Tom Moeller

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<p>New orders to manufacturers declined 1.0% (-0.2% y/y) during May following a
little-revised 1.8% April gain. A 0.9% decline had been expected in the Action
Economics Forecast Survey. Durable goods orders fell 2.3%, which was roughly the
same as in the advance report, and paced by a sharp drop in transportation
sector bookings.</p>

<p>Nondurable goods orders, which equal shipments, improved 0.3% (-4.6% y/y) led
by a steady 2.4% increase (-30.7% y/y) in petroleum refinery shipments. Apparel
shipments jumped 1.9% (13.6% y/y), but basic chemical shipments were off 0.5%
(+3.9% y/y). Durable goods shipments eased 0.2% (+0.2% y/y) led lower by fewer
motor vehicle shipments.</p>

<p>Unfilled orders gained 0.2% (-0.9% y/y) as durable goods backlogs increased
0.2% (-0.9% y/y), which was only the second gain this year. The rise was led by
a 0.7% increase (5.9% y/y) in computers &amp; electronic products, but
electrical equipment backlogs eased 0.3% (+2.5% y/y).</p>

<p>Inventories of manufactured products fell 0.1%, and have been declining
steadily since late in 2014. Transportation equipment inventories fell 0.3%
(-0.2% y/y). Outside of the transportation sector, inventories eased 0.1% (-3.8%
y/y). Electrical equipment inventories remained unchanged (-2.5% y/y).
Inventories on nondurable goods improved 0.1% (-4.0% y/y), but there was a
one-third y/y drop in the value of petroleum refinery inventories.</p>

<p>The factory sector figures are available in Haver's <b>USECON </b>database.
The expectations figure from the Action Economics Forecast Survey is available
in <b>AS1REPNA</b>.</p>

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >Factory Sector- NAICS
        Classification (%)</th>
      <th scope="col" ><b>May</b></th>
      <th scope="col" ><b>Apr</b></th>
      <th scope="col" ><b>Mar</b></th>
      <th scope="col" ><b>Y/Y</b></th>
      <th scope="col" ><b>2015</b></th>
      <th scope="col" ><b>2014</b></th>
      <th scope="col" ><b>2013</b></th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" >New Orders</td>
      <td  >-1.0</td>
      <td  >1.8</td>
      <td  >1.7</td>
      <td  >-0.2</td>
      <td  >-6.3</td>
      <td  >1.8</td>
      <td  >2.0</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >Shipments</td>
      <td  >0.0</td>
      <td  >0.4</td>
      <td  >0.3</td>
      <td  >-3.2</td>
      <td  >-4.4</td>
      <td  >1.2</td>
      <td  >2.0</td>
    </tr>
    <tr>
      <td class="firstcol" >Unfilled Orders</td>
      <td  >0.2</td>
      <td  >0.6</td>
      <td  >0.0</td>
      <td  >-0.9</td>
      <td  >-2.4</td>
      <td  >8.8</td>
      <td  >5.8t</td>
    </tr>
    <tr>
      <td class="firstcol" >Inventories</td>
      <td  >-0.1</td>
      <td  >-0.1</td>
      <td  >-0.1</td>
      <td  >-3.1</td>
      <td  >-2.5</td>
      <td  >1.8</td>
      <td  >0.9</td>
 </tr>
              </tbody>
            </table>
            </span>
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New orders to manufacturers declined 1.0% (-0.2% y/y) during May following a little-revised 1.8% April gain. A 0.9% decline had been expected in the Action Economics Forecast Survey. Durable goods orders fell 2.3%, which was roughly [...]

U.S. Factory Orders Backpedal in May

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<p><b>Total sales of light vehicles</b> during June declined 4.5% versus May
(-2.0% y/y) to 16.66 million units (SAAR), the lowest level in three months.</p>

<p><b>Auto</b> sales fell 5.0% to 6.76 million units (-11.2% y/y). The decline
reflected a 4.1% fall (-10.1% y/y) in domestic car sales to 4.95 million units.
Imported car sales declined 7.3% to 1.81 million (-14.0% y/y).</p>

<p>Sales of <b>light trucks</b> declined 4.2% to 9.90 million units (+5.5%
y/y). Sales of imported light trucks fell 6.9% to 1.66 million units (+22 .7%
y/y). Domestic light truck sales declined 3.6% to 8.24 million units (+2.6%
y/y). Truck sales edged up to 59.4% of the light vehicle market.</p>

<p><b>Imports share</b> of the light vehicle market of 20.8% compared to 19.8%
during all of last year. Imports share of the passenger car market of 26.7%
compared to 27.1% during all of last year. Imports share of the light truck
market eased to 16.8%.</p>

<p>U.S. vehicle sales figures are published by Autodata and can be found in
Haver's<b> USECON </b>database.</p>

