Tom Moeller

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<img align="left" border="0" height="264" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130e.jpg" width="353">
The Federal Open Market Committee today lowered the Federal funds rate by fifty basis points to 3.0%. The move was as expected following the seventy-five basis point reduction last week. The rate was last at 3.0% in June of 2005.
The discount rate also was reduced fifty basis points to 3.50%.
The Fed indicated that &quot;Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.&quot;
The Fed further indicated that &quot;The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.&quot;
Voting against taking the action was Richard W. Fisher, President of the Federal Reserve Bank of Dallas, who preferred no change in the target for the federal funds rate at this meeting.
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080130a.htm">link</a>.
Credit Derivatives: An Overview from the Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq407_mengle.pdf"> here</a>.
Booms and Busts: The Case of Subprime Mortgages from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q07Gramlich.pdf"> here</a>.

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The Federal Open Market Committee today lowered the Federal funds rate by fifty basis points to 3.0%. The move was as expected following the seventy-five basis point reduction last week. The rate was last at 3.0% in June of 2005. The [...]

FOMC Lowers Interest Rates Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130c.jpg" align="left" border="0" height="265" width="353">
The ADP National Employment Report, reported by the payroll
processor, indicated that private nonfarm payroll growth improved
sharply to 130,000 in January from a revised 37,000 worker advance in
December.
The U.S. Bureau of Labor Statistics employment figure for
January will be published this coming Friday.Last
month, the 37,000 gain ADP's measure of private nonfarm payrolls was
followed by a decline of 13,000 in the BLS measure of private nonfarm
payrolls.
According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90
The ADP sub-index for large payrolls nudged up 8,000 after a
35,000 worker collapse during December

Medium sized payrolls showed great improvement by 52,000 after
a 5,000 December increase.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130d.jpg" align="right" border="0" height="265" width="353">
Growth in small payrolls of 70,000 was near the very recent
rate but there has been a halving of the annual growth rate over the
last three years.
Employment in the goods producing industries continued to
decline (-1.7% y/y) while services rose (1.5% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's USECON database; historical data
go back to December 2000. The figures in this report cover only private
sector jobs and exclude employment in the public sector, which rose an
average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_DEC_07.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>130,000</td>
<td>37,000</td>
<td>0.9%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
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The ADP National Employment Report, reported by the payroll processor, indicated that private nonfarm payroll growth improved sharply to 130,000 in January from a revised 37,000 worker advance in December. The U.S. Bureau of Labor [...]

ADP Report: Private Payroll Growth Much Improved

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130a.jpg" width="353">
U.S. real GDP in the last quarter of 2007 rose at a 0.6% annual rate. The figure from the Commerce Department contrasted slightly with the Consensus expectation for a 1.2% advance. The figure contrasted sharply, however, with an average rate of growth during the prior two quarters of 4.4%.
Each of the economy&#39;s sectors including domestic demand, foreign trade and inventories contributed to the slowdown.
Inventories subtracted 1.3 percentage points from 4Q GDP growth as a rate of accumulation turned negative. That contrasted with an average 0.6 percentage point addition during 2Q &amp; 3Q.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130b.jpg" width="353">
An improved foreign trade account added much less to real GDP growth last quarter. The 0.4 point addition was down from an average 1.4 percentage point contribution during the prior two quarters. Growth in exports slowed to a still quite firm 10.2% rate from 18.3% and that meant that exports contributed just 0.5 percentage points to GDP, half the 1.5 point add during the two prior periods. Real imports grew 13.1%, a very slight pickup from 10.5% growth during 2Q &amp; 3Q. That sapped 0.1 points from GDP growth, the same as during the prior two quarters.
Financial Globalization and the U.S. Current Account Deficit from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci13-11.html">here</a>.
Growth in final sales to domestic purchasers totaled just 1.4%, down from a 2.3% rate of advance during the prior two quarters. The decline in residential construction at a -23.9% rate was an acceleration from a -16.3% rate during the prior two quarters. It was notable in that it pulled 1.2 percentage points out of GDP growth versus a 0.9 point lowering during 2Q &amp; 3Q. The slowdown in growth in business fixed investment to a 7.5% rate from a 2 Qtr change of 10.2% also was notable in that it added a lesser 0.8 percentage points last quarter versus 1.0 points during the prior two. Growth in real personal consumption held fairly steady at a 2.0% rate of growth versus an average of 2.1% in 2Q &amp; 3Q. That added 1.4 percentage points to growth last quarter in contrast to a 1.5 point add during the prior two.
The GDP chain price index rose 2.6% (AR), up from a 1.8% rate of advance during the prior two quarters. The PCE price index grew at a 3.9% rate. That was up a point from the prior two quarters not only due to higher energy prices. Less food &amp; energy, a measure relevant to those who don&#39;t eat or drive, rose at an accelerated 2.7% rate versus an average 1.7% rate in 2Q &amp; 3Q.

