Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217a.jpg" align="right" border="0" height="265" width="353">Recent
steadying in the job market stalled last week. The Labor Department
indicated that initial claims for unemployment insurance rose to
480,000 from a little-revised 473,000 during the prior week. As a
result, claims reached the highest level in four weeks but remained
down from the recession peak of 674,000 hit in March. The four-week
moving average of claims slipped to 467,500 and the latest weekly
figure was higher than Consensus expectations for a decline to 465,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217b.jpg" align="right" border="0" height="265" width="353">Initial
claims during the latest week cover the survey period
for November nonfarm payrolls. Claims fell 21,000 (4.2%) from the same
week in October. During the last ten years there has been a negative
84% correlation between the level of claims and the m/m change in
nonfarm payrolls.· Continuing claims for unemployment insurance during
the latest week ticked up 5,000 after a little-revised 289,000 decline
during the week prior. Continuing claims were at the lowest level since
late-February. The overall decline is a function of the improved job
market but also reflects the exhaustion of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to
5,318,250. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance retraced much of the prior week's
decline with a rise to 503,100 during the fourth week of November. The
latest compares to 550,343 during all of October.
The insured rate of
unemployment remained stable at 3.9%, the lowest level since February.
The rate reached a high of 5.2% during late-June. During the last ten
years, there has been a 93% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.&nbsp;· The highest
insured unemployment rates in the week ending November 28 were in
Wisconsin (6.4), Oregon (6.3), Alaska (6.2), Nevada (5.5),&nbsp;
Puerto Rico (5.5%), Pennsylvania (5.3), Michigan (5.3), California
(4.9) and South Carolina (4.8). The lowest insured unemployment rates
were in North Dakota (1.6%), Virginia (2.2), Texas (2.6), Maine (3.1),
Wyoming (3.2), Maryland (3.2),&nbsp; Mississippi (3.7), New York
(3.8), Florida (3.8) and Ohio (3.9). The data are not seasonally
adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">11/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>480</td>
<td>473</td>
<td>454</td>
<td>-13.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,186</td>
<td>5,181</td>
<td>19.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


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Recent steadying in the job market stalled last week. The Labor Department indicated that initial claims for unemployment insurance rose to 480,000 from a little-revised 473,000 during the prior week. As a result, claims reached the [...]

U.S. Initial Jobless Insurance Claims Unexpectedly Rise To Highest In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217a.jpg" align="right" border="0" height="265" width="353">Recent
steadying in the job market stalled last week. The Labor Department
indicated that initial claims for unemployment insurance rose to
480,000 from a little-revised 473,000 during the prior week. As a
result, claims reached the highest level in four weeks but remained
down from the recession peak of 674,000 hit in March. The four-week
moving average of claims slipped to 467,500 and the latest weekly
figure was higher than Consensus expectations for a decline to 465,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217b.jpg" align="right" border="0" height="265" width="353">Initial
claims during the latest week cover the survey period
for November nonfarm payrolls. Claims fell 21,000 (4.2%) from the same
week in October. During the last ten years there has been a negative
84% correlation between the level of claims and the m/m change in
nonfarm payrolls.· Continuing claims for unemployment insurance during
the latest week ticked up 5,000 after a little-revised 289,000 decline
during the week prior. Continuing claims were at the lowest level since
late-February. The overall decline is a function of the improved job
market but also reflects the exhaustion of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to
5,318,250. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance retraced much of the prior week's
decline with a rise to 503,100 during the fourth week of November. The
latest compares to 550,343 during all of October.
The insured rate of
unemployment remained stable at 3.9%, the lowest level since February.
The rate reached a high of 5.2% during late-June. During the last ten
years, there has been a 93% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.&nbsp;· The highest
insured unemployment rates in the week ending November 28 were in
Wisconsin (6.4), Oregon (6.3), Alaska (6.2), Nevada (5.5),&nbsp;
Puerto Rico (5.5%), Pennsylvania (5.3), Michigan (5.3), California
(4.9) and South Carolina (4.8). The lowest insured unemployment rates
were in North Dakota (1.6%), Virginia (2.2), Texas (2.6), Maine (3.1),
Wyoming (3.2), Maryland (3.2),&nbsp; Mississippi (3.7), New York
(3.8), Florida (3.8) and Ohio (3.9). The data are not seasonally
adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">11/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>480</td>
<td>473</td>
<td>454</td>
<td>-13.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,186</td>
<td>5,181</td>
<td>19.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


