Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126d.jpg" width="353">
The rise in initial claims for jobless insurance took a breather last week. The 14,000 decline to 529,000 was the first material weekly fall in over one month. Yet despite the decline, initial claims for the month remained 10.7% higher than they were in October.
Expectations had been for claims last week of 533,000. The four-week moving average of initial claims rose to this cycle&#39;s high of 518,500 (54.2% y/y).
The largest increases in initial claims for the week ending Nov. 15 were in Illinois (+5,285), Michigan (+2,697), Wisconsin (+1,551), Indiana (+1,549), and Missouri (+1,487), while the largest decreases were in California (-9,436), Tennessee (-4,566), North Carolina (-4,512), New Jersey (-3,729), and Florida (-2,686).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126c.jpg" width="353">
Continuing claims for unemployment insurance during the week of November 8 fell 54,000 and that reversed about half of the prior week&#39;s increase. The four-week average of continuing claims nevertheless rose to 3,929,000, this cycle&#39;s high and the highest since 1982. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment remained at this cycle&#39;s high of 3.0%. The Commerce Department indicated that the highest insured unemployment rates in the week ending Nov. 8 were in Puerto Rico (5.0 percent), Oregon (4.2), Michigan (3.8), Nevada (3.8), South Carolina (3.6), New Jersey (3.5), Pennsylvania (3.5), Alaska (3.4), Arkansas (3.4), and California (3.4).
Sectoral Reallocation and Unemployment from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-32.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/22/08</th>
<th scope="col">11/15/08</th>
<th scope="col">11/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>529</td>
<td>543</td>
<td>516</td>
<td>51.6%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,962</td>
<td>4,016</td>
<td>49.0%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
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The rise in initial claims for jobless insurance took a breather last week. The 14,000 decline to 529,000 was the first material weekly fall in over one month. Yet despite the decline, initial claims for the month remained 10.7% [...]

U.S. Claims For Unemployment Insurance Ticked Lower

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126a.jpg" width="353">
Led by a 5.9% m/m drop in consumer spending on motor vehicles (-17.8% y/y), personal consumption expenditures fell 1.0% last month. It was the third consecutive monthly decline and was the largest for any month since the recession of 1991. In fact, it was one of the largest declines in the series&#39; history. 
Spending began the fourth quarter 1.3% below 3Q. Real spending fell in October for the third consecutive month. The 0.5% decline (-0.9% y/y) left the starting point for spending 0.8% below the 3Q average and the three month rate of growth at a negative 4.0%. Real spending on motor vehicles fell at a 23.5% annual rate during the last three months. Furniture spending fell at a 10.9% rate following an 8.0% gain last year. Spending on clothing fell at a 14.6% rate during the last three months after a 4.7% rise during 2007. 
Disposable personal income increased 0.4% last month following a downwardly revised 0.1% September uptick. The absence of tax rebate checks and weaker job gains have slowed y/y growth to 3.8% after last year&#39;s rise of 5.5% and of 6.4% during 2006. Adjusted for inflation disposable income rose 0.5% y/y after a 2.8% rise during all of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126b.jpg" width="353">
Overall, personal income rose 0.3% last month which was slightly better than expectations. But wage &amp; salary income ticked up just 0.1% after the 0.1% slip during September. The y/y gain of 2.3% compares to a 5.6% rise last year. Factory sector wages fell for the third straight month (-0.6% y/y) and wages &amp; salaries in the private service-providing industries barely increased 0.1%. Their 2.2% y/y rise is roughly one-third of last year&#39;s increase. Wages in the government sector rose 0.4% (5.2% y/y).
The PCE chain price index fell 0.6% and the index returned to its June level. Lower gasoline prices, off 13.5% (+12.5% y/y) again offset the rise in food prices which rose 0.4% (6.2% y/y). The core PCE price index fell slightly and it was the first decline since 2001. The decline matched Consensus expectations. Three-month growth of 1.4% was the lowest since late-2006. Furniture prices fell yet again (-3.7% y/y) while apparel prices fell 1.1% (-0.1% y/y). Transportation costs rose 6.0% y/y while medical care prices rose 1.9%.
The personal savings rate rose sharply to 2.4%, it&#39;s highest since June, as spending fell and income rose.
The figures noted above are available in the Haver USECON and in the USNA databases. 