<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/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;07</th>
<th scope="col">3Q &#39;07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>4.9</td>
<td>2.5</td>
<td>2.2</td>
<td>2.9</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-1.3</td>
<td>0.9</td>
<td>-0.2</td>
<td>-0.3</td>
<td>0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.9</td>
<td>4.0</td>
<td>2.7</td>
<td>2.5</td>
<td>2.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>0.4</td>
<td>1.4</td>
<td>0.8</td>
<td>0.7</td>
<td>-0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.6</td>
<td>1.0</td>
<td>2.6</td>
<td>2.7</td>
<td>3.2</td>
<td>3.2</td>
</tr>
</tbody>
</table>


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U.S. real GDP in the last quarter of 2007 rose at a 0.6% annual rate. The figure from the Commerce Department contrasted slightly with the Consensus expectation for a 1.2% advance. The figure contrasted sharply, however, with an [...]

US 4Q GDP Weaker Than Expected At 0.6%. Exports & Inventories Added Less

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130a.jpg" align="left" border="0" height="265" width="353">
U.S. real GDP in the last quarter of 2007
rose at a 0.6% annual rate. The figure from the Commerce Department
contrasted slightly with the Consensus expectation for a 1.2% advance.
The figure contrasted sharply, however, with an average rate of growth
during the prior two quarters of 4.4%.
Each of the economy's sectors including domestic demand,
foreign trade and inventories contributed to the slowdown.
Inventories subtracted 1.3 percentage
points from 4Q GDP growth as a rate of accumulation turned negative.
That contrasted with an average 0.6 percentage point addition during 2Q
&amp; 3Q.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130b.jpg" align="right" border="0" height="265" width="353">
An improved foreign trade account added
much less to real GDP growth last quarter. The 0.4 point addition was
down from an average 1.4 percentage point contribution during the prior
two quarters. Growth in exports slowed to a still quite firm 10.2% rate
from 18.3% and that meant that exports contributed just 0.5 percentage
points to GDP, half the 1.5 point add during the two prior periods.
Real imports grew 13.1%, a very slight pickup from 10.5% growth during
2Q &amp; 3Q. That sapped 0.1 points from GDP growth, the same as
during the prior two quarters.
Financial Globalization and the U.S. Current Account
Deficit from the Federal Reserve Bank of New York can be
found <a href="http://www.newyorkfed.org/research/current_issues/ci13-11.html">here</a>.
Growth in final sales to domestic purchasers
totaled just 1.4%, down from a 2.3% rate of advance during the prior
two quarters. The decline in residential construction at
a -23.9% rate was an acceleration from a -16.3% rate during the prior
two quarters. It was notable in that it pulled 1.2 percentage points
out of GDP growth versus a 0.9 point lowering during 2Q &amp; 3Q.
The slowdown in growth in business fixed investment
to a 7.5% rate from a 2 Qtr change of 10.2% also was notable in that it
added a lesser 0.8 percentage points last quarter versus 1.0 points
during the prior two. Growth in real personal consumption
held fairly steady at a 2.0% rate of growth versus an average of 2.1%
in 2Q &amp; 3Q. That added 1.4 percentage points to growth last
quarter in contrast to a 1.5 point add during the prior two.
The GDP chain price index rose 2.6% (AR),
up from a 1.8% rate of advance during the prior two quarters. The PCE
price index grew at a 3.9% rate. That was up a point from the prior two
quarters not only due to higher energy prices. Less food &amp;
energy, a measure relevant to those who don't eat or drive, rose at an
accelerated 2.7% rate versus an average 1.7% rate in 2Q &amp; 3Q.