U.S. Leading Economic Indicators
Rise Again Signaling Positive Growth 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217e.jpg" align="left" border="0" height="265" width="353">
The Conference Board's Index of Leading Economic Indicators
continued its uptrend last month giving a strong signal that the recent
recession has ended. The 0.9% rise during November was the eighth
consecutive monthly increase. Moreover, the 10.2% (centered) rate of
increase during the last six months was nearly the strongest since
early-1983. The leading index is based on actual reports for eight
economic data series. The Conference Board initially estimates two
series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged
again last month. Sixty-five percent of the components rose during
November versus last month's reading of 70% that increased. During the
most recent six months, however, 80% of the series rose. Prominent in
last month's increase was a longer workweek, fewer jobless insurance
claims, more building permits, and the steeper interest rate yield
curve. These gains were offset by easier vendor performance, lower
consumer expectations and a downtick in capital goods orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217f.jpg" align="right" border="0" height="265" width="353">
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators which rose for the first
month in the last three. The 0.2% gain followed an unrevised no-change
during October. During the last six months the 1.4% rate of decline in
the coincident series compares with a shortfall of 8.0% at its worst in
January. Moderation of earlier declines has been due to higher
industrial production, higher real personal income and higher business
sales as well as easier declines in payroll employment.
In a continued sign that excesses in the U.S. economy are
falling, the lagging index has been falling since January. Leading the
decline has been lower commercial &amp; industrial loans
outstanding as well as slower growth in labor costs and less consumer
credit. The ratio of coincident-to-lagging indicators (another leading
indicator) also continued higher for the eighth straight month to the
highest level since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.9</td>
<td>0.3</td>
<td>1.2</td>
<td>10.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2</td>
<td>0.0</td>
<td>-0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.4</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
 Philadelphia Fed Index Gains With
Strength in Employment 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 17, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217g.jpg" align="right" border="0" height="265" width="353">The
Philadelphia Federal Reserve Bank indicated that its index of regional
factory sector activity rose this month to its highest level since
early-2005. At 20.5, the index was unexpectedly strong and positive for
the fifth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217h.jpg" align="right" border="0" height="265" width="353">During the
last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1209.pdf">here.</a>·
Amongst the components, the employment index was notably strong as it
rose to well above break-even and to the highest level since late-2007.
During the last ten years there has been a 91% correlation between the
index level and the three-month change in manufacturing sector
payrolls. Remaining strong were shipments, the workweek, unfilled
orders and the delivery times components. The inventory component also
improved significantly from its March low.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217i.jpg" align="left" border="0" height="265" width="353">The prices paid index rose
sharply to its highest level since August of last year and compares to
negative readings this past winter and spring. During the last ten
years there has been a 71% correlation between the prices paid index
and the three-month growth in the intermediate goods PPI. There has
been an 82% correlation with the change in core intermediate goods
prices.
Expected business conditions in six months deteriorated for
the sixth straight month. The December index fell to a still-positive
reading of 24.4&nbsp; but that was well-off the recent high. Many
of the index components, especially orders and shipments, were down
sharply.· The figures from the Philadelphia Federal Reserve can be
found in Haver's SURVEYS database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Philadelphia
Fed (%)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">December '08</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Activity Index</td>
<td>20.4</td>
<td>16.7</td>
<td>11.5</td>
<td>-35.1</td>
<td>-7.5</td>
<td>-21.3</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>6.5</td>
<td>14.8</td>
<td>6.2</td>
<td>-29.3</td>
<td>-9.6</td>
<td>-14.7</td>
<td>6.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>6.3</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-23.8</td>
<td>-23.7</td>
<td>-8.7</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>33.8</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;-26.6</td>
<td>-4.0</td>
<td>36.4</td>
<td>26.3</td>
</tr>
</tbody>
</table>

 UK Retail Sales Take A Sett Back
In November But Cling To Trend Rise 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217d.jpg" align="left" border="0" height="265" width="353">
UK retail sales volumes fell by 0.3% in November after having
rise in October. Sales volumes have risen twice in the last
three-months and seven times in the last 12-months. 
 

