Robert Brusca

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925g.jpg">
UK money supply is decelerating at the most rapid pace among our sample countries but its growth rate for real balances is still strong: 6.1% over 12 months and 11% (saar) over 3 months. Over the past year real EMU growth money is just about as strong as in the UK. The US shows substantial money supply deceleration and posts negative growth rates in real balances for horizons inside one year. The same is true of Japan.
In Europe credit to residents and overall loan growth are still strong and have hardly slowed. The slowing in real balances is more a function of rising inflation than of slowing credit.
While the credit crunch in the US has been more severe Europeans have created money at a much more rapid pace despite their insistence on a cap for overall money growth. Both the UK and the ECB have made a laughing stock of that ceiling rate.
Take my cap for money supply growth&#151;Please! It&#146;s like an old worn vaudeville joke.
In some quarters there are still concerns about accounting losses at European banks. US institutions are being hit harder and the impact is showing up in the money markets where trading has been seized up at various points. Growth is slowing everywhere and in Europe the news about slowing has been coming fast and furious. For the US the long standing bad news is getting a bit worse. Despite appearances European growth will slow a lot more and the ECB will be in dilemma over what to do with inflation and money growth still so high. It is interesting to note that the US central bank cut rates more aggressively yet has kept money supply growth in check much better than has Europe. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr><th colspan="8" scope="col"> Look at Global and Euro Liquidity Trends</th>

</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar-all</td>
<td colspan="3">Euro Measures (EA15): Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets: Money</td>
<td>Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&#128;&#128;-Supply M2</td>
<td>Credit:Resid</td>
<td>Loans</td>
<td>$US M2</td>
<td>&pound;&pound;UK M4</td>
<td>&yen;&yen;Jpn M2+Cds</td>
<td>OIL:WTI</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>7.4%</td>
<td>9.0%</td>
<td>6.0%</td>
<td>1.5%</td>
<td>17.8%</td>
<td>2.9%</td>
<td>-23.5%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>8.3%</td>
<td>9.1%</td>
<td>7.4%</td>
<td>3.5%</td>
<td>12.5%</td>
<td>1.8%</td>
<td>52.4%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>9.8%</td>
<td>11.1%</td>
<td>8.9%</td>
<td>5.4%</td>
<td>11.2%</td>
<td>2.4%</td>
<td>61.3%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>10.3%</td>
<td>11.2%</td>
<td>9.9%</td>
<td>5.9%</td>
<td>12.4%</td>
<td>2.1%</td>
<td>26.5%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>9.6%</td>
<td>11.4%</td>
<td>10.3%</td>
<td>5.5%</td>
<td>12.8%</td>
<td>1.6%</td>
<td>21.7%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Real Balances: deflated by Own CPI. Oil deflated by US CPI</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>5.1%</td>
<td>6.6%</td>
<td>3.7%</td>
<td>-5.3%</td>
<td>11.0%</td>
<td>-1.5%</td>
<td>-28.6%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>4.9%</td>
<td>5.7%</td>
<td>4.1%</td>
<td>-2.4%</td>
<td>6.7%</td>
<td>-1.4%</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>5.8%</td>
<td>7.0%</td>
<td>4.8%</td>
<td>0.0%</td>
<td>6.1%</td>
<td>0.2%</td>
<td>53.1%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>7.3%</td>
<td>8.2%</td>
<td>6.9%</td>
<td>2.2%</td>
<td>8.9%</td>
<td>1.1%</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>6.8%</td>
<td>8.6%</td>
<td>7.5%</td>
<td>1.7%</td>
<td>9.5%</td>
<td>0.6%</td>
<td>17.3%</td>
</tr>
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UK money supply is decelerating at the most rapid pace among our sample countries but its growth rate for real balances is still strong: 6.1% over 12 months and 11% (saar) over 3 months. Over the past year real EMU growth money is [...]