<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/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '07</th>
<th scope="col">3Q '07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>4.9</td>
<td>2.5</td>
<td>2.2</td>
<td>2.9</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-1.3</td>
<td>0.9</td>
<td>-0.2</td>
<td>-0.3</td>
<td>0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.9</td>
<td>4.0</td>
<td>2.7</td>
<td>2.5</td>
<td>2.8</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>0.4</td>
<td>1.4</td>
<td>0.8</td>
<td>0.7</td>
<td>-0.1</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.8</td>
<td>2.7</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.6</td>
<td>1.0</td>
<td>2.6</td>
<td>2.7</td>
<td>3.2</td>
<td>3.2</td>
</tr>
</tbody>
</table>
ADP Report: Private Payroll
GrowthMuch Improved 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 30, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130c.jpg" align="left" border="0" height="265" width="353">
The ADP National Employment Report, reported by the payroll
processor, indicated that private nonfarm payroll growth improved
sharply to 130,000 in January from a revised 37,000 worker advance in
December.
The U.S. Bureau of Labor Statistics employment figure for
January will be published this coming Friday.Last
month, the 37,000 gain ADP's measure of private nonfarm payrolls was
followed by a decline of 13,000 in the BLS measure of private nonfarm
payrolls.
According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90
The ADP sub-index for large payrolls nudged up 8,000 after a
35,000 worker collapse during December
Medium sized payrolls showed great improvement by 52,000 after
a 5,000 December increase.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130d.jpg" align="right" border="0" height="265" width="353">
Growth in small payrolls of 70,000 was near the very recent
rate but there has been a halving of the annual growth rate over the
last three years.
Employment in the goods producing industries continued to
decline (-1.7% y/y) while services rose (1.5% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's USECON database; historical data
go back to December 2000. The figures in this report cover only private
sector jobs and exclude employment in the public sector, which rose an
average 11,083 during the last twelve months. 

The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_DEC_07.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>130,000</td>
<td>37,000</td>
<td>0.9%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
FOMC Lowers Interest Rates Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 30, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130e.jpg" align="left" border="0" height="264" width="353">
The Federal Open Market Committee today lowered the Federal
funds rate by fifty basis points to 3.0%. The move was as expected
following the seventy-five basis point reduction last week. The rate
was last at 3.0% in June of 2005.
The discount rate also was reduced fifty basis points to 3.50%.
The Fed indicated that "Financial markets remain under
considerable stress, and credit has tightened further for some
businesses and households. Moreover, recent information indicates a
deepening of the housing contraction as well as some softening in labor
markets."
The Fed further indicated that "The Committee will continue to
assess the effects of financial and other developments on economic
prospects and will act in a timely manner as needed to address those
risks."
Voting against taking the action was Richard W. Fisher,
President of the Federal Reserve Bank of Dallas, who preferred no
change in the target for the federal funds rate at this meeting.
For the complete text of the Fed's latest press release please
follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080130a.htm">link</a>.
Credit Derivatives: An Overview from the
Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq407_mengle.pdf">
here</a>.
Booms and Busts: The Case of Subprime Mortgages
from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q07Gramlich.pdf">
here</a>.

Case-Shiller Home Price IndexLowest Since 2005 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 30, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130g.jpg" align="left" border="0" height="265" width="353">
<div align="left">

