Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026a.jpg" align="left" border="0" height="265" width="353">
The EMU economy continues to spin off better economic signals.
Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in
June. As a result the sequential growth rates are showing explosive
growth in orders- up at a 43% annual rate over three months - still
orders are lower Yr/Yr by over 20%. EMU MFG sales were up in August,
too, and they show sequential growth rates are improving. 
Orders rose in two of the four largest economies as Italy and
the UK took order setbacks in August. 
Italy and the UK also show dropping orders over three months.
The UK took a set back in growth as GDP dropped 0.4% Q/Q in Q3
(a 1.6% annualized rate of decline) an unexpected result that extends
the UK recession that was thought to have ended.
 Italy &#8217;s sharper drop in orders of 8.6% raises some
questions there. The UK GDP drop has brought pressure on sterling as
one might well have expected, but the weakness in Italy is another
matter as it is safely cocooned within the euro area. We do not know
how badly Italy &#8217;s orders drop will affect the economy but retail sales
have faltered recently. Consumers and businesses are seeing and
expecting totally different trends there. The hardest thing for EMU
policymakers is to have countries within the Zone moving in different
directions.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro Area
and UK Industrial Orders &amp; Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">% m/m</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
08</td>
<td>Aug 
07</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3
Mo</td>
<td>6
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>1.0%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>7.1%</td>
<td>2.3%</td>
<td>-19.6%</td>
<td>3.5%</td>
<td>5.8%</td>
<td>11.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.7%</td>
<td>4.8%</td>
<td>6.8%</td>
<td>34.6%</td>
<td>3.2%</td>
<td>-21.4%</td>
<td>2.0%</td>
<td>9.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Orders</td>
<td>2.0%</td>
<td>3.0%</td>
<td>4.2%</td>
<td>43.7%</td>
<td>20.4%</td>
<td>-21.8%</td>
<td>-2.1%</td>
<td>4.7%</td>
<td>37.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Countries:</td>
<td>Aug 09</td>
<td>Jul 09</td>
<td>Jun 09</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12-mo</td>
<td>Qtr 2 Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>1.8%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>36.9%</td>
<td>33.2%</td>
<td>-24.7%</td>
<td>-1.0%</td>
<td>6.0%</td>
<td>30.5%</td>
</tr>
<tr>
<td class="firstcol">France:</td>
<td>3.0%</td>
<td>4.1%</td>
<td>1.5%</td>
<td>39.8%</td>
<td>6.1%</td>
<td>-13.8%</td>
<td>-7.7%</td>
<td>8.1%</td>
<td>43.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-8.6%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>-19.0%</td>
<td>-18.8%</td>
<td>-29.8%</td>
<td>-3.4%</td>
<td>-1.6%</td>
<td>-34.5%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)</td>
<td>-15.6%</td>
<td>7.3%</td>
<td>3.6%</td>
<td>-22.5%</td>
<td>1.3%</td>
<td>-11.1%</td>
<td>-12.6%</td>
<td>4.3%</td>
<td>-48.8%</td>
</tr>
</tbody>
</table>


 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/0910231.gif" v:shapes="_x0000_s1026" align="left" height="258" hspace="12" width="203">
Markit PMIS are up-beat - The
goods news for EMU was that the Markit monthly look-ahead PMI reading
for October improved overall and for each of MFG and Services. The MFG
reading actually showed expansion for the first time since May of 2008.
Overall the EMU area seems to be continuing its progress despite Italy
&#8217;s troubles. 

Adding to the sense of good news in the face of the UK &#8217;s
ominous GDP drop was an improvement in Germany &#8217;s IFO index as business
climate improved along with current conditions and
expectations.
A background report from the OECD demonstrated that world
trade flows had stabilized in 2009-Q2. To
be sure it remains a day of mixed data but putting the UK &#8217;s GDP report
aside the news elsewhere was pretty upbeat. Dropping UK GDP is a big
fly in the ointment, but on the whole the signals from the UK economy
have not turned uniformly glum. Until GDP was reported, based on data
in hand, economists had expected a rise in GDP. Sometimes GDP
accounting can have this effect. While GDP is the best comprehensive
measure of how an economy is doing, around economic turning points
oddities with trade and inventories can send mixed the signals more
than they should. While we need to be wary of the UK economy&#8217;s
performance, on the whole the global economy seems to be in an upswing
and doing better. Ultimately that will help the UK too.

