Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123c.jpg" align="left" border="0" height="265" width="353">
With various country indices showing slowing the EMU orders
aggregate for November rose and was surprisingly strong showing a gain
of 2.7% following a rise of 2.5% in Oct. Two months into Q4 data show
total MFG orders rising at a 17.6% annual rate. Domestic MFG orders in
the zone are up at a 13.8% pace while foreign orders are up at a 26.5%
pace. In Q4 German orders through November are up at a 28% pace while
in France, Italy and the UK results are much worse. French orders are
rising at a 1.2% annual rate, in Italy the pace is 7.1%. In the UK
industrial orders are dropping at a 31% annual rate in Q4. 
 

Clearly the EU/EMU is seeing a great deal of irregularity
among members. Still, in January the ECB remains pre-occupied by
inflation risk and is not following the Fed in its rate-cutting
program. The orders data seem to confirm that there remains a core of
strength within the Euro Area but, at the same time we can wonder how
widespread it is and long lived it will be. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">E-zone-13
and UK Industrial Orders And Sales </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
</tr>
<tr class="grey4">
<td class="firstcol">Ezone Detail</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Manufacturing Orders</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>17.4%</td>
<td>9.4%</td>
<td>13.0%</td>
<td>10.0%</td>
<td>11.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>--</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>--</td>
<td>-0.5%</td>
<td>--</td>
<td>3.7%</td>
<td>--</td>
<td>5.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Consumer Goods</td>
<td>--</td>
<td>0.2%</td>
<td>0.2%</td>
<td>--</td>
<td>3.2%</td>
<td>--</td>
<td>4.1%</td>
<td>--</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>--</td>
<td>0.5%</td>
<td>0.5%</td>
<td>--</td>
<td>6.8%</td>
<td>--</td>
<td>7.1%</td>
<td>--</td>
<td>8.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Intermediate Goods</td>
<td>1.6%</td>
<td>4.2%</td>
<td>-3.0%</td>
<td>11.1%</td>
<td>2.5%</td>
<td>10.7%</td>
<td>8.4%</td>
<td>10.6%</td>
<td>7.1%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Memo: MFG</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">Total Orders</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>17.4%</td>
<td>9.4%</td>
<td>13.0%</td>
<td>10.0%</td>
<td>11.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">E-13 Domestic MFG orders</td>
<td>1.6%</td>
<td>4.2%</td>
<td>-3.0%</td>
<td>11.1%</td>
<td>2.5%</td>
<td>10.7%</td>
<td>8.4%</td>
<td>10.6%</td>
<td>7.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">E-13 Foreign MFG orders</td>
<td>3.9%</td>
<td>2.4%</td>
<td>0.0%</td>
<td>27.8%</td>
<td>18.6%</td>
<td>14.8%</td>
<td>13.5%</td>
<td>13.6%</td>
<td>11.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Countries:</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany (MFG):</td>
<td>4.1%</td>
<td>4.0%</td>
<td>-2.0%</td>
<td>26.8%</td>
<td>15.7%</td>
<td>13.3%</td>
<td>9.8%</td>
<td>14.0%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">France (Ind):</td>
<td>-0.2%</td>
<td>2.4%</td>
<td>-2.5%</td>
<td>-1.3%</td>
<td>-4.5%</td>
<td>2.7%</td>
<td>7.9%</td>
<td>7.9%</td>
<td>6.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy (Ind):</td>
<td>3.6%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>15.8%</td>
<td>-2.9%</td>
<td>11.0%</td>
<td>8.4%</td>
<td>10.4%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">UK (Engineering Ind):</td>
<td>-0.6%</td>
<td>-0.7%</td>
<td>-4.9%</td>
<td>-22.5%</td>
<td>-46.9%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>2.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

With various country indices showing slowing the EMU orders aggregate for November rose and was surprisingly strong showing a gain of 2.7% following a rise of 2.5% in Oct. Two months into Q4 data show total MFG orders rising at a [...]

European Orders Surprise with a Spurt in November

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123b.jpg" width="353">
The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago during December, at -0.91, was negative for the fifth consecutive month after having been negative for virtually all of last year. The three month moving average of the index at -0.67 was its lowest since 2003.
The Chicago Fed indicated that each of the four broad categories of indicators&#151; employment, production, consumption and housing&#151;made negative contributions to the index last month.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_january2008.pdf">here</a>.
Despite Increased Risks, Global Growth to Remain Solid in 2008 from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=224A79FB-5056-9F12-12F3B3005AA2A645&amp;method=display_body"> here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Dec. &#39;06</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.91</td>
<td>-0.29</td>
<td>-0.43</td>
<td>-0.39</td>
<td>0.03</td>
<td>0.28</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago during December, at -0.91, was negative for the fifth consecutive month after having been negative for virtually all of last year. The three month moving [...]

