Robert Brusca

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French business climate according to the INSEE index is up to 93 in June from 92 in May with May itself having risen to 92 from 89. The chart shows that there is some slight ongoing improvement but mostly that the downtrend in business confidence has been halted. The two-line chart of this activity shows the current index moving up slightly; there is more progress registered in terms of year-over-year improvement owing to a comparison with even weaker conditions in June of one year ago.


The recent trend is still poor at a reading of -42 but it’s better than -46 in May and -49 in April. The ‘likely trend’ at zero is better than the -2 reading for May and for April. New orders/demand situation overall has improved to -30 from -31 and that was an improvement from -40 back in April. The foreign orders situation hasn’t really improved very much. In the month its gain to -27 from -29 is still weaker than the -26 of April or the -25 from March. What we see is some sense of improved domestic orders and in domestic demand conditions compared to international orders and conditions. The ‘likely sales price trend’ remains negative and while the June reading is a modest improvement from May, April still is much weaker than it was in March.


Viewed in an historic context the climate reading is in the bottom 26% of its historic queue of values back to early 1990. The weakest relative reading is from the ‘recent trend’ which stands in the 12 percentile of its historic queue implying that it has been weaker than this only 12% of the time historically. Orders and demand as well as foreign orders and demand are both weak and stand approximately the lower 24th percentile of their respective historic queues. Only slightly better is the ‘likely sales price trend’ which is in the bottom 26 percentile of its historic queue. Slightly more optimistic and I emphasize that it’s only slightly optimistic is the ‘likely trend reading’ which is in about the lower 30th percentile of its historic queue. Queue standings are still extremely week. A brief perusal of the chart shows how weak the current numbers are compared to recent historic experience. The chart also shows the meager sense of improvement and of acceleration in the current numbers.


While it’s true that business confidence has improved it’s also true that it hasn’t approved by much. Climate is only back to a level that is very marginally better than what the readings have been and only back to what the readings were in September of last year. France continues to struggle.


On other fronts the UK survey of retail sales in June produced a standoff with nearly as many retailers reporting improve sales as reported worse sales. Weather has been a problem for retail sales in the UK and retailers are hoping that they’ll be a reversal so that sales can improve next month. In Italy, retail sales declined for the eighth consecutive month in April although the pace of decline slowed slightly.


The bottom line is that between what businesses are seeing what consumers are experiencing the euro-Zone continues to be under a great deal of pressure and continues to be waffling. The recent financial turmoil in markets is doing nothing to help the circumstances. It appears that we may have moved into another danger zone - maybe not a major danger zone- but it appears to be a danger zone nonetheless. It appears to be prompted by concerns about shifted Federal Reserve policy and what that will mean for the US and the rest of the world’s growth as well as financial markets performance. In addition it appears to have unveiled a credit bubble that is percolating in China and that could prove to be more of a risk factor for the rest of the world. That bears extremely close scrutiny. 


 
 
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French business climate according to the INSEE index is up to 93 in June from 92 in May with May itself having risen to 92 from 89. The chart shows that there is some slight ongoing improvement but mostly that the downtrend in [...]

French Businessmen See Some Improvement

Tom Moeller

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 Improvement in new orders is broadening within the factory sector.
 New orders for durable
 goods jumped
 3.6% 
 (7.6% y/y) during May following a like increase in
 April, initially reported as 3.3%. A 2.5% rise in orders for last month had been expected.
 As in April, higher orders in the transportation sector led the increase
 with a 10.2% gain (19.2% y/y). It reflected a 39.2% jump (60.5% y/y) in
 aircraft &amp; parts bookings. Nondefense aircraft orders increased by
 one-half (85.9% y/y) while defense aircraft orders gained 3.7% (0.5%
 y/y. Orders for
 motor vehicles and parts fell 1.2% (+7.3% y/y).
 Orders excluding the transportation sector rose 0.7% (2.8%
 y/y), which followed a 1.7% April jump. The broad-based gain reflected a
 2.7% increase (-5.2% y/y) in orders for computers &amp; electronic
 products. Communications equipment orders jumped 12.6% (19.0% y/y) and computers &amp; related products
 gained 1.0% (-15.1% y/y). Orders for electrical equipment strengthened
 by 1.4% (-2.3% y/y) while machinery orders rose 1.2% (6.5% y/y). Primary
 metal orders gained 0.9% (6.0% y/y) but orders for fabricated metals
 were off 0.9% (+2.7% y/y). Nondefense capital
 goods orders surged for a second month. The 9.3% gain (15.9% y/y) added
 to its 3.5% April rise. Orders excluding aircraft &amp; parts, a measure
 of &quot;core&quot; business investment, gained 1.1% (3.2% y/y), the
 third consecutive month of a similar increase.
 Shipments of durable goods improved 1.2% last month (2.4% y/y) to the series'
 record high. Transportation
 sector shipments jumped 3.6% last month and rose 7.5% y/y.
 Outside of the transportation sector, shipments ticked up 0.2% (0.3%
 y/y). Nondefense capital goods shipments recovered 6.0% (4.5% y/y) to a
 record high;
 excluding aircraft, they gained 1.7% (1.6% y/y).
 Unfilled orders for durable goods rose 0.8% (3.1% y/y) in May.
 Outside of the transportation sector, backlogs gained 0.8% (-0.8% y/y).
 Inventories of durable goods ticked up 0.1% (3.1% y/y) last month.
 Excluding transportation, inventories also nudged up 0.1% (0.2% y/y).
 The durable goods figures are available in Haver's USECON database.
 The Action Economics consensus forecast figure is in the AS1REPNA
 database.&nbsp;
 