<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/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</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">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>3.3</td>
<td>6.1</td>
<td>7.1</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Disposable Personal Income</td>
<td>0.4</td>
<td>0.1</td>
<td>3.8</td>
<td>5.5</td>
<td>6.4</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption</td>
<td>-1.0</td>
<td>-0.3</td>
<td>2.3</td>
<td>5.5</td>
<td>5.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.4</td>
<td>1.0</td>
<td>0.7 (Oct. &#39;07)</td>
<td>0.5</td>
<td>0.7</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.6</td>
<td>0.1</td>
<td>3.2</td>
<td>2.6</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>-0.0</td>
<td>0.2</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.1</td>
</tr>
</tbody>
</table>
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Led by a 5.9% m/m drop in consumer spending on motor vehicles (-17.8% y/y), personal consumption expenditures fell 1.0% last month. It was the third consecutive monthly decline and was the largest for any month since the recession of [...]

U.S. PCE Fell 1.0% During October; Income Rose 0.3%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126a.jpg" width="353">
Led by a 5.9% m/m drop in consumer spending on motor vehicles (-17.8% y/y), personal consumption expenditures fell 1.0% last month. It was the third consecutive monthly decline and was the largest for any month since the recession of 1991. In fact, it was one of the largest declines in the series&#39; history. 
Spending began the fourth quarter 1.3% below 3Q. Real spending fell in October for the third consecutive month. The 0.5% decline (-0.9% y/y) left the starting point for spending 0.8% below the 3Q average and the three month rate of growth at a negative 4.0%. Real spending on motor vehicles fell at a 23.5% annual rate during the last three months. Furniture spending fell at a 10.9% rate following an 8.0% gain last year. Spending on clothing fell at a 14.6% rate during the last three months after a 4.7% rise during 2007. 
Disposable personal income increased 0.4% last month following a downwardly revised 0.1% September uptick. The absence of tax rebate checks and weaker job gains have slowed y/y growth to 3.8% after last year&#39;s rise of 5.5% and of 6.4% during 2006. Adjusted for inflation disposable income rose 0.5% y/y after a 2.8% rise during all of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126b.jpg" width="353">
Overall, personal income rose 0.3% last month which was slightly better than expectations. But wage &amp; salary income ticked up just 0.1% after the 0.1% slip during September. The y/y gain of 2.3% compares to a 5.6% rise last year. Factory sector wages fell for the third straight month (-0.6% y/y) and wages &amp; salaries in the private service-providing industries barely increased 0.1%. Their 2.2% y/y rise is roughly one-third of last year&#39;s increase. Wages in the government sector rose 0.4% (5.2% y/y).
The PCE chain price index fell 0.6% and the index returned to its June level. Lower gasoline prices, off 13.5% (+12.5% y/y) again offset the rise in food prices which rose 0.4% (6.2% y/y). The core PCE price index fell slightly and it was the first decline since 2001. The decline matched Consensus expectations. Three-month growth of 1.4% was the lowest since late-2006. Furniture prices fell yet again (-3.7% y/y) while apparel prices fell 1.1% (-0.1% y/y). Transportation costs rose 6.0% y/y while medical care prices rose 1.9%.
The personal savings rate rose sharply to 2.4%, it&#39;s highest since June, as spending fell and income rose.
The figures noted above are available in the Haver USECON and in the USNA databases. 