Chicago Fed National Activity Index Remained Negative

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123a.jpg" width="353">
Chain store sales last week recovered 0.7% after a 0.9% decline during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS.
For the opening three weeks of the the year chain store sales were up 1.6% from the December average which rose 1.0% from November.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS similarly opened 2008 with firm gains of 0.9% and 0.7% to lift the January average level so far up 0.9% from December which fell 0.3% from November.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">01/19/08</th>
<th scope="col">01/12/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>488.6</td>
<td>485.4</td>
<td>1.6 %</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales last week recovered 0.7% after a 0.9% decline during the prior period, according to the International Council of Shopping Centers (ICSC)-UBS.

U.S. Chain Store Sales Move Sideways

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123a.jpg" align="left" border="0" height="265" width="353">
Chain store sales last week recovered 0.7% after a 0.9%
decline during the prior period, according to the International Council
of Shopping Centers (ICSC)-UBS.

For the opening three weeks of the the year chain store
sales were up 1.6% from the December average which rose 1.0% from
November.
During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


The leading indicator of chain store sales from ICSC-UBS
similarly opened 2008 with firm gains of 0.9% and 0.7% to lift the
January average level so far up 0.9% from December which fell 0.3% from
November.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">01/19/08</th>
<th scope="col">01/12/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>488.6</td>
<td>485.4</td>
<td>1.6 %</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Chicago Fed National Activity
Index Remained Negative 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 23, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123b.jpg" align="left" border="0" height="265" width="353">
The National Activity Index (CFNAI) from the Federal Reserve
Bank of Chicago during December, at -0.91, was negative for the fifth
consecutive month after having been negative for virtually all of last
year. The three month moving average of the index at -0.67 was its
lowest since 2003.
The Chicago Fed indicated that each of the four broad
categories of indicators&#8212; employment, production, consumption and
housing&#8212;made negative contributions to the index last month.
A zero value of the CFNAI indicates that the economy is
expanding at its historical trend rate of growth and during the last
twenty years there has been a 68% correlation between the level of the
CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic
activity. The indicators reflect activity in the following categories:
production &amp; income, the labor market, personal consumption
&amp; housing, manufacturing &amp; trade sales, and inventories
&amp; orders.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_january2008.pdf">here</a>.
Despite Increased
Risks, Global Growth to Remain Solid in 2008 from the Federal
Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=224A79FB-5056-9F12-12F3B3005AA2A645&amp;method=display_body">
here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Dec. '06</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.91</td>
<td>-0.29</td>
<td>-0.43</td>
<td>-0.39</td>
<td>0.03</td>
<td>0.28</td>
</tr>
</tbody>
</table>
European Orders Surprise with aSpurt in November 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 23, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080123c.jpg" align="left" border="0" height="265" width="353">
With various country indices showing slowing the EMU orders
aggregate for November rose and was surprisingly strong showing a gain
of 2.7% following a rise of 2.5% in Oct. Two months into Q4 data show
total MFG orders rising at a 17.6% annual rate. Domestic MFG orders in
the zone are up at a 13.8% pace while foreign orders are up at a 26.5%
pace. In Q4 German orders through November are up at a 28% pace while
in France, Italy and the UK results are much worse. French orders are
rising at a 1.2% annual rate, in Italy the pace is 7.1%. In the UK
industrial orders are dropping at a 31% annual rate in Q4. 
 