</body></html>

The EMU economy continues to spin off better economic signals. Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in June. As a result the sequential growth rates are showing explosive growth in orders- up at a 43% [...]

EMU Orders Continue to Rise and Cut Year/Year Drop

Tom Moeller

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&nbsp;

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023c.jpg" align="right" border="0" height="265" width="353">
The decline in home prices continued to moderate according the
U.S. House Price Index from the Federal Housing and Finance Agency
(FHFA). The Purchase Only Index for August fell 0.3% and reversed its
July increase. Nevertheless, the year-to-year decline in the nationwide
average of home prices eased to -3.6% from its worst reading of -8.8%
last November. Since their peak in early-2007 home prices nationwide
have fallen 10.7%. The FHFA uses data provided by Fannie Mae and
Freddie Mac and is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023d.jpg" align="right" border="0" height="265" width="353">

Notable monthly declines in home prices during August were
logged in the South Atlantic and the New England regions of the
country, though the y/y declines have moderated significantly.
Conversely, prices in the Mountain and in the Pacific regions recovered
m/m but remain down the most of the country's regions versus last
August. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023e.jpg" align="right" border="0" height="265" width="353">
Prices in the Middle Atlantic and in the East North Central
Regions also fell moderately during August but the y/y declines have
moderated significantly this year.
In the populous East North Central region prices slipped
another 0.6% during August but they were flat year-to-date. Prices also
slipped in the West South Central region but have risen slightly since
December.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023f.jpg" align="right" border="0" height="265" width="353">
Mideast Oil Exporters Face the Crisis Ahead from
the International Monetary Fund can be found <a href="http://blog-imfdirect.imf.org/2009/10/11/mideast-oil-exporters/">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.3</td>
<td>0.3</td>
<td>-3.6</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-1.1</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>-0.6</td>
<td>0.9</td>
<td>-2.8</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.6</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.2</td>
<td>0.1</td>
<td>1.0</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>-1.6</td>
<td>1.2</td>
<td>-5.5</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>0.4</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.0</td>
<td>-0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-0.0</td>
<td>-7.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.1</td>
<td>0.9</td>
<td>-6.5</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
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The decline in home prices continued to moderate according the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for August fell 0.3% and reversed its July increase. Nevertheless, the [...]

FHFA Home Price Index Reverses Monthly Gain While Y/Y Loss Eases

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023a.jpg" width="353">
Home sales continue to recover, helped by lower prices. The National Association of Realtors reported that September sales of existing homes rose sharply to the highest level since July 2007. The 9.4% m/m increase to 5.570M units (SAAR) followed a 2.9% July decline that was little revised. Moreover, the increase in September home sales outpaced Consensus expectations for a rise to 5.35M. Total sales include sales of condos and co-ops.
Sales of existing single-family homes alone similarly increased a sharp 9.4% to 4.890M last month and were up 20.7% from the January low. (These data have a longer history than the total sales series).
Recent sales have been helped by a tax credit for first-time home buyers. The credit of up to $8,000 extends though the end of this year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
The median price of an existing home fell for the third straight month, to $174,900. Though prices were still lower than the year-ago level, they have risen 6.1% from the January low. The median price for a single-family home was $174,900 (-8.1% y/y). These price declines have sharply raised home affordability. During August, the composite index of home affordability reversed all of its July decline and rose 2.3%. It was up 26.5% from August of last year but down 10.1% from its January peak due to a limited decline in interest rates.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023b.jpg" width="353">
Perhaps due to lower prices, potential sellers put fewer homes on the market. The number of unsold homes (condos &amp; single-family) for sale fell 7.5% (-15.0% y/y) during September to near the lowest level since January 2007. Year-to-year inventories were down 15.0%. At the current sales rate there was a 7.8 months&#39; supply on the market which was near the lowest since early-2007. The latest figure was down from a high of 11.3 months early last year. For single-family homes the inventory fell 9.1% m/m (-16.7% y/y). At the current sales rate there was a 7.6 month&#39;s supply of homes on the market, the lowest since early-2007.
The data on existing home sales, prices and affordability can be found in Haver&#39;s USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
Financial Regulation and Supervision after the Crisis: The Role of the Federal Reserve is the title of this morning&#39;s speech by Fed Chairman Ben S. Bernanke and it is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20091023a.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">Existing Home Sales (Thous, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,570</td>
<td>5,090</td>
<td>9.2%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>950</td>
<td>910</td>
<td>11.8</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,250</td>
<td>1,140</td>
<td>7.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,060</td>
<td>1,890</td>
<td>10.8</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,300</td>
<td>1,150</td>
<td>5.7</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,890</td>
<td>4,470</td>
<td>7.7</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>174,900</td>
<td>177,300</td>
<td>-8.5</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
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Home sales continue to recover, helped by lower prices. The National Association of Realtors reported that September sales of existing homes rose sharply to the highest level since July 2007. The 9.4% m/m increase to 5.570M units [...]