According to the S&amp;P/Case-Shiller
Composite 10 home price index, U.S. home prices fell
another 2.2% m/m in November to the lowest level since April 2005. Home
prices have fallen in every month since June of 2006 and the total
decline over that period amounts to 9.4%. The November decline pulled
the y/y comparison to a negative 8.4%.
The index of 10 U.S. cities and their surrounding areas is not
adjusted for the quality or the size of the home. The home price index
from the Office of Federal Housing Enterprise Oversight (OFHEO) does
make these adjustments. This series indicates that through the third
quarter home prices still were rising, but at a reduced 1.8% y/y rate.
The composite index of homes in 20 metropolitan areas fell
2.1% (-7.7% y/y) last month.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080130f.jpg" align="right" border="0" height="265" width="353">
Home prices in San Diego California continued quite weak and
registered a 13.4% y/y decline and they have fallen 16.3% from the late
2005 peak. Prices in Miami Florida also are down sharply, by 15.1% y/y.
Home prices in Las Vegas Nevada registered a 13.2% y/y decline and in
Los Angeles prices fell 11.9% y/y.
Relatively moderate declines were registered in New York
(-4.8% y/y), Chicago (-3.39% y/y) and Denver (-3.1%).
An overview of the S&amp;P/Case-Shiller home price series
can be found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">
here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's REGIONAL database.
Masters of Illusion from the Federal
Reserve Bank of Minneapolis explores why home prices soar in both high
and low inflation eras? It is available <a href="http://www.minneapolisfed.org/pubs/region/07-12/masters.cfm">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Ten City
Composite Index</td>
<td>205.09</td>
<td>209.75</td>
<td>-8.4%</td>
<td>224.56</td>
<td>209.16</td>
<td>178.90</td>
</tr>
</tbody>
</table>
</div></body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129i.jpg" align="left" border="0" height="265" width="353">
The French National Institute for Statistics and Economic
Studies (INSEE) released the results of its survey of consumer
confidence today. The summary indicator declined by 4 percentage points
in January from December, continuing a series of declines that began in
July of last year. The recent increase in inflation added to earlier
concerns over the strong euro and the fallout from the sub prime crisis
in the U. S. has taken its toll on the French consumers' optimism.
According to INSEE, the level of the balance is not open to
direct interpretation; it is the change in the balance that is
important. For this reason, we show both the balance and the month to
month changes in the balance in the first chart.
All five of the components of the indicator declined in
January. The French consumer's chief concern was the outlook for living
standards. The appraisal of the outlook for living standards over the
next 12 months fell by 12 basis points. In spite of concerns for future
living standards the French consumer saw little change, 1 basis point
decline, in the appraisal of the favorability of conditions for major
purchases. The second chart shows the appraisal of living standards
over the past 12 month and over the next 12 months, together with the
appraisal of the favorability of condition for major purchases.
The third chart shows the financial position over the past 12
months and its position over the next 12 months. The financial position
over the past 12 months has declined in each month since June 2007 The
financial position over the next 12 months has been declining since May
and at a faster rate than the financial position of the past 12 months.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129j.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129k.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">INSEE'S
CONSUMER CONFIDENCE SURVEY 
&nbsp;(% Balance)&nbsp;</th>
<th scope="col">Jan 08</th>
<th scope="col">Dec 07&nbsp;</th>
<th scope="col">Jan 07&nbsp;</th>
<th scope="col">M/M&nbsp; Dif&nbsp;</th>
<th scope="col">Y/Y&nbsp;Dif&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Summary Indicator</td>
<td>-34</td>
<td>-30</td>
<td>-22</td>
<td>-4</td>
<td>-12</td>
<td>-21</td>
<td>-25</td>
<td>-28</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Financial
Position over Past&nbsp;12 months&nbsp;</td>
<td>-25</td>
<td>-23</td>
<td>-18</td>
<td>-2</td>
<td>-7</td>
<td>-17</td>
<td>-19</td>
<td>-22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Financial
Position over Next 12 months</td>
<td>-13</td>
<td>-10</td>
<td>-1</td>
<td>-3</td>
<td>-12</td>
<td>-3</td>
<td>-4</td>
<td>-6</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;Living
Standards over Past 12 months</td>
<td>-64</td>
<td>-62</td>
<td>-55</td>
<td>-2</td>
<td>-9</td>
<td>-53</td>
<td>-57</td>
<td>-61</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Living
Standards over Next 12 months&nbsp;</td>
<td>-44</td>
<td>-32</td>
<td>-24</td>
<td>-12</td>
<td>-20</td>
<td>-20</td>
<td>-34</td>
<td>-37</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Favorable
Conditions for Major Purchases</td>
<td>-24</td>
<td>-23</td>
<td>-9</td>
<td>-1</td>
<td>-15</td>
<td>-11</td>
<td>-13</td>
<td>-15</td>
</tr>
</tbody>
</table>
</body></html>

The French National Institute for Statistics and Economic Studies (INSEE) released the results of its survey of consumer confidence today. The summary indicator declined by 4 percentage points in January from December, continuing a [...]