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 &nbsp;


<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Durable Goods NAICS
 Classification</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >New Orders</td>
 <td>3.6</td>
 <td>3.6</td>
 <td>-5.9</td>
 <td>7.6</td>
 <td>4.1</td>
 <td>11.0</td>
 <td>23.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Transportation</td>
 <td>10.2</td>
 <td>8.3</td>
 <td>-15.0</td>
 <td>19.2</td>
 <td>8.9</td>
 <td>14.9</td>
 <td>49.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total Excluding Transportation</td>
 <td>0.7</td>
 <td>1.7</td>
 <td>-1.6</td>
 <td>2.8</td>
 <td>2.1</td>
 <td>9.5</td>
 <td>15.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Nondefense Capital Goods</td>
 <td>9.3</td>
 <td>3.5</td>
 <td>-8.9</td>
 <td>15.9</td>
 <td>3.7</td>
 <td>15.3</td>
 <td>27.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Excluding
 Aircraft</td>
 <td>1.1</td>
 <td>1.2</td>
 <td>1.1</td>
 <td>3.2</td>
 <td>2.1</td>
 <td>11.6</td>
 <td>12.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td>1.2</td>
 <td>-0.6</td>
 <td>0.9</td>
 <td>2.4</td>
 <td>6.4</td>
 <td>9.4</td>
 <td>11.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td>0.1</td>
 <td>0.3</td>
 <td>-0.1</td>
 <td>3.1</td>
 <td>4.5</td>
 <td>10.8</td>
 <td>9.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unfilled Orders</td>
 <td>0.8</td>
 <td>0.3</td>
 <td>-0.6</td>
 <td>3.1</td>
 <td>3.7</td>
 <td>10.0</td>
 <td>5.2</td>
 </tr>
 </tbody>
 </table>


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Improvement in new orders is broadening within the factory sector. New orders for durable goods jumped 3.6% (7.6% y/y) during May following a like increase in April, initially reported as 3.3%. A 2.5% rise in orders for last month had [...]

U.S. Durable Goods Orders Strength Is Broad-based

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 The IFO headline index advanced this month on the strength of improved expectations as the current index toppled back month-to-month and increased its year-over-year drop compared to May.

In the table we present the sector diffusion-version readings for business climate. The overall climate reading rose in June to net 4.4 from 4.1 in May. In diffusion terms the current index fell to 7.5 in June from a net of 8.6 in May as expectations rose to 1.4 from -0.4. The All-Sector reading for climate stands in the 75th percentile of its historic queue, higher only about 25% of the time - a reasonably firm perch. Current conditions are slightly better positioned in the 76the percentile of their queue with expectations lagging and standing in the 64th percentile of their historic queue. 

Viewed by sector, only manufacturing improved this month, rising from a raw net reading of 6.1 in May to a net of 7.8 in June. Construction slipped to 1.0 from 1.2 as wholesaling and retailing each switched from net positive to net negative territory. Wholesaling posted a reading of -1 in June down from +1.7 in May as retailing slid to -1.4 from +0.1 in May. Despite the slippage construction still stands at the relative strongest ranking in its queue among sectors at the 97th percentile, followed by Retailing in the 80th percentile and wholesaling in the 80th percentile. Manufacturing stands in the 53rd percentile of its range barely above its historic median level (queue standing of 50). 

The chart shows that Germany saw a rather rapid improvement in its business metrics early last year. Since April of last year, however, the improvement has lost some footing and has been moving sideways.

The current index is lower month to month and is lower than its Feb (2013) reading but is higher than most readings back to September of last year. Expectations are up this month but are below February and March levels. Still the index is equal to or higher than most readings back until July of 2011. 

The German economy is well described by the path of the indices in the chart above. It recovered from the financial crisis, then its gains slowed and it began to show sporadic declines in some sectors and has since started to mend but it still struggling with that. All in all the German economy is still growing, but PMI metrics on German MFG show a legacy of declines. Germany continues to be the best-performing large country in EMU yet it is still faced with challenges. German elections have kept German policy largely unchanged since late last year. 

The conservative Bundesbank approach to ECB policy got a boost today when the BIS (Bank for International Settlements) pronounced that extra monetary stimulus could not make up for weak growth and the errant fiscal policy. The BIS argued that excessively accommodative monetary policies had taken the heat off some countries that have not made the full scope of fiscal change that they should have implemented. With this the ears of our representatives in the US Congress should be stinging. 

This debate has been alive and well (or not so well...) in the US for some time. The BIS noted that central banks could do whatever is necessary form their end to try to restore growth but that might not be enough (thereby turning on of Draghi's pledge of last year into an oxymoron- what if banks do all they can" but if that's not enough?). 

After various cycles of boom, bust, and recovery in the last several years Germany is now experiencing a sort of a pause The German economy, like most of Europe, is still not in the place it would like to be. Currently the world growth environment is an issue with policy risk in China seeming to have reached some new heights and with an ostensible US move in the works to scale back on its QE making markets very nervous. That is making it a difficult environment for all central banks to make decisions. As market instability causes central banks to re-inspect their assumptions that economic conditions were stabilizing...Markets are not encouraged by the loss in guidance and presence of uncertainty where policy certainty once dominated the landscape. 