The three-month rate of growth has dipped below the six-month
rate of growth but still exceeds the 12-month growth pace. Clothing and
footwear sales, however, are clearly losing momentum having dropped in
the last three months. Retail ex-auto sales are off from their six
month pace but nearly even with their 12-month pace. 
 

In the new quarter, Sales are growing at a pace of 3% to 3.5%.
That should help to underpin Q4 GDP growth. 
 

In a separate report, the CBI survey of the distributive
trades produced diffusion results saying that November sales were flat
with those in October. That of course is more ambitious that the sales
count from National Statistics (above). The outlook in the CBI
framework was negative, however. 
 

A poll of UK inflation expectations found that expectations
were stuck at 2.4% for the third consecutive quarter. While this is
above the BOE ceiling pace for inflation (of 2%) the Bank has admitted
that there would be some temporary overshoot to which it will not
respond. It is heartening that as inflation has risen in the UK,
inflation expectations have not. BOE credibility seems to be well
intact despite the damage done in the financial crisis. 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="8"> UK Real
and Nominal Retail Sales</th>
<th>Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>2.0%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-2.0%</td>
<td>1.5%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>1.4%</td>
<td>-1.7%</td>
<td>0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&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="even">
<td class="firstcol">Real</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="even">
<td class="firstcol">Retial Ex auto</td>
<td>-0.4%</td>
<td>0.6%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>5.3%</td>
<td>3.1%</td>
<td>0.8%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Initial JoblessInsurance Claims Unexpectedly Rise To Highest In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216h.jpg" align="right" border="0" height="265" width="353">In an
anticipated and unanimous vote, the Federal Open Market Committee today
left the Federal funds rate in a "range from 0 to 1/4 percent." The
discount rate also was left unchanged at 0.5%. The action was as
expected and left the Fed funds rate at its lowest level ever.
"Information received since the Federal Open Market Committee
met in
November suggests that economic activity has continued to pick up and
that the deterioration in the labor market is abating." Thus reads the
opening statement from today's FOMC meeting press release. The
statement then cites improvement in each of the economy's sectors;
however, it notes that activity "is likely to remain weak for a time
..."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216i.jpg" align="right" border="0" height="265" width="353">The
statement goes on to suggest that economic strengthening will
result from monetary &amp; fiscal stimulus. 
The Fed mentioned
price inflation twice, indicating that "higher levels of resource
utilization would occur in the context of price stability" and that
"inflation will remain subdued for some time" as resource utilization
remained low.
Again the Fed indicated that moderate economic growth
and slack capacity utilization would allow rates to say low for an
extended period of time. Also, "To provide support to mortgage lending
and housing markets and to improve overall conditions in private credit
markets, the Federal Reserve is in the process of purchasing $1.25
trillion of agency mortgage-backed securities and about $175 billion of
agency debt. In order to promote a smooth transition in markets, the
Committee is gradually slowing the pace of these purchases, and it
anticipates that these transactions will be executed by the end of the
first quarter of 2010."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216j.jpg" align="right" border="0" height="265" width="353">A complete
text of the Fed's latest press
release can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20091216a.htm">here</a>.
The Haver databases USECON, WEEKLY and DAILY
contain the figures from the Federal Reserve Board.
 Supply
and Demand Shocks in Residential Mortgages from the Federal
Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/trends/2009/1209/01banfin.cfm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>

</body></html>

In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent." The discount rate also was left unchanged at 0.5%. The action was as expected and left the [...]

FOMC Notes Economic & Job Market Improvement But Leaves Rates Unchanged

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216g.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s service sector as gauged by its tertiary sector index
advanced in October after registering a drop in September. The index is
down by 4.3 percent over 12-months compared to MFG and mining where the
index is down by 14% over 12-months. These drops compare to March and
February lows in the two indices, respectively. In March the tertiary
index was down by 8.6% Yr/Yr. In February the mining and MFG index
scored its largest 12-month drop at -36.9%.
Cleary Japan has been improving sharply from its recession
lows. But while the mining and MFG sector has eight straight months of
improvement in its mo/mo readings, services has only improved for one
month in a row. Services also has improved in five of the past six
months. Still, the tertiary sector is only up by 2.5% from its cycle
low point whereas MFG and mining is up by 23.8% from its cycle low
reading. MFG and mining currently stands by 21.8% below its cycle peak
whereas the services sector is off by just 6.4% from its cycle peak.
Two sectors are experiencing very different recession and recovery
forces.
The service sector stands in the 53rd percentile of its range
while Mining and MFG stands in the 40th percentile of its range, well
below its mid-way mark.
Still, the failure of services to post consistent gains or
strong gains while MFG is improving sharply is a sign that Japan is
still struggling. We know it is having some renewed problems with
deflation. In this environment because the service sector employs so
many, it is easy to see why confidence does not easily come back and
why Japan remains vulnerable to deflation even in face of some export
recovery and a strong MFG rebound. The rising yen has pre-empted the
possibility of compensation for service sector weakness with strong
export-led growth. While Japan&#8217;s exports are recovering they are also
hindered by the continuing strength of the yen. Japan&#8217;s recovery
continues to face a dilemma