 <p><a href="/comment/160701l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160701l.png"></a>
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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >Light Vehicle Sales (SAAR,
        Mil. Units)</th>
      <th scope="col" ><b>Jun</b></th>
      <th scope="col" ><b>May</b></th>
      <th scope="col" ><b>Apr</b></th>
      <th scope="col" ><b>Jun Y/Y %</b></th>
      <th scope="col" ><b>2015</b></th>
      <th scope="col" ><b>2014</b></th>
      <th scope="col" ><b>2013</b></th>
    </tr>
  </thead>
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    <tr>
      <td class="firstcol" >Total</td>
      <td  >16.66</td>
      <td  >17.45</td>
      <td  >17.42</td>
      <td  >-2.0</td>
      <td  >17.42</td>
      <td  >16.52</td>
      <td  >15.59</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;Autos</td>
      <td  >6.76</td>
      <td  >7.12</td>
      <td  >7.06</td>
      <td  >-11.2</td>
      <td  >7.72</td>
      <td  >7.92</td>
      <td  >7.77</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
      <td  >4.95</td>
      <td  >5.16</td>
      <td  >5.11</td>
      <td  >-10.1</td>
      <td  >5.63</td>
      <td  >5.68</td>
      <td  >5.48</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;&nbsp;Imported</td>
      <td  >1.81</td>
      <td  >1.95</td>
      <td  >1.95</td>
      <td  >-14.0</td>
      <td  >2.09</td>
      <td  >2.24</td>
      <td  >2.30</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;Light Trucks</td>
      <td  >9.90</td>
      <td  >10.33</td>
      <td  >10.36</td>
      <td  >5.5</td>
      <td  >9.69</td>
      <td  >8.60</td>
      <td  >7.82</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
      <td  >8.24</td>
      <td  >8.55</td>
      <td  >8.73</td>
      <td  >2.6</td>
      <td  >8.33</td>
      <td  >7.51</td>
      <td  >6.74</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;&nbsp;Imported</td>
      <td  >1.66</td>
      <td  >1.78</td>
      <td  >1.63</td>
      <td  >22.7</td>
      <td  >1.37</td>
      <td  >1.09</td>
      <td  >1.08</td>
</tr>
              </tbody>
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Total sales of light vehicles during June declined 4.5% versus May (-2.0% y/y) to 16.66 million units (SAAR), the lowest level in three months. Auto sales fell 5.0% to 6.76 million units (-11.2% y/y). The decline reflected a 4.1% fall [...]

U.S. Light Vehicle Sales Ease

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<p>The value of construction put-in-place declined 0.8% (+2.8% y/y) during May
following a 2.0% April drop, revised from -1.8%. A 0.7% increase was expected in
the Action Economics Forecast Survey. Data back to 2014 were revised.</p>

<p>Building activity in the private sector eased 0.3% (+4.7% y/y), led by a 0.7%
drop (+3.9% y/y) in nonresidential construction after a 0.1% shortfall.
Educational building declined 4.5% (+2.9% y/y) and commercial construction fell
1.6% (+3.2% y/y). Increasing was amusement &amp; recreation building by 3.2%
(20.1% y/y) and transportation construction by 1.7% (2.4% y/y).</p>

<p>The value of residential building activity was unchanged (+5.4% y/y) after a
3.5% drop. Single-family construction declined 1.3% (+6.3% y/y), down for the
fifth month in the last six. Multi-family construction activity rose 1.8% (23.9%
y/y) following a 2.0% decline, and the value of improvements rose 1.4% (-1.9%
y/y) after a 6.8% shortfall.</p>

<p>The value of public sector building activity declined 2.3% (-2.6% y/y), down
for the third straight month. Transportation building activity declined 4.6%
(-6.5% y/y) and highways &amp; streets construction eased 0.2% (-1.1% y/y).
Increasing was the value of office construction by 4.2% (-11.3% y/y).</p>

<p>The construction spending figures are in Haver's <b>USECON</b> database and
the expectations figure is contained in the <b>AS1REPNA</b> database.</p>

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >Construction Put in Place
        (SA, %)</th>
      <th scope="col" >May</th>
      <th scope="col" >Apr</th>
      <th scope="col" >Mar</th>
      <th scope="col" >May Y/Y</th>
      <th scope="col" >2015</th>
      <th scope="col" >2014</th>
      <th scope="col" >2013</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" >Total</td>
      <td  >-0.8</td>
      <td  >-2.0</td>
      <td  >1.6</td>
      <td  >2.8</td>
      <td  >10.3</td>
      <td  >11.4</td>
      <td  >6.3</td>
    </tr>
  </tbody>
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      <td class="firstcol" >&nbsp; Private</td>
      <td  >-0.3</td>
      <td  >-1.9</td>
      <td  >2.4</td>
      <td  >4.7</td>
      <td  >12.5</td>
      <td  >15.4</td>
      <td  >10.9</td>
    </tr>
  </tbody>
  <tbody>
    <tr>
      <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential</td>
      <td  >0.0</td>
      <td  >-3.5</td>
      <td  >2.8</td>
      <td  >5.4</td>
      <td  >16.8</td>
      <td  >14.6</td>
      <td  >20.1</td>
    </tr>
  </tbody>
  <tbody>
    <tr class="odd">
      <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential</td>
      <td  >-0.7</td>
      <td  >-0.1</td>
      <td  >2.0</td>
      <td  >3.9</td>
      <td  >8.1</td>
      <td  >16.3</td>
      <td  >2.7</td>
    </tr>
  </tbody>
  <tbody>
    <tr>
      <td class="firstcol" >&nbsp; Public</td>
      <td  >-2.3</td>
      <td  >-2.3</td>
      <td  >-0.7</td>
      <td  >-2.6</td>
      <td  >4.5</td>
      <td  >1.9</td>
      <td  >-3.1</td>
      </tr>
                 </tbody>
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The value of construction put-in-place declined 0.8% (+2.8% y/y) during May following a 2.0% April drop, revised from -1.8%. A 0.7% increase was expected in the Action Economics Forecast Survey. Data back to 2014 were revised. [...]