 
 
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The IFO headline index advanced this month on the strength of improved expectations as the current index toppled back month-to-month and increased its year-over-year drop compared to May. In the table we present the sector diffusion- [...]

IFO German Index Advances

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 The Chicago Federal Reserve indicated that its National Activity Index
 (CFNAI) remained negative last month. The figure improved, however, to
 -0.30 from a little-revised -0.52 in April. The three-month moving average
 deteriorated -0.43, its lowest reading since October. During the last ten
 years, there has been a 79% correlation between the Chicago Fed Index and
 the q/q change in real GDP.
 The Production &amp; Income component showed the greatest m/m
 improvement with a recovery to -0.10. The Employment, Unemployment &amp;
 Hours series improved to 0.01 and also recovered its April decline. The Personal
 Consumption &amp; Housing reading was stable at -0.17. Sales, Inventories
 &amp; Inventories deteriorated to -0.04. The Chicago Fed reported that
 during May, 33 of the 85 individual indicators made positive contributions
 to the overall index while 52 made negative contributions.
 The CFNAI is a weighted average of 85 indicators of national economic
 activity. It is constructed to have an average value of zero and a
 standard deviation of one. Since economic activity tends toward trend
 growth rate over time, a positive index reading corresponds to growth
 above trend and a negative index reading corresponds to growth below
 trend.
 The Chicago Federal Reserve figures are available in Haver's SURVEYS
 database.&nbsp;
 Managing Economic Development in Times of Fiscal Uncertainty
 from the Federal Reserve Bank of Chicago can be found <a href="http://chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfljuly2013_312a.pdf">here</a>.
 
 
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 &nbsp;


<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Chicago Federal Reserve
 Bank</th>
 <th scope="col">May</th>
 <th scope="col">Apr</th>
 <th scope="col">Mar</th>
 <th scope="col">May'12</th>
 <th scope="col">2012</th>
 <th scope="col">2011</th>
 <th scope="col">2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">CFNAI</td>
 <td>-0.30</td>
 <td>-0.52</td>
 <td>-0.48</td>
 <td>-0.12</td>
 <td>-0.08</td>
 <td>-0.08</td>
 <td>0.02</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;3-Month Moving Average</td>
 <td>-0.43</td>
 <td>-0.13</td>
 <td>-0.14</td>
 <td>-0.23</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Personal Consumption
 &amp; Housing</td>
 <td>-0.17</td>
 <td>-0.17</td>
 <td>-0.16</td>
 <td>-0.25</td>
 <td>-0.22</td>
 <td>-0.30</td>
 <td>-0.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Employment,
 Unemployment &amp; Hours</td>
 <td>0.01</td>
 <td>-0.06</td>
 <td>0.01</td>
 <td>0.09</td>
 <td>0.10</td>
 <td>0.14</td>
 <td>0.03</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;&nbsp;Production &amp; Income</td>
 <td>-0.10</td>
 <td>-0.33</td>
 <td>-0.10</td>
 <td>-0.03</td>
 <td>0.04</td>
 <td>0.05</td>
 <td>0.20</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;&nbsp;Sales, Orders &amp;
 Inventories</td>
 <td>-0.04</td>
 <td>0.03</td>
 <td>-0.24</td>
 <td>0.01</td>
 <td>-0.01</td>
 <td>0.04</td>
 <td>0.09</td>
 </tr>
 </tbody>
 </table>
 
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The Chicago Federal Reserve indicated that its National Activity Index (CFNAI) remained negative last month. The figure improved, however, to -0.30 from a little-revised -0.52 in April. The three-month moving average deteriorated [...]

U.S. Chicago Fed National Activity Index Remains Negative

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 Improvement in the overall labor market is evident in May's 7.6%
 unemployment rate. That compares to 7.8% at the end of last year and 8.1%
 during all of 2012. Notable has been the rate's recent decline in states
 where it previously was sticky. Great improvement has been in California
 where May's 8.6% rate of unemployment is two percentage below last year's
 average. Washington also saw great improvement. May's 6.8% unemployment
 rate compared to 8.2% during all of last year. In New York, May's rate of
 7.6% was roughly one full percentage point below last year's average.
 
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 The rate of labor market improvement has lagged in many large states.
 In Texas, for example, while the 6.5% jobless rate is low relative to the
 rest of the country, it's down just slightly from last year's 6.8%
 average. In Illinois, 9.1% joblessness differs little from the 8.9%
 averaged last year. In Tennessee, the current 8.3% unemployment rate is
 actually above last year's 8.0% average. In smaller states, the rate of
 job market improvement also varies. Nevada's 9.5% unemployment rate is
 well below last year's 11.1% average but in neighboring Arizona, 7.8%
 unemployment is down just modestly from last year's 8.3%.
 The household employment survey also produces data on individual
 metropolitan areas. These figures, in a few circumstances, differ widely
 from the state numbers. Florida's 7.1% unemployment rate, for example, is
 a far cry from the 9.3% in the Miami metro area. Michigan's 8.4% rate also
 is under the 9.5% rate around Detroit. New York state's 7.6% rate lags the
 8.3% in New York City while California's 8.6% rate is under 9.6% around
 Los Angeles. Running close to one another are the Illinois unemployment
 rate of 9.1% and the 9.3% rate around Chicago. Also, Ohio's 7.0%
 unemployment rate is near Cleveland's of 6.9%. Working the other way,
 Washington state's 6.8% jobless rate by far exceeds Seattle's 4.7%.
 State unemployment figures are available in Haver's EMPLR
 database.
 

