Tom Moeller

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        <p>Improvement in new orders is broadening within the factory sector.
        New orders for durable
        goods jumped
         3.6% 
         (7.6% y/y) during May following a like increase in
        April, initially reported as 3.3%. A 2.5% rise in orders for last month had been expected.
        As in April, higher orders in the transportation sector led the increase
        with a 10.2% gain (19.2% y/y). It reflected a 39.2% jump (60.5% y/y) in
        aircraft &amp; parts bookings. Nondefense aircraft orders increased by
        one-half (85.9% y/y) while defense aircraft orders gained 3.7% (0.5%
        y/y. Orders for
        motor vehicles and parts fell 1.2% (+7.3% y/y).</p>
        <p>Orders excluding the transportation sector rose 0.7% (2.8%
        y/y), which followed a 1.7% April jump. The broad-based gain reflected a
        2.7% increase (-5.2% y/y) in orders for computers &amp; electronic
        products. Communications equipment orders jumped 12.6% (19.0% y/y) and computers &amp; related products
        gained 1.0% (-15.1% y/y). Orders for electrical equipment strengthened
        by 1.4% (-2.3% y/y) while machinery orders rose 1.2% (6.5% y/y). Primary
        metal orders gained 0.9% (6.0% y/y) but orders for fabricated metals
        were off 0.9% (+2.7% y/y). Nondefense capital
        goods orders surged for a second month. The 9.3% gain (15.9% y/y) added
        to its 3.5% April rise. Orders excluding aircraft &amp; parts, a measure
        of &quot;core&quot; business investment, gained 1.1% (3.2% y/y), the
        third consecutive month of a similar increase.</p>
        <p>Shipments of durable goods improved 1.2% last month (2.4% y/y) to the series'
        record high. Transportation
        sector shipments jumped 3.6% last month and rose 7.5% y/y.
        Outside of the transportation sector, shipments ticked up 0.2% (0.3%
        y/y). Nondefense capital goods shipments recovered 6.0% (4.5% y/y) to a
        record high;
        excluding aircraft, they gained 1.7% (1.6% y/y).</p>
        <p>Unfilled orders for durable goods rose 0.8% (3.1% y/y) in May.
        Outside of the transportation sector, backlogs gained 0.8% (-0.8% y/y).
        Inventories of durable goods ticked up 0.1% (3.1% y/y) last month.
        Excluding transportation, inventories also nudged up 0.1% (0.2% y/y).</p>
        <p>The durable goods figures are available in Haver's <b>USECON </b>database.
        The Action Economics consensus forecast figure is in the <b>AS1REPNA</b>
        database.&nbsp;</p>
        
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      <p>&nbsp;</p>


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	<colgroup><col><col><col><col><col><col><col><col></colgroup>
        
        
          <thead>
            <tr>
              <th class="firstcol" scope="col" >Durable Goods NAICS
                Classification</th>
              <th scope="col" >May</th>
              <th scope="col" >Apr</th>
              <th scope="col" >Mar</th>
              <th scope="col" >Y/Y</th>
              <th scope="col" >2012</th>
              <th scope="col" >2011</th>
              <th scope="col" >2010</th>
            </tr>
          </thead>
          <tbody>
            <tr>
              <td class="firstcol" >New Orders</td>
              <td>3.6</td>
              <td>3.6</td>
              <td>-5.9</td>
              <td>7.6</td>
              <td>4.1</td>
              <td>11.0</td>
              <td>23.2</td>
            </tr>
            <tr class="odd">
              <td class="firstcol" >&nbsp; Transportation</td>
              <td>10.2</td>
              <td>8.3</td>
              <td>-15.0</td>
              <td>19.2</td>
              <td>8.9</td>
              <td>14.9</td>
              <td>49.5</td>
            </tr>
            <tr class="odd">
              <td class="firstcol" >Total Excluding Transportation</td>
              <td>0.7</td>
              <td>1.7</td>
              <td>-1.6</td>
              <td>2.8</td>
              <td>2.1</td>
              <td>9.5</td>
              <td>15.2</td>
            </tr>
            <tr class="odd">
              <td class="firstcol" >&nbsp; Nondefense Capital Goods</td>
              <td>9.3</td>
              <td>3.5</td>
              <td>-8.9</td>
              <td>15.9</td>
              <td>3.7</td>
              <td>15.3</td>
              <td>27.5</td>
            </tr>
            <tr>
              <td class="firstcol" >&nbsp;&nbsp;&nbsp; Excluding
                Aircraft</td>
              <td>1.1</td>
              <td>1.2</td>
              <td>1.1</td>
              <td>3.2</td>
              <td>2.1</td>
              <td>11.6</td>
              <td>12.9</td>
            </tr>
            <tr class="odd">
              <td class="firstcol" >Shipments</td>
              <td>1.2</td>
              <td>-0.6</td>
              <td>0.9</td>
              <td>2.4</td>
              <td>6.4</td>
              <td>9.4</td>
              <td>11.0</td>
            </tr>
            <tr>
              <td class="firstcol" >Inventories</td>
              <td>0.1</td>
              <td>0.3</td>
              <td>-0.1</td>
              <td>3.1</td>
              <td>4.5</td>
              <td>10.8</td>
              <td>9.4</td>
            </tr>
            <tr class="odd">
              <td class="firstcol" >Unfilled Orders</td>
              <td>0.8</td>
              <td>0.3</td>
              <td>-0.6</td>
              <td>3.1</td>
              <td>3.7</td>
              <td>10.0</td>
              <td>5.2</td>
            </tr>
          </tbody>
        </table>


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Improvement in new orders is broadening within the factory sector. New orders for durable goods jumped 3.6% (7.6% y/y) during May following a like increase in April, initially reported as 3.3%. A 2.5% rise in orders for last month had [...]

U.S. Durable Goods Orders Strength Is Broad-based

Robert Brusca

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	  <p><a href="/comment/130624d_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130624d.png" align="left"></a>


 The IFO headline index advanced this month on the strength of improved expectations as the current index toppled back month-to-month and increased its year-over-year drop compared to May.
</p><p>
In the table we present the sector diffusion-version readings for business climate. The overall climate reading rose in June to net 4.4 from 4.1 in May. In diffusion terms the current index fell to 7.5 in June from a net of 8.6 in May as expectations rose to 1.4 from -0.4. The All-Sector reading for climate stands in the 75th percentile of its historic queue, higher only about 25% of the time - a reasonably firm perch. Current conditions are slightly better positioned in the 76the percentile of their queue with expectations lagging and standing in the 64th percentile of their historic queue. 
</p><p>
Viewed by sector, only manufacturing improved this month, rising from a raw net reading of 6.1 in May to a net of 7.8 in June. Construction slipped to 1.0 from 1.2 as wholesaling and retailing each switched from net positive to net negative territory. Wholesaling posted a reading of -1 in June down from +1.7 in May as retailing slid to -1.4 from +0.1 in May. Despite the slippage construction still stands at the relative strongest ranking in its queue among sectors at the 97th percentile, followed by Retailing in the 80th percentile and wholesaling in the 80th percentile. Manufacturing stands in the 53rd percentile of its range barely above its historic median level (queue standing of 50). 
</p><p>
The chart shows that Germany saw a rather rapid improvement in its business metrics early last year. Since April of last year, however, the improvement has lost some footing and has been moving sideways.
</p><p>
The current index is lower month to month and is lower than its Feb (2013) reading but is higher than most readings back to September of last year. Expectations are up this month but are below February and March levels. Still the index is equal to or higher than most readings back until July of 2011. 
</p><p>
The German economy is well described by the path of the indices in the chart above. It recovered from the financial crisis, then its gains slowed and it began to show sporadic declines in some sectors and has since started to mend but it still struggling with that. All in all the German economy is still growing, but PMI metrics on German MFG show a legacy of declines. Germany continues to be the best-performing large country in EMU yet it is still faced with challenges. German elections have kept German policy largely unchanged since late last year. 
</p><p>
The conservative Bundesbank approach to ECB policy got a boost today when the BIS (Bank for International Settlements) pronounced that extra monetary stimulus could not make up for weak growth and the errant fiscal policy. The BIS argued that excessively accommodative monetary policies had taken the heat off some countries that have not made the full scope of fiscal change that they should have implemented. With this the ears of our representatives in the US Congress should be stinging.  
</p><p>
This debate has been alive and well (or not so well...) in the US for some time. The BIS noted that central banks could do whatever is necessary form their end to try to restore growth but that might not be enough (thereby turning on of Draghi's pledge of last year into an oxymoron- what if banks do all they can" but if that's not enough?). 
</p><p>
After various cycles of boom, bust, and recovery in the last several years Germany is now experiencing a sort of a pause The German economy, like most of Europe, is still not in the place it would like to be. Currently the world growth environment is an issue with policy risk in China seeming to have reached some new heights and with an ostensible US move in the works to scale back on its QE making markets very nervous. That is making it a difficult environment for all central banks to make decisions. As market instability causes central banks to re-inspect their assumptions that economic conditions were stabilizing...Markets are not encouraged by the loss in guidance and presence of uncertainty where policy certainty once dominated the landscape.  
</p>
 
 
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The IFO headline index advanced this month on the strength of improved expectations as the current index toppled back month-to-month and increased its year-over-year drop compared to May. In the table we present the sector diffusion- [...]