Selected National Money Supplies

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925e.jpg" width="353">
Initial claims for unemployment insurance jumped again last week. The level of 493,000 compared to an upwardly revised 461,000 during the week prior. The latest was the highest level since during the recession of 2001.
The four-week moving average also jumped to the highest level since the last recession and stood at 462,500 (45.7% y/y). During August initial claims averaged 443,000.
A claims level below 400,000 typically has been associated with positive growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment. Over the longer period of time, the level of claims for jobless insurance has not trended higher with the size of the labor force due to a higher proportion of self-employed workers who are not eligible for benefits.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925f.jpg" width="353">
Continuing claims for unemployment insurance during the latest week rose 63,000 and reversed a 53,000 decline during the prior period. The four-week average of claims rose to 3,489,250. That was the highest level since July 2003. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment held stable for the third week at 2.6%, the highest level since late-2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">09/20/08</th>
<th scope="col">09/13/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;493</td>
<td>461</td>
<td>59.5%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,542</td>
<td>38.4%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
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Initial claims for unemployment insurance jumped again last week. The level of 493,000 compared to an upwardly revised 461,000 during the week prior. The latest was the highest level since during the recession of 2001. The four-week [...]

U.S. Initial Claims For Unemployment Insurance Surged Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925c.jpg" width="353">
August sales of new single-family homes dropped 11.5% from July following a little revised 4.0% increase during that month. The latest drop greatly exceeded Consensus expectations. More impressive, however, was that the latest level of sales was the lowest since January of 1991 and it undoubtedly reflected the recent turmoil in the credit markets.
By region, sales in the West fell by one-third from their July level and that pulled sales down 50.0% from the year ago total. From their peak level in 2005, sales out West are down 82.1%. New home sales in the Northeast also were notably weak and they posted a 31.9% m/m decline. The level about equaled where sales were in May but that was down 69.2% from the 2004 peak. New home sales in the South fell a lesser 2.1% m/m but they were still down 60.4% from the early-2005 high. In the Midwest sales recovered 7.2% m/m following three months of sharp decline. However, the latest level still was down 71.1% from the 2003 peak.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925d.jpg" width="353">
The median price for a new single-family home fell 5.5% m/m to $221,900. The 6.2% y/y decline compares to a peak rate of growth of 13.9% back in 2004. 
The number of new homes for sale fell further, by a sharp 4.4% (-23.5% y/y). That reduced the inventory of unsold homes to the lowest level since late-2004. In each of the country&#39;s regions the inventory is down just short of one-quarter during the last year.
The month&#39;s supply of new homes for sale ticked slightly higher to 10.9 and that was near the record high.
Fed Chairman Ben S. Bernanke&#39;s testimony the morning on the Economic Outlook can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20080924a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>460</td>
<td>520</td>
<td>-34.5%</td>
<td>768</td>
<td>1,049</td>
<td>1,279</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>32</td>
<td>47</td>
<td>&nbsp;-45.8</td>
<td>64</td>
<td>64</td>
<td>81</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>74</td>
<td>69</td>
<td>-39.3</td>
<td>118</td>
<td>161</td>
<td>203</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>276</td>
<td>282</td>
<td>-24.4</td>
<td>408</td>
<td>559</td>
<td>638</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>78</td>
<td>122</td>
<td>-50.0</td>
<td>178</td>
<td>266</td>
<td>356</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>221,900</td>
<td>234,900</td>
<td>-6.2</td>
<td>243,742</td>
<td>243,067</td>
<td>234,208</td>
</tr>
</tbody>
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August sales of new single-family homes dropped 11.5% from July following a little revised 4.0% increase during that month. The latest drop greatly exceeded Consensus expectations. More impressive, however, was that the latest level [...]

U.S. New-Home Sales Lowest Since Early-1991

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925a.jpg" width="353">
New orders for durable goods fell 4.5% during August and that reversed all of the downwardly revised, modest increases during the prior two months. Last month&#39;s decline certainly reflected a 38.1% (+31.1% y/y) plunge in orders for commercial aircraft, but elsewhere orders also fell sharply. Consensus expectations had been for a 1.5% decline in orders last month.
Less the transportation sector altogether, durable goods orders fell 3.0% after a downwardly revised 0.1% July uptick. Expectations had been for a dip during August. On a three-month basis growth in orders less the transportation sector fell to -1.5% (AR), the weakest since late last year.
August orders for nondefense capital goods fell 7.5% paced by the plunge in orders for commercial aircraft. Nevertheless, without aircraft nondefense capital goods orders dropped 2.0%. That lowered the three-month growth rate to -0.2%, it&#39;s worst since early last year. During the last ten years there has been an 80% correlation between the y/y gain in nondefense capital goods orders and the rise in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925b.jpg" width="353">
Outside the transportation sector, new orders were weak led by a 6.2% plunge in new orders for machinery. These orders still were up 5.2% y/y but three-month growth fell to -0.9%.Primary metals orders also turned weak as they posted a 9.3% (+12.0% y/y) drop which reversed virtually all of the gains during the prior two months. New orders for electrical equipment also fell a sharp 2.2% -1.2% y/y) after the downwardly revised 8.2% July shortfall. On a three-month basis these orders were down at a 20.8% annual rate.
The 1.9% August rise in new orders for computers &amp; electronic products belies the weakness that has developed in this sector. On a three-month basis these orders fell at a 6.7% rate after a 2.1% decline during all of last year. Orders for just computers &amp; related products increased 2.0% (-14.8% y/y) after a downwardly revised 13.2% July plunge. New orders for communications equipment were stronger and they posted a 4.6% (1.3% y/y) increase. Three-month growth amounted to 5.5%, a recovery from last year&#39;s 7.5% decline.
Overall shipments of durable goods fell 3.5% (-2.6% y/y) and that reversed a 2.3% July increase. During the last three months growth is a negative 1.7% (AR) after last year&#39;s negligible 0.1% uptick. For comparison, industrial production of durable goods during the last three months is -3.0% (-2.2% y/y). During the last ten years there has been a 79% correlation between the y/y change in shipments of durable goods and the change in durables industrial production. Less transportation, shipments of durable goods reversed all of their July increase and fell 2.1% (+2.1% y/y). Three-month growth was 2.2% (AR), down from 5.9% in January.
Inventories of durable goods again were strong and they rose 0.7% (8.1% y/y). Three-month growth amounted to 10.2% (AR), the strongest rate of accumulation in roughly two years. Less transportation, inventories also rose a strong 0.7% (5.9% y/y) and the three-month growth rate amounted to 5.9% after the 1.4% rise during 2007.

<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">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-4.5%</td>
<td>0.8%</td>
<td>-4.7 %</td>
<td>1.4%</td>
<td>6.2%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>-3.0</td>
<td>0.1</td>
<td>1.4</td>
<td>-0.3</td>
<td>9.1</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-7.5</td>
<td>3.5</td>
<td>-1.9</td>
<td>3.5</td>
<td>9.4</td>
<td>17.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.0</td>
<td>0.4</td>
<td>1.9</td>
<td>-2.7</td>
<td>10.7</td>
<td>11.6</td>
</tr>
</tbody>
</table>
</body>
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New orders for durable goods fell 4.5% during August and that reversed all of the downwardly revised, modest increases during the prior two months. Last month's decline certainly reflected a 38.1% (+31.1% y/y) plunge in orders for [...]

U.S. Durable Goods Orders Show Broad-based Decline Last Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925a.jpg" width="353">
New orders for durable goods fell 4.5% during August and that reversed all of the downwardly revised, modest increases during the prior two months. Last month&#39;s decline certainly reflected a 38.1% (+31.1% y/y) plunge in orders for commercial aircraft, but elsewhere orders also fell sharply. Consensus expectations had been for a 1.5% decline in orders last month.
Less the transportation sector altogether, durable goods orders fell 3.0% after a downwardly revised 0.1% July uptick. Expectations had been for a dip during August. On a three-month basis growth in orders less the transportation sector fell to -1.5% (AR), the weakest since late last year.
August orders for nondefense capital goods fell 7.5% paced by the plunge in orders for commercial aircraft. Nevertheless, without aircraft nondefense capital goods orders dropped 2.0%. That lowered the three-month growth rate to -0.2%, it&#39;s worst since early last year. During the last ten years there has been an 80% correlation between the y/y gain in nondefense capital goods orders and the rise in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925b.jpg" width="353">
Outside the transportation sector, new orders were weak led by a 6.2% plunge in new orders for machinery. These orders still were up 5.2% y/y but three-month growth fell to -0.9%.Primary metals orders also turned weak as they posted a 9.3% (+12.0% y/y) drop which reversed virtually all of the gains during the prior two months. New orders for electrical equipment also fell a sharp 2.2% -1.2% y/y) after the downwardly revised 8.2% July shortfall. On a three-month basis these orders were down at a 20.8% annual rate.
The 1.9% August rise in new orders for computers &amp; electronic products belies the weakness that has developed in this sector. On a three-month basis these orders fell at a 6.7% rate after a 2.1% decline during all of last year. Orders for just computers &amp; related products increased 2.0% (-14.8% y/y) after a downwardly revised 13.2% July plunge. New orders for communications equipment were stronger and they posted a 4.6% (1.3% y/y) increase. Three-month growth amounted to 5.5%, a recovery from last year&#39;s 7.5% decline.
Overall shipments of durable goods fell 3.5% (-2.6% y/y) and that reversed a 2.3% July increase. During the last three months growth is a negative 1.7% (AR) after last year&#39;s negligible 0.1% uptick. For comparison, industrial production of durable goods during the last three months is -3.0% (-2.2% y/y). During the last ten years there has been a 79% correlation between the y/y change in shipments of durable goods and the change in durables industrial production. Less transportation, shipments of durable goods reversed all of their July increase and fell 2.1% (+2.1% y/y). Three-month growth was 2.2% (AR), down from 5.9% in January.
Inventories of durable goods again were strong and they rose 0.7% (8.1% y/y). Three-month growth amounted to 10.2% (AR), the strongest rate of accumulation in roughly two years. Less transportation, inventories also rose a strong 0.7% (5.9% y/y) and the three-month growth rate amounted to 5.9% after the 1.4% rise during 2007.

<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">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-4.5%</td>
<td>0.8%</td>
<td>-4.7 %</td>
<td>1.4%</td>
<td>6.2%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>-3.0</td>
<td>0.1</td>
<td>1.4</td>
<td>-0.3</td>
<td>9.1</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-7.5</td>
<td>3.5</td>
<td>-1.9</td>
<td>3.5</td>
<td>9.4</td>
<td>17.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.0</td>
<td>0.4</td>
<td>1.9</td>
<td>-2.7</td>
<td>10.7</td>
<td>11.6</td>
</tr>
</tbody>
</table>
U.S. New-Home Sales Lowest Since Early-1991 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 25, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925c.jpg" width="353">
August sales of new single-family homes dropped 11.5% from July following a little revised 4.0% increase during that month. The latest drop greatly exceeded Consensus expectations. More impressive, however, was that the latest level of sales was the lowest since January of 1991 and it undoubtedly reflected the recent turmoil in the credit markets.
By region, sales in the West fell by one-third from their July level and that pulled sales down 50.0% from the year ago total. From their peak level in 2005, sales out West are down 82.1%. New home sales in the Northeast also were notably weak and they posted a 31.9% m/m decline. The level about equaled where sales were in May but that was down 69.2% from the 2004 peak. New home sales in the South fell a lesser 2.1% m/m but they were still down 60.4% from the early-2005 high. In the Midwest sales recovered 7.2% m/m following three months of sharp decline. However, the latest level still was down 71.1% from the 2003 peak.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925d.jpg" width="353">
The median price for a new single-family home fell 5.5% m/m to $221,900. The 6.2% y/y decline compares to a peak rate of growth of 13.9% back in 2004. 
The number of new homes for sale fell further, by a sharp 4.4% (-23.5% y/y). That reduced the inventory of unsold homes to the lowest level since late-2004. In each of the country&#39;s regions the inventory is down just short of one-quarter during the last year.
The month&#39;s supply of new homes for sale ticked slightly higher to 10.9 and that was near the record high.
Fed Chairman Ben S. Bernanke&#39;s testimony the morning on the Economic Outlook can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20080924a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>460</td>
<td>520</td>
<td>-34.5%</td>
<td>768</td>
<td>1,049</td>
<td>1,279</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>32</td>
<td>47</td>
<td>&nbsp;-45.8</td>
<td>64</td>
<td>64</td>
<td>81</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>74</td>
<td>69</td>
<td>-39.3</td>
<td>118</td>
<td>161</td>
<td>203</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>276</td>
<td>282</td>
<td>-24.4</td>
<td>408</td>
<td>559</td>
<td>638</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>78</td>
<td>122</td>
<td>-50.0</td>
<td>178</td>
<td>266</td>
<td>356</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>221,900</td>
<td>234,900</td>
<td>-6.2</td>
<td>243,742</td>
<td>243,067</td>
<td>234,208</td>
</tr>
</tbody>
</table>
U.S. Initial Claims For Unemployment Insurance Surged Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 25, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925e.jpg" width="353">
Initial claims for unemployment insurance jumped again last week. The level of 493,000 compared to an upwardly revised 461,000 during the week prior. The latest was the highest level since during the recession of 2001.
The four-week moving average also jumped to the highest level since the last recession and stood at 462,500 (45.7% y/y). During August initial claims averaged 443,000.
A claims level below 400,000 typically has been associated with positive growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment. Over the longer period of time, the level of claims for jobless insurance has not trended higher with the size of the labor force due to a higher proportion of self-employed workers who are not eligible for benefits.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925f.jpg" width="353">
Continuing claims for unemployment insurance during the latest week rose 63,000 and reversed a 53,000 decline during the prior period. The four-week average of claims rose to 3,489,250. That was the highest level since July 2003. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment held stable for the third week at 2.6%, the highest level since late-2003.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">09/20/08</th>
<th scope="col">09/13/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;493</td>
<td>461</td>
<td>59.5%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,542</td>
<td>38.4%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
Selected National Money Supplies 
by <a href="/comment/Brusca.html">Robert Brusca</a> September 25, 2008


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080925g.jpg">
UK money supply is decelerating at the most rapid pace among our sample countries but its growth rate for real balances is still strong: 6.1% over 12 months and 11% (saar) over 3 months. Over the past year real EMU growth money is just about as strong as in the UK. The US shows substantial money supply deceleration and posts negative growth rates in real balances for horizons inside one year. The same is true of Japan.
In Europe credit to residents and overall loan growth are still strong and have hardly slowed. The slowing in real balances is more a function of rising inflation than of slowing credit.
While the credit crunch in the US has been more severe Europeans have created money at a much more rapid pace despite their insistence on a cap for overall money growth. Both the UK and the ECB have made a laughing stock of that ceiling rate.
Take my cap for money supply growth&#151;Please! It&#146;s like an old worn vaudeville joke.
In some quarters there are still concerns about accounting losses at European banks. US institutions are being hit harder and the impact is showing up in the money markets where trading has been seized up at various points. Growth is slowing everywhere and in Europe the news about slowing has been coming fast and furious. For the US the long standing bad news is getting a bit worse. Despite appearances European growth will slow a lot more and the ECB will be in dilemma over what to do with inflation and money growth still so high. It is interesting to note that the US central bank cut rates more aggressively yet has kept money supply growth in check much better than has Europe. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr><th colspan="8" scope="col"> Look at Global and Euro Liquidity Trends<</th>

</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar-all</td>
<td colspan="3">Euro Measures (EA15): Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets: Money</td>
<td>Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&#128;&#128;-Supply M2</td>
<td>Credit:Resid</td>
<td>Loans</td>
<td>$US M2</td>
<td>&pound;&pound;UK M4</td>
<td>&yen;&yen;Jpn M2+Cds</td>
<td>OIL:WTI</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>7.4%</td>
<td>9.0%</td>
<td>6.0%</td>
<td>1.5%</td>
<td>17.8%</td>
<td>2.9%</td>
<td>-23.5%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>8.3%</td>
<td>9.1%</td>
<td>7.4%</td>
<td>3.5%</td>
<td>12.5%</td>
<td>1.8%</td>
<td>52.4%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>9.8%</td>
<td>11.1%</td>
<td>8.9%</td>
<td>5.4%</td>
<td>11.2%</td>
<td>2.4%</td>
<td>61.3%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>10.3%</td>
<td>11.2%</td>
<td>9.9%</td>
<td>5.9%</td>
<td>12.4%</td>
<td>2.1%</td>
<td>26.5%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>9.6%</td>
<td>11.4%</td>
<td>10.3%</td>
<td>5.5%</td>
<td>12.8%</td>
<td>1.6%</td>
<td>21.7%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Real Balances: deflated by Own CPI. Oil deflated by US CPI</td>
</tr>
<tr>
<td class="firstcol">3-MO</td>
<td>5.1%</td>
<td>6.6%</td>
<td>3.7%</td>
<td>-5.3%</td>
<td>11.0%</td>
<td>-1.5%</td>
<td>-28.6%</td>
</tr>
<tr>
<td class="firstcol">6-MO</td>
<td>4.9%</td>
<td>5.7%</td>
<td>4.1%</td>
<td>-2.4%</td>
<td>6.7%</td>
<td>-1.4%</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">12-MO</td>
<td>5.8%</td>
<td>7.0%</td>
<td>4.8%</td>
<td>0.0%</td>
<td>6.1%</td>
<td>0.2%</td>
<td>53.1%</td>
</tr>
<tr>
<td class="firstcol">2Yr</td>
<td>7.3%</td>
<td>8.2%</td>
<td>6.9%</td>
<td>2.2%</td>
<td>8.9%</td>
<td>1.1%</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">3Yr</td>
<td>6.8%</td>
<td>8.6%</td>
<td>7.5%</td>
<td>1.7%</td>
<td>9.5%</td>
<td>0.6%</td>
<td>17.3%</td>
</tr>
</tbody>
</table>
</body>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080924e.jpg" align="left" border="0" height="265" width="353">
The IFO sector readings are plunging and the overall indices
are weak as well. In September the business expectations index remains
in the lower 13 percentile of its range. The current situation is mid
range at the 51st percentile. But sector
readings are deteriorating with manufacturing, wholesaling and
retailing falling especially sharply in just the past few months.
Moreover, all of euro is beginning to show this same sort of
malaise. Yesterday the Bank of Belgium index fell from 5.9 in August
to14.4 in September. Italian business confidence released today
registered its lowest reading in seven years. French business
confidence, another morning release, fell to its lowest mark in over
five years.
The German IFO reading is only the lowest in three years. But
this year&#8217;s low in expectations sub index is the lowest since 1993.
With the recent surge in oil prices and mini jump in the euro Europe
has a lot on its plate to worry about. If Europe escapes recession it
will be nothing short of a miracle.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Summary
of IFO Sector Diffusion readings: CLIMATE</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CLIMATE Sum</td>
<td>Current</td>
<td>Last Mo</td>
<td colspan="6">Since Jan 1991*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>Average</td>
<td>Median</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>% range</td>
</tr>
<tr>
<td class="firstcol">All Sectors</td>
<td>-14.8</td>
<td>-11.1</td>
<td>-6.6</td>
<td>-9.8</td>
<td>16.8</td>
<td>-26.3</td>
<td>43.1</td>
<td>26.7%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-11.6</td>
<td>-6.8</td>
<td>3.5</td>
<td>3.8</td>
<td>27.2</td>
<td>-22.6</td>
<td>49.8</td>
<td>22.1%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-25.2</td>
<td>-26.4</td>
<td>-32.8</td>
<td>-38.8</td>
<td>-7.9</td>
<td>-50.5</td>
<td>42.6</td>
<td>59.4%</td>
</tr>
<tr>
<td class="firstcol">Wholesale</td>
<td>-10.3</td>
<td>-5.5</td>
<td>-9.9</td>
<td>-14.5</td>
<td>23.5</td>
<td>-39.4</td>
<td>62.9</td>
<td>46.3%</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-24.0</td>
<td>-21.5</td>
<td>-20.3</td>
<td>-20.5</td>
<td>1.2</td>
<td>-39.6</td>
<td>40.8</td>
<td>38.2%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>8.3</td>
<td>7.7</td>
<td>10.7</td>
<td>9.5</td>
<td>28.5</td>
<td>-15.7</td>
<td>44.2</td>
<td>54.3%</td>
</tr>
<tr>
<td colspan="4" class="firstcol">* May 2001 for Services</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The IFO sector readings are plunging and the overall indices are weak as well. In September the business expectations index remains in the lower 13 percentile of its range. The current situation is mid range at the 51st percentile. [...]

