Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="7">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey1">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey4">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
</body></html>

Orders in Italy and in France were up strongly in September but on different causes. Both posted an orders rise in excess of five percent on the month. But Italy’s orders were boosted by a 7% gain in foreign orders; in France foreign [...]

Italian and French Industrial Orders Are Up In September

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" width="353">
The leaders haven&#39;t missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board&#39;s Index of Leading Economic Indicators rose 0.3% in October. That followed an unrevised 1.0% September increase and was the seventh gain in a row. Moreover, the 10.2% (centered) rate of increase during the last six months was nearly the strongest since early-1983. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a bit last month. Sixty percent of the components rose during October versus last month&#39;s reading of 75%. During the most recent six months, however, 80% to 90% of the series rose. Prominent in last month&#39;s increase was the steeper interest rate yield curve. The money supply, stock prices, hours worked, jobless insurance claims and orders for consumer goods contributed to the index&#39;s rise as well. These gains were offset by lower capital goods orders, lower building permits, quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators. They were unchanged during October after a slight September decline. During the last six months the 1.4% rate of decline in the coincident series compares with a shortfall of 8.0% at its worst in January. Prompting the moderation have been slight increases in industrial production, real personal income and higher business sales as well as fewer declines in payroll employment.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" width="353">
In a continued sign that excesses in the U.S. economy are falling, the lagging index has been down since December of last year. Leading the decline has been lower commercial &amp; industrial loans outstanding as well as less consumer credit. The ratio of coincident-to-lagging indicators (a measure of economic excess) also continued higher for the seventh 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.
The Peak Oil Debate from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.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"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 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>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</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>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The leaders haven't missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board's Index of Leading Economic Indicators rose 0.3% [...]

U.S. Leading Indicators Continue To Signal Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" align="left" border="0" height="265" width="353">
The leaders haven't missed one yet in their sixty year
history. Therefore, the probability is high that economic recovery is
near for the U.S. Released yesterday, the Conference Board's Index of
Leading Economic Indicators rose 0.3% in October. That followed an
unrevised 1.0% September increase and was the seventh gain in a row.
Moreover, the 10.2% (centered) rate of increase during the last six
months was nearly the strongest since early-1983. The leading index is
based on actual reports for eight economic data series. The Conference
Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a
bit last month. Sixty percent of the components rose during October
versus last month's reading of 75%. During the most recent six months,
however, 80% to 90% of the series rose. Prominent in last month's
increase was the steeper interest rate yield curve. The money supply,
stock prices, hours worked, jobless insurance claims and orders for
consumer goods contributed to the index's rise as well. These gains
were offset by lower capital goods orders, lower building permits,
quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators. They were unchanged during
October after a slight September decline. During the last six months
the 1.4% rate of decline in the coincident series compares with a
shortfall of 8.0% at its worst in January. Prompting the moderation
have been slight increases in industrial production, real personal
income and higher business sales as well as fewer declines in payroll
employment.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" align="left" border="0" height="265" width="353">
In a continued sign that excesses in the U.S. economy are
falling, the lagging index has been down since December of last year.
Leading the decline has been lower commercial &amp; industrial
loans outstanding as well as less consumer credit. The ratio of
coincident-to-lagging indicators (a measure of economic excess) also
continued higher for the seventh 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.


The Peak Oil Debate from the
Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.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"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 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>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</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>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
 Italian and French Industrial
Orders Are Up In September 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 


 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey2">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey5">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. The decline
reflects the improved job market but may also be a function of 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 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% and
matched its lowest since late-March. 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) and Florida (3.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.

<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">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</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>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</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>4.3</td>
<td>4.3</td>
<td>3.1(11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Layoffs from the U.S. workforce held steady last week at the recent low. That's according to the Labor Department which reported that initial claims for unemployment insurance equaled the prior week's upwardly revised level of [...]

U.S. Weekly Initial Claims Unemployment Insurance Hold Steady Near January Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119a.jpg" align="right" border="0" height="265" width="353">
The
Philadelphia Federal Reserve Bank indicated that the November index of
factory sector activity in the region continued to expand this month.
Moreover, the index was unexpectedly strong at 16.7 and positive for
the fourth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter. During the last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1109.pdf">here.</a>·
Amongst the components new orders and shipments each improved to the
highest since 2007. Also showing improvement was the employment index
which rose to nearly break-even compared with a low of -52.0 during
March. During the last ten years there has been a 79% correlation
between the index level and the m/m change in manufacturing sector
payrolls. The inventory component reversed the October decline and
suggests that any turn towards inventory accumulation will be modest.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119b.jpg" align="right" border="0" height="265" width="353">
A decline in the prices paid index reversed all of its October
increase. Nevertheless, the positive figure compares to negative
readings this past winter and spring. During the last ten years there
has been a 74% correlation between the prices paid index and the
three-month growth in the intermediate goods PPI. There has been an 83%
correlation with the change in core intermediate goods prices.
Expected business conditions in six months deteriorated for the fifth
straight month. The November index fell to a still-positive reading of
36.8 but that was well-off the recent high. Most of the index
components, especially orders and shipments, were down sharply. The
figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database. The exchange rate: what's in it for prices?
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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">Philadelphia
Fed (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '08</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">General Activity Index</td>
<td>16.7</td>
<td>11.5</td>
<td>14.1</td>
<td>-39.8</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>14.8</td>
<td>6.2</td>
<td>3.3</td>
<td>-29.3</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-14.3</td>
<td>-23.8</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;14.9</td>
<td>&nbsp;-26.6</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body></html>

The Philadelphia Federal Reserve Bank indicated that the November index of factory sector activity in the region continued to expand this month. Moreover, the index was unexpectedly strong at 16.7 and positive for the fourth [...]