<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/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</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">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>3.3</td>
<td>6.1</td>
<td>7.1</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Disposable Personal Income</td>
<td>0.4</td>
<td>0.1</td>
<td>3.8</td>
<td>5.5</td>
<td>6.4</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption</td>
<td>-1.0</td>
<td>-0.3</td>
<td>2.3</td>
<td>5.5</td>
<td>5.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.4</td>
<td>1.0</td>
<td>0.7 (Oct. &#39;07)</td>
<td>0.5</td>
<td>0.7</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.6</td>
<td>0.1</td>
<td>3.2</td>
<td>2.6</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>-0.0</td>
<td>0.2</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.1</td>
</tr>
</tbody>
</table>
U.S. Claims For Unemployment Insurance Ticked Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126d.jpg" width="353">
The rise in initial claims for jobless insurance took a breather last week. The 14,000 decline to 529,000 was the first material weekly fall in over one month. Yet despite the decline, initial claims for the month remained 10.7% higher than they were in October.
Expectations had been for claims last week of 533,000. The four-week moving average of initial claims rose to this cycle&#39;s high of 518,500 (54.2% y/y).
The largest increases in initial claims for the week ending Nov. 15 were in Illinois (+5,285), Michigan (+2,697), Wisconsin (+1,551), Indiana (+1,549), and Missouri (+1,487), while the largest decreases were in California (-9,436), Tennessee (-4,566), North Carolina (-4,512), New Jersey (-3,729), and Florida (-2,686).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126c.jpg" width="353">
Continuing claims for unemployment insurance during the week of November 8 fell 54,000 and that reversed about half of the prior week&#39;s increase. The four-week average of continuing claims nevertheless rose to 3,929,000, this cycle&#39;s high and the highest since 1982. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment remained at this cycle&#39;s high of 3.0%. The Commerce Department indicated that the highest insured unemployment rates in the week ending Nov. 8 were in Puerto Rico (5.0 percent), Oregon (4.2), Michigan (3.8), Nevada (3.8), South Carolina (3.6), New Jersey (3.5), Pennsylvania (3.5), Alaska (3.4), Arkansas (3.4), and California (3.4).
Sectoral Reallocation and Unemployment from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-32.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/22/08</th>
<th scope="col">11/15/08</th>
<th scope="col">11/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>529</td>
<td>543</td>
<td>516</td>
<td>51.6%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,962</td>
<td>4,016</td>
<td>49.0%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
U.S. New-Home Sales Fell During October; Lowest Since 1991 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126e.jpg" width="353">
The U.S. Census Department reported that October sales of new single-family homes fell 5.3% m/m to 433,000 after a downwardly revised 0.7% September uptick. The level of sales in October was off by nearly 70% from the July 2005 peak and sales fell short of Consensus expectations for 443,000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126f.jpg" width="353">
The m/m change in sales was quite mixed by region. Sales in the West dropped 18.0% and sales in the South were off 6.0%. These declines were countered by gains elsewhere in the country. New home sales in the Midwest sales recovered half of their September decline with a 6.0% gain and new home sales in the Northeast rose 22.6% to their highest level since June.
The median price for a new single-family home declined 1.7% to $218,000. The drop came after a 0.4% September gain that was better than the initial report of a m/m decline. Prices were off 7.0% y/y and new home prices in September were back to where they were late in 2004. The decline in home prices matched the 7.0% drop for September reported yesterday by the Office of Federal Housing Enterprise Oversight (FHFA). The FHFA figures, (formerly the Office of Federal Housing Enterprise Oversight (OFHEO), as well as the Census Dept. figures, are available in Haver&#39;s USECON database. 
The number of new homes for purchase again fell again fell sharply, by 8.0% (-25.7% y/y). That reduced the inventory of unsold homes to the lowest level since mid-2004. In each of the country&#39;s regions, the inventory is down roughly one-quarter during the last year.
The month&#39;s supply of new homes for sale ticked higher m/m to 11.1 and that roughly has been the level since earlier this year.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">October</th>
<th scope="col">September</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">Total Sales (SAAR, 000s)</td>
<td>433</td>
<td>457</td>
<td>-40.1</td>
<td>768</td>
<td>1,049</td>
<td>1,279</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>38</td>
<td>31</td>
<td>&nbsp;-41.5</td>
<td>64</td>
<td>64</td>
<td>81</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>67</td>
<td>-44.5</td>
<td>118</td>
<td>161</td>
<td>203</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>233</td>
<td>248</td>
<td>-38.5</td>
<td>408</td>
<td>559</td>
<td>638</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>91</td>
<td>111</td>
<td>-39.7</td>
<td>178</td>
<td>266</td>
<td>356</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>218,000</td>
<td>221,700</td>
<td>-7.0</td>
<td>243,742</td>
<td>243,067</td>
<td>234,208</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment Reading Lowest Since 1980 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126e.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for the full month of November was worse than at mid-month. The full month index fell to 55.3 from the mid-month read of 57.9 and from 57.6 for October. The latest level was the lowest since early-1980 and it was lower than Consensus expectations for a reading of 57.7.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081126f.jpg" width="353">
During the last ten years there has been a 55% correlation between the level of sentiment and the three-month change in real consumer spending.
The view of current personal finances fell to a record low level, off by nearly one half from last year&#39;s average. Sixty one percent of respondents indicated their finances were worse off than last year, a record high. The index of buying conditions for large household goods fell sharply to the lowest since 1980. Most (54%) indicated that now was a bad time to buy because of a heightened sense that times were bad and that more bad times lay ahead.
The expectations component of consumer sentiment was down further than reported at mid-month. A 5.3% m/m November decline came on top of the 15.2% October drop. The figures were, however, slightly above the lows reached this past Spring. Expectations for business conditions during the next years fell to their lowest since July and expectations for conditions during the next year fell as well. The expected change in personal finances improved slightly.
The opinion of government policy, which apparently influences economic expectations, remained about unchanged from October (-37.8% y/y). Only a slightly improved six percent of respondents thought that a good job was being done by government while 55% thought a poor job was being done. That was near the highest percentage on record.
Recent economic weakness and lower oil prices caused inflation expectations to fall. The mean expected rate of inflation during the next year plummeted to 2.9% from 4.3% last month. It was as high as 7.0% in May. The expected inflation rate during the next five years was stable at 3.1%, near the lowest level since 2003.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">November</th>
<th scope="col">Mid-November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November 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 Sentiment</td>
<td>55.3</td>
<td>57.9</td>
<td>57.6</td>
<td>70.3</td>
<td>-27.3%</td>
<td>85.6</td>
<td>87.3</td>
<td>88.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>57.5</td>
<td>61.4</td>
<td>58.4</td>
<td>75.0</td>
<td>-37.2</td>
<td>101.2</td>
<td>105.1</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>53.9</td>
<td>55.7</td>
<td>57.0</td>
<td>67.2</td>
<td>-18.6</td>
<td>75.6</td>
<td>75.9</td>
<td>77.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125h.jpg" align="left" border="0" height="265" width="353">
The Insee business climate indicator is plunging. The overall
index dropped to 80 in November from 87 in October and now sits in the
bottom 14% of its range going back to 1990. It is the 10th weakest
climate reading on record. The table below is for the manufacturing
sector which is similarly weak. For manufacturers in France the current
industrial trend is the worst on record. The price level is in the
bottom 16% of its range. The recent trend is weak, bottom 20 percent of
its range. But the outlook trend at a -28 raw reading is the worst in
the history of the series - bottom of the range. Orders and demand are
weak, in the bottom 21% of their range. Foreign orders are relatively
weak and reside in the bottom 16 percent of their range. Meanwhile
inventory levels are relatively high in the 87th percentile of their
range. 
 