French Consumer Confidence Continues to Decline

Robert Brusca

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<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129l.jpg" align="left" border="0" height="265" width="353">

The ISAE business index is still in a weakening trend.
However, it currently only hovers near the midpoint of a range it has
occupied over the last eight years.

But looking at the table below we see that the domestic
economy is generally in WORSE shape for overall industry as well as
each industry segment compared to the foreign sector. Overall the
domestic economy order/demand situation is in the 36th percentile of
its range. The foreign sector is in the 50th percentile of its range.
These comparisons play out like that across industry segments as well.

One interesting conclusion that this suggests is that it is
not the strong euro that is crushing Italian industry. Since its
greatest weakness comes from the domestic economy, Italy&#8217;s biggest
problems seem to be home-grown. One problem may be that jobs are just
not paying what they should and growth in jobs is not what it should be
to support business at home. Certainly Italian consumer confidence is
very weak. And through that channel the international economy is being
felt, but in a more structural way, not in a cyclical currency way.
Since Italian firms seem to be doing better abroad than at home the
euro per se does not appear to be the proximate cause of its weakness.
Internationalization and competition in general may be root problems.
Competitiveness may be an issue but if it is, it is an issue in a
structural sense. And that will be a tougher problem to solve than a
too-strong euro.

Italy, like France and Germany, shows that one of the weakest
portions of the economy continues to be the consumer sector. There, the
domestic order situation is in the bottom 22nd percentile of its range
compared with a nearly as weak 23rd percentile for overseas orders.
Production is in its 22nd percentile. The sector is the weakest overall
among Italian industries.&gt;

The theme of a weak consumer/consumer-serving sector is one of
the most durable across the Euro Area. 

