Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<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/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</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>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
</body></html>

The current recession has been harshest in the labor market. Employers look to cut costs as top-line revenues falter. Though the June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the speed of the rate's recent [...]

U.S. Unemployment Rates Rise Sharply And Rapidly For All

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<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/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</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>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Rise For A
Third Month Signaling Economic Recovery 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720e.jpg" align="left" border="0">
The Conference Board's Index of Leading Economic Indicators
continued to suggest a pending economic recovery. The June composite
index of leaders rose another 0.7% after gains of 1.3% (upwardly
revised) and 1.0% during the prior two months. The combined 3.0% rise
during those three months was the strongest since early 2002 while the
index itself was at the highest level since last July. The leading
index is based on actual reports for eight economic data series. The
Conference Board initially estimates two series, orders for consumer
goods and orders for capital goods.
For the third straight month, nearly three quarters of the ten
components of the leading index increased with the largest positive
contributions coming from a steeper yield curve, higher building
permits and higher stock prices. The money supply and consumer
expectations made slight negative contributions.
Again suggesting that the rate of decline in the economy is
slowing were the coincident indicators. They fell 0.2%, about as they
have for three consecutive months. These compare with monthly declines
of 0.6%-to-1.1% dating back to September. The negative contributions
from lower employment and production have eased. The remaining two
component series actually rose during June, led by very slight gains in
real disposable income and business sales. Over the last ten years
there has been a 76% correlation between this y/y change and real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720f.jpg" align="right" border="0">
In a sign that excesses in the U.S. economy are diminishing,
the lagging index fell for the sixth month in the last seven. The
declines have been paced by a longer duration of unemployment, lower
commercial and industrial loans and lower consumer installment credit.
The ratio of coincident-to-lagging indicators (a measure of economic
excess) rose m/m to the highest level since December.
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.



World Economic Outlook Update; Contractionary
Forces Receding But Weak Recovery Ahead from the
international Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.htm">here</a>.

<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">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March 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>0.7</td>
<td>1.3</td>
<td>1.0</td>
<td>4.1</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>-0.3</td>
<td>-0.7</td>
<td>-5.9</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.8</td>
<td>-0.6</td>
<td>-5.9</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
Industrial Orders Trends Begin To
Turn...Ever So Slowly 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720g.jpg" align="left" border="0" height="265" width="353">
Industrial orders in Italy made a slight bounce in May. French
orders fell after a slight bounce in April. Neither shows any sign of
upward momentum and the downward momentum has only just been trimmed if
we compare 3-month growth rates to 12-month growth rates. 
 

What is interesting is the very different performance in
foreign
orders as between Italy and France and Germany. Germany is showing some
very substantial recovery in foreign-sourced orders. But it Italy,
foreign order are falling at an accelerating pace through May. In
France, foreign orders have shown a clear patterns of progress with the
three-month growth rate reduced to an annual pace of -9.7% compared to
-24% Yr/Yr. 
 

Whatever progress is being experienced in Europe, it is
irregular.
Clearly some economies in the Zone are doing better than others despite
the common currency regime - and that is true for sales overseas
underlining the that exchange rates are not the only factor in the
success of foreign sales efforts. The more variance there is across
e-Zone countries in their respective economic performances, the more it
will wear on the fragile e-Zone area where talk of integration is tough
despite member countries efforts to continue to go it alone on fiscal
policy. Europe still has a recession and still has some divisive
political forces to weather. And yet more European &#8216;integration&#8217; lies
ahead. 
 


<table border="0" cellspacing="0" width="100%">
</table>
Italy Orders
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-2.6%</td>
<td>-20.9%</td>
<td>-24.3%</td>
<td>-29.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.2%</td>
<td>-2.9%</td>
<td>-9.3%</td>
<td>-39.4%</td>
<td>-27.5%</td>
<td>-33.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>0.5%</td>
<td>-3.9%</td>
<td>1.0%</td>
<td>-9.3%</td>
<td>-22.7%</td>
<td>-26.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-7.3%</td>
<td>-22.3%</td>
<td>-21.9%</td>
</tr>
<tr>
<td colspan="7">French Orders</td>
</tr>
<tr>
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>-5.7%</td>
<td>-22.3%</td>
<td>-9.2%</td>
<td>-23.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.4%</td>
<td>6.5%</td>
<td>-8.8%</td>
<td>-9.7%</td>
<td>-12.4%</td>
<td>-27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>-1.4%</td>
<td>1.4%</td>
<td>-15.1%</td>
<td>-15.0%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Unemployment Rates RiseSharply And Rapidly For All

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. 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.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>.
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


</html>

Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. [...]

