Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623f.jpg" align="left" border="0" height="265" width="353">
While the World Bank has down graded its forecast for Euro
area growth this year to -4.5% from its earlier forecast of -2.7%,
indicators of French and German Business confidence have become less
pessimistic, although they are still negative. Yesterday, the German
IFO reported an improvement in its Business Climate indicator and
today, France's INSEE (National Institute of Statistics and Economic
Studies) reports that its Composite Business Indicator has risen to 73
in June from 71 in May and 68 in April. Both the Industry and Services
components of the Composite Indicator, show similar rises and the
Construction component has held steady at 92. The components of the
Composite Indicator are shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623g.jpg" align="right" border="0" height="265" width="353">
The June preliminary or "flash" result from the Markit
Economics Purchasing Managers' Survey for France, released today, also
suggests that business is becoming less pessimistic. The diffusion
index for the purchasing managers' views on the total economy is 47.7,
close to the 50 mark above which expansion is indicated.
The second chart shows the INSEE indicator against its long
term average* and the results of the Markit Economics Purchasing
Managers' Survey against the 50% line that divides expansion and
contraction. The purchasing managers appear to be the less pessimistic.
The INSEE indicator is so constructed that its long term
average is 100 and its standard deviation, 10.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;
&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp; 09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Business Indicator
(LT Ave = 100)</td>
<td>73</td>
<td>71</td>
<td>68</td>
<td>69</td>
<td>70</td>
<td>78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Industry</td>
<td>75</td>
<td>73</td>
<td>71</td>
<td>68</td>
<td>69</td>
<td>75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Construction</td>
<td>92</td>
<td>92</td>
<td>92</td>
<td>95</td>
<td>93</td>
<td>96</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Services</td>
<td>67</td>
<td>64</td>
<td>60</td>
<td>60</td>
<td>66</td>
<td>68</td>
</tr>
</tbody>
</table>
</body></html>

While the World Bank has down graded its forecast for Euro area growth this year to -4.5% from its earlier forecast of -2.7%, indicators of French and German Business confidence have become less pessimistic, although they are still [...]

French Business Confidence: Viewed By Entrepreneurs And Purchasing Managers

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623c.jpg" align="left" border="0" height="265" width="353">
Tentative signs of recovery in the U.S. economy have recently
become more vague. The immediate effect of this backpedaling is evident
in energy markets where the cash market price for a gallon of regular
gasoline is down roughly twenty-five cents during just the last week.
Yesterday, the cash market price for a gallon of regular gasoline was
$1.79 versus the daily high of $2.04 last week and the weekly average
of $1.98. If sustained these declines likely be reflected in the retail
price for regular gasoline which last week rose
slightly to an average $2.69 per gallon of regular. That increase
pulled prices up by more than $1.00 per gallon, or by more than
one-half, from the December low to the highest level since
late-October. The figures are reported by the U.S. Department of Energy
and can be found in Haver's WEEKLY &amp; DAILY databases.
The tenuous nature of the recovery also is reflected in a
lower price for crude oil. Crude prices dropped
yesterday to $66.93 from last week's high of $71.37 and from an average
$70.61 last week for a barrel of West Texas Intermediate. The
speculation of weaker demand came against the backdrop of a 3.8%
year-to-year rise in crude oil production during the latest four weeks.
In addition, oil is plentiful as evidenced by a 13.4% y/y rise in
inventories of crude oil &amp; petroleum products. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.
Finally, an earlier plateau of natural gas prices was
sustained. The Monday price of $3.96 per mmbtu (-69.4% y/y) held
roughly steady with last week but that price was up slightly from the
earlier low of 3.56. Current prices are down by two-thirds from the
high reached in early-July of $13.19/mmbtu.
Fighting Downturns with Fiscal Policy from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-20.pdf">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">06/22/09</th>
<th scope="col">06/15/09</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>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.69</td>
<td>2.67</td>
<td>-34.0%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>70.61</td>
<td>70.83</td>
<td>-47.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body></html>

Tentative signs of recovery in the U.S. economy have recently become more vague. The immediate effect of this backpedaling is evident in energy markets where the cash market price for a gallon of regular gasoline is down roughly [...]