Industry in France undergoing severe downward pressure.
Today&#8217;s data on German GDP suggested that its GDP was hurt the most by
drops in exports. But then Germany is an exporting economy. Germany&#8217;s
main trade partners, like France, are in trouble so it looks like this
sort of weakness is something we will be seeing the coming months in
Germany as well. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col"> INSEE Manufacturing Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr>
<td class="firstcol">OUTLOOK</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Industrial Prod Trend</td>
<td>-69</td>
<td>-66</td>
<td>-42</td>
<td>-38</td>
<td>0.0</td>
<td>227</td>
<td>44</td>
<td>-69</td>
<td>113</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">Industrial Price Level</td>
<td>-17</td>
<td>14</td>
<td>27</td>
<td>41</td>
<td>16.7</td>
<td>197</td>
<td>68</td>
<td>-34</td>
<td>102</td>
<td>9</td>
</tr>
<tr>
<td class="firstcol">Production</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Recent Trend</td>
<td>-22</td>
<td>-12</td>
<td>-8</td>
<td>-2</td>
<td>19.7</td>
<td>214</td>
<td>35</td>
<td>-36</td>
<td>71</td>
<td>5</td>
</tr>
<tr>
<td class="firstcol">Likely trend</td>
<td>-28</td>
<td>-22</td>
<td>-11</td>
<td>-6</td>
<td>0.0</td>
<td>227</td>
<td>34</td>
<td>-28</td>
<td>62</td>
<td>6</td>
</tr>
<tr>
<td class="firstcol">Orders/Demand</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Orders&amp;Demand</td>
<td>-45</td>
<td>-32</td>
<td>-25</td>
<td>-22</td>
<td>21.3</td>
<td>211</td>
<td>29</td>
<td>-65</td>
<td>94</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">FgnOrders&amp;Demand</td>
<td>-46</td>
<td>-26</td>
<td>-28</td>
<td>-22</td>
<td>16.2</td>
<td>215</td>
<td>37</td>
<td>-62</td>
<td>99</td>
<td>-10</td>
</tr>
<tr>
<td class="firstcol">Inventories</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Levels</td>
<td>26</td>
<td>22</td>
<td>18</td>
<td>17</td>
<td>87.9</td>
<td>6</td>
<td>30</td>
<td>-3</td>
<td>33</td>
<td>13</td>
</tr>
<tr>
<td class="firstcol">Prices</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Likely Sales Price Trend</td>
<td>0</td>
<td>8</td>
<td>14</td>
<td>16</td>
<td>50.0</td>
<td>110</td>
<td>25</td>
<td>-25</td>
<td>50</td>
<td>0</td>
</tr>
</tbody>
</table>
</body></html>