&nbsp;Japan Industry Survey
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;</td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-2009</td>
<td>Sep-2009</td>
<td>Aug-2009</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mining and MFG</td>
<td>86.1</td>
<td>85.7</td>
<td>83.9</td>
<td>85.2</td>
<td>83.1</td>
<td>80.7</td>
<td>110.1</td>
<td>69.5</td>
<td>40.9%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>96.8</td>
<td>96.3</td>
<td>96.9</td>
<td>96.7</td>
<td>96.4</td>
<td>97.0</td>
<td>103.5</td>
<td>89.1</td>
<td>53.5%</td>
</tr>
<tr class="odd">
<td colspan="10" class="firstcol">Ranges, Max, Min since 1993</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s service sector as gauged by its tertiary sector index advanced in October after registering a drop in September. The index is down by 4.3 percent over 12-months compared to MFG and mining where the index is down by 14% over [...]

Japan's Service Sector Shows Improvement

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216d.jpg" align="right" border="0" height="265" width="353">The recent
recovery in home building has been hardly ebullient. Housing starts
rose 8.9% last month to 574,000 (AR) units versus 527,000 during
October, which was revised down slightly. These levels were, however,
6.2% below the 3Q average and remain down 12.4% y/y. More sobering is
the startling decline in housing in recent years. Since the peak in
January of 2006, starts have fallen by more than three-quarters.
November's figure fell short of Consensus expectations for 578,000
starts.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216e.jpg" align="right" border="0" height="265" width="353">Last
month, starts of single-family homes recovered
merely 2.1% to 482,000 after October's 7.1% decline. So far this
quarter, starts have fallen 4.2% from the 3Q average. Despite this loss
of forward momentum, single-family starts have recovered
from the February low. During the last ten years, there has been an 84%
correlation between the q/q change in single-family starts and their
contribution to quarterly GDP growth. The increase in
starts of single-family units was contained to the Southern (12.9% y/y)
and the Western (2.1% y/y) regions of the country. Elsewhere, starts in
the Northeast (2.1% y/y) and in the Midwest (-13.6% y/y) fell
month-to-month. A bit firmer were starts of multi-family units which
nearly doubled m/m during November from their record low. Starts of
apartments, condominiums &amp; town houses still were down 79.6%
from the January 2006 peak.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216f.jpg" align="right" border="0" height="265" width="353">Perhaps
more strength in starts is coming.
Building permits rose 6.0% during November to their highest level in
twelve months. As with starts, permits to build a single-family home
have been relatively strong versus the total. Moreover, they rose 5.3%
versus 3Q they have risen 38.3% from the January low.The
housing starts figures can be found in Haver's USECON database.Housing's
Great Fall: Putting Household Balance Sheets Together Again
from the Federal Reserve Bank of St. Louis is available <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>574</td>
<td>527</td>
<td>586</td>
<td>-12.4%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>482</td>
<td>472</td>
<td>508</td>
<td>5.5</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>92</td>
<td>55</td>
<td>78</td>
<td>-53.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>584</td>
<td>551</td>
<td>575</td>
<td>-7.3</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>

</body></html>

The recent recovery in home building has been hardly ebullient. Housing starts rose 8.9% last month to 574,000 (AR) units versus 527,000 during October, which was revised down slightly. These levels were, however, 6.2% below the 3Q [...]

U.S. Housing Starts Improve Modestly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216a.jpg" align="right" border="0" height="265" width="353">Pricing
power took on a new dimension last month. Despite higher fuel costs,
core prices were unchanged, a result not seen since the depths of the
recent recession. The overall November CPI matched Consensus
expectations and rose 0.4% after an unrevised 0.3% October increase.
Other than energy &amp; food prices, however, consumer prices were
flat. The last time they were unchanged was December of last year when
recessionary forces were gathering steam.

