**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.

260713T2.jpg

**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.

260713T3.jpg

**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.

260713T4.jpg

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.