Philadelphia Fed Index Improves To Highest Since 2007

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119a.jpg" align="right" border="0" height="265" width="353">The
Philadelphia Federal Reserve Bank indicated that the November index of
factory sector activity in the region continued to expand this month.
Moreover, the index was unexpectedly strong at 16.7 and positive for
the fourth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter.

 During the last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1109.pdf">here.</a>·
Amongst the components new orders and shipments each improved to the
highest since 2007. Also showing improvement was the employment index
which rose to nearly break-even compared with a low of -52.0 during
March. During the last ten years there has been a 79% correlation
between the index level and the m/m change in manufacturing sector
payrolls. The inventory component reversed the October decline and
suggests that any turn towards inventory accumulation will be modest.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119b.jpg" align="right" border="0" height="265" width="353">A decline
in the prices paid index reversed all of its October
increase. Nevertheless, the positive figure compares to negative
readings this past winter and spring. During the last ten years there
has been a 74% correlation between the prices paid index and the
three-month growth in the intermediate goods PPI. There has been an 83%
correlation with the change in core intermediate goods prices.

Expected business conditions in six months deteriorated for
the fifth
straight month. The November index fell to a still-positive reading of
36.8 but that was well-off the recent high. Most of the index
components, especially orders and shipments, were down sharply.

 The
figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database.

 The exchange rate: what's in it for prices?
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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">Philadelphia
Fed (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '08</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">General Activity Index</td>
<td>16.7</td>
<td>11.5</td>
<td>14.1</td>
<td>-39.8</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>14.8</td>
<td>6.2</td>
<td>3.3</td>
<td>-29.3</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-14.3</td>
<td>-23.8</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;14.9</td>
<td>&nbsp;-26.6</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>

 U.S. Weekly Initial Claims
Unemployment Insurance Hold Steady Near January Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 19, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. The decline
reflects the improved job market but may also be a function of 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 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% and
matched its lowest since late-March. 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) and Florida (3.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.

<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">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</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>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</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>4.3</td>
<td>4.3</td>
<td>3.1(11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Philadelphia Fed Index Improves ToHighest Since 2007

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118g.jpg" align="right" border="0" height="265" width="353">Since
the spring recovery, housing activity has been roughly flat according
to The National Association of Home Builders. They reported that its
November Composite Housing Market Index held stable with a downwardly
revised October reading. Though the index remained double the low of 8
this past January there's been little, if any, improvement during the
last several months. The index is compiled from survey questions asking
builders to rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very
high&#8221; to &#8220;very low&#8221;. The figure is a
diffusion index, therefore, numerical results over 50 indicate a
predominance of &#8220;good&#8221; readings. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118h.jpg" align="right" border="0" height="265" width="353">
The present sales
index held stable at 17 which equaled the 3Q average. In the West the
index rose slightly and was sharply higher than one year ago. In the
South the index also held stable m/m (+41.7% y/y). In the Northeast the
index fell m/m but remained three-quarters higher than the year-ago
level.&nbsp;In the Midwest the index also fell m/m but remained
double last year. The sub-index of sales during the next six months
rose slightly m/m and offset most of the October decline.
·&nbsp;The Home Builders' Association also reported that traffic of
prospective buyers held stable with October at the lowest level since
July.&lt;/p&gt;&lt;p&gt;The Home Builders' Housing
Opportunity Index,
which is the share of homes sold that could be considered affordable to
a family earning the median income, fell slightly in the second
quarter. It had jumped earlier to a record high of 72.5% buoyed by
lower home prices, lower interest rates and higher income. (There is a
break in the series from 2002 to 2003.)
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118i.jpg" align="right" border="0" height="265" width="353">The NAHB
has compiled the Housing Market Index since 1985. The weights assigned
to the individual index components are .5920 for single family detached
sales, present time; .1358 for single family detached sales, next six
months; and .2722 for traffic of prospective buyers. The results, along
with other housing and remodeling indexes from NAHB Economics, are
included in Haver&#8217;s SURVEYS database.
<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/SURVEYS/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">&nbsp;November '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good = 100)</td>
<td>17</td>
<td>17</td>
<td>19</td>
<td>9</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>17</td>
<td>18</td>
<td>9</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>28</td>
<td>26</td>
<td>29</td>
<td>18</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>13</td>
<td>13</td>
<td>17</td>
<td>7</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</thead>
</table>

</body></html>

Since the spring recovery, housing activity has been roughly flat according to The National Association of Home Builders. They reported that its November Composite Housing Market Index held stable with a downwardly revised October [...]