The Insee business climate indicator is plunging. The overall index dropped to 80 in November from 87 in October and now sits in the bottom 14% of its range going back to 1990. It is the 10th weakest climate reading on record. The [...]

France Business Climate Report

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125f.jpg" align="left" border="0" height="265" width="353">
The S&amp;P/Case-Shiller 20 Home Price
Composite Index fell another 1.8% during September. Since their peak in
July 2006, prices have fallen 22.0% -- down 17.4%
during the last twelve months. The series dates back only to 2000. The
decline in September prices was greater than generally expected.
The Case-Shiller index of 20 U.S. cities and their surrounding
areas is weighted to reflect price changes due to extensive remodeling,
home additions or extreme neglect. For example, smaller weights are
assigned to sales of homes that have undergone extensive remodeling.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125g.jpg" align="right" border="0" height="265" width="353">
The Case-Shiller composite index of homes in 10 metropolitan
areas, which has a longer history and dates back to 1987, fell 1.9%
during September. The index was down 18.6% year-to-year and was down
23.4% since the 2006 peak.
Weakest Regions: Home prices in Phoenix,
Nevada continued quite weak and fell 3.5% during September (-31.9% y/y)
and in San Diego prices fell another 2.4% (-26.3% y/y). Home prices in
Las Vegas, Nevada fell 2.6% (-31.3% y/y). Prices in Miami fell 2.6%
during September and were off 28.4% y/y, while the same was true for
home prices in Los Angeles, down 27.6% y/y. In San Francisco home
prices were off 29.5% y/y while prices in Miami fell 28.4%. Florida
generally has seen weak home prices and in Tampa they posted a 19.5%
y/y decline. The weak auto sector dragged down home prices in Detroit
by 18.6% y/y.
Less Weak Regions: In the Northeast, the
decline in home prices has been less severe to date. In New York,
prices fell a lesser 7.3% y/y and they were down 5.7% in Boston. In
Dallas, prices also were off by a modest 2.7% y/y and in Charlotte,
North Carolina they fell 3.5% y/y . In Denver, home prices were off
5.4% y/y and they were down 6.4% y/y in Cleveland Ohio. In Chicago,
home prices were off 10.1%.
The S&amp;P/Case-Shiller home price series can be found in
Haver's USECON database but the city data is in the
REGIONAL database.
The latest press release from Standard &amp; Poor's can be
found <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112555.pdf">here</a>.
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>.

