Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130d.jpg" width="353">
The economic news out of Japan is ambiguous. Production and exports are strong, employment, retail sales and family living expenditures are weak. The yen has depreciated sharply in recent weeks against the euro and the dollar. The yen is, currently, at its lowest point against the Euro since the introduction of the Euro in 1999.
Japanese industrial production made a new record in December, 2006 at 109.5 (2000=100), exceeding previous peak levels reached in 1991, 1997 and 2000 as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130e.jpg" width="353">
The strength in the production sector has not come from domestic consumer demand but, rather, from export demand. The second chart compares the index of retail trade and the value index of exports, both with a base of (2000=100). The index of retail sales was 92.0 in December, down from 92.2 in November and from 92,7 in December, 2005, while the value index of exports was 161.79 up 5.0% from November and 9.84% from December, 2005. Expenditures
Part of the sluggishness in retail trade is due to the relatively slow growth in employment. The third chart compares retail sales with total employment. There is a good correlation between the two series--.92. Although employment in December was 0.7% above the year ago figure it was 0.5% below November, 2006. Moreover, the unemployment rate rose by one percentage point to 4.1% in December.
Depreciations of the yen against the Euro and the U.S. dollar have stimulated the demand for exports. The very rapid depreciation of the yen in recent weeks is shown in the fourth chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130f.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130g.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Nov 06</th>
<th scope="col">Dec 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y%</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production (2000=100)</td>
<td>109.5</td>
<td>108.7</td>
<td>104.9</td>
<td>0.74</td>
<td>4.39</td>
<td>105.9</td>
<td>101.6</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol"> Exports </td>
<td>161.7</td>
<td>154.0</td>
<td>147.21</td>
<td>5.00</td>
<td>9.84</td>
<td>145.70</td>
<td>127.10</td>
<td>118.42</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>92.0</td>
<td>92.2</td>
<td>92.7</td>
<td>-0.22</td>
<td>-0.76</td>
<td>93.1</td>
<td>93.0</td>
<td>91.7</td>
</tr>
<tr>
<td class="firstcol">Family Living Expenditures</td>
<td>92.8</td>
<td>93.8</td>
<td>94.0</td>
<td>-1.01</td>
<td>-1.31</td>
<td>93.0</td>
<td>94.8</td>
<td>95.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (millions)</td>
<td>63.83</td>
<td>64.15</td>
<td>63.41</td>
<td>-0.50</td>
<td>0.66</td>
<td>63.83</td>
<td>63.57</td>
<td>63.29</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.1</td>
<td>4.0</td>
<td>4.4</td>
<td>0.1</td>
<td>-0.3</td>
<td>4.1</td>
<td>4.4</td>
<td>4.7</td>
</tr>
</tbody>
</table>
</body>
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The economic news out of Japan is ambiguous. Production and exports are strong, employment, retail sales and family living expenditures are weak. The yen has depreciated sharply in recent weeks against the euro and the dollar. The yen [...]

No Clear Direction for the Japanese Economy in Recent Statistics

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week reversed all of the increases during the prior four weeks with a 0.9% decline.
Nevertheless, the average level of chain store sales in January is up a notably firm 2.8% from the prior month.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS also gave back all of the gains during the prior two weeks with a 1.1% decline and for the month is 0.4% below December.
Access to Credit is the latest International Economic Trends from the Federal Reserve Bank of St. Louis and it is available <a href="http://research.stlouisfed.org/publications/iet/20070201/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">1/27/07</th>
<th scope="col">1/20/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>476.4</td>
<td>480.9</td>
<td>4.9%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week reversed all of the increases during the prior four weeks with a 0.9% decline. Nevertheless, the average level of chain store [...]

Weekly Chain Store Sales Reversed Prior Gains

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130b.jpg" width="353">
Consumer confidence increased a modest 0.3% in January, according to the Conference Board Survey, following an upwardly revised 4.5% December gain. The increase was to the highest level since March 2002.
The reading of present conditions rose a firmer 2.6% after the 4.1% December increase as the percentage of respondents who viewed business conditions as good rose to 28.1%, the highest since last May. The percentage who viewed jobs as plentiful also rose to 29.9%, the highest since 2001. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130c.jpg" width="353">
Expectations, however, reversed nearly half of the December gain with a 1.9% decline. Expectations about future income fell the hardest, offset by an uptick in expected employment conditions.
The expected inflation rate in twelve months ticked lower to 4.7%, that was versus expectations during all of last year for a 5.1% rate of inflation in twelve months.
Monetary Policy Inertia and Recent Fed Actions from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-03.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Conference Board &nbsp;(SA, 1985=100)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Index</td>
<td>110.3</td>
<td>110.0</td>
<td>3.3%</td>
<td>105.9</td>
<td>100.3</td>
<td>96.1</td>
</tr>
<tr>
<td class="firstcol">Present Conditions</td>
<td>133.9</td>
<td>130.5</td>
<td>4.0%</td>
<td>130.</td>
<td>116.1</td>
<td>94.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>94.5</td>
<td>96.3</td>
<td>2.6%</td>
<td>89.7</td>
<td>89.7</td>
<td>96.9</td>
</tr>
</tbody>
</table>