U.S. Home Builders’ Index Recovery Stuttering Again This Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118e.jpg" align="right" border="0" height="265" width="353">Housing
sector activity continued to moderate after increases this past spring.
Housing starts fell last month to 529,000 (AR) units versus 592,000
during September which was revised up slightly. The latest level was
the lowest since April and down nearly one-third y/y. More sobering was
that since the peak in January of 2006 starts have fallen by more than
three-quarters. In addition, October's figure fell well short of
Consensus expectations for 600,000 starts.
Loss of forward
momentum was evident in the decline in starts of single-family homes.
They fell 3.9% last month to 476,000 units (AR), reversed
all of the prior month's increase and were at the lowest level since
May. Despite these disappointments, however, single-family starts were
one-third higher than the February low. During the last ten years,
there has been an 84% correlation between the q/q change in
single-family starts and their contribution to quarterly GDP growth.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118f.jpg" align="right" border="0" height="265" width="353">A further
loss of momentum was evident in the multi-family sector where
starts starts fell by one-third m/m during October to the record low.
Starts of apartments, condominiums &amp; town houses were down
88.2% from the January 2006 peak.
Starts of single-family
units fell throughout the country last month. Single-family starts in
the Northeast fell 9.6% (-17.5% y/y) while starts in the South fell
7.3% (-4.9% y/y). In the Midwest starts declined 4.8% (-16.8% y/y) and
starts in the West fell 5.9% (-16.5% y/y) to their lowest level since
May. Building permits dropped 4.0%, the third decline in four months,
but remained 10.8% above their record low reached in April. As with
starts, permits to build a single-family home have been relatively
strong. They fell just 0.2% last month and were down 4.0%
y/y.
The housing starts figures can be found in
Haver's USECON database.
How
Rigid Are Producer Prices? from the Federal Reserve Bank of
New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr407.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">Housing
Starts (000s, SAAR)</th>
<th scope="col">October</th>
<th scope="col">Oct. Y/Y</th>
<th scope="col">September</th>
<th scope="col">August</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>529</td>
<td>-30.7%</td>
<td>592</td>
<td>581</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>476</td>
<td>-10.9</td>
<td>511</td>
<td>481</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>53</td>
<td>-76.9</td>
<td>81</td>
<td>100</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>552</td>
<td>-24.3</td>
<td>575</td>
<td>580</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>

</body></html>

Housing sector activity continued to moderate after increases this past spring. Housing starts fell last month to 529,000 (AR) units versus 592,000 during September which was revised up slightly. The latest level was the lowest since [...]

U.S. Housing Starts Fall To Their Lowest Level Since April

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.

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**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.

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**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.

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**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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The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 48.7 in April from 49.0 during March and 50.3 in February. It remained up from a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 47.8 for April. The series reached a monthly high of 63.8 in March 2021.

Two of the five component indexes weakened last month. The April production index fell to 44.0 after declining to 48.3 in March. It was the lowest level since May 2020. A lessened 19.8% (NSA) of respondents reported higher production while an increased 24.2% reported lower output. The inventories index declined to 50.8 last month from 53.4 in March. The index remained up from a low of 43.2 in October of last year.

Moving higher, the new orders index rose to 47.2 last month from 45.2 in March. The index remained below a January high of 55.1. Twenty-eight percent (NSA) of respondents reported higher new orders while 26.7% reported a decline. The employment index rose to 46.5 from 44.7 in March. It was below a high of 50.3 in January. A greater 13.1% (NSA) of respondents reported more hiring while a fewer 16.2% indicated less. The supplier delivery index rose to 55.2 from 53.5 in March. A higher 16.6% (NSA) of respondents reported slower delivery speeds while a fairly steady 6.2% reported a quickening.

The prices index, which is not part of the composite series, edged up to 69.8 (NSA) in April after increasing to 69.4 in March. It was the highest level since June 2022, up from a December 2022 low of 39.4. An increased 49.2% of respondents reported higher prices last month, up from 12.2% in November, while a higher 9.7% reported lower prices.

In other series, the export orders index plummeted to 43.1 in April from 49.6 during March. It was down from the high of 52.4 in January. The imports index fell sharply to 47.1 from 50.1 in March. It was the lowest reading since December 2023. The order backlog index dropped to 43.7 (NSA) last month from 44.5 in March. It was the lowest level in five months.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Carol Stone, CBE

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Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000, from 223,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). These state data are not seasonally adjusted.

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

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- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

U.S. Initial Jobless Claims Rise Notably in April 28 Week

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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.

Economy in Brief: November 2009

Jump to:

Italian and French Industrial Orders Are Up In September

U.S. Leading Indicators Continue To Signal Economic Recovery

U.S. Leading Indicators Continue To Signal Economic Recovery

U.S. Weekly Initial Claims Unemployment Insurance Hold Steady Near January Low

Philadelphia Fed Index Improves To Highest Since 2007

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U.S. Home Builders’ Index Recovery Stuttering Again This Month

U.S. Housing Starts Fall To Their Lowest Level Since April