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 &nbsp;


<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" >State Unemployment
 Rate</th>
 <th scope="col" >May</th>
 <th scope="col" >April</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 <th scope="col" >Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total U.S.</td>
 <td >7.6%</td>
 <td >7.5%</td>
 <td >8.1%</td>
 <td >8.9%</td>
 <td >9.6%</td>
 <td >155.7 mil.</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" >Ten States With Highest
 Jobless Rate</td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 <td ></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nevada</td>
 <td >9.5</td>
 <td >9.6</td>
 <td >11.1</td>
 <td >13.2</td>
 <td >13.8</td>
 <td >1.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Illinois</td>
 <td >9.1</td>
 <td >9.3</td>
 <td >8.9</td>
 <td >9.7</td>
 <td >10.4</td>
 <td >9.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Mississippi</td>
 <td >9.1</td>
 <td >9.1</td>
 <td >9.1</td>
 <td >10.5</td>
 <td >10.5</td>
 <td >1.3</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;North Carolina</td>
 <td >8.8</td>
 <td >8.9</td>
 <td >9.5</td>
 <td >10.3</td>
 <td >10.8</td>
 <td >4.7</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;California</td>
 <td >8.6</td>
 <td >9.0</td>
 <td >10.5</td>
 <td >11.8</td>
 <td >12.3</td>
 <td >18.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;New Jersey</td>
 <td >8.6</td>
 <td >8.7</td>
 <td >9.5</td>
 <td >9.3</td>
 <td >9.6</td>
 <td >4.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Georgia</td>
 <td >8.3</td>
 <td >8.2</td>
 <td >9.0</td>
 <td >9.9</td>
 <td >10.2</td>
 <td >4.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Indiana</td>
 <td >8.3</td>
 <td >8.5</td>
 <td >8.4</td>
 <td >9.0</td>
 <td >10.1</td>
 <td >3.2</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Tennessee</td>
 <td >8.3</td>
 <td >8.0</td>
 <td >8.0</td>
 <td >9.3</td>
 <td >9.8</td>
 <td >3.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;South Carolina</td>
 <td >8.0</td>
 <td >8.0</td>
 <td >9.1</td>
 <td >10.4</td>
 <td >11.2</td>
 <td >2.2</td>
 
 </tr>
 </tbody>
 </table>
 
<table class="centered" width="100%" border="0" cellspacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" >States With Lowest
 Jobless Rate</th>
 <th scope="col" >May</th>
 <th scope="col" >April</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 <th scope="col" >Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;New Hampshire</td>
 <td >5.3%</td>
 <td >5.5%</td>
 <td >5.5%</td>
 <td >5.5%</td>
 <td >6.1%</td>
 <td >0.7 mil.</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Minnesota</td>
 <td >5.3</td>
 <td >5.3</td>
 <td >5.6</td>
 <td >6.5</td>
 <td >7.3</td>
 <td >3.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Virginia</td>
 <td >5.3</td>
 <td >5.2</td>
 <td >5.9</td>
 <td >6.5</td>
 <td >7.1</td>
 <td >4.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Wyoming</td>
 <td >4.6</td>
 <td >4.8</td>
 <td >5.4</td>
 <td >6.1</td>
 <td >7.0</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Utah</td>
 <td >4.6</td>
 <td >4.7</td>
 <td >5.7</td>
 <td >6.9</td>
 <td >8.1</td>
 <td >1.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Iowa</td>
 <td >4.6</td>
 <td >4.7</td>
 <td >5.2</td>
 <td >5.9</td>
 <td >6.3</td>
 <td >1.6</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Vermont</td>
 <td >4.1</td>
 <td >4.0</td>
 <td >5.0</td>
 <td >5.6</td>
 <td >6.4</td>
 <td >0.4</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;South Dakota</td>
 <td >4.0</td>
 <td >4.1</td>
 <td >4.4</td>
 <td >4.8</td>
 <td >5.1</td>
 <td >0.4</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nebraska</td>
 <td >3.8</td>
 <td >3.7</td>
 <td >3.9</td>
 <td >4.5</td>
 <td >4.7</td>
 <td >1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;North Dakota</td>
 <td >3.2</td>
 <td >3.3</td>
 <td >3.1</td>
 <td >3.5</td>
 <td >3.8</td>
 <td >0.4</td>
 </tr>
 </tbody>
 </table>
 
<table class="centered" width="100%" border="0" cellspacing="0">
 <thead>
 <tr>
 <td class="firstcol" >Jobless Rate In Other Selected
 Large States
 </td><th scope="col" >May</th>
 <th scope="col" >April</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 <th scope="col" >Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Connecticut</td>
 <td >8.0%</td>
 <td >8.0%</td>
 <td >8.3%</td>
 <td >8.9%</td>
 <td >9.3%</td>
 <td >1.8 mil.</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Arizona</td>
 <td >7.8</td>
 <td >7.9</td>
 <td >8.3</td>
 <td >9.4</td>
 <td >10.4</td>
 <td >3.0</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;New York</td>
 <td >7.6</td>
 <td >7.8</td>
 <td >8.5</td>
 <td >8.3</td>
 <td >8.6</td>
 <td >9.6</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Florida</td>
 <td >7.1</td>
 <td >7.2</td>
 <td >8.6</td>
 <td >10.3</td>
 <td >11.3</td>
 <td >9.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Wisconsin</td>
 <td >7.0</td>
 <td >7.1</td>
 <td >6.9</td>
 <td >7.6</td>
 <td >8.4</td>
 <td >3.1</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Ohio</td>
 <td >7.0</td>
 <td >7.0</td>
 <td >7.2</td>
 <td >8.6</td>
 <td >10.0</td>
 <td >5.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Colorado</td>
 <td >6.9</td>
 <td >6.9</td>
 <td >8.0</td>
 <td >8.6</td>
 <td >9.0</td>
 <td >2.8</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Washington</td>
 <td >6.8</td>
 <td >7.0</td>
 <td >8.2</td>
 <td >9.2</td>
 <td >9.9</td>
 <td >3.5</td>
 