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Consumer confidence increased a modest 0.3% in January, according to the Conference Board Survey, following an upwardly revised 4.5% December gain. The increase was to the highest level since March 2002. The reading of present [...]

Consumer Confidence Rose Slightly, Highest Since 2002

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130b.jpg" width="353">
Consumer confidence increased a modest 0.3% in January, according to the Conference Board Survey, following an upwardly revised 4.5% December gain. The increase was to the highest level since March 2002.
The reading of present conditions rose a firmer 2.6% after the 4.1% December increase as the percentage of respondents who viewed business conditions as good rose to 28.1%, the highest since last May. The percentage who viewed jobs as plentiful also rose to 29.9%, the highest since 2001. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130c.jpg" width="353">
Expectations, however, reversed nearly half of the December gain with a 1.9% decline. Expectations about future income fell the hardest, offset by an uptick in expected employment conditions.
The expected inflation rate in twelve months ticked lower to 4.7%, that was versus expectations during all of last year for a 5.1% rate of inflation in twelve months.
Monetary Policy Inertia and Recent Fed Actions from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-03.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Conference Board &nbsp;(SA, 1985=100)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Index</td>
<td>110.3</td>
<td>110.0</td>
<td>3.3%</td>
<td>105.9</td>
<td>100.3</td>
<td>96.1</td>
</tr>
<tr>
<td class="firstcol">Present Conditions</td>
<td>133.9</td>
<td>130.5</td>
<td>4.0%</td>
<td>130.</td>
<td>116.1</td>
<td>94.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>94.5</td>
<td>96.3</td>
<td>2.6%</td>
<td>89.7</td>
<td>89.7</td>
<td>96.9</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Reversed Prior Gains 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 30, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week reversed all of the increases during the prior four weeks with a 0.9% decline.
Nevertheless, the average level of chain store sales in January is up a notably firm 2.8% from the prior month.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS also gave back all of the gains during the prior two weeks with a 1.1% decline and for the month is 0.4% below December.
Access to Credit is the latest International Economic Trends from the Federal Reserve Bank of St. Louis and it is available <a href="http://research.stlouisfed.org/publications/iet/20070201/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">1/27/07</th>
<th scope="col">1/20/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>476.4</td>
<td>480.9</td>
<td>4.9%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
No Clear Direction for the Japanese Economy in Recent  Statistics 
by <a href="/comment/Curley.html">Louise Curley</a> January 30, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130d.jpg" width="353">
The economic news out of Japan is ambiguous. Production and exports are strong, employment, retail sales and family living expenditures are weak. The yen has depreciated sharply in recent weeks against the euro and the dollar. The yen is, currently, at its lowest point against the Euro since the introduction of the Euro in 1999.
Japanese industrial production made a new record in December, 2006 at 109.5 (2000=100), exceeding previous peak levels reached in 1991, 1997 and 2000 as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130e.jpg" width="353">
The strength in the production sector has not come from domestic consumer demand but, rather, from export demand. The second chart compares the index of retail trade and the value index of exports, both with a base of (2000=100). The index of retail sales was 92.0 in December, down from 92.2 in November and from 92,7 in December, 2005, while the value index of exports was 161.79 up 5.0% from November and 9.84% from December, 2005. Expenditures
Part of the sluggishness in retail trade is due to the relatively slow growth in employment. The third chart compares retail sales with total employment. There is a good correlation between the two series--.92. Although employment in December was 0.7% above the year ago figure it was 0.5% below November, 2006. Moreover, the unemployment rate rose by one percentage point to 4.1% in December.
Depreciations of the yen against the Euro and the U.S. dollar have stimulated the demand for exports. The very rapid depreciation of the yen in recent weeks is shown in the fourth chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130f.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070130g.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Nov 06</th>
<th scope="col">Dec 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y%</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production (2000=100)</td>
<td>109.5</td>
<td>108.7</td>
<td>104.9</td>
<td>0.74</td>
<td>4.39</td>
<td>105.9</td>
<td>101.6</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol"> Exports </td>
<td>161.7</td>
<td>154.0</td>
<td>147.21</td>
<td>5.00</td>
<td>9.84</td>
<td>145.70</td>
<td>127.10</td>
<td>118.42</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>92.0</td>
<td>92.2</td>
<td>92.7</td>
<td>-0.22</td>
<td>-0.76</td>
<td>93.1</td>
<td>93.0</td>
<td>91.7</td>
</tr>
<tr>
<td class="firstcol">Family Living Expenditures</td>
<td>92.8</td>
<td>93.8</td>
<td>94.0</td>
<td>-1.01</td>
<td>-1.31</td>
<td>93.0</td>
<td>94.8</td>
<td>95.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (millions)</td>
<td>63.83</td>
<td>64.15</td>
<td>63.41</td>
<td>-0.50</td>
<td>0.66</td>
<td>63.83</td>
<td>63.57</td>
<td>63.29</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.1</td>
<td>4.0</td>
<td>4.4</td>
<td>0.1</td>
<td>-0.3</td>
<td>4.1</td>
<td>4.4</td>
<td>4.7</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129c.jpg" width="353">
Expectations of business conditions in Norway and Sweden improved in the latest surveys. The data for manufacturing in Norway are expressed in the form of a diffusion index and are reported quarterly. The data for manufacturing in Sweden are expressed in terms of percent balances and are reported monthly.
Both the appraisals of current production and expectations for the next three months are especially strong in Norway. The index for current production reached a peak of 61.1 in the first quarter of 2006, declined in the second quarter to 59.9. but rose in the third quarter to 60.1 and again in the fourth quarter to 60.4. The previous peak in the last ten years was 60.4 in the third quarter of 1997. The index for expectations in the fourth quarter was 62.8 and is the highest value since the fourth quarter of 1997 when the index was 62.4. The first chart shows the diffusion indexes for current and expected production in Norway.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129d.jpg" width="353">
Sweden has expectations data for January figure but not current production data. Partly for this reason and also for comparability with Norway, we have aggregated the data for Sweden on a quarterly basis. The second chart shows the percent balances for current and expected production for Sweden on a quarterly basis. While the excess of optimists over pessimists regarding current production declined by 3 percentage points in the fourth quarter, the excess of optimists over pessimists regarding expectations increased by 5 percentage points. According to the January figure for expected production the excess of optimists over pessimists was 19%. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SURVEYS OF MANUFACTURING&nbsp;</th>
<th scope="col">4Q 06</th>
<th scope="col">3Q 06</th>
<th scope="col">4Q 05</th>
<th scope="col">Q/Q&nbsp;Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Norway (Diffusion Index)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Current Production</td>
<td>60.4</td>
<td>60.1</td>
<td>61.0</td>
<td>0.3</td>
<td>-0.6</td>
<td>60.4</td>
<td>58.8</td>
<td>56.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations 3 Months Ahead</td>
<td>62.8</td>
<td>62.0</td>
<td>62.2</td>
<td>0.8</td>
<td>0.6</td>
<td>61.7</td>
<td>60.5</td>
<td>58.5</td>
</tr>
<tr>
<td class="firstcol"> Sweden (Percent Balance) </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Current Production</td>
<td>26.0</td>
<td>29</td>
<td>19</td>
<td>-3</td>
<td>7</td>
<td>29</td>
<td>13</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Expectations 3 Months Ahead</td>
<td>22</td>
<td>17</td>
<td>26</td>
<td>5</td>
<td>-4</td>
<td>22</td>
<td>19</td>
<td>32</td>
</tr>
</tbody>
</table>
</body>
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Expectations of business conditions in Norway and Sweden improved in the latest surveys. The data for manufacturing in Norway are expressed in the form of a diffusion index and are reported quarterly. The data for manufacturing in [...]