U.S. Existing Home Sales Jump But Prices Decline Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023a.jpg" align="left" border="0" height="265" width="353">
Home sales continue to recover, helped by lower prices. The
National Association of Realtors reported that September sales of
existing homes rose sharply to the highest level since July
2007. The 9.4% m/m increase to 5.570M units (SAAR) followed a 2.9% July
decline that was little revised. Moreover, the increase in September
home sales outpaced Consensus expectations for a rise to 5.35M. Total
sales include sales of condos and co-ops.
Sales of existing single-family homes alone similarly
increased a sharp 9.4% to 4.890M last month and were up 20.7% from the
January low. (These data have a longer history than the total sales
series).
Recent sales have been helped by a tax credit for first-time
home buyers. The credit of up to $8,000 extends though the end of this
year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
The median price of an existing home fell for the third
straight month, to $174,900. Though prices were still lower than the
year-ago level, they have risen 6.1% from the January low. The median
price for a single-family home was $174,900 (-8.1% y/y). These price
declines have sharply raised home affordability. During August, the
composite index of home affordability reversed all of its July decline
and rose 2.3%. It was up 26.5% from August of last year but down 10.1%
from its January peak due to a limited decline in interest rates.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023b.jpg" align="right" border="0" height="265" width="353">
Perhaps due to lower prices, potential sellers put fewer homes
on the market. The number of unsold homes (condos &amp;
single-family) for sale fell 7.5% (-15.0% y/y) during September to near
the lowest level since January 2007. Year-to-year inventories were down
15.0%. At the current sales rate there was a 7.8 months' supply on the
market which was near the lowest since early-2007. The latest figure
was down from a high of 11.3 months early last year. For single-family
homes the inventory fell 9.1% m/m (-16.7% y/y). At the current sales
rate there was a 7.6 month's supply of homes on the market, the lowest
since early-2007.
The data on existing home sales, prices and affordability can
be found in Haver's USECON database. The regional
price, affordability and inventory data is available in the REALTOR
database.
Financial Regulation and Supervision after the
Crisis: The Role of the Federal Reserve is the title of this
morning's speech by Fed Chairman Ben S. Bernanke and it is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20091023a.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">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,570</td>
<td>5,090</td>
<td>9.2%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>950</td>
<td>910</td>
<td>11.8</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,250</td>
<td>1,140</td>
<td>7.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,060</td>
<td>1,890</td>
<td>10.8</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,300</td>
<td>1,150</td>
<td>5.7</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,890</td>
<td>4,470</td>
<td>7.7</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>174,900</td>
<td>177,300</td>
<td>-8.5</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
FHFA Home Price Index Reverses
Monthly Gain While Y/Y Loss Eases&nbsp; 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> October 23, 2009&nbsp;

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023c.jpg" align="right" border="0" height="265" width="353">
The decline in home prices continued to moderate according the
U.S. House Price Index from the Federal Housing and Finance Agency
(FHFA). The Purchase Only Index for August fell 0.3% and reversed its
July increase. Nevertheless, the year-to-year decline in the nationwide
average of home prices eased to -3.6% from its worst reading of -8.8%
last November. Since their peak in early-2007 home prices nationwide
have fallen 10.7%. The FHFA uses data provided by Fannie Mae and
Freddie Mac and is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023d.jpg" align="right" border="0" height="265" width="353">