U.S. Construction Activity Declines Again

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<p>Factory sector activity continues to firm following last year's weakness. The ISM Composite
Index of manufacturing activity increased to 53.2 during June following an unrevised May gain
to 51.3. The latest level was the highest since February 2015, after falling as low as 48.0
in December. June's level beat expectations for 51.3 in the Action Economics
Forecast Survey. The data from the Institute for Supply Management (ISM)
are diffusion indexes where a reading above 50 indicates an increase in activity.
During the last ten years, there has been a 74% correlation between the level of
the ISM index and the q/q changed in real GDP.</p>

<p>Each of the component series improved last month, led by the inventories
index which rose to a 9-month high. That was followed by the production series
which recovered most of what it lost during the prior two months. At 57.0, the
new orders series improved to the highest level since December 2014. The vendor
deliveries showed the slowest delivery speeds since December 2014. The
employment series, at 50.4, indicated payroll expansion for the first time since
November. During the last ten years, there has been an 88% correlation between the figure
and the m/m change in factory sector payrolls.</p>

<p>The prices paid index eased moderately m/m, but at 60.5 remained near a
two-year high. Twenty-seven percent of industries reported
higher prices while 6% reported that prices fell.</p>

<p>Other component series, not included in the composite reading, also showed
improved performance. The export figure increased to 53.5, the highest level since
November 2014. The imports index strengthened to 52.0. The order backlog index
jumped to 52.5, the highest level since May of last year.</p>

<p>The figures from the Institute for Supply Management can be found in Haver's <b>USECON</b>
database. The expectations number is in Haver's <b>AS1REPNA</b> database.</p>

<p><b>The Science of Monetary Policy: An Imperfect Knowledge Perspective</b>
from the Federal Reserve Bank of New York is available <a href="https://www.newyorkfed.org/research/staff_reports/sr782">here</a>.</p>

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

  <thead>
    <tr>
      <th class="firstcol" scope="col" >ISM Mfg (SA)</th>
      <th scope="col" >Jun</th>
      <th scope="col" >May</th>
      <th scope="col" >Apr</th>
      <th scope="col" >Jun '15</th>
      <th scope="col" >2015</th>
      <th scope="col" >2014</th>
      <th scope="col" >2013</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" >Composite Index</td>
      <td  >53.2</td>
      <td  >51.3</td>
      <td  >50.8</td>
      <td  >53.1</td>
      <td  >51.3</td>
      <td  >55.6</td>
      <td  >53.8</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;New Orders</td>
      <td  >57.0</td>
      <td  >55.7</td>
      <td  >55.8</td>
      <td  >54.9</td>
      <td  >52.6</td>
      <td  >58.9</td>
      <td  >56.8</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;Production</td>
      <td  >54.7</td>
      <td  >52.6</td>
      <td  >54.2</td>
      <td  >52.8</td>
      <td  >53.5</td>
      <td  >59.2</td>
      <td  >57.5</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;Employment</td>
      <td  >50.4</td>
      <td  >49.2</td>
      <td  >49.2</td>
      <td  >55.3</td>
      <td  >51.0</td>
      <td  >54.4</td>
      <td  >53.1</td>
    </tr>
    <tr>
      <td class="firstcol" >&nbsp;Supplier Deliveries</td>
      <td  >55.4</td>
      <td  >54.1</td>
      <td  >49.1</td>
      <td  >49.6</td>
      <td  >50.7</td>
      <td  >55.0</td>
      <td  >51.9</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" >&nbsp;Inventories</td>
      <td  >48.5</td>
      <td  >45.0</td>
      <td  >45.5</td>
      <td  >53.0</td>
      <td  >49.0</td>
      <td  >50.8</td>
      <td  >49.4</td>
    </tr>
    <tr>
      <td class="firstcol" >Prices Paid Index (NSA)</td>
      <td  >60.5</td>
      <td  >63.5</td>
      <td  >59.0</td>
      <td  >49.5</td>
      <td  >39.8</td>
      <td  >55.6</td>
      <td  >53.8</td>
  </tr>
              </tbody>
            </table>
            </span>
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Factory sector activity continues to firm following last year's weakness. The ISM Composite Index of manufacturing activity increased to 53.2 during June following an unrevised May gain to 51.3. The latest level was the highest since [...]