Business Confidence Improves in Norway and Sweden: a New High in Norway

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129a.jpg" width="353">
The Chicago Federal Reserve Bank&#39;s Midwest manufacturing index, shown in the attached chart, increased 0.06% in December, reversing the down trend of the past four months. The index covers activity in Iowa, Indiana, Michigan, Wisconsin and most of Illinois. The bank also publishes indexes for the Auto, Steel, Machinery and Resource industries. As its name suggests, Resource Industries include food and related products, lumber, wood and paper products, chemicals, petroleum, coal, stone and glass.
The index for the auto sector rose 1.8% from November but was 0.5% below December, 2005. The machinery sector increased 1.3% in December and was 4.9% above December, 2005. Comparable figures for the steel sector were -1.2% and 1.0%; and for the resource sector, 1.0% and 1.9%. The Decemberrelease from the bank can be seen <a href="http://www.chicagofed.org/economic_research_and_data/cfmmi.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">FEDERAL RESERVE BANK OF CHICAGO&nbsp;</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Nov 06</th>
<th scope="col">Dec 05</th>
<th scope="col">M/M&nbsp;&nbsp; %</th>
<th scope="col">Y/Y&nbsp;&nbsp; %</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> SURVEY OF MANUFACTURING &nbsp;(Index 2002=100) </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>104.5</td>
<td>103.9</td>
<td>102.6</td>
<td>0.58</td>
<td>1.85</td>
<td>104.4</td>
<td>100.8</td>
<td>98.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Autos</td>
<td>92.1</td>
<td>95.4</td>
<td>97.6</td>
<td>1.78</td>
<td>-0.51</td>
<td>97.9</td>
<td>95.8</td>
<td>96.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Steel</td>
<td>103.6</td>
<td>104.9</td>
<td>102.6</td>
<td>-1.24</td>
<td>0..97</td>
<td>106.7</td>
<td>101.6</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;Machinery </td>
<td>112.2</td>
<td>110.7</td>
<td>106.9</td>
<td>1.26</td>
<td>4.86</td>
<td>109.9</td>
<td>103.5</td>
<td>99.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Resource</td>
<td>106.0</td>
<td>105.9</td>
<td>104.0</td>
<td>0.09</td>
<td>1.92</td>
<td>105.4</td>
<td>102.6</td>
<td>99.6</td>
</tr>
</tbody>
</table>
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The Chicago Federal Reserve Bank's Midwest manufacturing index, shown in the attached chart, increased 0.06% in December, reversing the down trend of the past four months. The index covers activity in Iowa, Indiana, Michigan, [...]