<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">September</th>
<th scope="col">August</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>
<td class="firstcol">20 City Composite
Index</td>
<td>161.56</td>
<td>164.60</td>
<td>-17.4%</td>
<td>-3.8%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>
</body></html>

The S&P/Case-Shiller 20 Home Price Composite Index fell another 1.8% during September. Since their peak in July 2006, prices have fallen 22.0% -- down 17.4% during the last twelve months. The series dates back only to 2000. The [...]

Case-Shiller Home Price Index Fell Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125d.jpg" align="left" border="0" height="265" width="353">
The Conference Board reported that its November index of
consumer confidence recovered a small piece of an October collapse. The
rise to a level of 44.9 followed an October decline to 38.8. Consensus
expectations had been for a roughly unchanged reading of 38.1.
During the last ten years there has been a 79% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125e.jpg" align="right" border="0" height="265" width="353">
This month's rise reflected a decrease in the percentage of
respondents expecting business conditions to worsen in six months. The
latest level did, however, remain near the highest since the credit
crunch of 1980. A small 11.4% expected improvement in conditions. More
jobs were expected by just 9.2% of respondents while a near-record
17.7% foresaw less income.
The present conditions index fell even further to the lowest
level since 1992. Jobs were seen as hard to get by 37.2% of
respondents, the highest since 1993 and jobs were seen as plentiful by
just 8.8%. Business conditions were seen as good by just 9.9%, the
lowest since 1991. Those who thought conditions were bad rose to 40.3%,
also the highest since 1992.
Expectations for the inflation rate in twelve months fell
further 5.9%, the lowest level since February.
The Federal Reserve announced on Tuesday that it
will initiate a program to purchase the direct obligations of
housing-related government-sponsored enterprises (GSEs). The
text of the announcement is available <a href="http://www.federalreserve.gov/newsevents/press/monetary/20081125a.htm">here</a>.

<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">November</th>
<th scope="col">October</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>44.9</td>
<td>38.8</td>
<td>-48.9</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>42.2</td>
<td>43.5</td>
<td>-63.5</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>46.7</td>
<td>35.7</td>
<td>-32.4</td>
<td>86.4</td>
<td>89.7</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board reported that its November index of consumer confidence recovered a small piece of an October collapse. The rise to a level of 44.9 followed an October decline to 38.8. Consensus expectations had been for a [...]

