Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627b.jpg" width="353">
 Total existing home sales fell 1.2% during May to 6.670M following a little revised 2.2% decline during April. Consensus expectations had been for sales of 6.62M and the figures were reported by the National Association of Realtors.
Sales of single-family homes fell 1.5%, down for the fourth month this year. The data cover sales closed in the latest and previous months and contrast to the new home sales (up in May) data which count sales at the signing of a contract.
In May sales of existing single family homes were down 8.1% versus the peak last June and for the first five months of this year were off 4.0% from the 2005 average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627d.jpg" width="353">
Sales were weakest last month in the Northeast which posted a 4.8% drop (-5.9% y/y) and in the Midwest where they fell 4.3% (-5.6% y/y). In the South (-2.8% y/y) and in the West (-14.1% y/y), May sales were unchanged from the prior month.
The median price of an existing single-family home rose 3.2% (6.4% y/y). The price figures are not seasonally adjusted.
The inventory of unsold existing homes rose 5.5% and was up 41.0% from one year earlier. The supply of unsold single family homes was up 36.3% y/y and the supply of condos &amp; coops for sale was up 73.0%.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>&nbsp;6,670</td>
<td>6,750</td>
<td>-6.6%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>5,820</td>
<td>5,910</td>
<td>-6.6%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$229.7 </td>
<td>$222.6 </td>
<td>6.4% </td>
<td>$206.3</td>
<td>$182.8 </td>
<td>$169.1 </td>
</tr>
</tbody>
</table>


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Total existing home sales fell 1.2% during May to 6.670M following a little revised 2.2% decline during April. Consensus expectations had been for sales of 6.62M and the figures were reported by the National Association of Realtors. [...]

U.S. Existing Home Sales Decline As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627b.jpg" width="353">
 Total existing home sales fell 1.2% during May to 6.670M following a little revised 2.2% decline during April. Consensus expectations had been for sales of 6.62M and the figures were reported by the National Association of Realtors.
Sales of single-family homes fell 1.5%, down for the fourth month this year. The data cover sales closed in the latest and previous months and contrast to the new home sales (up in May) data which count sales at the signing of a contract.
In May sales of existing single family homes were down 8.1% versus the peak last June and for the first five months of this year were off 4.0% from the 2005 average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627d.jpg" width="353">
Sales were weakest last month in the Northeast which posted a 4.8% drop (-5.9% y/y) and in the Midwest where they fell 4.3% (-5.6% y/y). In the South (-2.8% y/y) and in the West (-14.1% y/y), May sales were unchanged from the prior month.
The median price of an existing single-family home rose 3.2% (6.4% y/y). The price figures are not seasonally adjusted.
The inventory of unsold existing homes rose 5.5% and was up 41.0% from one year earlier. The supply of unsold single family homes was up 36.3% y/y and the supply of condos &amp; coops for sale was up 73.0%.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>&nbsp;6,670</td>
<td>6,750</td>
<td>-6.6%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>5,820</td>
<td>5,910</td>
<td>-6.6%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$229.7 </td>
<td>$222.6 </td>
<td>6.4% </td>
<td>$206.3</td>
<td>$182.8 </td>
<td>$169.1 </td>
</tr>
</tbody>
</table>
Consumer Confidence Improved A Bit 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627c.jpg" width="353">
Consumer confidence as reported by the Conference Board improved 1.0% in June to 105.7. The rise recovered a piece of the 4.6% May decline that was revised slightly shallower. It contrasted to Consensus expectations for a further decline to 103.5 and compared to a 4.2% rise in the University of Michigan&#39;s June Index of Consumer Sentiment.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
Consumers&#39; assessment of the present situation fell for a second month and posted a 1.0% decline (+9.9% y/y). The percentage of respondents who viewed business conditions as good (26.8%) fell for a second month and the percentage that viewed jobs as hard to get (19.9%) reversed the prior month&#39;s rise.
The index of consumers&#39; expectations rose a modest 2.9% (-9.1% y/y) and recovered just part of the May decline. Expectations for business conditions in six months improved slightly as did expectations that the number of jobs would rise. Expectations for the inflation rate in twelve months slipped to 5.1% from 5.6% expected in May.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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</thead>
<tbody>
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<td class="firstcol">Consumer Confidence</td>
<td>105.7</td>
<td>104.7</td>
<td>-0.5%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
Chain Store Sales Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales fell 0.4% last week after having been unchanged the prior period.
Sales in June are 0.2% below the May average which fell 0.4% from April. During the last ten years there has been a 47% 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 fell 0.3% (-2.0% y/y) during the latest period after three consecutive weeks of increase.
Parsing Recent Inflation Data from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/eyi/usecon/archived/0606inflation.html"> here</a>

<table border="0" cellspacing="0" width="100%">
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<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">06/24/06</th>
<th scope="col">06/17/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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</thead>
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<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>471.6</td>
<td>473.6</td>
<td>4.1%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
 Business Confidence in Europe Still Strong in Spite of Euro Strength, High Oil Prices and Rising Interest Rates 
by <a href="/comment/Curley.html">Louise Curley</a> June 27, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627e.jpg" width="353">
Germany, Italy and the Netherlands reported increased business confidence today. We noted yesterday that confidence in Belgium had also increased. France is the only Euro Zone country that, so far, has seen a decline in business confidence.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627f.jpg" width="353">
The German IFO measure of business confidence rose 1.0% from 105.7 to 106.8 (2000=100) in June, the highest level since February, 1991. In terms of the diffusion index the excess of optimists over pessimists rose 2.3 percentage points from 10.4% in May to 12.7% in June. In the Netherlands, where business confidence is measured by the excess of optimists over pessimists, the percent balance rose 3.1 percentage points from 3.3% to 6.4%. The first chart compares the percent balances indicators for Germany and the Netherlands. Business confidence in Italy, which has been lower than that in Germany, rose by almost 2% in June from May to reach 98.9 (2000=100), the highest level since December, 2000. The second chart compares the indexes of business confidence in Germany and Italy.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060627g.jpg">
Italy and the Netherlands also reported on consumer confidence. The Italian consumer lost some confidence as the indicator of consumer confidence fell 0.7% from 107.1 (2000=100) in May to 106.8 in June. The Dutch consumer, on the contrary, became more optimistic in June as the optimists exceeded the pessimist by 5% in contrast to May when the pessimists exceeded the optimists by 4%. The third chart compares consumer confidence in Italy and in the Netherlands.
The rise in business confidence in these countries has occurred in spite of strength in the euro, continued high oil prices and the likelihood of a rise in the European Central Bank&#39;s main lending interest rate. It may be that the biggest threat to confidence is the possibility of greater than expected increases in ECB&#39;s lending rate. The rate is currently 2.75%, having risen by from the low 2% in three increments of 25 basis points in December of last year and in March and June of this year. In the past week six council members of the ECB have hinted that the bank may accelerate interest rate increases to combat inflationary pressures. And just today, in its Annual Report the Bank of International Settlements (BIS) called on central bankers to raise interest rates to combat these same global inflationary pressures. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Confidence Measures</th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">May 06</th>
<th scope="col">Jun 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany&nbsp;Business Confidence</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Index (2000=100)</td>
<td>106.8</td>
<td>105.7</td>
<td>93.3</td>
<td>1.04</td>
<td>14.47</td>
<td>95.5</td>
<td>95.5</td>
<td>91.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Balance</td>
<td>12.7</td>
<td>10.4</td>
<td>-14.1</td>
<td>2.3*</td>
<td>24.5*</td>
<td>-9.7</td>
<td>-9.9</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Italy Business&nbsp;&nbsp;&nbsp; Confidence (2000=100)</td>
<td>98.9</td>
<td>92.0</td>
<td>84.8</td>
<td>1.96</td>
<td>16.62</td>
<td>87.5</td>
<td>89.5</td>
<td>87.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy Consumer Confidence (2000=100)</td>
<td>106.8</td>
<td>107.6</td>
<td>102.9</td>
<td>-0.74</td>
<td>3.79</td>
<td>104.2</td>
<td>101.4</td>
<td>106.1</td>
</tr>
<tr>
<td class="firstcol">Netherlands Business Confidence (% Balance&nbsp;</td>
<td>6.4</td>
<td>3.3</td>
<td>-1.7</td>
<td>3.1*</td>
<td>8.1*</td>
<td>0.6</td>
<td>-0.1</td>
<td>-5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands Consumer Confidence (% Balance)&nbsp;</td>
<td>5</td>
<td>-4</td>
<td>-26</td>
<td>9*</td>
<td>31*</td>
<td>-22</td>
<td>-25</td>
<td>-35</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626c.jpg" width="353">
European measures of confidence for June are beginning to appear. Last Friday Belgium reported a surprisingly large increase in business confidence. The National Bank of Belgium&#39;s overall gross synthetic indicator of business confidence rose 8.1 point from May to June and reached 10.2%, the highest value on record since the series began in January, 1980. The Bank also calculates a smoothed series, excluding outliers, that reflects the underlying trend of confidence. The smoothed series is only available after a delay of three to four months. Both the current indicator and the smoothed series are shown in the first chart. The continued rise in the current indicator suggests that the underlying trend in consumer confidence is still positive.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626d.jpg" width="353">
Consumers in Belgium are less confident than the business community. While they have shown a small increase in confidence recently, it has been more a case of a decline in the excess of pessimists over optimists.In June, the consumer indicator of confidence was -2% compared with -6% in May and -11% in June, 2005. Chart 2 compares the Belgian consumer and business confidence indicators.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626e.jpg" width="353">
In contrast to Belgium, business confidence in France has been slipping since April when a recent peak of 109 was reached. Confidence measured 107 in June, down almost 1% from 108 in May, but up 7% since June, 2005. Chart 3 compares the measures of business confidence in France and Belgium. While the levels of confidence are not comparable, the trends in the two series can be compared. Until recently business confidence in France has tended to follow the same ups and downs as business confidence in Belgium. Since April, the trends have diverged. (The Belgian series is expressed as a percent balance between optimists and pessimists while the French series has been constructed so that it has an average of 100 and a standard deviation of 10.)

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<th scope="col" class="firstcol">Measures of Confidence</th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">May 06</th>
<th scope="col">Jun 05</th>
<th scope="col">M/M</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Belgium&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Business Confidence (%)</td>
<td>&nbsp;10.1</td>
<td>2.0</td>
<td>-10.7</td>
<td>8.1</td>
<td>20.8</td>
<td>-7.5.</td>
<td>-2.3</td>
<td>-12.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Consumer Confidence(%)</td>
<td>-2</td>
<td>-6</td>
<td>-11</td>
<td>4</td>
<td>9</td>
<td>-8</td>
<td>4</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">France</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;Business Confidence (Average=100)</td>
<td>107</td>
<td>108</td>
<td>100</td>
<td>-0.93</td>
<td>7.00</td>
<td>101</td>
<td>104</td>
<td>95</td>
</tr>
</tbody>
</table>
</body>
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European measures of confidence for June are beginning to appear. Last Friday Belgium reported a surprisingly large increase in business confidence. The National Bank of Belgium's overall gross synthetic indicator of business [...]

ĀBusiness Confidence Strengthens in BelgiumĀ But Weakens in FranceĀĀ

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626a.jpg" width="353">
May new single family home sales continued unexpectedly firm and rose 4.6% m/m to 1.234 million (SAAR). The rise was third consecutive monthly increase and followed a 5.9% April gain that was little revised. Consensus expectations had been for a slight decline in sales to 1.15M during May.
Despite these signs of strength, new home sales so far this year are down 10.3% from the 2005 average and May sales were 9.7% below the monthly peak last July.
Sales down South posted the third consecutive firm m/m increase with a 6.0% gain (8.4% y/y). Year to year, that&#39;s the only region of country where sales were up. During May, sales in the Northeast fell 7.9% (-36.3% y/y), sales in the Midwest rose 2.7% but were off 20.8% y/y while in the West sales rose 5.3% in May but were down 12.7% y/y. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626b.jpg" width="353">
The number of new homes for sale dipped 0.7% m/m in May but were up a sharp 23.6% y/y. The year to year breakdown by region is as follows: Northeast, 52.8%; West, 27.2%; South, 31.0%; Midwest, -2.8%.
The median sales price of a new single family home fell 4.3% m/m to $235,300 following a 3.9% rise during April that was very much upwardly revised.
Movin&#39; On Up from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2006/b/pages/movin_up.html"> here</a>.
Can Financial Innovation Help to Explain the Reduced Volatility of Economic Activity? from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2005/200554/200554pap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E904.HTM">U.S. New Homes</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Sales (AR, 000&#39;s)</td>
<td>1,234</td>
<td>1,180</td>
<td>-5.9%</td>
<td>1,280</td>
<td>1,201</td>
<td>1,091</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA)</td>
<td>$235,300</td>
<td>$245,900</td>
<td>3.1%</td>
<td>$234,208</td>
<td>$217,817</td>
<td>$191,383</td>
</tr>
</tbody>
</table>
</body>
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May new single family home sales continued unexpectedly firm and rose 4.6% m/m to 1.234 million (SAAR). The rise was third consecutive monthly increase and followed a 5.9% April gain that was little revised. Consensus expectations had [...]

New Home Sales Continued Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626a.jpg" width="353">
May new single family home sales continued unexpectedly firm and rose 4.6% m/m to 1.234 million (SAAR). The rise was third consecutive monthly increase and followed a 5.9% April gain that was little revised. Consensus expectations had been for a slight decline in sales to 1.15M during May.
Despite these signs of strength, new home sales so far this year are down 10.3% from the 2005 average and May sales were 9.7% below the monthly peak last July.
Sales down South posted the third consecutive firm m/m increase with a 6.0% gain (8.4% y/y). Year to year, that&#39;s the only region of country where sales were up. During May, sales in the Northeast fell 7.9% (-36.3% y/y), sales in the Midwest rose 2.7% but were off 20.8% y/y while in the West sales rose 5.3% in May but were down 12.7% y/y. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626b.jpg" width="353">
The number of new homes for sale dipped 0.7% m/m in May but were up a sharp 23.6% y/y. The year to year breakdown by region is as follows: Northeast, 52.8%; West, 27.2%; South, 31.0%; Midwest, -2.8%.
The median sales price of a new single family home fell 4.3% m/m to $235,300 following a 3.9% rise during April that was very much upwardly revised.
Movin&#39; On Up from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2006/b/pages/movin_up.html"> here</a>.
Can Financial Innovation Help to Explain the Reduced Volatility of Economic Activity? from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2005/200554/200554pap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E904.HTM">U.S. New Homes</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Sales (AR, 000&#39;s)</td>
<td>1,234</td>
<td>1,180</td>
<td>-5.9%</td>
<td>1,280</td>
<td>1,201</td>
<td>1,091</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA)</td>
<td>$235,300</td>
<td>$245,900</td>
<td>3.1%</td>
<td>$234,208</td>
<td>$217,817</td>
<td>$191,383</td>
</tr>
</tbody>
</table>
 Business Confidence Strengthens in Belgium  But Weakens in France   
by <a href="/comment/Curley.html">Louise Curley</a> June 26, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626c.jpg" width="353">
European measures of confidence for June are beginning to appear. Last Friday Belgium reported a surprisingly large increase in business confidence. The National Bank of Belgium&#39;s overall gross synthetic indicator of business confidence rose 8.1 point from May to June and reached 10.2%, the highest value on record since the series began in January, 1980. The Bank also calculates a smoothed series, excluding outliers, that reflects the underlying trend of confidence. The smoothed series is only available after a delay of three to four months. Both the current indicator and the smoothed series are shown in the first chart. The continued rise in the current indicator suggests that the underlying trend in consumer confidence is still positive.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626d.jpg" width="353">
Consumers in Belgium are less confident than the business community. While they have shown a small increase in confidence recently, it has been more a case of a decline in the excess of pessimists over optimists.In June, the consumer indicator of confidence was -2% compared with -6% in May and -11% in June, 2005. Chart 2 compares the Belgian consumer and business confidence indicators.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060626e.jpg" width="353">
In contrast to Belgium, business confidence in France has been slipping since April when a recent peak of 109 was reached. Confidence measured 107 in June, down almost 1% from 108 in May, but up 7% since June, 2005. Chart 3 compares the measures of business confidence in France and Belgium. While the levels of confidence are not comparable, the trends in the two series can be compared. Until recently business confidence in France has tended to follow the same ups and downs as business confidence in Belgium. Since April, the trends have diverged. (The Belgian series is expressed as a percent balance between optimists and pessimists while the French series has been constructed so that it has an average of 100 and a standard deviation of 10.)

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Measures of Confidence</th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">May 06</th>
<th scope="col">Jun 05</th>
<th scope="col">M/M</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Belgium&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Business Confidence (%)</td>
<td>&nbsp;10.1</td>
<td>2.0</td>
<td>-10.7</td>
<td>8.1</td>
<td>20.8</td>
<td>-7.5.</td>
<td>-2.3</td>
<td>-12.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Consumer Confidence(%)</td>
<td>-2</td>
<td>-6</td>
<td>-11</td>
<td>4</td>
<td>9</td>
<td>-8</td>
<td>4</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">France</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;Business Confidence (Average=100)</td>
<td>107</td>
<td>108</td>
<td>100</td>
<td>-0.93</td>
<td>7.00</td>
<td>101</td>
<td>104</td>
<td>95</td>
</tr>
</tbody>
</table>
</body>
</html>

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/060623c.jpg" width="353">
Unemployment in Poland fell 59,000 in May, to 2.61 million, the lowest number since August 2000. The May decline accelerated a marked downtrend that began in July 2004 after a plateau at 3.2 million that had lasted about two years. These data, except where noted, are seasonally adjusted by Haver Analytics.
The associated unemployment rate was 16.6% in May, down from 17.0% in April. This is the lowest since late 2001. However, the rates prior to January 2002 were based on a different kind of population census, so they are not fully comparable. The May value is by far the lowest on the current population base. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623d.jpg" width="353">
Employment is rising. Employment is measured several ways in Poland, but fortunately, they are all behaving in the same manner at present. A kind of grand total is taken quarterly; it shows 14.43 million employed in Q1, up by 144,000 from Q4 and the third successive sizable increase. Within this total, private sector jobs account for 9.9 million in Q1, not seasonally adjusted, up 4.0% from the year-ago quarter. The public sector has started to increase modestly after a long &quot;downsizing&quot;; jobs there number 4.29 million in Q1, up 0.9% from Q1 2005. When this data series began in Q1 2000, there were 5.09 million public sector jobs and 9.23 million in the private sector. The private sector experienced a cyclical downturn in 2002-2003 but has recovered to a new peak since then. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623e.jpg" width="353">
A separate monthly tally of private nonagricultural enterprise employment (reported on June 19) reached 4.90 million in May, up 12,000 in the month and 3.0% ahead of a year ago. Industry detail through April shows cyclical gains since 2004 for most sectors except construction, which remains weak. The real estate/business services area has expanded consistently throughout the four-year history of these data.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGECW/@E9/@E96/@E96.HTM">Poland, 000s, SA* </a></th>
<th scope="col">May 2006 </th>
<th scope="col">April 2006 </th>
<th scope="col">Mar 2006/Q1 </th>
<th scope="col">Year Ago </th>
<th scope="col">2005 </th>
<th scope="col">2004 </th>
<th scope="col">2003 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment </td>
<td>2,608</td>
<td>2,667</td>
<td>2,714</td>
<td>2,897</td>
<td>2,871</td>
<td>3,091</td>
<td>3,179</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%) </td>
<td>16.6</td>
<td>17.0</td>
<td>17.2</td>
<td>18.4</td>
<td>18.2</td>
<td>19.5</td>
<td>19.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment </td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>14,430</td>
<td>14,002</td>
<td>14,116</td>
<td>13,795</td>
<td>13,716</td>
</tr>
<tr>
<td class="firstcol">Private Nonagr Employment </td>
<td>4,901</td>
<td>4,889</td>
<td>4,870</td>
<td>4,756</td>
<td>4,770</td>
<td>4,681</td>
<td>4,718</td>
</tr>
</tbody>
</table>
</body>
</html>

Unemployment in Poland fell 59,000 in May, to 2.61 million, the lowest number since August 2000. The May decline accelerated a marked downtrend that began in July 2004 after a plateau at 3.2 million that had lasted about two years. [...]