Chicago Surveys Show Some Reversal in Down Trends

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129a.jpg" width="353">
The Chicago Federal Reserve Bank&#39;s Midwest manufacturing index, shown in the attached chart, increased 0.06% in December, reversing the down trend of the past four months. The index covers activity in Iowa, Indiana, Michigan, Wisconsin and most of Illinois. The bank also publishes indexes for the Auto, Steel, Machinery and Resource industries. As its name suggests, Resource Industries include food and related products, lumber, wood and paper products, chemicals, petroleum, coal, stone and glass.
The index for the auto sector rose 1.8% from November but was 0.5% below December, 2005. The machinery sector increased 1.3% in December and was 4.9% above December, 2005. Comparable figures for the steel sector were -1.2% and 1.0%; and for the resource sector, 1.0% and 1.9%. The Decemberrelease from the bank can be seen <a href="http://www.chicagofed.org/economic_research_and_data/cfmmi.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">FEDERAL RESERVE BANK OF CHICAGO&nbsp;</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Nov 06</th>
<th scope="col">Dec 05</th>
<th scope="col">M/M&nbsp;&nbsp; %</th>
<th scope="col">Y/Y&nbsp;&nbsp; %</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> SURVEY OF MANUFACTURING &nbsp;(Index 2002=100) </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>104.5</td>
<td>103.9</td>
<td>102.6</td>
<td>0.58</td>
<td>1.85</td>
<td>104.4</td>
<td>100.8</td>
<td>98.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Autos</td>
<td>92.1</td>
<td>95.4</td>
<td>97.6</td>
<td>1.78</td>
<td>-0.51</td>
<td>97.9</td>
<td>95.8</td>
<td>96.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Steel</td>
<td>103.6</td>
<td>104.9</td>
<td>102.6</td>
<td>-1.24</td>
<td>0..97</td>
<td>106.7</td>
<td>101.6</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;Machinery </td>
<td>112.2</td>
<td>110.7</td>
<td>106.9</td>
<td>1.26</td>
<td>4.86</td>
<td>109.9</td>
<td>103.5</td>
<td>99.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Resource</td>
<td>106.0</td>
<td>105.9</td>
<td>104.0</td>
<td>0.09</td>
<td>1.92</td>
<td>105.4</td>
<td>102.6</td>
<td>99.6</td>
</tr>
</tbody>
</table>
Business Confidence Improves in Norway and Sweden: a New High in Norway 
by <a href="/comment/Curley.html">Louise Curley</a> January 29, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129c.jpg" width="353">
Expectations of business conditions in Norway and Sweden improved in the latest surveys. The data for manufacturing in Norway are expressed in the form of a diffusion index and are reported quarterly. The data for manufacturing in Sweden are expressed in terms of percent balances and are reported monthly.
Both the appraisals of current production and expectations for the next three months are especially strong in Norway. The index for current production reached a peak of 61.1 in the first quarter of 2006, declined in the second quarter to 59.9. but rose in the third quarter to 60.1 and again in the fourth quarter to 60.4. The previous peak in the last ten years was 60.4 in the third quarter of 1997. The index for expectations in the fourth quarter was 62.8 and is the highest value since the fourth quarter of 1997 when the index was 62.4. The first chart shows the diffusion indexes for current and expected production in Norway.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070129d.jpg" width="353">
Sweden has expectations data for January figure but not current production data. Partly for this reason and also for comparability with Norway, we have aggregated the data for Sweden on a quarterly basis. The second chart shows the percent balances for current and expected production for Sweden on a quarterly basis. While the excess of optimists over pessimists regarding current production declined by 3 percentage points in the fourth quarter, the excess of optimists over pessimists regarding expectations increased by 5 percentage points. According to the January figure for expected production the excess of optimists over pessimists was 19%. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SURVEYS OF MANUFACTURING&nbsp;</th>
<th scope="col">4Q 06</th>
<th scope="col">3Q 06</th>
<th scope="col">4Q 05</th>
<th scope="col">Q/Q&nbsp;Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Norway (Diffusion Index)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Current Production</td>
<td>60.4</td>
<td>60.1</td>
<td>61.0</td>
<td>0.3</td>
<td>-0.6</td>
<td>60.4</td>
<td>58.8</td>
<td>56.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations 3 Months Ahead</td>
<td>62.8</td>
<td>62.0</td>
<td>62.2</td>
<td>0.8</td>
<td>0.6</td>
<td>61.7</td>
<td>60.5</td>