Notable monthly declines in home prices during August were
logged in the South Atlantic and the New England regions of the
country, though the y/y declines have moderated significantly.
Conversely, prices in the Mountain and in the Pacific regions recovered
m/m but remain down the most of the country's regions versus last
August. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023e.jpg" align="right" border="0" height="265" width="353">
Prices in the Middle Atlantic and in the East North Central
Regions also fell moderately during August but the y/y declines have
moderated significantly this year.
In the populous East North Central region prices slipped
another 0.6% during August but they were flat year-to-date. Prices also
slipped in the West South Central region but have risen slightly since
December.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023f.jpg" align="right" border="0" height="265" width="353">
Mideast Oil Exporters Face the Crisis Ahead from
the International Monetary Fund can be found <a href="http://blog-imfdirect.imf.org/2009/10/11/mideast-oil-exporters/">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.3</td>
<td>0.3</td>
<td>-3.6</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-1.1</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>-0.6</td>
<td>0.9</td>
<td>-2.8</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.6</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.2</td>
<td>0.1</td>
<td>1.0</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>-1.6</td>
<td>1.2</td>
<td>-5.5</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>0.4</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.0</td>
<td>-0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-0.0</td>
<td>-7.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.1</td>
<td>0.9</td>
<td>-6.5</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
EMU Orders Continue to Rise and
Cut Year/Year Drop 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026a.jpg" align="left" border="0" height="265" width="353">
The EMU economy continues to spin off better economic signals.
Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in
June. As a result the sequential growth rates are showing explosive
growth in orders- up at a 43% annual rate over three months - still
orders are lower Yr/Yr by over 20%. EMU MFG sales were up in August,
too, and they show sequential growth rates are improving. 
Orders rose in two of the four largest economies as Italy and
the UK took order setbacks in August. 
Italy and the UK also show dropping orders over three months.
The UK took a set back in growth as GDP dropped 0.4% Q/Q in Q3
(a 1.6% annualized rate of decline) an unexpected result that extends
the UK recession that was thought to have ended.
 Italy &#8217;s sharper drop in orders of 8.6% raises some
questions there. The UK GDP drop has brought pressure on sterling as
one might well have expected, but the weakness in Italy is another
matter as it is safely cocooned within the euro area. We do not know
how badly Italy &#8217;s orders drop will affect the economy but retail sales
have faltered recently. Consumers and businesses are seeing and
expecting totally different trends there. The hardest thing for EMU
policymakers is to have countries within the Zone moving in different
directions.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro Area
and UK Industrial Orders &amp; Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">% m/m</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
08</td>
<td>Aug 
07</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3
Mo</td>
<td>6
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>1.0%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>7.1%</td>
<td>2.3%</td>
<td>-19.6%</td>
<td>3.5%</td>
<td>5.8%</td>
<td>11.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.7%</td>
<td>4.8%</td>
<td>6.8%</td>
<td>34.6%</td>
<td>3.2%</td>
<td>-21.4%</td>
<td>2.0%</td>
<td>9.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Orders</td>
<td>2.0%</td>
<td>3.0%</td>
<td>4.2%</td>
<td>43.7%</td>
<td>20.4%</td>
<td>-21.8%</td>
<td>-2.1%</td>
<td>4.7%</td>
<td>37.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Countries:</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12-mo</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>1.8%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>36.9%</td>
<td>33.2%</td>
<td>-24.7%</td>
<td>-1.0%</td>
<td>6.0%</td>
<td>30.5%</td>
</tr>
<tr>
<td class="firstcol">France:</td>
<td>3.0%</td>
<td>4.1%</td>
<td>1.5%</td>
<td>39.8%</td>
<td>6.1%</td>
<td>-13.8%</td>
<td>-7.7%</td>
<td>8.1%</td>
<td>43.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-8.6%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>-19.0%</td>
<td>-18.8%</td>
<td>-29.8%</td>
<td>-3.4%</td>
<td>-1.6%</td>
<td>-34.5%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)</td>
<td>-15.6%</td>
<td>7.3%</td>
<td>3.6%</td>
<td>-22.5%</td>
<td>1.3%</td>
<td>-11.1%</td>
<td>-12.6%</td>
<td>4.3%</td>
<td>-48.8%</td>
</tr>
</tbody>
</table>


 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/0910231.gif" v:shapes="_x0000_s1026" align="left" height="258" hspace="12" width="203">
Markit PMIS are up-beat - The
goods news for EMU was that the Markit monthly look-ahead PMI reading
for October improved overall and for each of MFG and Services. The MFG
reading actually showed expansion for the first time since May of 2008.
Overall the EMU area seems to be continuing its progress despite Italy
&#8217;s troubles. 