Clearly the EU/EMU is seeing a great deal of irregularity
among members. Still, in January the ECB remains pre-occupied by
inflation risk and is not following the Fed in its rate-cutting
program. The orders data seem to confirm that there remains a core of
strength within the Euro Area but, at the same time we can wonder how
widespread it is and long lived it will be. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">E-zone-13
and UK Industrial Orders And Sales </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
</tr>
<tr class="grey4">
<td class="firstcol">Ezone Detail</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Manufacturing Orders</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>17.4%</td>
<td>9.4%</td>
<td>13.0%</td>
<td>10.0%</td>
<td>11.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>--</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>--</td>
<td>-0.5%</td>
<td>--</td>
<td>3.7%</td>
<td>--</td>
<td>5.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Consumer Goods</td>
<td>--</td>
<td>0.2%</td>
<td>0.2%</td>
<td>--</td>
<td>3.2%</td>
<td>--</td>
<td>4.1%</td>
<td>--</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>--</td>
<td>0.5%</td>
<td>0.5%</td>
<td>--</td>
<td>6.8%</td>
<td>--</td>
<td>7.1%</td>
<td>--</td>
<td>8.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Intermediate Goods</td>
<td>1.6%</td>
<td>4.2%</td>
<td>-3.0%</td>
<td>11.1%</td>
<td>2.5%</td>
<td>10.7%</td>
<td>8.4%</td>
<td>10.6%</td>
<td>7.1%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Memo: MFG</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">Total Orders</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>17.4%</td>
<td>9.4%</td>
<td>13.0%</td>
<td>10.0%</td>
<td>11.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">E-13 Domestic MFG orders</td>
<td>1.6%</td>
<td>4.2%</td>
<td>-3.0%</td>
<td>11.1%</td>
<td>2.5%</td>
<td>10.7%</td>
<td>8.4%</td>
<td>10.6%</td>
<td>7.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">E-13 Foreign MFG orders</td>
<td>3.9%</td>
<td>2.4%</td>
<td>0.0%</td>
<td>27.8%</td>
<td>18.6%</td>
<td>14.8%</td>
<td>13.5%</td>
<td>13.6%</td>
<td>11.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Countries:</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany (MFG):</td>
<td>4.1%</td>
<td>4.0%</td>
<td>-2.0%</td>
<td>26.8%</td>
<td>15.7%</td>
<td>13.3%</td>
<td>9.8%</td>
<td>14.0%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">France (Ind):</td>
<td>-0.2%</td>
<td>2.4%</td>
<td>-2.5%</td>
<td>-1.3%</td>
<td>-4.5%</td>
<td>2.7%</td>
<td>7.9%</td>
<td>7.9%</td>
<td>6.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy (Ind):</td>
<td>3.6%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>15.8%</td>
<td>-2.9%</td>
<td>11.0%</td>
<td>8.4%</td>
<td>10.4%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">UK (Engineering Ind):</td>
<td>-0.6%</td>
<td>-0.7%</td>
<td>-4.9%</td>
<td>-22.5%</td>
<td>-46.9%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>2.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122f.jpg" height="265" width="312">
After a day of record declines in stock markets around the
world, the Fed announced, in an emergency move, a 75 basis points cut
in its benchmark interest rate from 4.25% to 3.50% today. This is the
largest cut since the Fed began, in 1990, to use this rate as its
principal tool of monetary policy.
Daily prices of many of the stock markets of the world can be
found in the Haver data base, INTDAILY.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122b.jpg" align="left" border="0" height="265" width="312">
We have
attached five charts showing daily stock price changes in selected
countries in five areas of the world: Western Europe, Eastern Europe,
Asia, South America and the Midlle East. The random nature of the day
to day stock price changes make for messy charts, but unusual movements
such as occurred yesterday do stand out. It should be noted, too that
in several countries, similar stock price declines occurred last
August, when the sub prime crisis was first surfacing.
The reaction of U.S. and foreign investors to the Fed's
dramatic move can be monitored using the high frequency data in the
Haver data bases, DAILY and INTDAILY. These
data bases contain daily data on interest rates, exchange rates, stock
markets and commodity prices<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122c.jpg" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122d.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">STOCK
MARKETS&nbsp;</th>
<th scope="col">Percent Decline January 21,
2008</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">United Kingdom</td>
<td>5.27</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>7.16</td>
</tr>
<tr class="grey4">
<td class="firstcol">France</td>
<td>6.83</td>
</tr>
<tr class="grey4">
<td class="firstcol">Italy</td>
<td>5.09</td>
</tr>
<tr class="grey3">
<td class="firstcol">China</td>
<td>5.20</td>
</tr>
<tr class="grey3">
<td class="firstcol">India</td>
<td>7.81</td>
</tr>
<tr class="grey3">
<td class="firstcol">Japan</td>
<td>3.86</td>
</tr>
<tr class="grey3">
<td class="firstcol">South Korea&nbsp;</td>
<td>2.95</td>
</tr>
<tr class="grey2">
<td class="firstcol">Russia</td>
<td>7.38</td>
</tr>
<tr class="grey2">
<td class="firstcol">Poland</td>
<td>6.73</td>
</tr>
<tr class="grey2">
<td class="firstcol">Latvia</td>
<td>4.57</td>
</tr>
<tr class="grey2">
<td class="firstcol">Czech Republic</td>
<td>4.62</td>
</tr>
<tr class="grey1">
<td class="firstcol">Brazil</td>
<td>6.60</td>
</tr>
<tr class="grey1">
<td class="firstcol">Argentina</td>
<td>5.68</td>
</tr>
<tr class="grey1">
<td class="firstcol">Mexico</td>
<td>5.35</td>
</tr>
<tr class="grey1">
<td class="firstcol">Chile</td>
<td>4.30</td>
</tr>
</tbody>
</table>
</body></html>

After a day of record declines in stock markets around the world, the Fed announced, in an emergency move, a 75 basis points cut in its benchmark interest rate from 4.25% to 3.50% today. This is the largest cut since the Fed began, in [...]