U.S. Housing Starts Post A Surprising Gain During June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. 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.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>. 
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716g.jpg" width="353">
According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June of last year. The index is compiled from survey questions asking builders to rate market conditions as &#147;good&#148;, &#147;fair&#148;, &#147;poor&#148; or &#147;very high&#148; to &#147;very low&#148;. Numerical results over 50 indicate a predominance of &#147;good&#148; readings.
Also showing improvement during all of the first quarter was the Home Builders&#39; Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income. It jumped to a record high of 72.5% buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)
The Home Builders Association indicated that its sub-index of present sales rose this month to the highest level since June &#39;08. At a reading of 17 the figure was up significantly from the January low of 6. Since 1990, the year-to-year change in this index has had an 80% correlation with the year-to-year percentage change in new single-family home sales.
The index of builders&#146; expectations for home sales in six months held stable but remained near its highest since September. The &#147;traffic&quot; of prospective buyers also improved from June and was up from the record lows of this past Winter.
The strength in the July composite index readings was concentrated in the South. Elsewhere in the country composite indexes were flat-to-lower.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716h.jpg" width="353">
The NAHB has compiled the Housing Market Index since 1985. The weights assigned to the individual index components are .5920 for single family detached sales, present time; .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver&#146;s SURVEYS database.
Today&#39;s House testimony by Fed Governor Elizabeth A. Duke titled Consumer Protection can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090716a.htm">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/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">&nbsp;July &#39;08</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">Composite Housing Market Index (All Good = 100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales: Next Six Months</td>
<td>26</td>
<td>26</td>
<td>23</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of Prospective Buyers</td>
<td>14</td>
<td>13</td>
<td>12</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
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According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June [...]

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716e.jpg">
The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply negative levels this past Winter and, thus, suggests that recessionary forces have moderated. The index reached -38.23 this past March and the latest level was better than Consensus expectations for a reading of -5.0.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State. Participants from across the state in a variety of industries respond to a questionnaire and report the change in indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The figure is a diffusion index. Since the series&#39; inception in 2001, there has been a 75% correlation between its level and the three-month change in U.S. factory sector industrial production. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components. The series dates back only to 2001.
Improvement in the new orders component paced last month&#39;s index with a gain to the highest level since December of 2007. The shipments index also improved to its highest since the middle of last year while the average workweek expanded moderately. The employment index also improved slightly to the highest level since last October. In the history of the NY employment index, there has been an 87% correlation between it and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department. <img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716f.jpg">
To the downside was a sharp decline in the inventories index, to a series&#39; low, unfilled orders and delivery times.
Prices firmed as indicated by the first positive index reading since November. Nevertheless, the index level remained down sharply from last year. Since inception in 2001, there has been a 76% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.
The Empire State index of expected business conditions in six months slipped during July from its highest level since mid-2007. The subseries for new orders, shipments, employment and capital expenditures each fell but still remained improved from the winter lows..
The Empire State data is available in Haver&#39;s SURVEYS database.

<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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;08&nbsp;</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">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-0.55</td>
<td>-9.41</td>
<td>-6.16</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>5.89</td>
<td>-8.15</td>
<td>4.52</td>
<td>-6.25</td>
<td>15.71</td>
<td>20.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>-20.83</td>
<td>-21.84</td>
<td>-6.32</td>
<td>-5.36</td>
<td>11.28</td>
<td>12.62</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>10.42</td>
<td>-5.75</td>
<td>77.89</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>


</html>

The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply [...]