Adding to the sense of good news in the face of the UK &#8217;s
ominous GDP drop was an improvement in Germany &#8217;s IFO index as business
climate improved along with current conditions and
expectations.
A background report from the OECD demonstrated that world
trade flows had stabilized in 2009-Q2. To
be sure it remains a day of mixed data but putting the UK &#8217;s GDP report
aside the news elsewhere was pretty upbeat. Dropping UK GDP is a big
fly in the ointment, but on the whole the signals from the UK economy
have not turned uniformly glum. Until GDP was reported, based on data
in hand, economists had expected a rise in GDP. Sometimes GDP
accounting can have this effect. While GDP is the best comprehensive
measure of how an economy is doing, around economic turning points
oddities with trade and inventories can send mixed the signals more
than they should. While we need to be wary of the UK economy&#8217;s
performance, on the whole the global economy seems to be in an upswing
and doing better. Ultimately that will help the UK too.

</body></html>

U.S. Existing Home Sales Jump ButPrices Decline Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022f.jpg" align="left" border="0" height="265" width="353">
The EMU surplus in trade shrank in August at exports fell a
sharp 5.8% in the month and imports skittered lower by 1.3%. While
exports are down by a heft 22.8% Yr/Yr their annual rate of decline is
cut to the 3% to 4% range over three and six months. While that is a
sharp improvement but it still is not growth. Imports are off by
26.&amp;% Yr/Yr and at a -9.7% pace over six months but over three
months imports are barely lower falling at an annualized rate of -0.8%. 
 

It is too soon to make anything of significance out of these
differences in growth rates. Italy, however, has seen its exports to
China drop with the sharpest drop in exports to Russia, the US, and
OPEC countries. Timely data on the geography of exports is spotty. But
we have seen Italy and Germany report some irregular export and export
orders figures recently. In August exports were down across the board
in EMU. Few categories show anything but continued deceleration from
6-months to three months although the progress compared to Yr/Yr rates
of growth is obvious and very strong. Imports show a clearer, steadier,
more widespread picture of growth rates that are cutting their pace of
decline. 
 

On balance trade is not the clear homerun it had appeared to
be early in the cycle. Some irregularities are cropping up in trade
flows and in measures of international export orders. 


 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">E-zone Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 995</td>
<td>&#8364;&#8364; 6,000</td>
<td>&#8364;&#8364; (6,370)</td>
<td>&#8364;&#8364; 1,505</td>
<td>&#8364;&#8364; (2,779)</td>
<td>&#8364;&#8364; 1,666</td>
</tr>
<tr class="grey4">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All Exp</td>
<td>-5.8%</td>
<td>4.7%</td>
<td>-2.9%</td>
<td>-3.8%</td>
<td>-22.8%</td>
<td>1.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-6.5%</td>
<td>3.4%</td>
<td>-10.4%</td>
<td>-5.0%</td>
<td>-12.2%</td>
<td>2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>-6.1%</td>
<td>6.0%</td>
<td>-3.5%</td>
<td>27.3%</td>
<td>-21.5%</td>
<td>7.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-5.8%</td>
<td>4.8%</td>
<td>-2.2%</td>
<td>-4.3%</td>
<td>-23.5%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-8.9%</td>
<td>8.2%</td>
<td>-11.8%</td>
<td>-8.6%</td>
<td>-25.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All IMP</td>
<td>-1.3%</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>-9.7%</td>
<td>-26.7%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-5.1%</td>
<td>1.1%</td>
<td>-17.9%</td>
<td>-13.8%</td>
<td>-13.9%</td>
<td>8.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>1.2%</td>
<td>2.1%</td>
<td>16.6%</td>
<td>-12.4%</td>
<td>-39.5%</td>
<td>8.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-1.1%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>-9.3%</td>
<td>-26.8%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; MFG</td>
<td>-1.8%</td>
<td>0.6%</td>
<td>-10.8%</td>
<td>-12.1%</td>
<td>-23.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey3">
<td colspan="7">*Eur mlns; mo or period
average</td>
</tr>
</tbody>
</table>
</body></html>

The EMU surplus in trade shrank in August at exports fell a sharp 5.8% in the month and imports skittered lower by 1.3%. While exports are down by a heft 22.8% Yr/Yr their annual rate of decline is cut to the 3% to 4% range over three [...]