<td>58.5</td>
</tr>
<tr>
<td class="firstcol"> Sweden (Percent Balance) </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Current Production</td>
<td>26.0</td>
<td>29</td>
<td>19</td>
<td>-3</td>
<td>7</td>
<td>29</td>
<td>13</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Expectations 3 Months Ahead</td>
<td>22</td>
<td>17</td>
<td>26</td>
<td>5</td>
<td>-4</td>
<td>22</td>
<td>19</td>
<td>32</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070126e.jpg" width="353">
The number of employed workers in Spain passed 20 million in Q4, a record and a new milestone. The Spanish labor market continues to impress with its vigor. Growth rates are moderating a bit, but conditions remain strong overall. The unemployment rate was 8.3%, seasonally adjusted, the same as in Q3 and the lowest since Q2 1979, more than 27 years ago. Labor force participation increased to 58.6%, also a record for this data, which began just over 30 years ago; this rate has gone up about a percentage point a year for the last five years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070126f.jpg" width="353">
We wrote about Spain&#39;s unique labor market last October, on the release of Q3 data. We noted then that the &quot;industry&quot; sector was holding up in Spain, even as it was declining elsewhere in Europe. In Q4, Spanish industry employment firmed, so it now has 31,000 more jobs, 0.9%, than in Q4 2005. European-wide data are not yet available for Q4, but through Q3, they were running 1.0% below a year ago. In other Spanish activity, the service sector had slower growth in Q4, &quot;just&quot; 4.3% year-on-year; the year as a whole was up 5.1%, the third year in the last four with more than 5% growth in service sector jobs. The real star is construction, as is easily evident in the second graph. Job growth there has picked up this year, with 8.3% in Q4 over the year earlier. For all of 2006, construction jobs increased 7.9%, the fastest in five years.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070126g.jpg" width="353">
Another striking feature of the Spanish labor market is the participation of foreign workers. It may be that other countries are experiencing this phenomenon, but we have not been aware of it. Foreigners in Spain who are of working age (over 16) constitute 10.2% of that age segment of the total population, but they are 13% of the employees. While they have a higher unemployment rate than the population as a whole, 12.0% versus the total 8.3%, they are far more active in the labor market, with a participation rate of 77.6% compared to the overall 58.3%. Clearly immigrants come to Spain to look for work and persist in trying to get it.
Seasonal adjustment of Spain&#39;s employment and unemployment series is done by Haver Analytics. These series are in Haver&#39;s &quot;G10&quot; database. Other data, especially that on foreign workers, is carried in the SPAIN database, the &quot;country-sourced&quot; database in which data are presented in the style in which they are published by the national statistical sources.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SPAIN</th>
<th scope="col">Q4 2006</th>
<th scope="col">Q3 2006</th>
<th scope="col">Q4 2005</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment (Millions, SA)</td>
<td>20.01</td>
<td>19.81</td>
<td>19.32</td>
<td>19.75</td>
<td>18.97</td>
<td>17.97</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Industry</td>
<td>3.33</td>
<td>3.26</td>
<td>3.30</td>
<td>3.29</td>
<td>3.28</td>
<td>3.21</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>2.64</td>
<td>2.58</td>
<td>2.44</td>
<td>2.54</td>
<td>2.36</td>
<td>2.25</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services</td>
<td>13.13</td>
<td>13.02</td>
<td>12.59</td>
<td>12.97</td>
<td>12.34</td>
<td>11.52</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%, SA)</td>
<td>8.3</td>
<td>8.3</td>
<td>8.7</td>
<td>8.5</td>
<td>9.1</td>
<td>11.0</td>
</tr>
<tr>
<td class="firstcol">Participation Rate (%, SA)</td>
<td>58.6</td>
<td>58.4</td>
<td>57.7</td>
<td>58.3</td>
<td>57.3</td>
<td>56.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign % of Working Age Population (NSA)</td>
<td>10.2</td>
<td>9.9</td>
<td>9.0</td>
<td>9.8</td>
<td>8.5</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Foreign % of Employment (NSA)</td>
<td>13.0</td>
<td>12.7</td>
<td>11.3</td>
<td>12.5</td>
<td>10.9</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
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The number of employed workers in Spain passed 20 million in Q4, a record and a new milestone. The Spanish labor market continues to impress with its vigor. Growth rates are moderating a bit, but conditions remain strong overall. The [...]