</div>


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"> Italy
ISAE Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since January 1999</td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan 08</td>
<td>Dec 07</td>
<td>Nov 07</td>
<td>Oct 07</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Biz Confidence</td>
<td>91.6</td>
<td>91.7</td>
<td>92.1</td>
<td>92.8</td>
<td>52.1</td>
<td>47</td>
<td>102</td>
<td>81</td>
<td>21</td>
<td>92</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">TOTAL
INDUSTRY</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Order
books &amp;
Demand</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-6</td>
<td>-6</td>
<td>-7</td>
<td>-6</td>
<td>52.5</td>
<td>35</td>
<td>13</td>
<td>-27</td>
<td>40</td>
<td>-9</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-15</td>
<td>-9</td>
<td>-11</td>
<td>-9</td>
<td>36.6</td>
<td>56</td>
<td>11</td>
<td>-30</td>
<td>41</td>
<td>-12</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-11</td>
<td>-6</td>
<td>-9</td>
<td>-10</td>
<td>50.0</td>
<td>44</td>
<td>11</td>
<td>-33</td>
<td>44</td>
<td>-13</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>5</td>
<td>6</td>
<td>7</td>
<td>8</td>
<td>66.7</td>
<td>51</td>
<td>13</td>
<td>-11</td>
<td>24</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">Production</td>
<td>-12</td>
<td>-4</td>
<td>-4</td>
<td>-3</td>
<td>30.6</td>
<td>70</td>
<td>22</td>
<td>-27</td>
<td>49</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">INTERMEDIATE</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Order
books &amp;
Demand</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-13</td>
<td>-13</td>
<td>-11</td>
<td>-9</td>
<td>41.8</td>
<td>54</td>
<td>19</td>
<td>-36</td>
<td>55</td>
<td>-10</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-17</td>
<td>-15</td>
<td>-12</td>
<td>-11</td>
<td>31.3</td>
<td>62</td>
<td>16</td>
<td>-32</td>
<td>48</td>
<td>-12</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-13</td>
<td>-13</td>
<td>-10</td>
<td>-9</td>
<td>46.6</td>
<td>51</td>
<td>18</td>
<td>-40</td>
<td>58</td>
<td>-12</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>3</td>
<td>6</td>
<td>7</td>
<td>4</td>
<td>62.1</td>
<td>38</td>
<td>14</td>
<td>-15</td>
<td>29</td>
<td>0</td>
</tr>
<tr>
<td class="firstcol">Production</td>
<td>-14</td>
<td>-11</td>
<td>-5</td>
<td>-5</td>
<td>29.3</td>
<td>70</td>
<td>27</td>
<td>-31</td>
<td>58</td>
<td>-7</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">INVESTMENT
GOODS</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Order
books &amp;
Demand</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>1</td>
<td>4</td>
<td>4</td>
<td>8</td>
<td>53.7</td>
<td>35</td>
<td>32</td>
<td>-35</td>
<td>67</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-5</td>
<td>0</td>
<td>-6</td>
<td>4</td>
<td>49.2</td>
<td>33</td>
<td>25</td>
<td>-34</td>
<td>59</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-1</td>
<td>2</td>
<td>-1</td>
<td>-3</td>
<td>55.6</td>
<td>35</td>
<td>23</td>
<td>-31</td>
<td>54</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>4</td>
<td>3</td>
<td>6</td>
<td>14</td>
<td>56.8</td>
<td>46</td>
<td>20</td>
<td>-17</td>
<td>37</td>
<td>2</td>
</tr>
<tr>
<td class="firstcol">Production</td>
<td>-1</td>
<td>6</td>
<td>5</td>
<td>13</td>
<td>45.5</td>
<td>40</td>
<td>35</td>
<td>-31</td>
<td>66</td>
<td>-1</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">CONSUMER
GOODS</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Order
books &amp;
Demand</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-18</td>
<td>-5</td>
<td>-10</td>
<td>-13</td>
<td>21.4</td>
<td>78</td>
<td>15</td>
<td>-27</td>
<td>42</td>
<td>-10</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-21</td>
<td>-8</td>
<td>-15</td>
<td>-16</td>
<td>17.1</td>
<td>85</td>
<td>8</td>
<td>-27</td>
<td>35</td>
<td>-12</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-24</td>
<td>-11</td>
<td>-15</td>
<td>-17</td>
<td>23.4</td>
<td>80</td>
<td>12</td>
<td>-35</td>
<td>47</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>6</td>
<td>5</td>
<td>8</td>
<td>9</td>
<td>65.4</td>
<td>47</td>
<td>15</td>
<td>-11</td>
<td>26</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">Production</td>
<td>-17</td>
<td>-2</td>
<td>-8</td>
<td>-12</td>
<td>22.2</td>
<td>86</td>
<td>11</td>
<td>-25</td>
<td>36</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td colspan="3">Total number of months:</td>
<td>100</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The ISAE business index is still in a weakening trend. However, it currently only hovers near the midpoint of a range it has occupied over the last eight years. But looking at the table below we see that the domestic economy is [...]

ISAE Biz Confidence Edges Lower

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<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129e.jpg" align="left" border="0" height="265" width="353">

Weakness remains in play in the UK retail sector. In January
the &#8216;+4&#8217; orders and sales results continue a trend of progressively
weaker net balance results that extends back to early 2007. Still those
readings bested the &#8216;-5&#8217; for sales and the &#8216;-9&#8217; for orders that
retailers themselves had expected. So while conditions have steadily
worsened, they have still exceeded the expectations of the
participating retailers themselves, at least in December. Expectations
for sales &#8216;for the time of year&#8217; were a weak &#8216;-16&#8217; for January,
however, and that reading resided in the bottom 22 percentile of its
range. Looking ahead to February &#8216;time of year sales&#8217; is still negative
at &#8216;-5&#8217;, but retailers appear to have scaled back on their pessimism.
Sales and orders compared to a year ago are expected to be in the &#8216;+10&#8221;
range. If so that would pose a bit of a reversal to the ongoing down
trend. But January was the first positive sales surprise in the past
five months and only the second in the past nine. Retailers have had a
reason for their pessimism. 