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Maryland</td>
 <td >6.7</td>
 <td >6.5</td>
 <td >6.8</td>
 <td >7.3</td>
 <td >7.8</td>
 <td >3.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Texas</td>
 <td >6.5</td>
 <td >6.4</td>
 <td >6.8</td>
 <td >8.0</td>
 <td >8.2</td>
 <td >12.8</td>
 </tr>
 </tbody>
 </table>
 


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Improvement in the overall labor market is evident in May's 7.6% unemployment rate. That compares to 7.8% at the end of last year and 8.1% during all of 2012. Notable has been the rate's recent decline in states where it previously [...]

State Unemployment Rates Continue Lower but Vary Greatly

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 Improvement in the overall labor market is evident in May's 7.6%
 unemployment rate. That compares to 7.8% at the end of last year and 8.1%
 during all of 2012. Notable has been the rate's recent decline in states
 where it previously was sticky. Great improvement has been in California
 where May's 8.6% rate of unemployment is two percentage below last year's
 average. Washington also saw great improvement. May's 6.8% unemployment
 rate compared to 8.2% during all of last year. In New York, May's rate of
 7.6% was roughly one full percentage point below last year's average.
 
 The rate of labor market improvement has lagged in many large states.
 In Texas, for example, while the 6.5% jobless rate is low relative to the
 rest of the country, it's down just slightly from last year's 6.8%
 average. In Illinois, 9.1% joblessness differs little from the 8.9%
 averaged last year. In Tennessee, the current 8.3% unemployment rate is
 actually above last year's 8.0% average. In smaller states, the rate of
 job market improvement also varies. Nevada's 9.5% unemployment rate is
 well below last year's 11.1% average but in neighboring Arizona, 7.8%
 unemployment is down just modestly from last year's 8.3%.
 The household employment survey also produces data on individual
 metropolitan areas. These figures, in a few circumstances, differ widely
 from the state numbers. Florida's 7.1% unemployment rate, for example, is
 a far cry from the 9.3% in the Miami metro area. Michigan's 8.4% rate also
 is under the 9.5% rate around Detroit. New York state's 7.6% rate lags the
 8.3% in New York City while California's 8.6% rate is under 9.6% around
 Los Angeles. Running close to one another are the Illinois unemployment
 rate of 9.1% and the 9.3% rate around Chicago. Also, Ohio's 7.0%
 unemployment rate is near Cleveland's of 6.9%. Working the other way,
 Washington state's 6.8% jobless rate by far exceeds Seattle's 4.7%.
 State unemployment figures are available in Haver's EMPLR
 database. 
 <table class="centered" border="0" cellSpacing="0" width="1231">
 <colgroup>
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 <col>
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 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" ? width="527">State Unemployment
 Rate</th>
 <th scope="col" width="116">May</th>
 <th scope="col" width="116">April</th>
 <th scope="col" width="117">2012</th>
 <th scope="col" width="117">2011</th>
 <th scope="col" width="117">2010</th>
 <th scope="col" width="117">Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" ? width="527">Total U.S.</td>
 <td align="center" width="116">7.6%</td>
 <td align="center" width="116">7.5%</td>
 <td align="center" width="117">8.1%</td>
 <td align="center" width="117">8.9%</td>
 <td align="center" width="117">9.6%</td>
 <td align="center" width="117">155.7 mil.</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" ? width="527">Ten States With Highest
 Jobless Rate</td>
 <td align="center" width="116"></td>
 <td align="center" width="116"></td>
 <td align="center" width="117"></td>
 <td align="center" width="117"></td>
 <td align="center" width="117"></td>
 <td align="center" width="117"></td>
 </tr>
 <tr>
 <td class="firstcol" ? width="527">&nbsp;&nbsp;Nevada</td>
 <td align="center" width="116">9.5</td>
 <td align="center" width="116">9.6</td>
 <td align="center" width="117">11.1</td>
 <td align="center" width="117">13.2</td>
 <td align="center" width="117">13.8</td>
 <td align="center" width="117">1.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" ? width="527">&nbsp;&nbsp;Illinois</td>
 <td align="center" width="116">9.1</td>
 <td align="center" width="116">9.3</td>
 <td align="center" width="117">8.9</td>
 <td align="center" width="117">9.7</td>
 <td align="center" width="117">10.4</td>
 <td align="center" width="117">9.6</td>
 </tr>
 <tr>
 
 <td class="firstcol" ? width="527">&nbsp;&nbsp;Mississippi</td>
 <td align="center" width="116">9.1</td>
 <td align="center" width="116">9.1</td>
 <td align="center" width="117">9.1</td>
 <td align="center" width="117">10.5</td>
 <td align="center" width="117">10.5</td>
 <td align="center" width="117">1.3</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" ? width="527">&nbsp;&nbsp;North Carolina</td>
 <td align="center" width="116">8.8</td>
 <td align="center" width="116">8.9</td>
 <td align="center" width="117">9.5</td>
 <td align="center" width="117">10.3</td>
 <td align="center" width="117">10.8</td>
 <td align="center" width="117">4.7</td>
 