Energy prices
jumped 4.1% m/m and have risen 18.7% so far this year. Gasoline prices
were quite strong posting a 6.4% (23.6% y/y) increase and rising by
more-than-half since December. Fuel oil prices also were firm and rose
7.3% (-7.7% y/y) following a 6.0% gain during October. Finally, prices
for natural gas &amp; electricity rose 1.4% (-5.0% y/y) but are
down 5.1% this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216b.jpg" align="right" border="0" height="265" width="353">Food
&amp; beverage prices posted another
modest 0.1% uptick. So far this year, food prices have fallen an
unprecedented 0.5%. Recent weakness has been led by lower dairy prices
(-9.0% y/y) and lower fruit &amp; vegetable (-4.9% y/y) costs.
Prices for meats, poultry, fish &amp; eggs also fell 4.0% y/y while
cereals &amp; bakery product prices slipped 0.8%.
Consumer prices
less food &amp; energy were unchanged following two months of 0.2%
increase. A 0.1% November uptick had been expected. The 1.7% y/y gain
has been the annual growth rate of core prices all this year. Core
services prices continue to feel the recession's effect and
slipped slightly last month. Their 1.3% y/y gain was a record
low. Weakness in the housing market accounts for much of that
moderation. Last month, shelter prices slipped 0.2% and they've risen a
minimal 0.2% so far in 2009. Owners equivalent rent of primary
residences, a measure not equivalent to other house price measures,
slipped for the fourth month in the last five and have risen 0.7% so
far this year after a 2.5% increase during 2008. Elsewhere in services,
public transportation prices were strong again and posted a 2.6%
increase. Recent gains are, however, just making up for declines during
the recession.&nbsp;Medical care services prices increased 0.4%
(3.5% y/y). Finally, education costs have been firm, up 4.8% y/y after
a 5.8% gain during 2008. The annual gain is, however, down from the
6.9% increase during 2004. Recreation prices have really shown the
recession's effect and are down 0.2% y/y after a 1.6% 2008 gain. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216c.jpg" align="right" border="0" height="265" width="353">Despite
the weak economy, core goods prices have
been relatively firm and last month increased 0.2%. The increase lifted
prices 2.8% since December following no change during the prior two
years. Higher tobacco prices continued to account for much of the
recent strength and rose 1.0% last month (30.3% y/y). New &amp;
used motor vehicles also have firmed considerably. The 0.8% increase
last month lifted prices by 5.2% since December. That compares with
price deflation during the last two years. Working the other way,
apparel prices fell for the third month in the last four (1.0% y/y.
That follows price declines which extend back to 1994. Continuing weak
were prices for household furnishings &amp; operation. They fell
another 0.3%, leaving them down 1.1% so far this year. · The chained
CPI, which adjusts for shifts in consumption patterns, was unchanged
during November and year-to-year prices rose 1.6%. Conversely, chained
prices less food and energy edged 0.2% lower last month. 
The consumer
price data is available in Haver's USECON database
while detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM" style="color: white;">Consumer Price Index</a> 
(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. y/y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.4</td>
<td>0.3</td>
<td>0.2</td>
<td>1.8</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.2</td>
<td>0.4</td>
<td>0.3</td>
<td>2.6</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.1</td>
<td>1.5</td>
<td>0.6</td>
<td>7.7</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.1</td>
<td>-0.5</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: Black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.6</td>
<td>3.3</td>
<td>2.5</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>-0.2</td>
<td>0.3</td>
<td>0.2</td>
<td>1.3</td>
<td>1.9</td>
<td>1.9</td>
<td>2.2</td>
</tr>
</tbody>
</table>

</body></html>

Pricing power took on a new dimension last month. Despite higher fuel costs, core prices were unchanged, a result not seen since the depths of the recent recession. The overall November CPI matched Consensus expectations and rose 0.4% [...]

CPI's 0.4% Gain Is Fueled By Energy; Core Prices Are Unchanged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216a.jpg" align="right" border="0" height="265" width="353">Pricing
power took on a new dimension last month. Despite higher fuel costs,
core prices were unchanged, a result not seen since the depths of the
recent recession. The overall November CPI matched Consensus
expectations and rose 0.4% after an unrevised 0.3% October increase.
Other than energy &amp; food prices, however, consumer prices were
flat. The last time they were unchanged was December of last year when
recessionary forces were gathering steam.