Turmoil in Stock Markets Around the World Leads to a 75 Point Cut in FED'S Benchmark Interest Rate

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122g.jpg" align="left" border="0" height="264" width="353">
UK orders are holding in positive territory, but not by much.
Order volumes expected in 3-Mos snapped back in January. Prices are
staying very strong in the range in the top seven percent since end
2000. Export orders did tick back down in January to -4 juts below
their 12-month average at -3. On balance the UK industrial sector looks
fairly firm and somewhat inflation prone. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col"> UK Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>Nov-06</td>
<td>Oct-06</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-9</td>
<td>-5</td>
<td>-6</td>
<td>-20</td>
<td>-11</td>
<td>74%</td>
<td>2</td>
<td>-40</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-3</td>
<td>-5</td>
<td>3</td>
<td>-11</td>
<td>-6</td>
<td>89%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>17</td>
<td>11</td>
<td>2</td>
<td>20</td>
<td>12</td>
<td>63%</td>
<td>26</td>
<td>2</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3-Mo</td>
<td>12</td>
<td>11</td>
<td>5</td>
<td>9</td>
<td>11</td>
<td>80%</td>
<td>22</td>
<td>-28</td>
<td>50</td>
</tr>
<tr>
<td class="firstcol">Avg Prices for Next 3 mos</td>
<td>19</td>
<td>8</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>100%</td>
<td>19</td>
<td>-30</td>
<td>49</td>
</tr>
</tbody>
</table>
</body></html>

UK orders are holding in positive territory, but not by much. Order volumes expected in 3-Mos snapped back in January. Prices are staying very strong in the range in the top seven percent since end 2000. Export orders did tick back [...]

UK Industrial Sector Shows no Sign of Weakness, but Hints at Inflation

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<img align="left" border="0" height="264" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122a.jpg" width="353">
After an unscheduled meeting, the Federal Open Market Committee today lowered the Federal funds rate by seventy-five basis points to 3.50%. It was the largest cut in the rate since October 1984, followed thereafter by moves either in 25 or 50 basis point increments. The rate was last at 3.5% in August of 2005.
Voting against the decision was St. Louis Fed President William Poole.
The discount rate also was reduced seventy-five basis points to 4.00%.
&quot;The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.&quot; It came ahead of next week&#39;s regularly scheduled meeting of the FOMC.
Worried about even further deterioration in U.S. economic conditions, the Fed indicated that &quot;Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.&quot;
Still expressing some caution, the FOMC indicated only &quot;that it will be necessary to continue to monitor inflation developments carefully.&quot;
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm">link</a>.

</body>
</html>

After an unscheduled meeting, the Federal Open Market Committee today lowered the Federal funds rate by seventy-five basis points to 3.50%. It was the largest cut in the rate since October 1984, followed thereafter by moves either in [...]

FOMC Takes Aggressive Action

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122a.jpg" align="left" border="0" height="265" width="353">
After an unscheduled meeting, the Federal Open Market
Committee today lowered the Federal funds rate by seventy-five basis
points to 3.50%. It was the largest cut in the rate since October 1984,
followed thereafter by moves either in 25 or 50 basis point increments.
The rate was last at 3.5% in August of 2005.
Voting against the decision was St. Louis Fed President
William Poole.
The discount rate also was reduced seventy-five basis points
to 4.00%.
"The Committee took this action in view of a weakening of the
economic outlook and increasing downside risks to growth." It came
ahead of next week's regularly scheduled meeting of the FOMC.
Worried about even further deterioration in U.S. economic
conditions, the Fed indicated that "Appreciable downside risks to
growth remain. The Committee will continue to assess the effects of
financial and other developments on economic prospects and will act in
a timely manner as needed to address those risks."
Still expressing some caution, the FOMC indicated only "that
it will be necessary to continue to monitor inflation developments
carefully."
For the complete text of the Fed's latest press release please
follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm">link</a>.