IFO German Index Advances

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 <p><a href="/comment/130624a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130624a.png" align="left"></a>
   
      The Chicago Federal Reserve indicated that its National Activity Index
      (CFNAI) remained negative last month. The figure improved, however, to
      -0.30 from a little-revised -0.52 in April. The three-month moving average
      deteriorated -0.43, its lowest reading since October. During the last ten
      years, there has been a 79% correlation between the Chicago Fed Index and
      the q/q change in real GDP.</p>
      <p>The Production &amp; Income component showed the greatest m/m
      improvement with a recovery to -0.10. The Employment, Unemployment &amp;
      Hours series improved to 0.01 and also recovered its April decline. The Personal
      Consumption &amp; Housing reading was stable at -0.17. Sales, Inventories
      &amp; Inventories deteriorated to -0.04. The Chicago Fed reported that
      during May, 33 of the 85 individual indicators made positive contributions
      to the overall index while 52 made negative contributions.</p>
      <p>The CFNAI is a weighted average of 85 indicators of national economic
      activity. It is constructed to have an average value of zero and a
      standard deviation of one. Since economic activity tends toward trend
      growth rate over time, a positive index reading corresponds to growth
      above trend and a negative index reading corresponds to growth below
      trend.</p>
      <p>The Chicago Federal Reserve figures are available in Haver's <b>SURVEYS</b>
      database.&nbsp;</p>
      <p><b>Managing Economic Development in Times of Fiscal Uncertainty</b>
      from the Federal Reserve Bank of Chicago can be found <a href="http://chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfljuly2013_312a.pdf">here</a>.</p>
      
      
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      <p>&nbsp;</p>


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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

       <thead>
          <tr>
            <th class="firstcol" scope="col">Chicago Federal Reserve
              Bank</th>
            <th  scope="col">May</th>
            <th  scope="col">Apr</th>
            <th  scope="col">Mar</th>
            <th  scope="col">May'12</th>
            <th  scope="col">2012</th>
            <th  scope="col">2011</th>
            <th  scope="col">2010</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol">CFNAI</td>
            <td>-0.30</td>
            <td>-0.52</td>
            <td>-0.48</td>
            <td>-0.12</td>
            <td>-0.08</td>
            <td>-0.08</td>
            <td>0.02</td>
          </tr>
          <tr class="odd">
            <td class="firstcol">&nbsp;3-Month Moving Average</td>
            <td>-0.43</td>
            <td>-0.13</td>
            <td>-0.14</td>
            <td>-0.23</td>
            <td>--</td>
            <td>--</td>
            <td>--</td>
          </tr>
          <tr>
            <td class="firstcol">&nbsp;&nbsp;Personal Consumption
              &amp; Housing</td>
            <td>-0.17</td>
            <td>-0.17</td>
            <td>-0.16</td>
            <td>-0.25</td>
            <td>-0.22</td>
            <td>-0.30</td>
            <td>-0.30</td>
          </tr>
          <tr class="odd">
            <td class="firstcol">&nbsp;&nbsp;Employment,
              Unemployment &amp; Hours</td>
            <td>0.01</td>
            <td>-0.06</td>
            <td>0.01</td>
            <td>0.09</td>
            <td>0.10</td>
            <td>0.14</td>
            <td>0.03</td>
          </tr>
          <tr>
            <td class="firstcol">&nbsp;&nbsp;Production &amp; Income</td>
            <td>-0.10</td>
            <td>-0.33</td>
            <td>-0.10</td>
            <td>-0.03</td>
            <td>0.04</td>
            <td>0.05</td>
            <td>0.20</td>
          </tr>
          <tr class="odd">
            <td class="firstcol">&nbsp;&nbsp;Sales, Orders &amp;
              Inventories</td>
            <td>-0.04</td>
            <td>0.03</td>
            <td>-0.24</td>
            <td>0.01</td>
            <td>-0.01</td>
            <td>0.04</td>
            <td>0.09</td>
          </tr>
        </tbody>
      </table>
      </span>
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The Chicago Federal Reserve indicated that its National Activity Index (CFNAI) remained negative last month. The figure improved, however, to -0.30 from a little-revised -0.52 in April. The three-month moving average deteriorated [...]

U.S. Chicago Fed National Activity Index Remains Negative

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            <p>Improvement in the overall labor market is evident in May's 7.6%
      unemployment rate. That compares to 7.8% at the end of last year and 8.1%
      during all of 2012. Notable has been the rate's recent decline in states
      where it previously was sticky. Great improvement has been in California
      where May's 8.6% rate of unemployment is two percentage below last year's
      average. Washington also saw great improvement. May's 6.8% unemployment
      rate compared to 8.2% during all of last year. In New York, May's rate of
      7.6% was roughly one full percentage point below last year's average.</p>
      
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      <p>The rate of labor market improvement has lagged in many large states.
      In Texas, for example, while the 6.5% jobless rate is low relative to the
      rest of the country, it's down just slightly from last year's 6.8%
      average. In Illinois, 9.1% joblessness differs little from the 8.9%
      averaged last year. In Tennessee, the current 8.3% unemployment rate is
      actually above last year's 8.0% average. In smaller states, the rate of
      job market improvement also varies. Nevada's 9.5% unemployment rate is
      well below last year's 11.1% average but in neighboring Arizona, 7.8%
      unemployment is down just modestly from last year's 8.3%.</p>
      <p>The household employment survey also produces data on individual
      metropolitan areas. These figures, in a few circumstances, differ widely
      from the state numbers. Florida's 7.1% unemployment rate, for example, is
      a far cry from the 9.3% in the Miami metro area. Michigan's 8.4% rate also
      is under the 9.5% rate around Detroit. New York state's 7.6% rate lags the
      8.3% in New York City while California's 8.6% rate is under 9.6% around
      Los Angeles. Running close to one another are the Illinois unemployment
      rate of 9.1% and the 9.3% rate around Chicago. Also, Ohio's 7.0%
      unemployment rate is near Cleveland's of 6.9%. Working the other way,
      Washington state's 6.8% jobless rate by far exceeds Seattle's 4.7%.</p>
      <p>State unemployment figures are available in Haver's <b>EMPLR</b>
      database.
            </p>

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      <p>&nbsp;</p>


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	<colgroup><col><col><col><col><col><col><col><col></colgroup>
        <thead>
          <tr>
            <th class="firstcol" scope="col" >State Unemployment
              Rate</th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>April</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>Labor Force</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" ><b>Total U.S.</b></td>
            <td  >7.6%</td>
            <td  >7.5%</td>
            <td  >8.1%</td>
            <td  >8.9%</td>
            <td  >9.6%</td>
            <td  >155.7 mil.</td>
          </tr>
          <tr class="grey3">
            <td class="firstcol" ><b>Ten States With Highest
              Jobless Rate</b></td>
            <td  ></td>
            <td  ></td>
            <td  ></td>
            <td  ></td>
            <td  ></td>
            <td  ></td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Nevada</td>
            <td  >9.5</td>
            <td  >9.6</td>
            <td  >11.1</td>
            <td  >13.2</td>
            <td  >13.8</td>
            <td  >1.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol"  >&nbsp;&nbsp;Illinois</td>
            <td  >9.1</td>
            <td  >9.3</td>
            <td  >8.9</td>
            <td  >9.7</td>
            <td  >10.4</td>
            <td  >9.6</td>
          </tr>
          <tr>
            <td class="firstcol"  >&nbsp;&nbsp;Mississippi</td>
            <td  >9.1</td>
            <td  >9.1</td>
            <td  >9.1</td>
            <td  >10.5</td>
            <td  >10.5</td>
            <td  >1.3</td>
            
          </tr>
          <tr class="odd">
            <td class="firstcol"  >&nbsp;&nbsp;North Carolina</td>
            <td  >8.8</td>
            <td  >8.9</td>
            <td  >9.5</td>
            <td  >10.3</td>
            <td  >10.8</td>
            <td  >4.7</td>
            
          </tr>
          <tr>
            <td class="firstcol"  >&nbsp;&nbsp;California</td>
            <td  >8.6</td>
            <td  >9.0</td>
            <td  >10.5</td>
            <td  >11.8</td>
            <td  >12.3</td>
            <td  >18.6</td>
          </tr>
          <tr class="odd">
            <td class="firstcol"  >&nbsp;&nbsp;New Jersey</td>
            <td  >8.6</td>
            <td  >8.7</td>
            <td  >9.5</td>
            <td  >9.3</td>
            <td  >9.6</td>
            <td  >4.6</td>
          </tr>
          <tr>
            <td class="firstcol"  >&nbsp;&nbsp;Georgia</td>
            <td  >8.3</td>
            <td  >8.2</td>
            <td  >9.0</td>
            <td  >9.9</td>
            <td  >10.2</td>
            <td  >4.8</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Indiana</td>
            <td  >8.3</td>
            <td  >8.5</td>
            <td  >8.4</td>
            <td  >9.0</td>
            <td  >10.1</td>
            <td  >3.2</td>
            
          </tr>
          <tr>
            <td class="firstcol" >&nbsp; Tennessee</td>
            <td  >8.3</td>
            <td  >8.0</td>
            <td  >8.0</td>
            <td  >9.3</td>
            <td  >9.8</td>
            <td  >3.1</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;South Carolina</td>
            <td  >8.0</td>
            <td  >8.0</td>
            <td  >9.1</td>
            <td  >10.4</td>
            <td  >11.2</td>
            <td  >2.2</td>
            
          </tr>
        </tbody>
      </table>
      <br>
<table class="centered" width="100%" border="0" cellspacing="0">
        <thead>
          <tr>
            <th class="firstcol" scope="col" >States With Lowest
              Jobless Rate</th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>April</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>Labor Force</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;New Hampshire</td>
            <td  >5.3%</td>
            <td  >5.5%</td>
            <td  >5.5%</td>
            <td  >5.5%</td>
            <td  >6.1%</td>
            <td  >0.7 mil.</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Minnesota</td>
            <td  >5.3</td>
            <td  >5.3</td>
            <td  >5.6</td>
            <td  >6.5</td>
            <td  >7.3</td>
            <td  >3.0</td>
           </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Virginia</td>
            <td  >5.3</td>
            <td  >5.2</td>
            <td  >5.9</td>
            <td  >6.5</td>
            <td  >7.1</td>
            <td  >4.2</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Wyoming</td>
            <td  >4.6</td>
            <td  >4.8</td>
            <td  >5.4</td>
            <td  >6.1</td>
            <td  >7.0</td>
            <td  >0.3</td>
           </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Utah</td>
            <td  >4.6</td>
            <td  >4.7</td>
            <td  >5.7</td>
            <td  >6.9</td>
            <td  >8.1</td>
            <td  >1.4</td>
          </tr>
          <tr class="odd">
             <td class="firstcol" >&nbsp;&nbsp;Iowa</td>
            <td  >4.6</td>
            <td  >4.7</td>
            <td  >5.2</td>
            <td  >5.9</td>
            <td  >6.3</td>
            <td  >1.6</td>
            
          </tr>
          <tr>
             <td class="firstcol" >&nbsp;&nbsp;Vermont</td>
            <td  >4.1</td>
            <td  >4.0</td>
            <td  >5.0</td>
            <td  >5.6</td>
            <td  >6.4</td>
            <td  >0.4</td>
            
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;South Dakota</td>
            <td  >4.0</td>
            <td  >4.1</td>
            <td  >4.4</td>
            <td  >4.8</td>
            <td  >5.1</td>
            <td  >0.4</td>
            
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Nebraska</td>
            <td  >3.8</td>
            <td  >3.7</td>
            <td  >3.9</td>
            <td  >4.5</td>
            <td  >4.7</td>
            <td  >1.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;North Dakota</td>
            <td  >3.2</td>
            <td  >3.3</td>
            <td  >3.1</td>
            <td  >3.5</td>
            <td  >3.8</td>
            <td  >0.4</td>
          </tr>
        </tbody>
      </table>
      <br>
<table class="centered" width="100%" border="0" cellspacing="0">
        <thead>
          <tr>
            <td class="firstcol" ><b>Jobless Rate In Other Selected
              Large States</b>
            </td><th scope="col" ><b>May</b></th>
            <th scope="col" ><b>April</b></th>
            <th scope="col" ><b>2012</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>Labor Force</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol"  >&nbsp;&nbsp;Connecticut</td>
            <td  >8.0%</td>
            <td  >8.0%</td>
            <td  >8.3%</td>
            <td  >8.9%</td>
            <td  >9.3%</td>
            <td  >1.8 mil.</td>
            
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Arizona</td>
            <td  >7.8</td>
            <td  >7.9</td>
            <td  >8.3</td>
            <td  >9.4</td>
            <td  >10.4</td>
            <td  >3.0</td>
            
          </tr>
          <tr>
            <td class="firstcol"  >&nbsp;&nbsp;New York</td>
            <td  >7.6</td>
            <td  >7.8</td>
            <td  >8.5</td>
            <td  >8.3</td>
            <td  >8.6</td>
            <td  >9.6</td>
            
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Florida</td>
            <td  >7.1</td>
            <td  >7.2</td>
            <td  >8.6</td>
            <td  >10.3</td>
            <td  >11.3</td>
            <td  >9.4</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Wisconsin</td>
            <td  >7.0</td>
            <td  >7.1</td>
            <td  >6.9</td>
            <td  >7.6</td>
            <td  >8.4</td>
            <td  >3.1</td>
            
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Ohio</td>
            <td  >7.0</td>
            <td  >7.0</td>
            <td  >7.2</td>
            <td  >8.6</td>
            <td  >10.0</td>
            <td  >5.7</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Colorado</td>
            <td  >6.9</td>
            <td  >6.9</td>
            <td  >8.0</td>
            <td  >8.6</td>
            <td  >9.0</td>
            <td  >2.8</td>
            
          </tr>
          <tr class="odd">
              <td class="firstcol" >&nbsp;&nbsp;Washington</td>
            <td  >6.8</td>
            <td  >7.0</td>
            <td  >8.2</td>
            <td  >9.2</td>
            <td  >9.9</td>
            <td  >3.5</td>
            
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Maryland</td>
            <td  >6.7</td>
            <td  >6.5</td>
            <td  >6.8</td>
            <td  >7.3</td>
            <td  >7.8</td>
            <td  >3.1</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Texas</td>
            <td  >6.5</td>
            <td  >6.4</td>
            <td  >6.8</td>
            <td  >8.0</td>
            <td  >8.2</td>
            <td  >12.8</td>
          </tr>
        </tbody>
      </table>
      


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Improvement in the overall labor market is evident in May's 7.6% unemployment rate. That compares to 7.8% at the end of last year and 8.1% during all of 2012. Notable has been the rate's recent decline in states where it previously [...]