 </tr>
 <tr>
 <td class="firstcol" ? width="527">&nbsp;&nbsp;California</td>
 <td align="center" width="116">8.6</td>
 <td align="center" width="116">9.0</td>
 <td align="center" width="117">10.5</td>
 <td align="center" width="117">11.8</td>
 <td align="center" width="117">12.3</td>
 <td align="center" width="117">18.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" ? width="527">&nbsp;&nbsp;New Jersey</td>
 <td align="center" width="116">8.6</td>
 <td align="center" width="116">8.7</td>
 <td align="center" width="117">9.5</td>
 <td align="center" width="117">9.3</td>
 <td align="center" width="117">9.6</td>
 <td align="center" width="117">4.6</td>
 </tr>
 <tr>
 <td class="firstcol" ? width="527">&nbsp;&nbsp;Georgia</td>
 <td align="center" width="116">8.3</td>
 <td align="center" width="116">8.2</td>
 <td align="center" width="117">9.0</td>
 <td align="center" width="117">9.9</td>
 <td align="center" width="117">10.2</td>
 <td align="center" width="117">4.8</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;Indiana</td>
 <td width="122" align="center">8.3</td>
 <td width="129" align="center">8.5</td>
 <td width="117" align="center">8.4</td>
 <td width="118" align="center">9.0</td>
 <td width="118" align="center">10.1</td>
 <td width="118" align="center">3.2</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="518">&nbsp; Tennessee</td>
 <td width="122" align="center">8.3</td>
 <td width="129" align="center">8.0</td>
 <td width="117" align="center">8.0</td>
 <td width="118" align="center">9.3</td>
 <td width="118" align="center">9.8</td>
 <td width="118" align="center">3.1</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;South Carolina</td>
 <td width="122" align="center">8.0</td>
 <td width="129" align="center">8.0</td>
 <td width="117" align="center">9.1</td>
 <td width="118" align="center">10.4</td>
 <td width="118" align="center">11.2</td>
 <td width="118" align="center">2.2</td>
 
 </tr>
 </tbody>
 </table>
 
 <table class="centered" border="0" cellSpacing="0" width="1240">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="524">States With Lowest
 Jobless Rate</th>
 <th scope="col" width="121">May</th>
 <th scope="col" width="121">April</th>
 <th scope="col" width="121">2012</th>
 <th scope="col" width="121">2011</th>
 <th scope="col" width="122">2010</th>
 <th scope="col" width="122">Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;New Hampshire</td>
 <td width="121" align="center">5.3%</td>
 <td width="121" align="center">5.5%</td>
 <td width="121" align="center">5.5%</td>
 <td width="121" align="center">5.5%</td>
 <td width="122" align="center">6.1%</td>
 <td width="122" align="center">0.7 mil.</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;Minnesota</td>
 <td width="121" align="center">5.3</td>
 <td width="121" align="center">5.3</td>
 <td width="121" align="center">5.6</td>
 <td width="121" align="center">6.5</td>
 <td width="122" align="center">7.3</td>
 <td width="122" align="center">3.0</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" width="524">&nbsp;&nbsp;Virginia</td>
 <td width="121" align="center">5.3</td>
 <td width="121" align="center">5.2</td>
 <td width="121" align="center">5.9</td>
 <td width="121" align="center">6.5</td>
 <td width="122" align="center">7.1</td>
 <td width="122" align="center">4.2</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;Wyoming</td>
 <td width="121" align="center">4.6</td>
 <td width="121" align="center">4.8</td>
 <td width="121" align="center">5.4</td>
 <td width="121" align="center">6.1</td>
 <td width="122" align="center">7.0</td>
 <td width="122" align="center">0.3</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="524">&nbsp;&nbsp;Utah</td>
 <td width="121" align="center">4.6</td>
 <td width="121" align="center">4.7</td>
 <td width="121" align="center">5.7</td>
 <td width="121" align="center">6.9</td>
 <td width="122" align="center">8.1</td>
 <td width="122" align="center">1.4</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;Iowa</td>
 <td width="121" align="center">4.6</td>
 <td width="121" align="center">4.7</td>
 <td width="121" align="center">5.2</td>
 <td width="121" align="center">5.9</td>
 <td width="122" align="center">6.3</td>
 <td width="122" align="center">1.6</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;Vermont</td>
 <td width="121" align="center">4.1</td>
 <td width="121" align="center">4.0</td>
 <td width="121" align="center">5.0</td>
 <td width="121" align="center">5.6</td>
 <td width="122" align="center">6.4</td>
 <td width="122" align="center">0.4</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="524">&nbsp;&nbsp;South Dakota</td>
 <td width="121" align="center">4.0</td>
 <td width="121" align="center">4.1</td>
 <td width="121" align="center">4.4</td>
 <td width="121" align="center">4.8</td>
 <td width="122" align="center">5.1</td>
 <td width="122" align="center">0.4</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" width="524">&nbsp;&nbsp;Nebraska</td>
 <td width="121" align="center">3.8</td>
 <td width="121" align="center">3.7</td>
 <td width="121" align="center">3.9</td>
 <td width="121" align="center">4.5</td>
 <td width="122" align="center">4.7</td>
 <td width="122" align="center">1.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="524">&nbsp;&nbsp;North Dakota</td>
 <td width="121" align="center">3.2</td>
 <td width="121" align="center">3.3</td>
 <td width="121" align="center">3.1</td>
 <td width="121" align="center">3.5</td>
 <td width="122" align="center">3.8</td>
 <td width="122" align="center">0.4</td>
 </tr>
 </tbody>
 </table>
 