Energy prices
jumped 4.1% m/m and have risen 18.7% so far this year. Gasoline prices
were quite strong posting a 6.4% (23.6% y/y) increase and rising by
more-than-half since December. Fuel oil prices also were firm and rose
7.3% (-7.7% y/y) following a 6.0% gain during October. Finally, prices
for natural gas &amp; electricity rose 1.4% (-5.0% y/y) but are
down 5.1% this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216b.jpg" align="right" border="0" height="265" width="353">Food
&amp; beverage prices posted another
modest 0.1% uptick. So far this year, food prices have fallen an
unprecedented 0.5%. Recent weakness has been led by lower dairy prices
(-9.0% y/y) and lower fruit &amp; vegetable (-4.9% y/y) costs.
Prices for meats, poultry, fish &amp; eggs also fell 4.0% y/y while
cereals &amp; bakery product prices slipped 0.8%.
Consumer prices
less food &amp; energy were unchanged following two months of 0.2%
increase. A 0.1% November uptick had been expected. The 1.7% y/y gain
has been the annual growth rate of core prices all this year. Core
services prices continue to feel the recession's effect and
slipped slightly last month. Their 1.3% y/y gain was a record
low. Weakness in the housing market accounts for much of that
moderation. Last month, shelter prices slipped 0.2% and they've risen a
minimal 0.2% so far in 2009. Owners equivalent rent of primary
residences, a measure not equivalent to other house price measures,
slipped for the fourth month in the last five and have risen 0.7% so
far this year after a 2.5% increase during 2008. Elsewhere in services,
public transportation prices were strong again and posted a 2.6%
increase. Recent gains are, however, just making up for declines during
the recession.&nbsp;Medical care services prices increased 0.4%
(3.5% y/y). Finally, education costs have been firm, up 4.8% y/y after
a 5.8% gain during 2008. The annual gain is, however, down from the
6.9% increase during 2004. Recreation prices have really shown the
recession's effect and are down 0.2% y/y after a 1.6% 2008 gain. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216c.jpg" align="right" border="0" height="265" width="353">Despite
the weak economy, core goods prices have
been relatively firm and last month increased 0.2%. The increase lifted
prices 2.8% since December following no change during the prior two
years. Higher tobacco prices continued to account for much of the
recent strength and rose 1.0% last month (30.3% y/y). New &amp;
used motor vehicles also have firmed considerably. The 0.8% increase
last month lifted prices by 5.2% since December. That compares with
price deflation during the last two years. Working the other way,
apparel prices fell for the third month in the last four (1.0% y/y.
That follows price declines which extend back to 1994. Continuing weak
were prices for household furnishings &amp; operation. They fell
another 0.3%, leaving them down 1.1% so far this year. · The chained
CPI, which adjusts for shifts in consumption patterns, was unchanged
during November and year-to-year prices rose 1.6%. Conversely, chained
prices less food and energy edged 0.2% lower last month. 
The consumer
price data is available in Haver's USECON database
while detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM" style="color: white;">Consumer Price Index</a> 
(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. y/y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.4</td>
<td>0.3</td>
<td>0.2</td>
<td>1.8</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.2</td>
<td>0.4</td>
<td>0.3</td>
<td>2.6</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.1</td>
<td>1.5</td>
<td>0.6</td>
<td>7.7</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.1</td>
<td>-0.5</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: Black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.6</td>
<td>3.3</td>
<td>2.5</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>-0.2</td>
<td>0.3</td>
<td>0.2</td>
<td>1.3</td>
<td>1.9</td>
<td>1.9</td>
<td>2.2</td>
</tr>
</tbody>
</table>