Employment in Spain Surpasses 20 Million in Q4; Foreign Workers Increase Share of Jobs

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) eased 0.2% (-3.6% y/y) in January to 100.7 after rising 1.5% to 100.9 in December and falling 2.9% in November to 99.4. The level of home affordability has risen 12.0% from its low of 89.9 in October 2023. It remains 43.8% below the high of 179.2 in April 2020.

The slip in affordability in January reflected a 1.6% drop (+5.0% y/y) in the median price of an existing single-family home to $402,000 which was offset by a rise in mortgage rates to 7.04% from 6.80% in December. The price decline was the sixth in the last seven months from the record $432,900 in June. The rise in mortgage rates compared to a September low of 6.26% and a 7.14% high during May. It remained increased from a December 2020 low of 2.73%. These changes raised the principal & interest payment by 0.8% (8.4% y/y) to $2,148 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a steady 24.8% of income during January. They remained up from a low of 14.0% in April 2020.

The rise in housing costs in January was accompanied by improvement in median family income. It increased 0.7% (4.5% y/y) to a record $103,850 after rising 0.3% in December and 0.4% in November.

Housing affordability was mixed m/m across the country in January. The index rose 0.4% (-5.9% y/y) to 134.2 in the Midwest. It remains the most affordable region of the country. In the South, the index eased 0.6% (-2.5% y/y) to 103.3 and the affordability index in the Northeast fell 1.9% (-8.7% y/y) to 89.9. In the West, where homes are the least affordable, the index weakened 1.8% (-5.5% y/y) to 69.8 in January.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022 (98.8).

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices ease but mortgage rates rise.
- Median income strengthens.
- Affordability weakens in most of country.

U.S. Housing Affordability Is Little Changed in January

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Yesterday, March 13, the Federal Reserve published the Financial Accounts for Q4 2024. They show, among numerous other things, that domestic nonfinancial participants in the U.S. economy had borrowings that represented 11.4% of GDP during Q4. This is down moderately from 12.3% in Q3 and produced an amount for the whole year of 2024 of 11.9% of GDP. The quarterly amounts cited here are at seasonally adjusted annual rates.

In Q4, the largest borrowing sector was the federal government, which used $2,602.9 billion, or 8.8% of GDP, up from $2,261 billion in Q3, or 7.7% of GDP.  Households borrowed $624.3 billion or 2.1% of GDP; this amount included $294.3 billion of home mortgages and $133.1 billion of consumer credit.

Nonfinancial business corporations actually paid down debt of $64.1 billion in Q4, or 0.2% of GDP. In Q1 of 2024, businesses had borrowed $698.2 billion and for the whole year, they borrowed $436.6 billion or 1.5% of GDP. State and local governments paid down $46.0 billion in Q4; for the whole year they did use $97.8 billion or 0.3% of GDP.

In addition to domestic borrowers, the foreign sector borrowed $341.3 billion in Q4, or 1.1% of GDP and up from $196.7 billion in Q3.  For all of 2024, foreign participants used $345.5 billion, or 1.2% of GDP.

The Financial Accounts data are in Haver's **FFUNDS** database. The Federal Reserve is the main source, while associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); those nonfinancial data are carried in Haver's **USNA** database as well as in **FFUNDS**. Note that revisions are common throughout the accounts with every quarterly release.

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- Nonfinancial sectors together borrowed 11.4% of GDP in Q4.
- Not surprisingly, the largest borrowing sector was the federal government.
- Households had sizable amounts of home mortgage borrowing, though this was less than in Q3.
- Businesses paid down debt in Q4.