State Unemployment Rates Continue Lower but Vary Greatly

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      <p>Improvement in the overall labor market is evident in May's 7.6%
      unemployment rate. That compares to 7.8% at the end of last year and 8.1%
      during all of 2012. Notable has been the rate's recent decline in states
      where it previously was sticky. Great improvement has been in California
      where May's 8.6% rate of unemployment is two percentage below last year's
      average. Washington also saw great improvement. May's 6.8% unemployment
      rate compared to 8.2% during all of last year. In New York, May's rate of
      7.6% was roughly one full percentage point below last year's average.</p>
      </span>
      <p>The rate of labor market improvement has lagged in many large states.<span id="articletext">
      In Texas, for example, while the 6.5% jobless rate is low relative to the
      rest of the country, it's down just slightly from last year's 6.8%
      average. In Illinois, 9.1% joblessness differs little from the 8.9%
      averaged last year. In Tennessee, the current 8.3% unemployment rate is
      actually above last year's 8.0% average. In smaller states, the rate of
      job market improvement also varies. Nevada's 9.5% unemployment rate is
      well below last year's 11.1% average but in neighboring Arizona, 7.8%
      unemployment is down just modestly from last year's 8.3%.
      <p>The household employment survey also produces data on individual
      metropolitan areas. These figures, in a few circumstances, differ widely
      from the state numbers. Florida's 7.1% unemployment rate, for example, is
      a far cry from the 9.3% in the Miami metro area. Michigan's 8.4% rate also
      is under the 9.5% rate around Detroit. New York state's 7.6% rate lags the
      8.3% in New York City while California's 8.6% rate is under 9.6% around
      Los Angeles. Running close to one another are the Illinois unemployment
      rate of 9.1% and the 9.3% rate around Chicago. Also, Ohio's 7.0%
      unemployment rate is near Cleveland's of 6.9%. Working the other way,
      Washington state's 6.8% jobless rate by far exceeds Seattle's 4.7%.</p>
      <p>State unemployment figures are available in Haver's <b>EMPLR</b>
      database. </p>
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            <th class="firstcol" scope="col" ? width="527">State Unemployment
              Rate</th>
            <th scope="col" width="116"><b>May</b></th>
            <th scope="col" width="116"><b>April</b></th>
            <th scope="col" width="117"><b>2012</b></th>
            <th scope="col" width="117"><b>2011</b></th>
            <th scope="col" width="117"><b>2010</b></th>
            <th scope="col" width="117"><b>Labor Force</b></th>
          </tr>
        </thead>
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            <td class="firstcol" ? width="527"><b>Total U.S.</b></td>
            <td align="center" width="116">7.6%</td>
            <td align="center" width="116">7.5%</td>
            <td align="center" width="117">8.1%</td>
            <td align="center" width="117">8.9%</td>
            <td align="center" width="117">9.6%</td>
            <td align="center" width="117">155.7 mil.</td>
          </tr>
          <tr class="grey3">
            <td class="firstcol" ? width="527"><b>Ten States With Highest
              Jobless Rate</b></td>
            <td align="center" width="116"></td>
            <td align="center" width="116"></td>
            <td align="center" width="117"></td>
            <td align="center" width="117"></td>
            <td align="center" width="117"></td>
            <td align="center" width="117"></td>
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            <td class="firstcol" ? width="527">&nbsp;&nbsp;Nevada</td>
            <td align="center" width="116">9.5</td>
            <td align="center" width="116">9.6</td>
            <td align="center" width="117">11.1</td>
            <td align="center" width="117">13.2</td>
            <td align="center" width="117">13.8</td>
            <td align="center" width="117">1.4</td>
          </tr>
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            <td class="firstcol" ? width="527">&nbsp;&nbsp;Illinois</td>
            <td align="center" width="116">9.1</td>
            <td align="center" width="116">9.3</td>
            <td align="center" width="117">8.9</td>
            <td align="center" width="117">9.7</td>
            <td align="center" width="117">10.4</td>
            <td align="center" width="117">9.6</td>
          </tr>
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            <span id="articletext">
            <td class="firstcol" ? width="527">&nbsp;&nbsp;Mississippi</td>
            <td align="center" width="116">9.1</td>
            <td align="center" width="116">9.1</td>
            <td align="center" width="117">9.1</td>
            <td align="center" width="117">10.5</td>
            <td align="center" width="117">10.5</td>
            <td align="center" width="117">1.3</td>
            </span>
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            <span id="articletext">
            <td class="firstcol" ? width="527">&nbsp;&nbsp;North Carolina</td>
            <td align="center" width="116">8.8</td>
            <td align="center" width="116">8.9</td>
            <td align="center" width="117">9.5</td>
            <td align="center" width="117">10.3</td>
            <td align="center" width="117">10.8</td>
            <td align="center" width="117">4.7</td>
            </span>
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            <td class="firstcol" ? width="527">&nbsp;&nbsp;California</td>
            <td align="center" width="116">8.6</td>
            <td align="center" width="116">9.0</td>
            <td align="center" width="117">10.5</td>
            <td align="center" width="117">11.8</td>
            <td align="center" width="117">12.3</td>
            <td align="center" width="117">18.6</td>
          </tr>
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            <td class="firstcol" ? width="527">&nbsp;&nbsp;New Jersey</td>
            <td align="center" width="116">8.6</td>
            <td align="center" width="116">8.7</td>
            <td align="center" width="117">9.5</td>
            <td align="center" width="117">9.3</td>
            <td align="center" width="117">9.6</td>
            <td align="center" width="117">4.6</td>
          </tr>
          <tr>
            <td class="firstcol" ? width="527">&nbsp;&nbsp;Georgia</td>
            <td align="center" width="116">8.3</td>
            <td align="center" width="116">8.2</td>
            <td align="center" width="117">9.0</td>
            <td align="center" width="117">9.9</td>
            <td align="center" width="117">10.2</td>
            <td align="center" width="117">4.8</td>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;Indiana</td>
            <td width="122" align="center">8.3</td>
            <td width="129" align="center">8.5</td>
            <td width="117" align="center">8.4</td>
            <td width="118" align="center">9.0</td>
            <td width="118" align="center">10.1</td>
            <td width="118" align="center">3.2</td>
            </span>
          </tr>
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            <td class="firstcol" width="518">&nbsp; Tennessee</td>
            <td width="122" align="center">8.3</td>
            <td width="129" align="center">8.0</td>
            <td width="117" align="center">8.0</td>
            <td width="118" align="center">9.3</td>
            <td width="118" align="center">9.8</td>
            <td width="118" align="center">3.1</td>
          </tr>
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            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;South Carolina</td>
            <td width="122" align="center">8.0</td>
            <td width="129" align="center">8.0</td>
            <td width="117" align="center">9.1</td>
            <td width="118" align="center">10.4</td>
            <td width="118" align="center">11.2</td>
            <td width="118" align="center">2.2</td>
            </span>
          </tr>
        </tbody>
      </table>
      <br>
      <table class="centered" border="0" cellSpacing="0" width="1240">
        <thead>
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            <th class="firstcol" scope="col" width="524">States With Lowest
              Jobless Rate</th>
            <th scope="col" width="121"><b>May</b></th>
            <th scope="col" width="121"><b>April</b></th>
            <th scope="col" width="121"><b>2012</b></th>
            <th scope="col" width="121"><b>2011</b></th>
            <th scope="col" width="122"><b>2010</b></th>
            <th scope="col" width="122"><b>Labor Force</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;New Hampshire</td>
            <td width="121" align="center">5.3%</td>
            <td width="121" align="center">5.5%</td>
            <td width="121" align="center">5.5%</td>
            <td width="121" align="center">5.5%</td>
            <td width="122" align="center">6.1%</td>
            <td width="122" align="center">0.7 mil.</td>
            </span>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;Minnesota</td>
            <td width="121" align="center">5.3</td>
            <td width="121" align="center">5.3</td>
            <td width="121" align="center">5.6</td>
            <td width="121" align="center">6.5</td>
            <td width="122" align="center">7.3</td>
            <td width="122" align="center">3.0</td>
            </span>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="524">&nbsp;&nbsp;Virginia</td>
            <td width="121" align="center">5.3</td>
            <td width="121" align="center">5.2</td>
            <td width="121" align="center">5.9</td>
            <td width="121" align="center">6.5</td>
            <td width="122" align="center">7.1</td>
            <td width="122" align="center">4.2</td>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;Wyoming</td>
            <td width="121" align="center">4.6</td>
            <td width="121" align="center">4.8</td>
            <td width="121" align="center">5.4</td>
            <td width="121" align="center">6.1</td>
            <td width="122" align="center">7.0</td>
            <td width="122" align="center">0.3</td>
            </span>
          </tr>
          <tr>
            <td class="firstcol" width="524">&nbsp;&nbsp;Utah</td>
            <td width="121" align="center">4.6</td>
            <td width="121" align="center">4.7</td>
            <td width="121" align="center">5.7</td>
            <td width="121" align="center">6.9</td>
            <td width="122" align="center">8.1</td>
            <td width="122" align="center">1.4</td>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;Iowa</td>
            <td width="121" align="center">4.6</td>
            <td width="121" align="center">4.7</td>
            <td width="121" align="center">5.2</td>
            <td width="121" align="center">5.9</td>
            <td width="122" align="center">6.3</td>
            <td width="122" align="center">1.6</td>
            </span>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;Vermont</td>
            <td width="121" align="center">4.1</td>
            <td width="121" align="center">4.0</td>
            <td width="121" align="center">5.0</td>
            <td width="121" align="center">5.6</td>
            <td width="122" align="center">6.4</td>
            <td width="122" align="center">0.4</td>
            </span>
          </tr>
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            <span id="articletext">
            <td class="firstcol" width="524">&nbsp;&nbsp;South Dakota</td>
            <td width="121" align="center">4.0</td>
            <td width="121" align="center">4.1</td>
            <td width="121" align="center">4.4</td>
            <td width="121" align="center">4.8</td>
            <td width="122" align="center">5.1</td>
            <td width="122" align="center">0.4</td>
            </span>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="524">&nbsp;&nbsp;Nebraska</td>
            <td width="121" align="center">3.8</td>
            <td width="121" align="center">3.7</td>
            <td width="121" align="center">3.9</td>
            <td width="121" align="center">4.5</td>
            <td width="122" align="center">4.7</td>
            <td width="122" align="center">1.0</td>
          </tr>
          <tr>
            <td class="firstcol" width="524">&nbsp;&nbsp;North Dakota</td>
            <td width="121" align="center">3.2</td>
            <td width="121" align="center">3.3</td>
            <td width="121" align="center">3.1</td>
            <td width="121" align="center">3.5</td>
            <td width="122" align="center">3.8</td>
            <td width="122" align="center">0.4</td>
          </tr>
        </tbody>
      </table>
      <br>
      <table class="centered" border="0" cellSpacing="0" width="1231">
        <thead>
          <tr>
            <td class="firstcol" width="518"><b>Jobless Rate In Other Selected
              Large States</b>
            </td><th scope="col" width="122"><b>May</b></th>
            <th scope="col" width="129"><b>April</b></th>
            <th scope="col" width="117"><b>2012</b></th>
            <th scope="col" width="118"><b>2011</b></th>
            <th scope="col" width="118"><b>2010</b></th>
            <th scope="col" width="118"><b>Labor Force</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <span id="articletext">
            <td class="firstcol" ? width="527">&nbsp;&nbsp;Connecticut</td>
            <td align="center" width="116">8.0%</td>
            <td align="center" width="116">8.0%</td>
            <td align="center" width="117">8.3%</td>
            <td align="center" width="117">8.9%</td>
            <td align="center" width="117">9.3%</td>
            <td align="center" width="117">1.8 mil.</td>
            </span>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;Arizona</td>
            <td width="122" align="center">7.8</td>
            <td width="129" align="center">7.9</td>
            <td width="117" align="center">8.3</td>
            <td width="118" align="center">9.4</td>
            <td width="118" align="center">10.4</td>
            <td width="118" align="center">3.0</td>
            </span>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" ? width="527">&nbsp;&nbsp;New York</td>
            <td align="center" width="116">7.6</td>
            <td align="center" width="116">7.8</td>
            <td align="center" width="117">8.5</td>
            <td align="center" width="117">8.3</td>
            <td align="center" width="117">8.6</td>
            <td align="center" width="117">9.6</td>
            </span>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="518">&nbsp;&nbsp;Florida</td>
            <td width="122" align="center">7.1</td>
            <td width="129" align="center">7.2</td>
            <td width="117" align="center">8.6</td>
            <td width="118" align="center">10.3</td>
            <td width="118" align="center">11.3</td>
            <td width="118" align="center">9.4</td>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;Wisconsin</td>
            <td width="122" align="center">7.0</td>
            <td width="129" align="center">7.1</td>
            <td width="117" align="center">6.9</td>
            <td width="118" align="center">7.6</td>
            <td width="118" align="center">8.4</td>
            <td width="118" align="center">3.1</td>
            </span>
          </tr>
          <tr>
            <td class="firstcol" width="518">&nbsp;&nbsp;Ohio</td>
            <td width="122" align="center">7.0</td>
            <td width="129" align="center">7.0</td>
            <td width="117" align="center">7.2</td>
            <td width="118" align="center">8.6</td>
            <td width="118" align="center">10.0</td>
            <td width="118" align="center">5.7</td>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;Colorado</td>
            <td width="122" align="center">6.9</td>
            <td width="129" align="center">6.9</td>
            <td width="117" align="center">8.0</td>
            <td width="118" align="center">8.6</td>
            <td width="118" align="center">9.0</td>
            <td width="118" align="center">2.8</td>
            </span>
          </tr>
          <tr>
            <span id="articletext">
            <td class="firstcol" width="518">&nbsp;&nbsp;Washington</td>
            <td width="122" align="center">6.8</td>
            <td width="129" align="center">7.0</td>
            <td width="117" align="center">8.2</td>
            <td width="118" align="center">9.2</td>
            <td width="118" align="center">9.9</td>
            <td width="118" align="center">3.5</td>
            </span>
          </tr>
          <tr>
            <td class="firstcol" width="518">&nbsp;&nbsp;Maryland</td>
            <td width="122" align="center">6.7</td>
            <td width="129" align="center">6.5</td>
            <td width="117" align="center">6.8</td>
            <td width="118" align="center">7.3</td>
            <td width="118" align="center">7.8</td>
            <td width="118" align="center">3.1</td>
          </tr>
          <tr>
            <td class="firstcol" width="518">&nbsp;&nbsp;Texas</td>
            <td width="122" align="center">6.5</td>
            <td width="129" align="center">6.4</td>
            <td width="117" align="center">6.8</td>
            <td width="118" align="center">8.0</td>
            <td width="118" align="center">8.2</td>
            <td width="118" align="center">12.8</td>
          </tr>
        </tbody>
      </table>
      </span>
    </p></div>
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   <p><a href="/comment/130620m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620m.png"></a>
      <a href="/comment/130620j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620j.png"></a></p>
      