 U.S. Housing Starts Improve
Modestly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 16, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216d.jpg" align="right" border="0" height="265" width="353">The recent
recovery in home building has been hardly ebullient. Housing starts
rose 8.9% last month to 574,000 (AR) units versus 527,000 during
October, which was revised down slightly. These levels were, however,
6.2% below the 3Q average and remain down 12.4% y/y. More sobering is
the startling decline in housing in recent years. Since the peak in
January of 2006, starts have fallen by more than three-quarters.
November's figure fell short of Consensus expectations for 578,000
starts.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216e.jpg" align="right" border="0" height="265" width="353">Last
month, starts of single-family homes recovered
merely 2.1% to 482,000 after October's 7.1% decline. So far this
quarter, starts have fallen 4.2% from the 3Q average. Despite this loss
of forward momentum, single-family starts have recovered
from the February low. During the last ten years, there has been an 84%
correlation between the q/q change in single-family starts and their
contribution to quarterly GDP growth. The increase in
starts of single-family units was contained to the Southern (12.9% y/y)
and the Western (2.1% y/y) regions of the country. Elsewhere, starts in
the Northeast (2.1% y/y) and in the Midwest (-13.6% y/y) fell
month-to-month.
 A bit firmer were starts of multi-family units which
nearly doubled m/m during November from their record low. Starts of
apartments, condominiums &amp; town houses still were down 79.6%
from the January 2006 peak.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216f.jpg" align="right" border="0" height="265" width="353">Perhaps
more strength in starts is coming.
Building permits rose 6.0% during November to their highest level in
twelve months. As with starts, permits to build a single-family home
have been relatively strong versus the total. Moreover, they rose 5.3%
versus 3Q they have risen 38.3% from the January low.
The
housing starts figures can be found in Haver's USECON database.
Housing's
Great Fall: Putting Household Balance Sheets Together Again
from the Federal Reserve Bank of St. Louis is available <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>574</td>
<td>527</td>
<td>586</td>
<td>-12.4%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>482</td>
<td>472</td>
<td>508</td>
<td>5.5</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>92</td>
<td>55</td>
<td>78</td>
<td>-53.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>584</td>
<td>551</td>
<td>575</td>
<td>-7.3</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>

 Japan's Service Sector Shows
Improvement 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216g.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s service sector as gauged by its tertiary sector index
advanced in October after registering a drop in September. The index is
down by 4.3 percent over 12-months compared to MFG and mining where the
index is down by 14% over 12-months. These drops compare to March and
February lows in the two indices, respectively. In March the tertiary
index was down by 8.6% Yr/Yr. In February the mining and MFG index
scored its largest 12-month drop at -36.9%.
Cleary Japan has been improving sharply from its recession
lows. But while the mining and MFG sector has eight straight months of
improvement in its mo/mo readings, services has only improved for one
month in a row. Services also has improved in five of the past six
months. Still, the tertiary sector is only up by 2.5% from its cycle
low point whereas MFG and mining is up by 23.8% from its cycle low
reading. MFG and mining currently stands by 21.8% below its cycle peak
whereas the services sector is off by just 6.4% from its cycle peak.
Two sectors are experiencing very different recession and recovery
forces.
The service sector stands in the 53rd percentile of its range
while Mining and MFG stands in the 40th percentile of its range, well
below its mid-way mark.
Still, the failure of services to post consistent gains or
strong gains while MFG is improving sharply is a sign that Japan is
still struggling. We know it is having some renewed problems with
deflation. In this environment because the service sector employs so
many, it is easy to see why confidence does not easily come back and
why Japan remains vulnerable to deflation even in face of some export
recovery and a strong MFG rebound. The rising yen has pre-empted the
possibility of compensation for service sector weakness with strong
export-led growth. While Japan&#8217;s exports are recovering they are also
hindered by the continuing strength of the yen. Japan&#8217;s recovery
continues to face a dilemma