EMU Trade Surplus Shrinks

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022d.jpg" width="353">
The Conference Board&#39;s Index of Leading Economic Indicators suggested pending economic recovery with a 1.0% September increase that was the sixth consecutive monthly rise. The 5.7% increase during those six months was the strongest since early-1983 and the index itself was at the highest level since October 2007. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.
The breadth of the increase amongst the component series was impressive last month. Eighty percent of the components rose, led by a steeper yield curve, higher consumer expectations, lower initial claims for jobless insurance and higher stock prices. These gains were offset slightly by shorter weekly hours worked and lower building permits.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022e.jpg" width="353">
Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators. They were unchanged during September after a modest 0.1% August gain. These declines compare with monthly shortfalls of 0.6%-to-1.1% dating back to September. Fostering the turnaround have been slight increases in industrial production, real personal income and higher business sales, as well as diminished monthly declines in payrolls.
In a continued sign that excesses in the U.S. economy are falling, the lagging index fell for the ninth month in the last ten. Commercial and industrial loans outstanding fell sharply for the tenth straight month and consumer credit versus personal income was off for the sixth month this year. Regardless, the average duration of unemployment shortened and the change in CPI for services eased. The ratio of coincident-to-lagging indicators (a measure of economic excess) also continued higher for the sixth straight month to the highest level since November.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>1.0</td>
<td>0.4</td>
<td>1.0</td>
<td>11.8</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.2</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-0.6</td>
<td>-6.4</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


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The Conference Board's Index of Leading Economic Indicators suggested pending economic recovery with a 1.0% September increase that was the sixth consecutive monthly rise. The 5.7% increase during those six months was the strongest [...]

U.S. Leading Economic Indicators Increase For Sixth Straight Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022a.jpg" align="right" border="0" height="265" width="353">
The recent
improvement in the labor market stalled last week, but the trend toward
improvement seems still in place. The Labor Department indicated that
initial claims for unemployment insurance increased to 531,000 from
520,000, initially reported at 514,000, during the prior week. The
latest figure included the Columbus Day holiday. Both of the latest are
down from the September average of 549,000 claims and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 532,250 while the latest weekly figure was
slightly higher than Consensus expectations for 517,000 claims.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022b.jpg" align="right" border="0" height="265" width="353">Congress
is considering legislation that would extend the period of
receiving jobless insurance benefits. The House has approved an
extension, but the Senate has not yet voted on it.
 The latest claims
figure covers the survey period for October payroll employment. Initial
claims fell 19,000 (3.5%) from the September period. During the last
ten years their has been an eighty-six percent correlation between the
level of initial claims and the m/m change in payroll employment.
The
largest decreases in initial claims during the week ending October 10
were in Florida (+9,976, 16.5% y/y), New York (+5,411, 4.5% y/y),
Wisconsin (+4,999, 63.1% y/y), Indiana (+4,977, 19.2% y/y), and
Arkansas (+4,704, 35.5% y/y), while the largest decreases were in
California (-7,062, -2.5% y/y), Tennessee (-294, +7.7% y/y), Maine
(-140, +19.3% y/y), and Nebraska (-34, +0.9% y/y).
Continuing claims
for unemployment insurance during the latest week fell 98,000 to their
lowest level since late-March. The decline continues to owe partially
to the exhaustion of benefits. Continuing claims provide an indication
of workers' ability to find employment. The four-week average of
continuing claims fell modestly to 6,030,750 and have fallen 11.0% from
their peak. This series dates back to
1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance
fell slightly for the first decline in six weeks. Through early-October
extended benefits averaged 464,788.
The insured rate of unemployment
slipped to 4.5%, from an upwardly revised 4.6%, and matched its lowest
since early-April. The rate reached a high of 5.2% during late-June.
During the last ten years, there has been a 93% correlation between the
level of the insured unemployment rate and the overall rate of
unemployment published by the Bureau of Labor Statistics.
The lowest insured unemployment rates during the week ending
October 3
were in North Dakota (1.0%), South Dakota (1.0), Virginia (2.1),
Wyoming (2.4), Maine (2.5), Texas (2.5), Colorado (2.9), Minnesota
(3.0), Maryland (3.1), Mississippi (3.5), New York (3.5), Florida
(3.8), and Georgia (3.9). The highest insured unemployment rates were
in Puerto Rico (6.6), Oregon (5.3), Nevada (5.2), Pennsylvania (4.9),
California (4.8), Michigan (4.7), Wisconsin (4.7), North Carolina
(4.6), South Carolina (4.5), and Washington (4.5).
 The unemployment
insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.· The Fed's latest Beige Book covering
regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/BeigeBook/2009/20091021/default.htm">here</a>.
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</th>
<th scope="col">10/02/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>531</td>
<td>520</td>
<td>524</td>
<td>10.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,923</td>
<td>6,021</td>
<td>57.6%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.5</td>
<td>4.6</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

</body></html>

The recent improvement in the labor market stalled last week, but the trend toward improvement seems still in place. The Labor Department indicated that initial claims for unemployment insurance increased to 531,000 from 520,000, [...]