ISM Manufacturing Index Strengthens to 16-Month High

Robert Brusca

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<p><b>Phillips Curve Busters!</b></p>
<p><a href="/comment/160701e_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160701e.png" align="left"></a>
Unemployment rates fell in six of 11 of these early-reporting EMU member states in May. Greece, where data lag by two months, shows a decline on that basis as well (making it seven of 12 drops in the `most recent month of data' among EMU members). The month of May saw the unemployment rate tick higher only in Austria and in Belgium.
</p><p>
More remarkably, unemployment rates are net lower over three-month, six-month and 12-month for most of the euro area. Nine of 11 countries show a drop over three-months and six-months with 10 of 11 net lower over 12-months. Austria is a persistent exception with a small backtracking in its rate.
</p><p>
The pace of the unemployment decline still appears to be pretty fast in Portugal and Ireland as well as France and possibly (surprisingly) Italy. The question now is what the Brexit process is going to do to all that.
</p><p>
On one hand, we expect `cooler heads to prevail' in actual UK-EU negotiations than what some of the early remarks suggest. However, there is still anger in Europe where the U.K. is viewed as having opened the air lock on a former air-tight ship. Europe has known for quite a long time that much of what it now professes to be surprised about is real: namely that there is a lot of grassroots dissatisfaction with the so-called euro project. Europeans have done all sorts of things to try to keep issues from ever being put to a public vote because what happened in the U.K. is really no surprise. But the U.K. vote has brought that difficult fact to the forefront and now European leaders have had to confront it and to confront the fact of it being not simply a problem in the U.K. Still, there is no sense that the U.K. has triggered the demise of the EMU. It is much a harder for an EMU member country to leave, but that does not mean that it could not be done. And as long and economic times are hard the process of Europeanization is relatively more painful and because of that more at risk.
</p><p>
This brings us to the final reason to worry about the impact of Brexit. It is that the EU leadership wants to send the message that leaving the EU is not painless. There has to be a cost to leaving since there is a cost to membership. That cost has to buy members something special. But what is that? The less good of a deal that Europe cuts for the U.K., the less good of a deal the U.K. will cut for Europe. Europe and Germany do trade a lot, but Germany trades the most with the U.K. among EMU members. And the U.K. is relatively more dependent on exports to the EU than vice versa. Still, there is enough mutuality to make any tie-severing painful and with economic impact.
</p><p>
The big unknown in this whole Brexit process is what will happen to financial services. No one yet has a hint, but Dublin, Paris and Frankfurt are three places hoping to make gains at the U.K.'s expense.
</p><p>
The good news is that the unemployment rates across the EMU are dropping suggests that the EMU is on solid footing as this process of dealing with Brexit unfolds. The release of the manufacturing PMI's from Markit underscores that point as the EMU readings for manufacturing are slightly firmer upon final revision. Italian unemployment surprisingly fell in May. Other Italian metrics have not been so robust recently.
</p><p>
Interestingly, the EMU shows no sign of Phillips curve behavior. As the unemployment rate has fallen so has the inflation rate. There is no sense of falling unemployment driving up prices or labor costs. In most cases we would applaud this result, but since the ECB is trying to get inflation back in the normal zone, this abnormality is still part of its policy conundrum.
</p><p>
In related reports released today, Asia for the most part is still very weak. It is Europe alone that is `outperforming.' China's manufacturing sector was either weak or weaker and shrinking depending on the PMI survey you favor. China's services sector did improve, but it's the manufacturing sector that most directly affects the rest of the world. And there is still not much certainty about the reports concerning China's foreign exchange plans in the wake of several conflicting news reports over the past several days.
</p><p>
On balance, we have a still weak Asia with its economic giant still struggling. U.S. gauges continue to show some weakness growth and we continue to wait on the performance of important new U.S. economic reports day by day. Today U.S. manufacturing sector is looking a bit firmer after the ISM release. Europe is showing some of the best momentum globally, but it will have to face the Brexit challenge. Today the IMF chief economist warned that it might have to reduce its forecasts yet again. BOE Governor Mark Carney asserts that the U.K. will need to cuts rates this summer in the wake of its own Brexit challenge. Despite some good economic news, all scenarios are still in play. To me the extension of weakens seems the most likely one. But there are grounds for greater optimisms if you're so inclined.
</p>

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Phillips Curve Busters! Unemployment rates fell in six of 11 of these early-reporting EMU member states in May. Greece, where data lag by two months, shows a decline on that basis as well (making it seven of 12 drops in the `most [...]

Euro Area Improvement Is Loud and Clear...But Will It Endure Brexit?

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      <p>Chicago purchasing managers reported that their Business Barometer
      surged to 56.8 this month following a May decline to 49.3. The figure was
      at the highest level since January 2015, and exceeded expectations for
      50.4 in the Action Economics Forecast Survey.</p>
      <p><b>Haver Analytics </b>constructs an ISM-Adjusted Index using the
      Chicago numbers, comparable to the overall ISM index to be released
      tomorrow. Our figure increased to 52.9, the highest level since October.
      During the last ten years, there has been a 61% correlation between the
      adjusted Chicago Purchasing Managers index and real GDP growth.</p>
      <p>Increases in the component series were widespread. Most notable was a
      14.4 point gain in the new orders index to 63.2, the highest level since
      October 2014. The order backlog measure also surged 12.0 points to the
      highest level (59.7) since March 2011. The production and inventory
      indexes increased moderately to 56.3 and 50.0,
      respectively.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
      <p>The employment figure also declined 3.3 points to 45.0, the lowest
      level since November 2009. During the last ten years, there has been an
      80% correlation between the employment figure and the m/m change in
      factory sector employment. Supplier delivery speeds quickened, prompting a
      decline in the index.</p>
      <p>The prices paid reading eased to 55.7, leaving the Q2 average of 56.4
      above the Q1 mean of 43.3. An increased 25% (NSA) of respondents reported
      paying higher prices while 10% paid less.</p>
      <p>The MNI Chicago Report is produced by MNI/Deutsche Borse Group in
      partnership with ISM-Chicago. The survey covers a sample of over 200
      purchasing professionals in the Chicago area with a monthly response rate
      of about 50%. The ISM-Adjusted headline index is calculated by Haver
      Analytics using these data to construct a figure with the ISM methodology.
      The figures can be found in Haver's <b>SURVEYS</b> database. The Consensus
      expectations figure is available in <b>AS1REPNA</b>.</p>
     