U.S. Economic Sectors Borrowed Moderately in Q4 and for All of 2024

Andrew Cates

**Falling US growth momentum**
The latest Blue Chip Economic Indicators survey reflects a shifting global economic landscape, with the US experiencing a notable loss of momentum. After climbing above 2.0% on the back of a strong economic performance in late 2024, consensus forecasts for US growth in 2025 have now been revised downward for the first time in nearly a year. This reversal reflects weaker-than-expected economic data and emerging challenges tied to the policy shifts of the new administration. The downgrade in US growth projections also coincides with a further downward revision to an already subdued outlook for the UK and the euro area, reinforcing concerns about a sluggish global growth outlook (chart 1).

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**Global inflation expectations**
In the meantime the same survey reveals growing concerns about the inflation outlook in the US and Europe this year, and possibly reflecting the impact of US tariff policies on global price pressures. Japan’s inflation forecast for 2025 has also surged, as rising import costs and shifting trade dynamics have additionally contributed to stronger price pressures. This all stands in contrast to China with inflation expectations for this year falling below 1%, reinforcing concerns about deflation and weak demand (chart 2).

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**Global bond markets**
Recent shifts in 10-year government bond yields reflect changing market expectations. While yields have risen sharply in Germany, China, and Japan, they have fallen in the US. Germany’s increase is tied to expanded defense spending and industrial subsidies, while China’s reflects a shift toward more aggressive fiscal easing, with its deficit target rising to 4% of GDP to counter deflation and weak demand. In contrast, falling US yields signal a reassessment of growth expectations under the new administration. This divergence suggests capital may be flowing toward economies with stronger fiscal stimulus, potentially weakening the dollar, increasing borrowing costs for US businesses, and complicating efforts to revive domestic manufacturing.

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**Overseas holdings of US Securities**
Latest data show that foreign-holdings of US long-term securities have risen steadily over the past decade, with a notable acceleration in the past two years. The most recent data additionally highlights a significant increase in foreign ownership of US corporate equities, reflecting, until recently, investor confidence in US companies.

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**Industrialisation versus de-industrialisation**
Recent US policy shifts—particularly higher tariffs on Chinese imports—aim to address the long-term decline in domestic manufacturing jobs. However, their effectiveness is uncertain, given the growing role of automation and AI in reshaping industrial production. While tariffs may offer short-term relief, they are unlikely to reverse decades of global manufacturing shifts. China’s rise from a low-value agrarian economy to an industrial powerhouse has reshaped trade patterns, while US industrial employment has steadily declined, mirroring trends in other advanced economies. Meanwhile, Vietnam and other emerging markets have absorbed manufacturing capacity, benefiting from shifting supply chains. The real challenge for US policymakers is not just bringing back jobs but ensuring domestic industries stay competitive amid changing cost structures and technological advancements.

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**Global competitiveness**
Historically, China's low unit labour costs provided it with a significant advantage, fuelling its manufacturing boom and accelerating the offshoring of US industrial jobs. However, as China's wages have risen due to economic development and increased productivity, and as US unit labour costs have remained relatively stable, the gap has narrowed considerably. Yet, still high labour costs in the US – coupled with rising trade barriers and rising input costs - still pose a challenge to the effectiveness of US policies, as firms may still find it difficult to maintain competitiveness without significant productivity gains. Indeed, as suggested above, there is a real risk that firms may instead accelerate their shift toward automation or relocate production to other low-cost regions (e.g. Vietnam), undermining the broader economic rationale for these interventions. The erosion of economic goodwill, combined with rising costs and financial market instability, additionally suggest that while the strategic objectives of US policy may be clear, the long-term implications remain highly uncertain.

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The recent financial market volatility, marked by sharp swings in bond yields and equity market repricing, reflects growing uncertainty about the trajectory of the US economy amid a rapidly shifting policy environment. The US administration’s latest tariff measures, and their conflicting objectives, have amplified uncertainty, stifled risk appetite and further ignited inflation concerns (charts 1 and 2). Markets are grappling with the inflationary impact of rising import costs, the potential supply chain disruptions caused by abrupt shifts in trade policy, and the broader implications of protectionism on corporate investment. Meanwhile, recent policy announcements from Germany and China, coupled with firming inflationary pressures in Japan, have pushed global (ex-US) bond yields sharply higher, potentially amplifying global financial instability (charts 3 and 4). These shifts could profoundly reshape global trade and investment, not just through economic fundamentals but also through a growing erosion of goodwill toward the United States. As policy unpredictability forces companies and governments to hedge against potential disruptions, trust in the stability of US economic leadership is weakening. At the same time, concerns are mounting over the effectiveness of US policy choices, particularly in relation to one of its core ambitions—reshoring manufacturing jobs (charts 5 and 6). The question remains whether these interventions will achieve their intended goals or simply accelerate automation and supply chain realignment elsewhere.