 <table class="centered" border="0" cellSpacing="0" width="1231">
 <thead>
 <tr>
 <td class="firstcol" width="518">Jobless Rate In Other Selected
 Large States
 </td><th scope="col" width="122">May</th>
 <th scope="col" width="129">April</th>
 <th scope="col" width="117">2012</th>
 <th scope="col" width="118">2011</th>
 <th scope="col" width="118">2010</th>
 <th scope="col" width="118">Labor Force</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 
 <td class="firstcol" ? width="527">&nbsp;&nbsp;Connecticut</td>
 <td align="center" width="116">8.0%</td>
 <td align="center" width="116">8.0%</td>
 <td align="center" width="117">8.3%</td>
 <td align="center" width="117">8.9%</td>
 <td align="center" width="117">9.3%</td>
 <td align="center" width="117">1.8 mil.</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;Arizona</td>
 <td width="122" align="center">7.8</td>
 <td width="129" align="center">7.9</td>
 <td width="117" align="center">8.3</td>
 <td width="118" align="center">9.4</td>
 <td width="118" align="center">10.4</td>
 <td width="118" align="center">3.0</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" ? width="527">&nbsp;&nbsp;New York</td>
 <td align="center" width="116">7.6</td>
 <td align="center" width="116">7.8</td>
 <td align="center" width="117">8.5</td>
 <td align="center" width="117">8.3</td>
 <td align="center" width="117">8.6</td>
 <td align="center" width="117">9.6</td>
 
 </tr>
 <tr class="odd">
 <td class="firstcol" width="518">&nbsp;&nbsp;Florida</td>
 <td width="122" align="center">7.1</td>
 <td width="129" align="center">7.2</td>
 <td width="117" align="center">8.6</td>
 <td width="118" align="center">10.3</td>
 <td width="118" align="center">11.3</td>
 <td width="118" align="center">9.4</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;Wisconsin</td>
 <td width="122" align="center">7.0</td>
 <td width="129" align="center">7.1</td>
 <td width="117" align="center">6.9</td>
 <td width="118" align="center">7.6</td>
 <td width="118" align="center">8.4</td>
 <td width="118" align="center">3.1</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="518">&nbsp;&nbsp;Ohio</td>
 <td width="122" align="center">7.0</td>
 <td width="129" align="center">7.0</td>
 <td width="117" align="center">7.2</td>
 <td width="118" align="center">8.6</td>
 <td width="118" align="center">10.0</td>
 <td width="118" align="center">5.7</td>
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;Colorado</td>
 <td width="122" align="center">6.9</td>
 <td width="129" align="center">6.9</td>
 <td width="117" align="center">8.0</td>
 <td width="118" align="center">8.6</td>
 <td width="118" align="center">9.0</td>
 <td width="118" align="center">2.8</td>
 
 </tr>
 <tr>
 
 <td class="firstcol" width="518">&nbsp;&nbsp;Washington</td>
 <td width="122" align="center">6.8</td>
 <td width="129" align="center">7.0</td>
 <td width="117" align="center">8.2</td>
 <td width="118" align="center">9.2</td>
 <td width="118" align="center">9.9</td>
 <td width="118" align="center">3.5</td>
 
 </tr>
 <tr>
 <td class="firstcol" width="518">&nbsp;&nbsp;Maryland</td>
 <td width="122" align="center">6.7</td>
 <td width="129" align="center">6.5</td>
 <td width="117" align="center">6.8</td>
 <td width="118" align="center">7.3</td>
 <td width="118" align="center">7.8</td>
 <td width="118" align="center">3.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="518">&nbsp;&nbsp;Texas</td>
 <td width="122" align="center">6.5</td>
 <td width="129" align="center">6.4</td>
 <td width="117" align="center">6.8</td>
 <td width="118" align="center">8.0</td>
 <td width="118" align="center">8.2</td>
 <td width="118" align="center">12.8</td>
 </tr>
 </tbody>
 </table>
 
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 The index of Leading Economic Indicators, published by the Conference
 Board, ticked up 0.1% (2.0% y/y) during May to 95.2, another high for the
 economic recovery. The gain followed an upwardly revised 0.8% April
 increase, last month reported as 0.6%. A 0.2% rise had been expected for
 April. Just 45 percent of the component series had a positive influence on
 the index. A steeper interest rate yield curve, higher stock prices and
 the leading credit index increased the total. These were offset by a lower
 ISM new orders index, fewer building permits and higher initial claims for
 unemployment insurance.
 The index of coincident indicators gained 0.2% (1.5% y/y) after an
 unrevised 0.1% April uptick. Higher payroll employment, improved personal
 income less transfers and more manufacturing and trade sales had positive
 influences on the index. Industrial production was unchanged.
 The index of lagging economic indicators increased 0.3% (3.4% y/y)
 after a minimal 0.1% April rise. Roughly two-thirds of the component
 series rose paced by more commercial &amp; industrial loans outstanding.
 Another leading economic series is the ratio of coincident-to-lagging
 indicators. It measures how the economy is performing versus its excesses.
 The figure fell 0.2% (-1.9% y/y) last month to its lowest level of the
 economic expansion.
 The Conference Board figures are available in Haver's BCI
 database; the components are available there, and most are also in USECON.
 The forecast figures for the Consensus are in the AS1REPNA
 database. Visit the Conference Board's <a href="http://www.conference-board.org/">site</a>
 for coverage of leading indicator series from around the world.&nbsp;
 The economic projections which accompanied yesterday's FOMC
 meeting are available <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20130619.pdf">here</a>.
 