     
     <p><b>Monetary Policy Transmission before and after the Crisis</b> from
      the Federal Reserve Bank of New York can be found here <a href="http://libertystreeteconomics.newyorkfed.org/2016/06/monetary-policy-transmission-before-and-after-the-crisis.html#.V3QeiJAm6po">http://libertystreeteconomics.newyorkfed.org/2016/06/monetary-policy-transmission-before-and-after-the-crisis.html#.V3QeiJAm6po</a></p>





        <thead>
          <tr>
            <th class="firstcol" width="977">Chicago Purchasing Managers Index
              (%, SA)</th>
            <th scope="col" width="114">Jun</th>
            <th scope="col" width="114">May</th>
            <th scope="col" width="114">Apr</th>
            <th scope="col" width="114">Jun '15</th>
            <th scope="col" width="115">2015</th>
            <th scope="col" width="115">2014</th>
            <th scope="col" width="115">2013</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" width="977">General Business Barometer</td>
            <td align="center" width="114">56.8</td>
            <td align="center" width="114">49.3</td>
            <td align="center" width="114">50.4</td>
            <td align="center" width="114">49.2</td>
            <td align="center" width="115">50.3</td>
            <td align="center" width="115">60.7</td>
            <td align="center" width="115">56.0</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">ISM-Adjusted General Business
              Barometer</td>
            <td align="center" width="114">52.9</td>
            <td align="center" width="114">48.0</td>
            <td align="center" width="114">52.0</td>
            <td align="center" width="114">49.5</td>
            <td align="center" width="115">51.6</td>
            <td align="center" width="115">59.3</td>
            <td align="center" width="115">54.2</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;Production</td>
            <td align="center" width="114">56.3</td>
            <td align="center" width="114">47.4</td>
            <td align="center" width="114">54.0</td>
            <td align="center" width="114">50.4</td>
            <td align="center" width="115">52.5</td>
            <td align="center" width="115">64.5</td>
            <td align="center" width="115">58.2</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;New Orders</td>
            <td align="center" width="114">63.2</td>
            <td align="center" width="114">48.8</td>
            <td align="center" width="114">51.0</td>
            <td align="center" width="114">51.2</td>
            <td align="center" width="115">50.4</td>
            <td align="center" width="115">63.8</td>
            <td align="center" width="115">59.1</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;Order Backlogs</td>
            <td align="center" width="114">59.7</td>
            <td align="center" width="114">47.7</td>
            <td align="center" width="114">38.7</td>
            <td align="center" width="114">42.9</td>
            <td align="center" width="115">44.4</td>
            <td align="center" width="115">54.2</td>
            <td align="center" width="115">48.8</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;Inventories</td>
            <td align="center" width="114">50.0</td>
            <td align="center" width="114">37.9</td>
            <td align="center" width="114">49.6</td>
            <td align="center" width="114">47.9</td>
            <td align="center" width="115">52.1</td>
            <td align="center" width="115">55.9</td>
            <td align="center" width="115">45.6</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;Employment</td>
            <td align="center" width="114">45.0</td>
            <td align="center" width="114">48.3</td>
            <td align="center" width="114">47.5</td>
            <td align="center" width="114">47.2</td>
            <td align="center" width="115">50.3</td>
            <td align="center" width="115">56.0</td>
            <td align="center" width="115">55.6</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="977">&nbsp;&nbsp;Supplier Deliveries</td>
            <td align="center" width="114">50.0</td>
            <td align="center" width="114">57.8</td>
            <td align="center" width="114">57.8</td>
            <td align="center" width="114">50.7</td>
            <td align="center" width="115">52.5</td>
            <td align="center" width="115">56.5</td>
            <td align="center" width="115">52.5</td>
          </tr>
          <tr>
            <td class="firstcol" width="977">&nbsp;&nbsp;Prices Paid</td>
            <td align="center" width="114">55.7</td>
            <td align="center" width="114">56.5</td>
            <td align="center" width="114">56.9</td>
            <td align="center" width="114">50.4</td>
            <td align="center" width="115">46.8</td>
            <td align="center" width="115">61.0</td>
            <td align="center" width="115">59.8</td>
          </tr>
        </tbody>
      
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<p>&nbsp;</p>
<span id="articletitle">U.S. Initial Claims for Unemployment Insurance Rise</span><br>
<span id="byline">by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;June
30, 2016</span><span id="articletext">
<p>Initial jobless insurance claims increased to 268,000 (-4.3% y/y) during the
week ended June 25 from 258,000 in the prior week, revised from 259,000. The Action Economics
Forecast Survey expected 270,000 claims. The four-week moving average of claims
remained steady at 266,750. During the last ten years, there has been a 74% correlation
between the level of claims and the m/m change in payroll employment.</p>
<p>In the week ending June 18, continuing claims for unemployment insurance
declined to 2.120 million (-6.7% y/y) from 2.140 million. Claims were near the
lowest level since 2000. The four-week moving average fell to 2.134 million.</p>
<p>The insured rate of unemployment eased to a record low of 1.5%.</p>
<p>Insured rates of unemployment across states continued to vary. Near the low
end of the range were South Dakota (0.37%), Florida (0.64%), Indiana (0.76%), Tennessee
(0.80%), Virginia (0.86%) and South Carolina (0.89%). At the high end of
the scale were Texas (1.66%), Massachusetts (1.77%), Nevada (1.79%), Illinois
(1.96%), New Jersey (2.22%) and Pennsylvania (2.25%). The state data are
not seasonally adjusted.</p>
<p>Data on weekly unemployment insurance are contained in Haver's <b>WEEKLY</b>
database and they are summarized monthly in <b>USECON</b>. Data for individual
states are in <b>REGIONW</b>. The expectations figure is from the Action
Economics survey, carried in the <b>AS1REPNA</b> database.</p>
<table width="1782" class="centered" border="0" cellSpacing="0">
  <thead>
    <tr>
      <th class="firstcol" 0801 width="650">Unemployment Insurance (000s)</th>
      <th 0801 width="161">06/25/16</th>
      <th 0801 width="161">06/18/16</th>
      <th 0801 width="161">06/11/16</th>
      <th 0801 width="161">Y/Y</th>
      <th 0801 width="161">2015</th>
      <th 0801 width="161">2014</th>
      <th 0801 width="162">2013</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td class="firstcol" 0801 width="650">Initial Claims</td>
      <td 0801 align="center" width="161">268</td>
      <td 0801 align="center" width="161">258</td>
      <td 0801 align="center" width="161">277</td>
      <td 0801 align="center" width="161">-4.3%</td>
      <td 0801 align="center" width="161">277</td>
      <td 0801 align="center" width="161">307</td>
      <td 0801 align="center" width="162">342</td>
    </tr>
    <tr class="odd">
      <td class="firstcol" 0801 width="650">Continuing Claims</td>
      <td 0801 align="center" width="161">--</td>
      <td 0801 align="center" width="161">2,120</td>
      <td 0801 align="center" width="161">&nbsp;2,140</td>
      <td 0801 align="center" width="161">-6.7</td>
      <td 0801 align="center" width="161">2,268</td>
      <td 0801 align="center" width="161">2,607</td>
      <td 0801 align="center" width="162">2,978</td>
    </tr>
    <tr>
      <td class="firstcol" 0801 width="650">Insured Unemployment Rate (%)</td>
      <td 0801 align="center" width="161">--</td>
      <td 0801 align="center" width="161">1.5</td>
      <td 0801 align="center" width="161">1.6</td>
      <td 0801 align="center" width="161">
        <p>1.7<br>
        (June 2015)</p>
      </td>
      <td 0801 align="center" width="161">1.7</td>
      <td 0801 align="center" width="161">2.0</td>
      <td 0801 align="center" width="162">2.3</td>
    </tr>
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Chicago purchasing managers reported that their Business Barometer surged to 56.8 this month following a May decline to 49.3. The figure was at the highest level since January 2015, and exceeded expectations for 50.4 in the Action [...]

Chicago Purchasing Managers Index Recovers Sharply

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      <span id="articletext">
      <p></p>

      <p><a href="/comment/160630f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160630f.png"></a>
      <a href="/comment/160630g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160630g.png"></a></p>

      <p>Chicago purchasing managers reported that their Business Barometer
      surged to 56.8 this month following a May decline to 49.3. The figure was
      at the highest level since January 2015, and exceeded expectations for
      50.4 in the Action Economics Forecast Survey.</p>

      <p><b>Haver Analytics </b>constructs an ISM-Adjusted Index using the
      Chicago numbers, comparable to the overall ISM index to be released
      tomorrow. Our figure increased to 52.9, the highest level since October.
      During the last ten years, there has been a 61% correlation between the
      adjusted Chicago Purchasing Managers index and real GDP growth.</p>

      <p>Increases in the component series were widespread. Most notable was a
      14.4 point gain in the new orders index to 63.2, the highest level since
      October 2014. The order backlog measure also surged 12.0 points to the
      highest level (59.7) since March 2011. The production and inventory
      indexes increased moderately to 56.3 and 50.0, respectively.</p>

      <p>The employment figure also declined 3.3 points to 45.0, the lowest
      level since November 2009. During the last ten years, there has been an
      80% correlation between the employment figure and the m/m change in
      factory sector employment. Supplier delivery speeds quickened, prompting a
      decline in the index.</p>

      <p>The prices paid reading eased to 55.7, leaving the Q2 average of 56.4
      above the Q1 mean of 43.3. An increased 25% (NSA) of respondents reported
      paying higher prices while 10% paid less.</p>

      <p>The MNI Chicago Report is produced by MNI/Deutsche Borse Group in
      partnership with ISM-Chicago. The survey covers a sample of over 200
      purchasing professionals in the Chicago area with a monthly response rate
      of about 50%. The ISM-Adjusted headline index is calculated by Haver
      Analytics using these data to construct a figure with the ISM methodology.
      The figures can be found in Haver's <b>SURVEYS</b> database. The Consensus
      expectations figure is available in <b>AS1REPNA</b>.</p>

      <p><b>Recent Economic Developments, Monetary Policy Considerations and Longer-term Prospects</b>
      is the title of Tuesday's speech by Fed Governor Jerome H. Powell, and it can be found <a href="https://www.federalreserve.gov/newsevents/speech/powell20160628a.htm">here</a>.</p>

<p><a href="/comment/160630h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160630h.png"></a>
      <a href="/comment/160630i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160630i.png"></a></p>

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

        <thead>
          <tr>
            <th class="firstcol" >Chicago Purchasing Managers Index
              (%, SA)</th>
            <th scope="col" >Jun</th>
            <th scope="col" >May</th>
            <th scope="col" >Apr</th>
            <th scope="col" >Jun '15</th>
            <th scope="col" >2015</th>
            <th scope="col" >2014</th>
            <th scope="col" >2013</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >General Business Barometer</td>
            <td  >56.8</td>
            <td  >49.3</td>
            <td  >50.4</td>
            <td  >49.2</td>
            <td  >50.3</td>
            <td  >60.7</td>
            <td  >56.0</td>
          </tr>
          <tr>
            <td class="firstcol" >ISM-Adjusted General Business
              Barometer</td>
            <td  >52.9</td>
            <td  >48.0</td>
            <td  >52.0</td>
            <td  >49.5</td>
            <td  >51.6</td>
            <td  >59.3</td>
            <td  >54.2</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Production</td>
            <td  >56.3</td>
            <td  >47.4</td>
            <td  >54.0</td>
            <td  >50.4</td>
            <td  >52.5</td>
            <td  >64.5</td>
            <td  >58.2</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;New Orders</td>
            <td  >63.2</td>
            <td  >48.8</td>
            <td  >51.0</td>
            <td  >51.2</td>
            <td  >50.4</td>
            <td  >63.8</td>
            <td  >59.1</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Order Backlogs</td>
            <td  >59.7</td>
            <td  >47.7</td>
            <td  >38.7</td>
            <td  >42.9</td>
            <td  >44.4</td>
            <td  >54.2</td>
            <td  >48.8</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Inventories</td>
            <td  >50.0</td>
            <td  >37.9</td>
            <td  >49.6</td>
            <td  >47.9</td>
            <td  >52.1</td>
            <td  >55.9</td>
            <td  >45.6</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Employment</td>
            <td  >45.0</td>
            <td  >48.3</td>
            <td  >47.5</td>
            <td  >47.2</td>
            <td  >50.3</td>
            <td  >56.0</td>
            <td  >55.6</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;&nbsp;Supplier Deliveries</td>
            <td  >50.0</td>
            <td  >57.8</td>
            <td  >57.8</td>
            <td  >50.7</td>
            <td  >52.5</td>
            <td  >56.5</td>
            <td  >52.5</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;&nbsp;Prices Paid</td>
            <td  >55.7</td>
            <td  >56.5</td>
            <td  >56.9</td>
            <td  >50.4</td>
            <td  >46.8</td>
            <td  >61.0</td>
            <td  >59.8</td>
     </tr>
              </tbody>
            </table>
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      <br>
      
      
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<p><a href="/comment/160630e_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/160630e.png" align="left"></a>
German retail sales ex-autos rose by 0.8% in May after a skinny gain of 0.1% in April. The three-month growth rate is zero. Over six-months, sales are up at a 0.5% pace. Over 12-months, sales are up at a 0.7% pace. Sales are decelerating on this timeline albeit at a very slow pace of erosion. And real retail sales (ex-autos) also are on a decelerating path with the recent three-month growth rate showing a decline.
</p><p>
Car registrations are falling in each of the last three-months and are decelerating sharply on that 12-month to six-month to three-month timeline.
</p><p>
In the quarter-to-date, German retail sales ex-autos, the same series in real terms and car registration all are contracting. Registrations are contracting at a very rapid pace.
</p><p>
The Brexit shock is not exactly catching German spending at its strongest point in this cycle, but the German economy is doing better than retail sales suggest. For one the GfK look-ahead reading on consumer climate for July already is estimated to have risen. That index is up to its highest reading since August 2015 and is in the top 1% of all its historic series readings (which extends back to 2002). That certainly is more impressive-looking than the retail sales result. Moreover, a new reading on German unemployment was just released today; the rate remains at a low point since German reunification. The number unemployed continues to drop. That is another set of signals pointing to overall German economic strength as well as to positive momentum, unlike retail sales.
</p><p>
The German consumer has been relatively more active in this expansion period than usual, but consumption is not the source of strength for the German economy. Moreover, spending trends recently have been fading. German economic strength simply does not help the rest of Europe very much because the economy is not generally focused on consumption. And for now, the German economy is much stronger than consumer spending would make it seem.
</p>

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German retail sales ex-autos rose by 0.8% in May after a skinny gain of 0.1% in April. The three-month growth rate is zero. Over six-months, sales are up at a 0.5% pace. Over 12-months, sales are up at a 0.7% pace. Sales are [...]

German Retail Sales Rebound

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

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- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

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**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

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**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

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**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

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**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

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**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

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Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). 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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- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

U.S. Initial Unemployment Insurance Claims Decline in Latest Week

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Business in the service sector recovered last month. The Services PMI rose to 52.4 during October after falling to 50.0 in September, following a rise to 52.0 in August, according to the Institute for Supply Management. The index hit a recent high of 55.8 in October of last year and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected a reading of 50.9 in October.

The ISM Composite Index, developed by Haver Analytics, combines the services index and the ISM manufacturing index released on Monday. This index rose to 52.0 in October, the highest level since February, after declining to 49.9 in September.

Most components of the services index increased last month. The business activity index rose to 54.3 last month after falling to 49.9 in September. It remained below its high of 70.9 in both October & November of 2021. Twenty-three percent (NSA) of respondents reported improved activity while 15.3% reported decline. The new orders index surged to a twelve month high of 56.2 after falling to 50.4 in September. Twenty-eight percent (NSA) of respondents reported improved orders while a 16.3% reported decline. Also working higher, the employment series rose to 48.2, its highest level in five months, after rising to 47.2 in September. A higher 14.3% (NSA) of respondents reported increased employment while 17.9% reported declines. Working lower, the supplier delivery series fell to 50.8 in October after rising to 52.6 in September. A lessened 3.5% of respondents (NSA) reported faster delivery speeds while a much lower 5.1% reported slower speeds.

On the inflation front, the prices index rose to a three-year high of 70.0 in October after rising to 69.4 in September. The index has increased from its March 2024 low of 53.5. An increased 43.2% (NSA) of respondents reported higher prices while 5.4% reported lower prices.

Additionally, the new export orders index rose to 47.8 (NSA) in October following a decline to 46.5 in September. A higher 14.1% of survey respondents reported higher exports while a steady 18.6% reported decline. The imports index fell to 43.7 last month after falling to 49.2 in September. A lessened 6.9% of respondents reported higher imports while an increased 19.6% reported decline. The inventory change index rose to 49.5 after falling to 47.8 and the order backlog index declined sharply to 40.8 and reversed its September rise. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Total services index is highest since February.
- Business activity, new orders and employment increase.
- Prices index continues upward trend from 2024 low.

U.S. ISM Services PMI Rebounds in October; Price Index Advances

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The ADP National Employment Report indicated that nonfarm private sector payrolls during October increased 42,000 (0.7% y/y) after declining 29,000 in September, revised from -32,000, and dipping an unrevised 3,000 in August. The three-month average change of 3,000 compares to 24,000 in Q3’25, 22,000 in Q2 and 139,000 in Q1. The Action Economics Forecast Survey expected a 25,000 increase in October.

Small business hiring (less than 50 employees) fell 10,000 (+0.1% y/y) after declining 34,000 in September, revised from -40,000. Employment at medium-sized firms (50-499 employees) weakened 22,000 (+0.7% y/y) after declining 30,000 in September, revised from a 20,000 fall. Large business hiring (500+ employees) offset these declines and rose 74,000 (2.2% y/y) after increasing 31,000 in September, revised from 33,000. It was the largest gain in twelve months.

Service-producing jobs increased 32,000 (0.7% y/y) in October after falling 21,000 in September, revised from -28,000. Changes amongst industry sectors were mixed. Trade, transportation & utilities employment rose 47,000 (0.3% y/y) after falling 6,000. Financial activities employment improved 11,000 (1.9% y/y) following a 9,000 decline in September. Education & health services rose 25,000 (0.2% y/y) after increasing 32,000 in September. Working lower, leisure & hospitality employment declined 5,000 (+2.4% y/y) after falling 16,000 in September. Professional & business jobs fell 15,000 (+0.1% y/y) following a 6,000 decline. Information sector employment weakened 17,000 (-0.0% y/y) after rising 1,000 in September.

Goods-producing employment moved up by 9,000 (1.0% y/y) in October, following a 7,000 decrease, revised from a 3,000 decline. Construction jobs rose 5,000 (1.8% y/y) after falling 4,000. Manufacturing jobs fell 3,000 (+0.2% y/y) following a 2,000 increase. Natural resources and mining jobs increased 7,000 (2.7% y/y) after declining 5,000 in September.

By region, in the Midwest employment rose 9,000 (0.8% y/y) last month after falling 55,000 in September. In the West, the number of jobs improved 39,000 (0.6% y/y) following a 16,000 increase. In the South, employment rose 5,000 (0.7% y/y) following a 17,000 September increase. Working lower, the number of jobs fell 12,000 (+0.9% y/y) in the Northeast in October after falling 5,000 in September.

Wage growth for job-changers in October held steady at 6.7% y/y, well below a high of 16.1% in April 2022. Wage growth for job-stayers advanced 4.5% y/y, unchanged from September and the slowest increase since June 2021. Across major industries, wage growth for job-stayers was reduced.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Gain in private payrolls is first in three months.
- Service-sector & construction hirings move up, but factory jobs decline.
- Wage growth steadies.

Economy in Brief: 2016

Jump to:

U.S. Factory Orders Backpedal in May

U.S. Light Vehicle Sales Ease

U.S. Construction Activity Declines Again

ISM Manufacturing Index Strengthens to 16-Month High

Euro Area Improvement Is Loud and Clear...But Will It Endure Brexit?

Chicago Purchasing Managers Index Recovers Sharply

Chicago Purchasing Managers Index Recovers Sharply

German Retail Sales Rebound