U.S. Weekly Initial Claims For Jobless Insurance Rise But Trend Continues Down

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022a.jpg" align="right" border="0" height="265" width="353">The recent
improvement in the labor market stalled last week, but the trend toward
improvement seems still in place. The Labor Department indicated that
initial claims for unemployment insurance increased to 531,000 from
520,000, initially reported at 514,000, during the prior week. The
latest figure included the Columbus Day holiday. Both of the latest are
down from the September average of 549,000 claims and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 532,250 while the latest weekly figure was
slightly higher than Consensus expectations for 517,000 claims.


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022b.jpg" align="right" border="0" height="265" width="353">Congress
is considering legislation that would extend the period of
receiving jobless insurance benefits. The House has approved an
extension, but the Senate has not yet voted on it.
 The latest claims
figure covers the survey period for October payroll employment. Initial
claims fell 19,000 (3.5%) from the September period. During the last
ten years their has been an eighty-six percent correlation between the
level of initial claims and the m/m change in payroll employment.
The
largest decreases in initial claims during the week ending October 10
were in Florida (+9,976, 16.5% y/y), New York (+5,411, 4.5% y/y),
Wisconsin (+4,999, 63.1% y/y), Indiana (+4,977, 19.2% y/y), and
Arkansas (+4,704, 35.5% y/y), while the largest decreases were in
California (-7,062, -2.5% y/y), Tennessee (-294, +7.7% y/y), Maine
(-140, +19.3% y/y), and Nebraska (-34, +0.9% y/y).
Continuing claims
for unemployment insurance during the latest week fell 98,000 to their
lowest level since late-March. The decline continues to owe partially
to the exhaustion of benefits. Continuing claims provide an indication
of workers' ability to find employment. The four-week average of
continuing claims fell modestly to 6,030,750 and have fallen 11.0% from
their peak. This series dates back to
1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance
fell slightly for the first decline in six weeks. Through early-October
extended benefits averaged 464,788.
The insured rate of unemployment
slipped to 4.5%, from an upwardly revised 4.6%, and matched its lowest
since early-April. The rate reached a high of 5.2% during late-June.
During the last ten years, there has been a 93% correlation between the
level of the insured unemployment rate and the overall rate of
unemployment published by the Bureau of Labor Statistics.
The lowest insured unemployment rates during the week ending
October 3
were in North Dakota (1.0%), South Dakota (1.0), Virginia (2.1),
Wyoming (2.4), Maine (2.5), Texas (2.5), Colorado (2.9), Minnesota
(3.0), Maryland (3.1), Mississippi (3.5), New York (3.5), Florida
(3.8), and Georgia (3.9). The highest insured unemployment rates were
in Puerto Rico (6.6), Oregon (5.3), Nevada (5.2), Pennsylvania (4.9),
California (4.8), Michigan (4.7), Wisconsin (4.7), North Carolina
(4.6), South Carolina (4.5), and Washington (4.5).
 The unemployment
insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.· The Fed's latest Beige Book covering
regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/BeigeBook/2009/20091021/default.htm">here</a>.
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</th>
<th scope="col">10/02/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>531</td>
<td>520</td>
<td>524</td>
<td>10.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,923</td>
<td>6,021</td>
<td>57.6%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.5</td>
<td>4.6</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