Germany Shows Extreme Weakness Like the Rest of Europe

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080924c.jpg" width="353">
The level of existing homes during August fell 2.2% m/m to 4.910 million. The figure, reported by the National Association of Realtors, followed a 3.5% increase during July which was revised up modestly. The figure about matched Consensus expectations for a selling rate of 4.94M homes. Total sales include sales of condos and co-ops.
Sales of existing single-family homes fell a lesser 1.4% and have moved sideways since last Fall. These sales have a longer history than the total and they were still near their lowest level since early-1998.
By region, home sales in the Northeast reversed all of their July improvement with a 6.6% (-15.0% y/y) decline. Sales out West also fell 5.3% (+4.9% y/y) and reversed the July increase. Working the other way, sales in the Midwest rose 0.9% (-12.3% y/y) and in the South sales also reversed the July downtick and inched up 0.5% (-15.1% y/y).
Median home prices fell 3.4% last month after a downwardly revised 2.2% drop during July.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080924d.jpg" width="353">
The number of unsold homes (condos &amp; single-family) on the market fell 7.0% from July (-2.9% y/y). At the current sales rate the inventory fell slightly to a 10.4 months supply which is near the record high for this series. For single-family homes, however, the inventory fell a bit more to a 10.0 months supply at the current sales rate. That was down from an 11.0 months supply in June.
Why Do Chinese Households Save So Much? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/iet/20080801/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous)</th>
<th scope="col">August</th>
<th scope="col">y/y %</th>
<th scope="col">July</th>
<th scope="col">August &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>4,910</td>
<td>-10.7</td>
<td>5,020</td>
<td>5,500</td>
<td>5,672</td>
<td>6,508</td>
<td>7,076</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>850</td>
<td>-15.0</td>
<td>910</td>
<td>1,000</td>
<td>1,008</td>
<td>1,090</td>
<td>1,168</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,140</td>
<td>-12.3</td>
<td>1,130</td>
<td>1,300</td>
<td>1,331</td>
<td>1,491</td>
<td>1,589</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>1,860</td>
<td>-15.1</td>
<td>1,850</td>
<td>2,190</td>
<td>2,240</td>
<td>2,576</td>
<td>2,704</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,070</td>
<td>4.9</td>
<td>1,130</td>
<td>1,020</td>
<td>1,093</td>
<td>1,353</td>
<td>1,617</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,350</td>
<td>-9.6</td>
<td>4,410</td>
<td>4,810</td>
<td>4,958</td>
<td>5,703</td>
<td>6,181</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Price, Total, $</td>
<td>203,100</td>
<td>-9.5</td>
<td>210,300</td>
<td>224,400</td>
<td>216,617</td>
<td>222,000</td>
<td>218,217</td>
</tr>
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The level of existing homes during August fell 2.2% m/m to 4.910 million. The figure, reported by the National Association of Realtors, followed a 3.5% increase during July which was revised up modestly. The figure about matched [...]

U.S. Existing Home Sales & Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080924a.jpg" width="353">
The index of U.S. house prices from the Office of Federal Housing Enterprise Oversight (OFHEO) continued moving lower in July. The 0.6% m/m decline from June followed a revised 0.3% dip during that month which was revised from the initial report of no change in prices.
The 5.3% year-to-year decline is by far the sharpest for this cycle and on record. Negative y/y comparisons began last November.
The OFHEO price index reflects repeat sales of the same property. It does not, however, make an adjustment for changes in the form of additions to or deterioration of that property.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080924b.jpg" width="353">
Regional declines in home prices during the latest twelve months were greatest in the Pacific region where prices fell 17.7% y/y. That followed a 0.6% rise last year and several years of double digit gain. Prices also fell a sharp 5.2% in the South Atlantic states, by 4.7% in the Mountain states and by 4.6% in New England.
Elsewhere in the country home prices fell 3.5% in the Middle Atlantic region, by 1.9% in the West North Central region and by 1.2% in the East South central states.
Only in the West South Central of the country did prices rise year-to-year. The 0.6% gain was, however, down from nearly ten years of 3%-to-7% growth.
The latest report from OFHEO can be found <a href="http://www.ofheo.gov/newsroom.aspx?ID=466&amp;q1=0&amp;q2=0">here</a>.
OFHEO figures are available in Haver&#39;s USECON database.
 Another Conundrum? from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20081001/mtpub.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">OFHEO House Price Index (Q1 1991=100,SA)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Purchase Only</td>
<td>212.0</td>
<td>213.4</td>
<td>-5.3%</td>
<td>1.6%</td>
<td>6.3%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>


</html>

The index of U.S. house prices from the Office of Federal Housing Enterprise Oversight (OFHEO) continued moving lower in July. The 0.6% m/m decline from June followed a revised 0.3% dip during that month which was revised from the [...]

OFHEO House Price Index Continued Moving Lower

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: September 2008

Jump to:

Selected National Money Supplies

U.S. Initial Claims For Unemployment Insurance Surged Further

U.S. New-Home Sales Lowest Since Early-1991

U.S. Durable Goods Orders Show Broad-based Decline Last Month

U.S. Durable Goods Orders Show Broad-based Decline Last Month

Germany Shows Extreme Weakness Like the Rest of Europe

U.S. Existing Home Sales & Prices Fell

OFHEO House Price Index Continued Moving Lower