Poland Unemployment Rate at 4-Year Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623a.jpg" width="353">
New orders for durable goods fell 0.3% last month after a little revised 4.7% drop during April. Consensus expectations had been for a 0.5% decline.
Lower Boeing orders dropped nondefense aircraft &amp; parts bookings by 17.9% (-38.7% y/y) after a 29.7% decline during April. A partial offset to that decline came from a 2.5% (0.6% y/y) increase in new orders for motor vehicles &amp; parts.
Less the transportation sector altogether durable goods orders recovered most of the prior month&#39;s decline with 0.7% gain.
During the last ten years there has been a 69% correlation between the y/y change in durable goods orders and the change in output of durable goods.
Dragged down by the decline in aircraft, orders for nondefense capital goods fell 1.9%. Less aircraft, these orders recovered half of the prior month&#39;s decline with a 1.0% gain. During the last ten years there has been an 86% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment &amp; software from the GDP accounts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623b.jpg" width="353">
Machinery orders jumped 2.3% (15.0% y/y) but electrical equipment orders slipped 0.2% (+13.4% y/y) after a 6.6% April spike. Primary metals surged 3.5% (22.2% y/y), surging for the third consecutive month. Orders for computers &amp; electronic products fell 1.1% (+7.5% y/y) after a 10.8% April slump though computer orders alone rose 1.9% (1.0% y/y).
Shipments of durable goods jumped 2.6% (7.7% y/y) after a 1.2% April decline. Shipments less the transportation sector surged 1.8% (9.0% y/y). During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods.
Order backlogs rose another 0.6% (20.7% y/y) reflecting a 1.5% jump in nondefense aircraft &amp; parts (59.4% y/y). Also strong was the 0.9% (14.3% y/y) rise in unfilled orders less transportation. The ratio of backlogs to shipments outside of transportation slipped moderately after surging in April.
Durable inventories rose 0.4% (3.3% y/y) after an upwardly revised 1.1% April increase. Less transportation inventories rose 0.3% (3.8% y/y) after two months of 1.0% gain. The inventory to sales ratio outside of the transportation sector gave back all of the prior month&#39;s increase.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-0.3%</td>
<td>-4.7%</td>
<td>3.3%</td>
<td>9.0%</td>
<td>6.4%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>9.8%</td>
<td>9.4%</td>
<td>7.6%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-1.9%</td>
<td>-6.3%</td>
<td>-1.7%</td>
<td>21.4%</td>
<td>5.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>10.3%</td>
<td>12.3%</td>
<td>2.8%</td>
<td>-2.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

New orders for durable goods fell 0.3% last month after a little revised 4.7% drop during April. Consensus expectations had been for a 0.5% decline. Lower Boeing orders dropped nondefense aircraft & parts bookings by 17.9% (-38.7% [...]