UK Industrial Sector Shows no
Signof Weakness, but Hints at Inflation 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122g.jpg" align="left" border="0" height="264" width="353">
UK orders are holding in positive territory, but not by much.
Order volumes expected in 3-Mos snapped back in January. Prices are
staying very strong in the range in the top seven percent since end
2000. Export orders did tick back down in January to -4 juts below
their 12-month average at -3. On balance the UK industrial sector looks
fairly firm and somewhat inflation prone. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col"> UK
Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>Nov-06</td>
<td>Oct-06</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-9</td>
<td>-5</td>
<td>-6</td>
<td>-20</td>
<td>-11</td>
<td>74%</td>
<td>2</td>
<td>-40</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-3</td>
<td>-5</td>
<td>3</td>
<td>-11</td>
<td>-6</td>
<td>89%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>17</td>
<td>11</td>
<td>2</td>
<td>20</td>
<td>12</td>
<td>63%</td>
<td>26</td>
<td>2</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3-Mo</td>
<td>12</td>
<td>11</td>
<td>5</td>
<td>9</td>
<td>11</td>
<td>80%</td>
<td>22</td>
<td>-28</td>
<td>50</td>
</tr>
<tr>
<td class="firstcol">Avg Prices for Next 3 mos</td>
<td>19</td>
<td>8</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>100%</td>
<td>19</td>
<td>-30</td>
<td>49</td>
</tr>
</tbody>
</table>
Turmoil in Stock Markets Around
the World Leads to a 75 Point Cut in FED'S Benchmark Interest Rate 
by <a href="/comment/Curley.html">Louise
Curley</a> January 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122f.jpg" height="265" width="312">
After a day of record declines in stock markets around the
world, the Fed announced, in an emergency move, a 75 basis points cut
in its benchmark interest rate from 4.25% to 3.50% today. This is the
largest cut since the Fed began, in 1990, to use this rate as its
principal tool of monetary policy.
Daily prices of many of the stock markets of the world can be
found in the Haver data base, INTDAILY.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122b.jpg" align="left" border="0" height="265" width="312">
We have
attached five charts showing daily stock price changes in selected
countries in five areas of the world: Western Europe, Eastern Europe,
Asia, South America and the Midlle East. The random nature of the day
to day stock price changes make for messy charts, but unusual movements
such as occurred yesterday do stand out. It should be noted, too that
in several countries, similar stock price declines occurred last
August, when the sub prime crisis was first surfacing.
The reaction of U.S. and foreign investors to the Fed's
dramatic move can be monitored using the high frequency data in the
Haver data bases, DAILY and INTDAILY. These
data bases contain daily data on interest rates, exchange rates, stock
markets and commodity prices
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122c.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122d.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">STOCK
MARKETS&nbsp;</th>
<th scope="col">Percent Decline January 21,
2008</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">United Kingdom</td>
<td>5.27</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>7.16</td>
</tr>
<tr class="grey4">
<td class="firstcol">France</td>
<td>6.83</td>
</tr>
<tr class="grey4">
<td class="firstcol">Italy</td>
<td>5.09</td>
</tr>
<tr class="grey3">
<td class="firstcol">China</td>
<td>5.20</td>
</tr>
<tr class="grey3">
<td class="firstcol">India</td>
<td>7.81</td>
</tr>
<tr class="grey3">
<td class="firstcol">Japan</td>
<td>3.86</td>
</tr>
<tr class="grey3">
<td class="firstcol">South Korea&nbsp;</td>
<td>2.95</td>
</tr>
<tr class="grey2">
<td class="firstcol">Russia</td>
<td>7.38</td>
</tr>
<tr class="grey2">
<td class="firstcol">Poland</td>
<td>6.73</td>
</tr>
<tr class="grey2">
<td class="firstcol">Latvia</td>
<td>4.57</td>
</tr>
<tr class="grey2">
<td class="firstcol">Czech Republic</td>
<td>4.62</td>
</tr>
<tr class="grey1">
<td class="firstcol">Brazil</td>
<td>6.60</td>
</tr>
<tr class="grey1">
<td class="firstcol">Argentina</td>
<td>5.68</td>
</tr>
<tr class="grey1">
<td class="firstcol">Mexico</td>
<td>5.35</td>
</tr>
<tr class="grey1">
<td class="firstcol">Chile</td>
<td>4.30</td>
</tr>
</tbody>
</table>
</body></html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

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

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

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Charts of the Week: Tariff Truce, Tenuous Trust

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

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

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

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

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

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

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

Carol Stone, CBE

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Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

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

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

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

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

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

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

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

Economy in Brief: January 2008

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European Orders Surprise with a Spurt in November

Chicago Fed National Activity Index Remained Negative

U.S. Chain Store Sales Move Sideways

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Turmoil in Stock Markets Around the World Leads to a 75 Point Cut in FED'S Benchmark Interest Rate

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FOMC Takes Aggressive Action

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