U.S. Leading Economic Indicators
Increase For Sixth Straight Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022d.jpg" align="left" border="0" height="265" width="353">
The Conference Board's Index of Leading Economic Indicators
suggested pending economic recovery with a 1.0% September increase that
was the sixth consecutive monthly rise. The 5.7% increase during those
six months was the strongest since early-1983 and the index itself was
at the highest level since October 2007. The leading index is based on
actual reports for eight economic data series. The Conference Board
initially estimates two series, orders for consumer goods and orders
for capital goods.
The breadth of the increase amongst the component series was
impressive last month. Eighty percent of the components rose, led by a
steeper yield curve, higher consumer expectations, lower initial claims
for jobless insurance and higher stock prices. These gains were offset
slightly by shorter weekly hours worked and lower building permits.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022e.jpg" align="right" border="0" height="265" width="353">
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators. They were unchanged during
September after a modest 0.1% August gain. These declines compare with
monthly shortfalls of 0.6%-to-1.1% dating back to September. Fostering
the turnaround have been slight increases in industrial production,
real personal income and higher business sales, as well as diminished
monthly declines in payrolls.
In a continued sign that excesses in the U.S. economy are
falling, the lagging index fell for the ninth month in the last ten.
Commercial and industrial loans outstanding fell sharply for the tenth
straight month and consumer credit versus personal income was off for
the sixth month this year. Regardless, the average duration of
unemployment shortened and the change in CPI for services eased. The
ratio of coincident-to-lagging indicators (a measure of economic
excess) also continued higher for the sixth straight month to the
highest level since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>1.0</td>
<td>0.4</td>
<td>1.0</td>
<td>11.8</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.2</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-0.6</td>
<td>-6.4</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
EMU Trade Surplus Shrinks 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022f.jpg" align="left" border="0" height="265" width="353">
The EMU surplus in trade shrank in August at exports fell a
sharp 5.8% in the month and imports skittered lower by 1.3%. While
exports are down by a heft 22.8% Yr/Yr their annual rate of decline is
cut to the 3% to 4% range over three and six months. While that is a
sharp improvement but it still is not growth. Imports are off by
26.&amp;% Yr/Yr and at a -9.7% pace over six months but over three
months imports are barely lower falling at an annualized rate of -0.8%. 
 

It is too soon to make anything of significance out of these
differences in growth rates. Italy, however, has seen its exports to
China drop with the sharpest drop in exports to Russia, the US, and
OPEC countries. Timely data on the geography of exports is spotty. But
we have seen Italy and Germany report some irregular export and export
orders figures recently. In August exports were down across the board
in EMU. Few categories show anything but continued deceleration from
6-months to three months although the progress compared to Yr/Yr rates
of growth is obvious and very strong. Imports show a clearer, steadier,
more widespread picture of growth rates that are cutting their pace of
decline. 
 

On balance trade is not the clear homerun it had appeared to
be early in the cycle. Some irregularities are cropping up in trade
flows and in measures of international export orders. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">E-zone
Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 995</td>
<td>&#8364;&#8364; 6,000</td>
<td>&#8364;&#8364; (6,370)</td>
<td>&#8364;&#8364; 1,505</td>
<td>&#8364;&#8364; (2,779)</td>
<td>&#8364;&#8364; 1,666</td>
</tr>
<tr class="grey4">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All Exp</td>
<td>-5.8%</td>
<td>4.7%</td>
<td>-2.9%</td>
<td>-3.8%</td>
<td>-22.8%</td>
<td>1.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-6.5%</td>
<td>3.4%</td>
<td>-10.4%</td>
<td>-5.0%</td>
<td>-12.2%</td>
<td>2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>-6.1%</td>
<td>6.0%</td>
<td>-3.5%</td>
<td>27.3%</td>
<td>-21.5%</td>
<td>7.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-5.8%</td>
<td>4.8%</td>
<td>-2.2%</td>
<td>-4.3%</td>
<td>-23.5%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-8.9%</td>
<td>8.2%</td>
<td>-11.8%</td>
<td>-8.6%</td>
<td>-25.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All IMP</td>
<td>-1.3%</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>-9.7%</td>
<td>-26.7%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-5.1%</td>
<td>1.1%</td>
<td>-17.9%</td>
<td>-13.8%</td>
<td>-13.9%</td>
<td>8.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>1.2%</td>
<td>2.1%</td>
<td>16.6%</td>
<td>-12.4%</td>
<td>-39.5%</td>
<td>8.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-1.1%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>-9.3%</td>
<td>-26.8%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; MFG</td>
<td>-1.8%</td>
<td>0.6%</td>
<td>-10.8%</td>
<td>-12.1%</td>
<td>-23.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey3">
<td colspan="7">*Eur mlns; mo or period
average</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Weekly Initial Claims ForJobless Insurance Rise But Trend Continues Down

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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Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

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Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

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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.

Economy in Brief: October 2009

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