      <p>The index of Leading Economic Indicators, published by the Conference
      Board, ticked up 0.1% (2.0% y/y) during May to 95.2, another high for the
      economic recovery. The gain followed an upwardly revised 0.8% April
      increase, last month reported as 0.6%. A 0.2% rise had been expected for
      April. Just 45 percent of the component series had a positive influence on
      the index. A steeper interest rate yield curve, higher stock prices and
      the leading credit index increased the total. These were offset by a lower
      ISM new orders index, fewer building permits and higher initial claims for
      unemployment insurance.</p>
      <p>The index of coincident indicators gained 0.2% (1.5% y/y) after an
      unrevised 0.1% April uptick. Higher payroll employment, improved personal
      income less transfers and more manufacturing and trade sales had positive
      influences on the index. Industrial production was unchanged.</p>
      <p>The index of lagging economic indicators increased 0.3% (3.4% y/y)
      after a minimal 0.1% April rise. Roughly two-thirds of the component
      series rose paced by more commercial &amp; industrial loans outstanding.</p>
      <p>Another leading economic series is the ratio of coincident-to-lagging
      indicators. It measures how the economy is performing versus its excesses.
      The figure fell 0.2% (-1.9% y/y) last month to its lowest level of the
      economic expansion.</p>
      <p>The Conference Board figures are available in Haver's <b>BCI</b>
      database; the components are available there, and most are also in <b>USECON</b>.
      The forecast figures for the Consensus are in the <b>AS1REPNA</b>
      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.&nbsp;</p>
      <p>The <b>economic projections</b> which accompanied yesterday's FOMC
      meeting are available <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20130619.pdf">here</a>.</p>
      
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      <a href="/comment/130620l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620l.png"></a></p>
      
      
      
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
        
          <tr>
            <th class="firstcol" scope="col">Business Cycle
              Indicators (%)</th>
            <th scope="col">May</th>
            <th scope="col">Apr</th>
            <th scope="col">Mar</th>
            <th scope="col">Y/Y</th>
            <th scope="col">2012</th>
            <th scope="col">2011</th>
            <th scope="col">2010</th>
          </tr>
        <tbody>
          <tr>
            <td class="firstcol">Leading</td>
            <td>0.1</td>
            <td>0.8</td>
            <td>-0.3</td>
            <td>2.0</td>
            <td>2.0</td>
            <td>5.1</td>
            <td>8.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol">Coincident</td>
            <td>0.2</td>
            <td>0.1</td>
            <td>0.1</td>
            <td>1.5</td>
            <td>2.1</td>
            <td>2.4</td>
            <td>1.2</td>
          </tr>
          <tr>
            <td class="firstcol">Lagging</td>
            <td>0.3</td>
            <td>0.1</td>
            <td>0.3</td>
            <td>3.4</td>
            <td>3.6</td>
            <td>2.7</td>
            <td>-3.1</td>
                            </tr>
              </tbody>
            
            

            
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The index of Leading Economic Indicators, published by the Conference Board, ticked up 0.1% (2.0% y/y) during May to 95.2, another high for the economic recovery. The gain followed an upwardly revised 0.8% April increase, last month [...]

U.S. Leading Economic Indicators Rise on Financial Series' Strength

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<p><a href="/comment/130620i_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620i.png" align="left"></a>

The flash readings for Markit's manufacturing and service sector PMIs both rose in June, indicating the least amount of contraction since March of 2012 for the service sector (compared to finalized data) and since February of 2012 for the manufacturing sector. 

</p><p>
The downdraft in Europe seems to be slowly dissipating. The chart shows a relatively stronger and longer-lived rise for the manufacturing index compared to the services index. Indeed, the manufacturing PMI stands in the lower 29th percentile of its historic queue compared to a 19% standing for the services sector. Both of these are still extremely low readings. Viewed another way, the manufacturing index is at 95% of its historic average compared to services which is at the 91st percentile of its historic average.

</p><p>
Both indicators are below the mark of '50' indicating ongoing contraction; both of them are below their historic mean indicating weaker than normal activity. And both of them are on an improving trend of some sort.

</p><p></p>
The manufacturing index has been moving up relatively strongly since about August 2012. During that move, there was a decline in October 2012 and two recent declines in March and in April 2013. The increases in May and June 2013, however, have now brought manufacturing back up to a local cycle high reading, its best since February 2012.

<p>
The services index shows a much flatter profile. It has now risen for three months in a row after falling for two months in a row in February and March; it has generally been increasing since October 2012.

</p><p>
Other Euro area data continue to be mixed. The economy in Europe is still not doing well, but the PMI data are speaking to the issue of the degree of decline and that is letting up. Europe has great internal differences in terms of the PMI values for individual country members. We will get more on that when the final figures are released. For now, we will note that France's PMI index for manufacturing jumped in June to 48.3 from 46.4 in May- even so that measures a decline in the French MFG sector. France's services PMI rose by more than two points on the month as well. In Germany the two sector PMI gauges translated into a net gain in its private sector in June for the second month in a row. Even so, the German MFG sector took a step back to 48.7 in June from 49.4 in May.  

</p><p>
Conditions in the Zone remain somewhat unpredictable in spite of the month's overall improvement. The news today from China of a weakening in the MFG PMI there is an offsetting bit of disturbing global news. Early data in the US seem to be better than expected for housing and for a regional MFG report on manufacturing from the Philadelphia Fed region. 

</p><p>
Still, markets are wary about the Fed down-shifting its support. Data have blown hot and cold. While Europe seems to have a trend improvement in train (less weakness) markets and central banks remain wary, The Fed, in its zeal to end QE, still is using language of a very hedged nature. Meanwhile, many inflation-sensitive indicators are very weak with silver looking especially weak in today's trading. The global economy is in flux if not in play. Many Fed watchers are trying to square the Fed's newest policy choice and bond market reactions with the ongoing weak -and weakening- inflation picture globally and in the US itself.

</p><p>
The picture is perplexing. The outlook while possibly better and stronger is also still with a good deal of risk even as the Fed says it sees less risk. The recent drop in inflation has caught some attention but not yet headlines and is the focus of at least one Fed member, St Louis Fed President, James Bullard. There are still a lot of interesting international twists and turns in the data that merit our full attention. We are not yet 'off to the races' despite what some of today's data might suggest. 
</p>

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The flash readings for Markit's manufacturing and service sector PMIs both rose in June, indicating the least amount of contraction since March of 2012 for the service sector (compared to finalized data) and since February of 2012 for [...]

EMU Down-Draft Abates

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      <p></p>

   <p><a href="/comment/130620e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620e.png"></a>
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            <p> Economic recovery is
      taking hold. The Philadelphia Federal
      Reserve Bank reported that its General Business Conditions Index for June
      jumped to 12.5. This figure was the highest level since April 2011 and it
      followed an unrevised -5.2 in May. Another negative reading (-2.0) had
      been expected. <b>Haver Analytics constructs a seasonally adjusted figure
      comparable to the ISM index. It also rose but more moderately to 49.6, its
      highest level since December. </b>During the last ten years there has been
      a 71% correlation between the adjusted Philadelphia Fed index and real GDP
      growth.</p>
      <p>Improvement in the Composite Index was driven by a surge in new orders
      to its highest level (16.6) since March 2011. The shipments series also
      recovered handsomely to its highest level this year (4.1). Lesser
      improvement was logged by unfilled orders and employment. During the last
      ten year there has been a 79% correlation between the employment index and
      the m/m change in nonfarm payrolls. To the downside, the delivery times
      and inventories indexes slipped. </p>
      <p>Pricing power recovered sharply m/m to its highest level since December.
      A sharply higher 28.2% of firms paid higher prices while a reduced 5.7%
      paid less. During the last ten years there has been a 71% correlation
      between the prices paid index and three-month growth in the intermediate
      goods PPI.</p>
      <p>The separate index of expected business conditions in six months
      advanced to 33.7, the highest level in nine months. The employment figure
      surged to its highest reading since April 2011. The readings for new
      orders, shipments, unfilled orders also improved significantly.</p>
      <p>The survey panel consists of 150 manufacturing companies in Federal
      Reserve District III (consisting of southeastern PA, southern NJ and
      Delaware.) The diffusion indexes represent the percentage of respondents
      indicating an increase minus the percentage indicating a decrease in
      activity. The figures from the Philadelphia Federal Reserve can be found
      in Haver's <b>SURVEYS</b> database. The Consensus expectations figure is
      available in <b>AS1REPNA</b>.&nbsp; 
            </p>

   <p><a href="/comment/130620g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620g.png"></a>
      <a href="/comment/130620h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/130620h.png"></a></p>
      <p>&nbsp;</p>