&nbsp;Japan Industry Survey
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;</td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-2009</td>
<td>Sep-2009</td>
<td>Aug-2009</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mining and MFG</td>
<td>86.1</td>
<td>85.7</td>
<td>83.9</td>
<td>85.2</td>
<td>83.1</td>
<td>80.7</td>
<td>110.1</td>
<td>69.5</td>
<td>40.9%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>96.8</td>
<td>96.3</td>
<td>96.9</td>
<td>96.7</td>
<td>96.4</td>
<td>97.0</td>
<td>103.5</td>
<td>89.1</td>
<td>53.5%</td>
</tr>
<tr class="odd">
<td colspan="10" class="firstcol">Ranges,
Max, Min since 1993</td>
</tr>
</tbody>
</table>
 FOMC Notes Economic &amp; Job
Market Improvement But Leaves Rates Unchanged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 16, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216h.jpg" align="right" border="0" height="265" width="353">In an
anticipated and unanimous vote, the Federal Open Market Committee today
left the Federal funds rate in a "range from 0 to 1/4 percent." The
discount rate also was left unchanged at 0.5%. The action was as
expected and left the Fed funds rate at its lowest level ever.
"Information received since the Federal Open Market Committee
met in
November suggests that economic activity has continued to pick up and
that the deterioration in the labor market is abating." Thus reads the
opening statement from today's FOMC meeting press release. The
statement then cites improvement in each of the economy's sectors;
however, it notes that activity "is likely to remain weak for a time
..."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216i.jpg" align="right" border="0" height="265" width="353">The
statement goes on to suggest that economic strengthening will
result from monetary &amp; fiscal stimulus. 
The Fed mentioned
price inflation twice, indicating that "higher levels of resource
utilization would occur in the context of price stability" and that
"inflation will remain subdued for some time" as resource utilization
remained low.
Again the Fed indicated that moderate economic growth
and slack capacity utilization would allow rates to say low for an
extended period of time. Also, "To provide support to mortgage lending
and housing markets and to improve overall conditions in private credit
markets, the Federal Reserve is in the process of purchasing $1.25
trillion of agency mortgage-backed securities and about $175 billion of
agency debt. In order to promote a smooth transition in markets, the
Committee is gradually slowing the pace of these purchases, and it
anticipates that these transactions will be executed by the end of the
first quarter of 2010."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216j.jpg" align="right" border="0" height="265" width="353">A complete
text of the Fed's latest press
release can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20091216a.htm">here</a>.
The Haver databases USECON, WEEKLY and DAILY
contain the figures from the Federal Reserve Board.
 Supply
and Demand Shocks in Residential Mortgages from the Federal
Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/trends/2009/1209/01banfin.cfm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>

</body></html>

CPI's 0.4% Gain Is Fueled ByEnergy; Core Prices Are Unchanged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215g.jpg" align="right" border="0" height="265" width="353">
Industrial
production resumed the increase that began this past July. The November
0.8% gain followed an unrevised unchanged reading for October and it
exceeded Consensus expectations for a 0.6% rise. The improvement from
October was across-the-board but it was greatest in the construction
supplies and in the materials areas. Output of consumer goods rose a
moderate 0.3% and that was led by a 2.9% (-13.5% y/y) increase in
furniture production and a 1.9% (-6.9% y/y) increase in motor vehicle
output. Output of machinery also rose (-19.7% y/y) as did computers
&amp; electronics (-4.0% y/y) production. Less the motor vehicle
&amp; high-tech sectors output increased 0.8%&nbsp;(-5.1% y/y)
last month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215h.jpg" align="right" border="0" height="265" width="353">During
November, production increases amongst
industries sagged somewhat to 52.9% of the total from the high of 60.6%
during August. The breadth of increase from last July also dipped to a
still-firm 59.9%, near the strongest since early-2007.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215i.jpg" align="right" border="0" height="265" width="353">Capacity
utilization rose further to 71.3%, its
highest level since December. In the factory sector alone utilization
rose to 68.4%. Utilization in the primary metals area has risen sharply
to 59.1% with the rebound in output. There's also been a slight rise in
utilization in the machinery area but it's down most elsewhere. The
overall increase was caused by another estimated 0.1% (-0.9% y/y)
decline in industry capacity.The industrial production data
are available in Haver's USECON database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (SA,%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output</td>
<td>0.8</td>
<td>0.0</td>
<td>0.5</td>
<td>-5.2</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>1.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>-4.8</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.3</td>
<td>0.1</td>
<td>1.0</td>
<td>-1.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.5</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-8.1</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>1.6</td>
<td>-1.6</td>
<td>-1.2</td>
<td>-12.5</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>1.2</td>
<td>0.1</td>
<td>0.7</td>
<td>-4.8</td>
<td>-1.9</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>-1.8</td>
<td>1.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>71.3</td>
<td>70.6</td>
<td>70.0</td>
<td>74.4 (Nov. '08)</td>
<td>77.5</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>

</body></html>

Industrial production resumed the increase that began this past July. The November 0.8% gain followed an unrevised unchanged reading for October and it exceeded Consensus expectations for a 0.6% rise. The improvement from October was [...]

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

250501J5.jpg

250501K5.jpg

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

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

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

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

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

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

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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: December 2009

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