U.S. Durable Goods Orders Off Slightly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623a.jpg" width="353">
New orders for durable goods fell 0.3% last month after a little revised 4.7% drop during April. Consensus expectations had been for a 0.5% decline.
Lower Boeing orders dropped nondefense aircraft &amp; parts bookings by 17.9% (-38.7% y/y) after a 29.7% decline during April. A partial offset to that decline came from a 2.5% (0.6% y/y) increase in new orders for motor vehicles &amp; parts.
Less the transportation sector altogether durable goods orders recovered most of the prior month&#39;s decline with 0.7% gain.
During the last ten years there has been a 69% correlation between the y/y change in durable goods orders and the change in output of durable goods.
Dragged down by the decline in aircraft, orders for nondefense capital goods fell 1.9%. Less aircraft, these orders recovered half of the prior month&#39;s decline with a 1.0% gain. During the last ten years there has been an 86% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment &amp; software from the GDP accounts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623b.jpg" width="353">
Machinery orders jumped 2.3% (15.0% y/y) but electrical equipment orders slipped 0.2% (+13.4% y/y) after a 6.6% April spike. Primary metals surged 3.5% (22.2% y/y), surging for the third consecutive month. Orders for computers &amp; electronic products fell 1.1% (+7.5% y/y) after a 10.8% April slump though computer orders alone rose 1.9% (1.0% y/y).
Shipments of durable goods jumped 2.6% (7.7% y/y) after a 1.2% April decline. Shipments less the transportation sector surged 1.8% (9.0% y/y). During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods.
Order backlogs rose another 0.6% (20.7% y/y) reflecting a 1.5% jump in nondefense aircraft &amp; parts (59.4% y/y). Also strong was the 0.9% (14.3% y/y) rise in unfilled orders less transportation. The ratio of backlogs to shipments outside of transportation slipped moderately after surging in April.
Durable inventories rose 0.4% (3.3% y/y) after an upwardly revised 1.1% April increase. Less transportation inventories rose 0.3% (3.8% y/y) after two months of 1.0% gain. The inventory to sales ratio outside of the transportation sector gave back all of the prior month&#39;s increase.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-0.3%</td>
<td>-4.7%</td>
<td>3.3%</td>
<td>9.0%</td>
<td>6.4%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>9.8%</td>
<td>9.4%</td>
<td>7.6%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-1.9%</td>
<td>-6.3%</td>
<td>-1.7%</td>
<td>21.4%</td>
<td>5.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>10.3%</td>
<td>12.3%</td>
<td>2.8%</td>
<td>-2.0%</td>
</tr>
</tbody>
</table>
Poland Unemployment Rate at 4-Year Low 
by <a href="/comment/Stone.html">Carol Stone</a> June 23, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623c.jpg" width="353">
Unemployment in Poland fell 59,000 in May, to 2.61 million, the lowest number since August 2000. The May decline accelerated a marked downtrend that began in July 2004 after a plateau at 3.2 million that had lasted about two years. These data, except where noted, are seasonally adjusted by Haver Analytics.
The associated unemployment rate was 16.6% in May, down from 17.0% in April. This is the lowest since late 2001. However, the rates prior to January 2002 were based on a different kind of population census, so they are not fully comparable. The May value is by far the lowest on the current population base. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623d.jpg" width="353">
Employment is rising. Employment is measured several ways in Poland, but fortunately, they are all behaving in the same manner at present. A kind of grand total is taken quarterly; it shows 14.43 million employed in Q1, up by 144,000 from Q4 and the third successive sizable increase. Within this total, private sector jobs account for 9.9 million in Q1, not seasonally adjusted, up 4.0% from the year-ago quarter. The public sector has started to increase modestly after a long &quot;downsizing&quot;; jobs there number 4.29 million in Q1, up 0.9% from Q1 2005. When this data series began in Q1 2000, there were 5.09 million public sector jobs and 9.23 million in the private sector. The private sector experienced a cyclical downturn in 2002-2003 but has recovered to a new peak since then. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060623e.jpg" width="353">
A separate monthly tally of private nonagricultural enterprise employment (reported on June 19) reached 4.90 million in May, up 12,000 in the month and 3.0% ahead of a year ago. Industry detail through April shows cyclical gains since 2004 for most sectors except construction, which remains weak. The real estate/business services area has expanded consistently throughout the four-year history of these data.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGECW/@E9/@E96/@E96.HTM">Poland, 000s, SA* </a></th>
<th scope="col">May 2006 </th>
<th scope="col">April 2006 </th>
<th scope="col">Mar 2006/Q1 </th>
<th scope="col">Year Ago </th>
<th scope="col">2005 </th>
<th scope="col">2004 </th>
<th scope="col">2003 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment </td>
<td>2,608</td>
<td>2,667</td>
<td>2,714</td>
<td>2,897</td>
<td>2,871</td>
<td>3,091</td>
<td>3,179</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%) </td>
<td>16.6</td>
<td>17.0</td>
<td>17.2</td>
<td>18.4</td>
<td>18.2</td>
<td>19.5</td>
<td>19.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment </td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>14,430</td>
<td>14,002</td>
<td>14,116</td>
<td>13,795</td>
<td>13,716</td>
</tr>
<tr>
<td class="firstcol">Private Nonagr Employment </td>
<td>4,901</td>
<td>4,889</td>
<td>4,870</td>
<td>4,756</td>
<td>4,770</td>
<td>4,681</td>
<td>4,718</td>
</tr>
</tbody>
</table>
</body>
</html>

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 2006

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U.S. Existing Home Sales Decline As Expected

U.S. Existing Home Sales Decline As Expected

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U.S. Durable Goods Orders Off Slightly