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Charts of the Week: From Blue to Red

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The Producer Price Index for final demand held steady (+3.2% y/y) during February after increasing 0.6% in January, revised from 0.4% and rising an unrevised 0.5% in December according to the Bureau of Labor Statistics (BLS). The February reading compared to a 0.2% rise expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.2% (3.3% y/y) last month after an unrevised 0.3% January increase, and an unrevised 0.4% gain in December. The PPI excluding food & energy eased 0.1% (+3.4% y/y) after rising 0.5% in January, revised from 0.3%. A 0.3% increase had been expected.

Energy prices declined 1.2% (-3.7% y/y) during February, after rising 1.8% in January. Gasoline costs fell 4.7% (-8.2% y/y) after rising 0.3% while home heating oil prices declined 9.8% (-12.2% y/y) after a 6.5% strengthening. Electric power prices rose 0.5% (0.9% y/y) in February following a 0.4% January decline and natural gas costs strengthened 1.3% (6.7% y/y) following a 3.8% surge. Diesel fuel prices declined 3.9% (-18.5% y/y) after a 10.5% jump.

Final demand food prices rose 1.7% (5.9% y/y) in February, following a 1.0% January gain. Egg prices jumped 28.1% (136.6% y/y) following a 44.0% increase. Prices for fresh and dry vegetables rose 6.0% (-16.3% y/y) after falling 22.3% in January. Beef & veal prices declined 1.8% (+9.5% y/y) after a 5.7% rise while dairy product prices rose 0.1% (5.7% y/y) after a 0.4% increase.

Final demand goods prices excluding food & energy rose 0.4% (2.1% y/y) in February following a 0.2% rise. Core finished consumer goods prices rose 0.4% (2.1% y/y) after a decline of 0.2% in January. Core nondurable goods prices strengthened 0.6% (2.3% y/y) last month after falling 0.4% in January. Durable consumer goods prices improved 0.2% (1.6% y/y), after edging 0.1% higher in January. Capital equipment prices rose 0.2% (2.5% y/y) last month following a 0.3% gain. Core government-purchased goods prices rose 0.2% (2.4% y/y) in January, after a 0.6% January increase.

Final demand services prices declined 0.2% (+3.9% y/y) last month after rising 0.6% in January. Trade services prices fell 1.0% (+4.0% y/y) last month following a 1.2% gain. Trade of finished goods prices declined 1.1% (3.6% y/y) and reversed the January rise. Prices for final demand transportation and warehousing services held steady (+2.6% y/y) in February, after strengthening 0.9% in January. Services prices less these costs rose 0.2% (4.0% y/y) last month, after a rise of 0.3% in January.

Construction costs eased 0.1% (+1.7% y/y) in February, after increasing 0.4% during January.

Prices for intermediate demand of processed goods rose 0.5% (0.3% y/y) following a 1.0% jump. Processed energy goods prices rose 0.5% last month after increasing 3.6% in January, while food prices rose 2.0% following a 0.7% January gain.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Energy prices weaken and food prices firm.
- Price gains in core goods pick up.
- Services prices decline.

U.S. PPI Is Unchanged in February; Rise in Core Index Moderates

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Initial claims for unemployment insurance were 220,000 seasonally adjusted in the week ended March 8, just slightly less than the 222,000 the week before; that earlier amount was revised marginally from 221,000 reported before. In the latest week, the Action Economics Forecast Survey had expected 230,000. In this March 8 week, the four-week moving average was 226,000.

The total number of unemployment insurance beneficiaries was 1.87 million in the week ended March 1, down from 1.897 million in the week ended February 22. The four-week moving average was 1.872 million through the March 1st week, up from 1.866 million the week before.

The insured unemployment rate, that is, the total number of beneficiaries as a percent of covered employment, remained at 1.2%, which has held since March 2023.

Economic conditions vary widely across states and territories. In the week ended February 22, the highest rates were in Rhode Island (3.37%), New Jersey (2.90%), Massachusetts (2.58%), Minnesota (2.57%) and California (2.42%). The lowest rates were in Florida (0.36%), Alabama (0.44%), Virginia (0.46%), Tennessee and North Carolina (both 0.56%) and Mississippi (0.58%). Rates in other notable states include New York (2.08%), Pennsylvania (2.03%) and Texas (1.12%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims were less than forecast.
- Total recipients of unemployment insurance also fell.
- Insured unemployment rate still 1.2%.

Economy in Brief: January 2007

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