<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
        <thead>
          <tr>
            <th class="firstcol" >Philadelphia Fed (%, SA)</th>
            <th scope="col">Jun</th>
            <th scope="col" >May</th>
            <th scope="col" >Apr</th>
            <th scope="col" >Jun'12</th>
            <th scope="col" >2012</th>
            <th scope="col" >2011</th>
            <th scope="col" >2010</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >ISM-Adjusted General Business
              Conditions</td>
            <td>49.6</td>
            <td  >45.8</td>
            <td  >46.1</td>
            <td  >44.7</td>
            <td  >47.7</td>
            <td  >51.9</td>
            <td  >50.7</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >General Business Conditions</td>
            <td>12.5</td>
            <td  >-5.2</td>
            <td  >1.3</td>
            <td  >-12.8</td>
            <td  >-0.2</td>
            <td  >7.7</td>
            <td  >12.1</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;New Orders</td>
            <td>16.6</td>
            <td  >-7.9</td>
            <td  >-1.0</td>
            <td  >-13.1</td>
            <td  >-0.1</td>
            <td  >7.2</td>
            <td  >5.5</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Shipments</td>
            <td>4.1</td>
            <td  >-8.5</td>
            <td  >9.1</td>
            <td  >-13.8</td>
            <td  >-1.4</td>
            <td  >9.9</td>
            <td  >8.3</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Unfilled Orders</td>
            <td>-7.9</td>
            <td  >-9.3</td>
            <td  >-8.7</td>
            <td  >-11.3</td>
            <td  >-6.5</td>
            <td  >-0.9</td>
            <td  >-3.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Delivery Time</td>
            <td>-9.3</td>
            <td  >-6.0</td>
            <td  >-13.8</td>
            <td  >-14.0</td>
            <td  >-9.1</td>
            <td  >-0.4</td>
            <td  >0.9</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Inventories</td>
            <td>-6.6</td>
            <td  >4.1</td>
            <td  >-22.2</td>
            <td  >-7.8</td>
            <td  >-6.0</td>
            <td  >-0.3</td>
            <td  >-4.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Number of Employees</td>
            <td>-5.4</td>
            <td  >-8.7</td>
            <td  >-6.8</td>
            <td  >2.3</td>
            <td  >0.0</td>
            <td  >11.0</td>
            <td  >4.7</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Prices Paid</td>
            <td>22.5</td>
            <td  >6.9</td>
            <td  >3.1</td>
            <td  >5.4</td>
            <td  >17.6</td>
            <td  >39.3</td>
            <td  >29.0</td>
          </tr>
        </tbody>
      </table>
      </span>
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Economic recovery is taking hold. The Philadelphia Federal Reserve Bank reported that its General Business Conditions Index for June jumped to 12.5. This figure was the highest level since April 2011 and it followed an unrevised -5.2 [...]

Philadelphia Fed Business Conditions Index Recovers to a Two-Year High

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

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Michael J. Moran

260521M5.jpg

Housing starts fell 2.8% in April, but the drop followed a jump of 12% in March that had pushed activity to one of the firmest levels of the past few years. Even with the decline in April, starts remained in the upper end of the recent range. In fact, March and April combined brought the best two-month performance since late 2023.

The housing sector has been generally soft in the past few years. Activity was strong in late 2020 and 2021 as the economy recovered from the pandemic and as low interest rates boosted affordability. However, the market cooled in 2022 as the Fed tightened monetary policy, and home construction has been lethargic since then. The contribution of residential construction to GDP growth has been negative in seven of the past eight quarters (subtracting 0.1 percentage point on average). The improvement in multi-family activity offers the prospect of a positive contribution in the quarters ahead, but it would probably not be a large one. Single-family activity has a heavier weight in residential construction, and recent results have not been firm enough to suggest meaningful gains. 


260521M1.jpg

260521M2.jpg


Multi-family construction led the advance in the past two months, increasing 14.7% in March and 10.3% in April. The trend in multi-family starts had been moving sideways for a time (note the 6-month average in the left chart), but recent gains have quickened the pace, perhaps renewing the upward drift that began in 2024. Single-family construction stirred in March (up 10.7 percent), but it gave back much of the advance with a decline of 9.0% in April. Still, the six-month average of single family starts is tilting upward, although only mildly so.

The slight pick up in single-family starts is encouraging, but recent movement in building permits suggests caution. Single-family permits fell in both March and April, offsetting a hint of improvement in February and leaving little change in the six-month average (chart, lower right). Multi-family permits have moved erratically in recent months, but they are drifting higher on average.



260521M3.jpg

260521M4.jpg

- March & April brought the best two-month performance since late 2023
- Multi-family activity has led the advance; single-family activity lags


Housing Starts: Hints of Improvement

Andrew Cates

**Inflation angst and renewed bond market jitters**
The recent rise in US Treasury yields has coincided with a renewed upswing in US economic surprises, particularly on the inflation and labour market fronts. As chart 1 illustrates below, our newly developed and combined Haver US Labour Market Surprise Index and Inflation Surprise Index (see methodological note at the end of this document) has moved back into positive territory, indicating that incoming data for labour market activity and inflation have, on balance, been coming in stronger than consensus expectations. This rebound has occurred against an increasingly fragile global backdrop marked by rising oil prices, shipping disruptions and renewed geopolitical tensions linked to the Middle East conflict. Markets are becoming increasingly concerned that higher energy costs could feed into broader inflation pressures at a time when underlying labour market momentum remains firmer than many expected. 

260521Z1.jpg

**Central banks face renewed inflation concern**
A rise in short-term government bond yields has become increasingly broad-based across the major developed economies, with UK, US and Japanese two-year yields all trending higher in recent weeks. Investors are increasingly concerned that renewed geopolitical instability in the Middle East and higher energy prices could prolong global inflation pressures just as many central banks had been preparing for a gradual easing cycle. UK yields remain elevated amid persistent domestic inflation concerns, while Japanese yields have also continued to edge higher as markets reassess the outlook for Bank of Japan policy normalization in a world of rising imported energy costs. The synchronized move higher in front-end yields reflects growing unease that central banks may ultimately face a more difficult trade-off between supporting growth and containing another inflationary impulse.

260521Z2.jpg

**Weak labour bargaining power may limit inflation persistence**
Despite growing market anxiety about renewed inflation pressures, an important structural counterpoint comes from the continued weakness in labour’s share of US national income. As the next chart illustrates, labour’s share of nonfarm business income has declined to multi-decade lows. Historically, sustained inflation cycles have often been associated with stronger labour bargaining power, rising wage shares and the emergence of wage-price dynamics. Today, however, workers appear to retain relatively limited pricing power within the broader economy, particularly compared with earlier inflationary eras such as the 1970s. This may help explain why longer-term inflation expectations have, so far, remained relatively contained despite higher energy prices and geopolitical instability. 

At the same time as this, the prolonged decline in labour’s share of income may also help explain the broader rise of populist politics across many advanced economies. Weak wage growth relative to profits, rising inequality and a growing perception that the gains from globalization and asset appreciation have been unevenly distributed have contributed to mounting political dissatisfaction. 

260521Z3.jpg

**Energy markets remain under strain**
Yet the principal counterargument to the more benign inflation outlook suggested by weak labour bargaining power lies on the supply side — most notably in energy markets. As the chart shows, oil prices have remained elevated even as broader measures of geopolitical risk have started to retreat from their recent extremes. The Caldara-Iacoviello Geopolitical Risk Index suggests that fears of a major regional escalation in the Middle East have eased somewhat. However, Brent crude prices continue to reflect persistent disruption to energy flows and shipping routes, particularly given the ongoing effective closure and disruption surrounding the Strait of Hormuz. This divergence matters because financial markets and central banks are increasingly confronting the possibility that supply-side inflation pressures may persist even without a further escalation in military conflict. In other words, fading war fears do not necessarily imply a normalization in energy markets. Instead, the global economy may be entering a more prolonged period of structurally higher energy and transport costs, adding to inflation pressures even as underlying demand conditions soften. The result is an increasingly uncomfortable backdrop for policymakers, combining weaker growth momentum with renewed upside risks to inflation and interest rates.

260521Z4.jpg

**Benign Core CPI Inflation For Now**
Ultimately, what will matter most for central banks is not simply higher oil prices themselves, but the extent to which those higher costs feed through into broader underlying inflation. On that front, the recent inflation data from several advanced economies have, so far, remained remarkably benign. As the chart illustrates, core inflation measures pubished this week in the UK, Canada and Austria have all continued to moderate despite renewed geopolitical tensions and rising energy prices. This suggests that the broader inflationary impulse across goods, services and wages remains contained for now.

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**The AI Investment Boom**
Yet even as markets grapple with inflation risks, energy shocks and slowing global demand, financial markets continue to be dominated by one extraordinarily powerful countervailing force: the AI investment boom. As the chart illustrates, capital expenditure among the major technology firms — including Meta, Oracle, Amazon, Alphabet and Microsoft — has exploded higher over the past several years as the race to build generative AI infrastructure intensifies. Collectively, these firms have spent almost $1.5 trillion on capital expenditure since early 2021, with spending in Q1 2026 alone reaching an extraordinary $179 billion, nearly double the level of a year earlier.