</div>


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col">UK Retail volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Feb 08</td>
<td>Jan 08</td>
<td>Dec 07</td>
<td>Nov 07</td>
<td>12Mos Avg</td>
<td>%tile</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Sales/Year Ago</td>
<td>--</td>
<td>4</td>
<td>8</td>
<td>13</td>
<td>19</td>
<td>42%</td>
<td>57</td>
<td>-35</td>
<td>92</td>
</tr>
<tr>
<td class="firstcol">Orders/Year Ago</td>
<td>--</td>
<td>4</td>
<td>6</td>
<td>18</td>
<td>15</td>
<td>53%</td>
<td>42</td>
<td>-38</td>
<td>80</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Year</td>
<td>--</td>
<td>0</td>
<td>-5</td>
<td>-3</td>
<td>4</td>
<td>47%</td>
<td>41</td>
<td>-37</td>
<td>78</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>--</td>
<td>9</td>
<td>24</td>
<td>18</td>
<td>13</td>
<td>30%</td>
<td>30</td>
<td>0</td>
<td>30</td>
</tr>
<tr class="odd">
<td class="firstcol">Expected:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Feb-08</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Sales/Year Ago</td>
<td>10</td>
<td>-5</td>
<td>11</td>
<td>15</td>
<td>16</td>
<td>46%</td>
<td>49</td>
<td>-23</td>
<td>72</td>
</tr>
<tr>
<td class="firstcol">Orders/Year Ago</td>
<td>10</td>
<td>-9</td>
<td>10</td>
<td>12</td>
<td>11</td>
<td>61%</td>
<td>38</td>
<td>-34</td>
<td>72</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Year</td>
<td>-5</td>
<td>-16</td>
<td>3</td>
<td>2</td>
<td>3</td>
<td>41%</td>
<td>29</td>
<td>-29</td>
<td>58</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>11</td>
<td>24</td>
<td>11</td>
<td>12</td>
<td>10</td>
<td>38%</td>
<td>24</td>
<td>3</td>
<td>21</td>
</tr>
</tbody>
</table>
</body></html>

Weakness remains in play in the UK retail sector. In January the ‘+4’ orders and sales results continue a trend of progressively weaker net balance results that extends back to early 2007. Still those readings bested the ‘-5’ for [...]

UK Retail Sector Continues to Ramp Down

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129c.jpg" align="left" border="0" height="265" width="353">
The Conference Board reported today that consumer confidence
gave back about all of its December gain. The level fell 3.0% in
January to a reading of 87.9. The decline was slightly less than had
been expected by economists but it was to a point near the low of last
year.
A decline in the expectations component accounted for all of
last month's decline with an 8.2% m/m drop. Expectations for employment
(more jobs) and for business conditions deteriorated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080129d.jpg" align="right" border="0" height="265" width="353">

The percentage of respondents planning to buy an existing home
fell but those planning to buy a new home rose to the highest in four
months. Those planning to buy a major appliance rose to the highest
level since August. 
Respondents planning to buy an automobile within the next six
months rose sharply
The present conditions index rose 2.1% and that made up just a
small piece of the declines during the last nine months of 2007. Just
20.7% of respondents saw business conditions as good, near the least
since 2004, but a slightly greater 23.9% saw jobs as plentiful. 
The expected inflation rate in twelve months fell m/m to 5.3%
but that still was up from the 5.1% expected rate during 2006 and 2007.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board 
&nbsp;(SA, 1985=100)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>87.9</td>
<td>90.6</td>
<td>-20.2%</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>115.3</td>
<td>112.9</td>
<td>-13.9%</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>69.6</td>
<td>75.8</td>
<td>-26.3%</td>
<td>86.4</td>
<td>89.7</td>
<td>89.7</td>
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The Conference Board reported today that consumer confidence gave back about all of its December gain. The level fell 3.0% in January to a reading of 87.9. The decline was slightly less than had been expected by economists but it was [...]

Consumer Confidence Stayed Low

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: January 2008

Jump to:

FOMC Lowers Interest Rates Further

ADP Report: Private Payroll Growth Much Improved

US 4Q GDP Weaker Than Expected At 0.6%. Exports & Inventories Added Less

US 4Q GDP Weaker Than Expected At 0.6%. Exports & Inventories Added Less

French Consumer Confidence Continues to Decline

ISAE Biz Confidence Edges Lower

UK Retail Sector Continues to Ramp Down

Consumer Confidence Stayed Low