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	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 <tr>
 <th class="firstcol" scope="col">Business Cycle
 Indicators (%)</th>
 <th scope="col">May</th>
 <th scope="col">Apr</th>
 <th scope="col">Mar</th>
 <th scope="col">Y/Y</th>
 <th scope="col">2012</th>
 <th scope="col">2011</th>
 <th scope="col">2010</th>
 </tr>
 <tbody>
 <tr>
 <td class="firstcol">Leading</td>
 <td>0.1</td>
 <td>0.8</td>
 <td>-0.3</td>
 <td>2.0</td>
 <td>2.0</td>
 <td>5.1</td>
 <td>8.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Coincident</td>
 <td>0.2</td>
 <td>0.1</td>
 <td>0.1</td>
 <td>1.5</td>
 <td>2.1</td>
 <td>2.4</td>
 <td>1.2</td>
 </tr>
 <tr>
 <td class="firstcol">Lagging</td>
 <td>0.3</td>
 <td>0.1</td>
 <td>0.3</td>
 <td>3.4</td>
 <td>3.6</td>
 <td>2.7</td>
 <td>-3.1</td>
 </tr>
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The index of Leading Economic Indicators, published by the Conference Board, ticked up 0.1% (2.0% y/y) during May to 95.2, another high for the economic recovery. The gain followed an upwardly revised 0.8% April increase, last month [...]

U.S. Leading Economic Indicators Rise on Financial Series' Strength

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The flash readings for Markit's manufacturing and service sector PMIs both rose in June, indicating the least amount of contraction since March of 2012 for the service sector (compared to finalized data) and since February of 2012 for the manufacturing sector. 


The downdraft in Europe seems to be slowly dissipating. The chart shows a relatively stronger and longer-lived rise for the manufacturing index compared to the services index. Indeed, the manufacturing PMI stands in the lower 29th percentile of its historic queue compared to a 19% standing for the services sector. Both of these are still extremely low readings. Viewed another way, the manufacturing index is at 95% of its historic average compared to services which is at the 91st percentile of its historic average.


Both indicators are below the mark of '50' indicating ongoing contraction; both of them are below their historic mean indicating weaker than normal activity. And both of them are on an improving trend of some sort.


The manufacturing index has been moving up relatively strongly since about August 2012. During that move, there was a decline in October 2012 and two recent declines in March and in April 2013. The increases in May and June 2013, however, have now brought manufacturing back up to a local cycle high reading, its best since February 2012.


The services index shows a much flatter profile. It has now risen for three months in a row after falling for two months in a row in February and March; it has generally been increasing since October 2012.


Other Euro area data continue to be mixed. The economy in Europe is still not doing well, but the PMI data are speaking to the issue of the degree of decline and that is letting up. Europe has great internal differences in terms of the PMI values for individual country members. We will get more on that when the final figures are released. For now, we will note that France's PMI index for manufacturing jumped in June to 48.3 from 46.4 in May- even so that measures a decline in the French MFG sector. France's services PMI rose by more than two points on the month as well. In Germany the two sector PMI gauges translated into a net gain in its private sector in June for the second month in a row. Even so, the German MFG sector took a step back to 48.7 in June from 49.4 in May. 


Conditions in the Zone remain somewhat unpredictable in spite of the month's overall improvement. The news today from China of a weakening in the MFG PMI there is an offsetting bit of disturbing global news. Early data in the US seem to be better than expected for housing and for a regional MFG report on manufacturing from the Philadelphia Fed region. 


Still, markets are wary about the Fed down-shifting its support. Data have blown hot and cold. While Europe seems to have a trend improvement in train (less weakness) markets and central banks remain wary, The Fed, in its zeal to end QE, still is using language of a very hedged nature. Meanwhile, many inflation-sensitive indicators are very weak with silver looking especially weak in today's trading. The global economy is in flux if not in play. Many Fed watchers are trying to square the Fed's newest policy choice and bond market reactions with the ongoing weak -and weakening- inflation picture globally and in the US itself.


The picture is perplexing. The outlook while possibly better and stronger is also still with a good deal of risk even as the Fed says it sees less risk. The recent drop in inflation has caught some attention but not yet headlines and is the focus of at least one Fed member, St Louis Fed President, James Bullard. There are still a lot of interesting international twists and turns in the data that merit our full attention. We are not yet 'off to the races' despite what some of today's data might suggest. 


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The flash readings for Markit's manufacturing and service sector PMIs both rose in June, indicating the least amount of contraction since March of 2012 for the service sector (compared to finalized data) and since February of 2012 for [...]

EMU Down-Draft Abates

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: June 2013

Jump to:

French Businessmen See Some Improvement

U.S. Durable Goods Orders Strength Is Broad-based

IFO German Index Advances

U.S. Chicago Fed National Activity Index Remains Negative

State Unemployment Rates Continue Lower but Vary Greatly

State Unemployment Rates Continue Lower but Vary Greatly

U.S. Leading Economic Indicators Rise on Financial Series' Strength

EMU Down-Draft Abates