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Ongoing geopolitical tensions in the Middle East and the associated surge in energy prices have pushed inflation and bond market concerns back to the forefront of global financial markets. Investors are increasingly worried that central banks may now face even greater difficulty in bringing inflation fully under control, particularly in economies where underlying price pressures had already remained sticky prior to the latest energy shock. Recent upside surprises in US labour market and inflation data have already contributed to higher Treasury yields and a broader global backup in short-term government bond yields across the major economies (charts 1 and 2). Yet the picture is not entirely one-sided. Labour’s share of US national income remains historically weak, suggesting limited underlying wage bargaining power and helping explain why broader inflation persistence could ultimately remain contained (chart 3). Meanwhile, oil prices have remained elevated despite some moderation in broader geopolitical risk indicators, reflecting persistent supply-side disruption and ongoing stress surrounding key global energy and shipping routes (chart 4). Even so, recent core inflation data from economies including the UK, Canada and Austria suggest that pass-through from higher energy costs into broader underlying inflation has so far remained relatively limited (chart 5). At the same time, financial markets continue to be supported by an extraordinary AI-driven investment boom, with technology firms engaged in an unprecedented surge in spending on data centres, semiconductors and energy infrastructure (chart 6). Increasingly, the global economy appears caught between two powerful and competing forces: renewed supply-side inflation risks on one side and a historic wave of AI-driven technological investment on the other.

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Charts of the Week: Surprise, Surprise

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 3,000 to 209,000 in the week ending May 16, from 212,000 in the week ending May 9, revised from 211,000. The four-week average declined by 1,500 to 202,500 in the week ending May 16, from 204,000 the May 9 week, revised marginally from 203,750. The Action Economics/Haver Analytics Survey looked for 210,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 6,000 to 1.782 million in the week ending May 9, from 1.776 million in the week ending May 2, revised from 1.782 million. The four-week moving average declined to 1.773 million in the latest week from 1.780 in the May 2 week, revised from 1.781 million. The four-week moving average reached the lowest level since January 2024. The insured unemployment rate was unchanged at 1.2% in the week of May 9. Except for a one-week dip to 1.1% in the week of April 25, the insured unemployment rate has been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending May 2, the highest unemployment rates were in New Jersey (2.17%) and Washington (2.11%). The lowest rates were in Florida and South Dakota (both 0.30%), Louisiana (0.32%), Alabama (0.35%), Arkansas (0.37%), North Carolina (0.38%), Tennessee (0.47%) and Iowa, Kansas, Virginia and Virgin Islands (all 0.48%). Rates in other notable states include California (1.97%), New York (1.61%), Illinois (1.51%), Pennsylvania (1.26%), and Texas (1.01%). 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 **USECON**. Data for individual states are in **REGIONW** back to December 1986.



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- New claims declined by 3,000 to 209,000 in the week ending May 16.
- Continuing claims rose by 6,000 to 1.782 million.
- The insured unemployment rate was unchanged at 1.2% in the week of May 9.


U.S. Initial Unemployment Claims Declined in the Week of May 16

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CPI inflation in the UK eased sharply in April with the headline making no change at all and the core rising by only 0.1%. The headline is a marked departures from March when the UK CPI rose by 0.4% as the core put in another good month, rising 0.1%. Sequentially, UK inflation as measured by the CPIH has been relatively stable with a 3% growth rate over 12 months, a 3% annual rate over three-months, and a gain of 2.9% annualized over six-months; it's about as steady as you can get. The core (CPH excluding energy, food, alcohol, and tobacco) rises 2.9% over 12 months, eases to a 2.7% annual rate over six-months, then rises at a 2% annual rate over three-months.

**Low inflation amid a global surge in oil prices**
The core is showing significant temperance and sequential improvement. Meanwhile, globally oil prices are flaring sharply, and most countries are seeing inflation rates rise. An energy cap in the UK is holding energy costs down and helping to keep the headline rate of inflation low. However, the cap can only work its magic for so long, eventually persisting strength in oil prices are going to show through into the headline index.

**Acceleration tendencies abate**
In April, 50% of the categories of the CPI H showed acceleration compared to March; in March only 41% had accelerated compared to February; in February only 41% had accelerated compared to January. On a broad basis, inflation acceleration has been substantially neutralized or controlled. Sequential calculations show that over three-months acceleration has occurred in 50% of the categories, over six-months and 12-months, however, acceleration has occurred in only 33% of the categories, indicating that there has been a relatively long-lived environment of inflation temperance.

**Still Too high**
However, inflation in the UK remains relatively high. The HICP measure, which is comparable to the measures used on the continent by the European Central Bank, has a 69th-percentile standing when ranked on data back to 2000. The CPIH has a 75.1-percentile standing and the CPIH-core has an 81.5 percentile standing. These are based on year-over-year percent changes and the two inflation gauges.

Inflation rankings tell us that inflation in the UK is still relatively high compared to how it has performed over the last 25 years. However, what's most important is inflation relative to the target of 2%. At 3% the inflation rate is too high and at 2.9% the core inflation rate is too-high as well. However, we see the shorter-term inflation rates particularly for the core have come down. The core rate over three-months has even reached the 2% mark, which is both encouraging and surprising. The UK economy has been performing poorly. The Bank of England will certainly be making its next monetary policy decision based on the performance of inflation with some assessment and how the trend is faring as well as with reference to economic performance which has been marginal. We will have to see how the BOE looks at the effect of the energy cap. At the same time there's a great deal of political turmoil in the UK to pair with difficult global geopolitical conditions


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United Kingdom

UK CPIH Eases Amid Global Oil Price Shock 

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Mortgage applications declined 2.3% w/w (+18.9% y/y) in the week ending May 15, after rising 1.7% w/w (15.5% y/y) in the week ending May 8, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house dropped 4.1% w/w (+8.0% y/y) in the May 15 week, following a rise of 3.9% w/w (6.7% y/y) in the May 8 week.  Applications for loan refinancing edged down 0.1% w/w (+34.8% y/y) in the latest week after declining 0.8% w/w (+28.3% y/y) in the May 8 week.

The effective interest rate on a 30-year fixed-rate loan rose 9bps to 6.73% in the week ending May 15 from 6.64% in the week ending May 8. The rate on 15-year fixed-rate mortgages rose 12bps to 6.11% in the latest week from 5.99% in the week ending May 8. The 30-year Jumbo rate rose 5bps to 6.69% in the May 15 week from 6.64% in the May 8 week. The rate on a 5-year ARM also rose 5bps to 6.07% in the latest week from 6.02% in the week ending May 8.

The share of applications for refinancing an existing loan rose to 41.9% of total applications in the week of May 15 from 40.8% in the May 8 week. The adjustable-rate mortgage (ARM) share of activity rose to 9.6% in the May 15 week from 8.8% in the week ending May 8.

The average size of a mortgage loan declined 1.4% w/w (+3.5% y/y) to $403,200 in the week ending May 15, after retrenching 0.5% w/w (+2.9% y/y) to $409,000 in the week ending May 8. The average size of a purchase loan edged down 0.1% w/w (+4.6% y/y) to $466,900 in the latest week from $467,200 in the May 8 week. The average size of a loan to refinance a mortgage declined 3.0% w/w (+8.1% y/y) to $314,700 in the May 15 week from $324,500 in the May 8 week. 

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.


- Both applications for loans to purchase and applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 9bps to 6.73%. 
- Average loan size declined.


Economy in Brief: 2013

Jump to:

U.S. Durable Goods Orders Strength Is Broad-based

IFO German Index Advances

U.S. Chicago Fed National Activity Index Remains Negative

State Unemployment Rates Continue Lower but Vary Greatly

State Unemployment Rates Continue Lower but Vary Greatly

U.S. Leading Economic Indicators Rise on Financial Series' Strength

EMU Down-Draft Abates

Philadelphia Fed Business Conditions Index Recovers to a Two-Year High