Consumer Confidence Recovered A Bit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125a.jpg" width="353">
U.S. real GDP growth last quarter was little revised at -0.5% due to offsetting revisions to final demand growth (down) and inventories (up). The modest 0.5% (AR) decline compared to the advance report of a 0.3% dip and the revised figure matched Consensus expectations. Continuing its recent trend, the y/y rate of growth of 0.7% was the weakest since the end of the 2001 recession.
Released for the first time were corporate profits. They fell 1.0% and were down 9.0% y/y. Last quarter&#39;s decline compared to a 3.8% drop during 2Q and it was the seventh decline of the last eight quarters. The y/y decline was the weakest since the 2001 recession. The financial sector&#39;s travails continued to lead profits lower. Profits here fell 16.4% (-28.3% y/y) during 3Q. To some extent, cost cutting amongst domestic nonfinancial corporations offset that decline in financial sector earnings, but it wasn&#39;t by much. Profits in the domestic nonfinancial sector rose 6.1% during 3Q , but the weaker economy still left them down 4.8% versus last year. Finally, economic weakness lowered repatriated foreign sector earnings. They slipped 0.2% and were down for the third consecutive quarter. For the four quarters ending in 3Q, however, earnings were still positive, up 4.5%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125k.jpg" width="353">
Back in the U.S., real final sales to domestic purchasers remained notably weak in 3Q. The estimate was shaved to a 2.3% annual rate of decline versus the initial figure of a 1.8% drop. It remained the largest quarterly decline since the end of the 1990-91 recession. The year-to-year dip of 0.3%, while still modest, was the first since 1991.
A decline in real PCE subtracted 2.7 percentage points from 3Q real GDP growth after a 0.9 point addition during 2Q. Personal consumption expenditures fell at a 3.7% annual rate (0.0% y/y) versus the initial estimate of a 3.1% fall. The drop followed 1.2% growth during 2Q which presumably was fueled by tax rebate checks but the lift seems to have been slight. Spending on autos &amp; light trucks continued to collapse, down at a 26.4% annual rate (-15.0% y/y). Real spending on furniture &amp; other household equipment fell at an 8.9% rate; Lower prices fueled the positive 2.4% y/y gain in furniture sales; nominal sales were down 1.6% y/y. Real spending on apparel fell at a 13.6% clip (-1.1% y/y) and that more than reversed a 2Q jump. Spending on consumer services was unchanged. The y/y gain of 1.1% in consumer services remained the weakest since 1981. 
Residential construction fell again last quarter and the little revised 17.6% (-20.9% y/y) rate of decline subtracted 0.7% points from GDP growth. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125b.jpg" width="353">
Business fixed investment was little changed at a -1.5% annual rate (+1.7% y/y), the first decline since the fourth quarter of 2006. It followed 2.5% growth during 2Q, a 4.9% rise during 2007 and roughly 7.5% growth in 2006 and 2005. Equipment investment repeated its 2Q performance and fell at a 5.6% rate (-2.6% y/y), the third consecutive quarter of decline. Conversely, structures investment was firm again and rose at a 6.6% annual rate (10.5% y/y).
Inventory accumulation added a somewhat greater 0.9 percentage points to GDP growth after three consecutive quarters of subtraction.
An improved foreign trade deficit added the same 1.1 percentage points to U.S. growth as estimated last month and it remained the main source of lift to GDP growth. The addition was, however, almost one third of that in 2Q. Exports grew at a slower 3.4% annual rate (6.2% y/y), half that in 2Q. Growth in imports weakened with the slowdown in overall economic growth. The 3.2% fall (-3.4% y/y) was the fifth quarterly decline in the last six.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081125c.jpg" width="353">
Spending by governments was strong again. The 5.3% rise (3.0% y/y) was little revised but the quickest since early 2003.
The GDP chain price index surged at an unrevised 4.2% annual rate. The accelerated rate of increase owed to a 5.2% jump in the PCE price index which was fueled by higher energy prices. Capital spending prices rose at an accelerated 4.3% rate (2.2% y/y) while the residential investment price deflator declined for the fourth straight quarter (-1.9% y/y).
The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF) and the announcement can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20081125a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><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">3Q &#39;08 (Preliminary)</th>
<th scope="col">3Q &#39;08 (Advance)</th>
<th scope="col">2Q &#39;08</th>
<th scope="col">3Q 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>-0.5</td>
<td>-0.3</td>
<td>2.8</td>
<td>0.7</td>
<td>2.0</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.9</td>
<td>0.6</td>
<td>-1.5</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.0</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-1.4</td>
<td>-0.8</td>
<td>4.4</td>
<td>1.1</td>
<td>2.4</td>
<td>2.8</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.1</td>
<td>1.1</td>
<td>2.9</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-2.3</td>
<td>-1.8</td>
<td>1.3</td>
<td>-0.3</td>
<td>1.8</td>
<td>2.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>4.2</td>
<td>4.2</td>
<td>1.1</td>
<td>2.7</td>
<td>2.7</td>
<td>3.2</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

U.S. real GDP growth last quarter was little revised at -0.5% due to offsetting revisions to final demand growth (down) and inventories (up). The modest 0.5% (AR) decline compared to the advance report of a 0.3% dip and the revised [...]

Dip in U.S. 3Q'08 GDP Revised Little; Profits Fell (Again)

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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: November 2008

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Dip in U.S. 3Q'08 GDP Revised Little; Profits Fell (Again)

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