Gasoline Prices Off Sharply With Weaker Economic News

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623a.jpg" width="353">
The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, the same as they did during April, to 4.77M (AR). Consensus expectations had been for April sales of 4.80M homes. Total sales include sales of condos and co-ops.
Home affordability recovered most of its April slip and rose to near its record high. The increase came despite a modest m/m gain in home prices from an April level that was revised sharply lower. Home prices remained down by one-quarter from the 2007 peak. The series dates back to 1971.
The recently enacted tax credit is for first-time home buyers of either a new or a pre-owned home. The credit of up to $8,000 extends through the rest 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><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623b.jpg" width="353">
Sales of existing single-family homes alone increased 1.9% last month and they were up 4.9% from the January low. Nevertheless, sales remained near the lowest level since July 1997. (These data have a longer history than the total series).
The number of unsold homes (condos &amp; single-family) on the market reversed roughly half of a sharp April increase with a 3.5% decline and year-to-year inventories are down 15.3%. At the current sales rate there was a 9.6 months&#39; supply on the market which was near the lowest since 2007. For single-family homes the inventory also fell 3.3% (-15.8% y/y). At the current sales rate there was a 9.0 month&#39;s supply, near the lowest since 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.
Why has home ownership fallen among the young? from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/workingpapers/wp2009_01.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous)</th>
<th scope="col">May</th>
<th scope="col">April</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>4,770</td>
<td>4,660</td>
<td>-3.6%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>800</td>
<td>770</td>
<td>-10.1</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,090</td>
<td>1,000</td>
<td>-4.4</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,740</td>
<td>1,740</td>
<td>-8.9</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,140</td>
<td>1,150</td>
<td>11.8</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,250</td>
<td>4,170</td>
<td>-3.0</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>173,000</td>
<td>166,600</td>
<td>-16.8</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>


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The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, [...]

U.S. Existing Home Sales Rise With Affordability And Tax Credit

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Ezone 16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

The EMU (16-country) consolidated balance of trade with countries outside the region fell to eru336mln in April from eur1.7bln in March. The Year-to-date deficit of eur2.5BLn is below the YTD average for the same period of a year ago [...]

EMU Trade Balance Deficit For Goods Shrinks

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
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Germany's IFO institute reported today that its business climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This was the third month of improvement. The business climate index is made up of the business community's [...]

German Business Confidence Improving But Still Subdued

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
EMU Trade Balance Deficit For
Goods Shrinks 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> June 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Ezone
16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns;
mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

German Business ConfidenceImproving But Still Subdued

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090619d.jpg" align="left" border="0" height="265" width="353">
UK retail sales fell unexpectedly in May and, combined with
news of greater public sector borrowing, markets sold off with
particular pressure on the pound sterling. The UK has been posting some
of the best economic numbers in Europe but with the slippage in retail
sales some of that optimism has faded. Still there are upbeat signs in
the UK economy. 
 

One sign of optimism is still retail sales themselves.
Although the Yr/Yr figures are worsening the six months trends have
barely turned lower and three-month trends are sill quite strong and
advancing. Perhaps the disappointment is more about markets getting
ahead of themselves than about any real disappointment in retail sales
trends themselves. 
 

The UK housing market is showing some signs of stirring.
Mortgage lending still fell in the recent month (May) but lenders
suspect that demand for purchases has been increasing. It is mostly
re-mortgaging activity that has been slackening off. It is reported
that for every home for sale there are four who are looking to buy
according to a survey by the U.K.'s National Association of Estate
Agents on Thursday. There are still signs of an upswing in the UK. 
 

The CBI industrial trend survey is still very weak but its
index moved up to -51 from -56 in May as well. 
 

On balance the reaction to retail sales may prove to be
excessively pessimistic since improving trends still seem to the rule,
not the exception, in the UK. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">UK Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>Quarter 2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>1.2%</td>
<td>6.3%</td>
<td>2.4%</td>
<td>-1.1%</td>
<td>6.4%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>0.6%</td>
<td>0.2%</td>
<td>0.8%</td>
<td>6.6%</td>
<td>4.8%</td>
<td>3.8%</td>
<td>8.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing footwear</td>
<td>-2.3%</td>
<td>-1.0%</td>
<td>1.3%</td>
<td>-7.9%</td>
<td>1.7%</td>
<td>-8.5%</td>
<td>8.5%</td>
<td>-9.3%</td>
</tr>
<tr>
<td class="firstcol" colspan="9">&nbsp;</td>
</tr>
<tr>
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Ex Auto</td>
<td>-0.7%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>6.0%</td>
<td>2.0%</td>
<td>-1.7%</td>
<td>6.1%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body></html>

UK retail sales fell unexpectedly in May and, combined with news of greater public sector borrowing, markets sold off with particular pressure on the pound sterling. The UK has been posting some of the best economic numbers in Europe [...]

UK Retail Sales Fall And Markets Quiver

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.

250501Z6.jpg

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

250501J5.jpg

250501K5.jpg

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.

250501L5.jpg

250501M5.jpg

- 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

250501A8.jpg

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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: June 2009

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