Empire State Factory Conditions Improved To Best In Over One Year

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716c.jpg" width="353">
The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the manufacturing sector at -7.5 versus -2.2. However, both figures were materially improved from the lows of this past winter. Consensus expectations had been for a July reading of -5.0.
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/bos0709.pdf">here</a>.
Amongst the components, both the shipments and employment indexes turned lower month-to-month but remained up from the March-April lows. During the last ten years there has been a 79% correlation between the index level and the m/m change in manufacturing sector payrolls. The new orders, unfilled orders and average workweek components each improved to new highs.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716d.jpg" width="353">
The prices paid index also improved to a less-negative 3.5. During the last ten years there has been a 74% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 83% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months also slipped during July after having improved to its highest level since 2003. Most of the index components fell except that expectations for prices paid, employment and inventories rose to new cycle highs.
The figures from the Philadelphia Federal Reserve can be found in Haver&#39;s SURVEYS database.
Residential Housing and Personal Bankruptcy from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q2/brq209_housing-and-bankruptcy.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Philadelphia Fed (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-7.5</td>
<td>-2.2</td>
<td>-16.7</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-3.5</td>
<td>&nbsp;-13.0</td>
<td>&nbsp;71.3</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body>
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The Philadelphia Federal Reserve Bank indicated that, during July, factory sector activity in the region continued to contract. The rate of decline even quickened versus June as indicated by the Index of General Activity in the [...]

Philadelphia Fed Index Remains Somewhat Weak

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<img align="left" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716a.jpg" width="353">
Conditions in the labor market improved further last week as evidenced by a sharp decline in both initial and continuing claims for unemployment insurance. For the second consecutive week, the report on initial claims was surprising. A 47,000 drop to 522,000 which followed a similar decline during the prior week. The latest level was the lowest since the first week of January and it was off from the March peak of 674,000. The four-week average of claims, which smoothes out some of the volatility in the weekly numbers, also fell to 584,000. The latest weekly level was quite a bit lower than Consensus expectations for 554,000.
The Labor Department indicated that the largest decreases in initial claims for the week ending July 4 were in New Jersey (-5,030), California (-4,293), North Carolina (-3,983), Kansas (-3,544), and Oregon (-1,454) while the largest increases were in Michigan (+12,144), New York (+8,913), Wisconsin (+5,838), Indiana (+5,430), and Ohio (+4,240).
Confirming the labor market&#39;s improvement was a 642,000 drop in continuing claims for unemployment insurance to the lowest level since mid-April. The continuing claims figures lag initial claims by one week and provide an indication of workers&#39; ability to find employment. At 6,273,000 claims still were nearly double the year ago level. The four-week average of continuing claims fell back to 6,666,750 which was the lowest since mid-May. The series dates back to 1966.<img align="right" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716b.jpg" width="353">
The insured rate of unemployment dropped sharply to 4.7% which was the lowest level since mid-April. 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.
The highest insured unemployment rates in the week ending June 27 were in Michigan (7.2 percent), Puerto Rico (6.9), Oregon (6.5), Pennsylvania (6.3), Nevada (6.1), Wisconsin (5.8), California (5.4), South Carolina (5.4), Connecticut (5.2), Illinois (5.2), New Jersey (5.2), and North Carolina (5.2). Rates were lowest in Texas (3.0), Wyoming (3.2), Colorado (3.2), Maine (3.4), Maryland (3.6), Minnesota (4.0), Florida (4.1), Georgia (4.2) and Mississippi (4.3).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database.
The minutes to the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20090624.pdf"> here</a>.

<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>&nbsp;</th>
<th scope="col">07/11/09</th>
<th scope="col">07/04/09</th>
<th scope="col">06/27/09</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>522</td>
<td>569</td>
<td>617</td>
<td>34.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,273</td>
<td>6,915</td>
<td>97.9%</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>4.7</td>
<td>5.2</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Conditions in the labor market improved further last week as evidenced by a sharp decline in both initial and continuing claims for unemployment insurance. For the second consecutive week, the report on initial claims was surprising. [...]

Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

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**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

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

250501H20.jpg

250501I20.jpg

- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

U.S. Light Vehicle Sales Fall in April

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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%.

Economy in Brief: July 2009

Jump to:

U.S. Unemployment Rates Rise Sharply And Rapidly For All

U.S. Unemployment Rates RiseSharply And Rapidly For All

U.S. Housing Starts Post A Surprising Gain During June

U.S. Housing Starts Post A Surprising Gain During June

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

Empire State Factory Conditions Improved To Best In Over One Year

Philadelphia Fed Index Remains Somewhat Weak

Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement