Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920c.jpg" width="353">
Political considerations apparently weighed heavily on the economic expectations of German institutional investors and analysts in September. The Frankfurt based, Center for European Research (ZEW) reported that the number of those expecting better conditions six months from now over those expecting worse conditions fell from 50% in August to 38.6% in September. Although most of the 309 respondents to the survey reported before the election took place, the 44 replies that were received after the September 18 election showed a significantly lower reading than the overall September results.
Preliminary results of the September 18 election indicate that the CDU/CSU, (The Christian Democratic Union and The Christian Social Union) won 225 seats; the SPD (Social Democratic Party), 222; the FDP (The Free Democratic Party), 61; the Left Party, 54 and the Greens, 51. The Left Party, formerly known as Party for Democratic Socialism consists largely of former communists and former SPD members who disagreed with the party&#39;s plans for reform. The inconclusive results of the election will have to be resolved by some sort of a coalition or, if that fails before October 18 when Parliament is set to open, by another election. Political uncertainty is likely to continue to cast a cloud over the economic outlook.
Important as the effects of political uncertainty on confidence may be, the rise in energy prices resulting from hurricane Katrina has also had a depressing effect. In spite of the deterioration in expectations, investors reported a slight improvement in what they judged to be, according to the negative figures, depressing current conditions. In September, there was a three percentage point improvement in the appraisal of current conditions as the excess of pessimists over optimists (noted by a negative) went to -58.1% from -61.1% in August.
The attached chart shows the month-to-month changes in the German investors&#39; appraisal of current conditions and their expectation of conditions six months from now.

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</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Zew Indicators</a></th>
<th scope="col">Sep 05&nbsp;</th>
<th scope="col">Aug&nbsp; 05</th>
<th scope="col">Sep 04</th>
<th scope="col">M/M DIF</th>
<th scope="col">Y/Y DIF</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current conditions</td>
<td>-58.1</td>
<td>-61.1</td>
<td>-61.5</td>
<td>3.0</td>
<td>3.4</td>
<td>-67.7</td>
<td>-92.6</td>
<td>-83.3</td>
</tr>
<tr>
<td class="firstcol">Expectations 6 mo. ahead</td>
<td>38.6</td>
<td>50.0</td>
<td>38.4</td>
<td>-11.4</td>
<td>0.2</td>
<td>44.6</td>
<td>38.4</td>
<td>45.3</td>
</tr>
</tbody>
</table>
</body>
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Political considerations apparently weighed heavily on the economic expectations of German institutional investors and analysts in September. The Frankfurt based, Center for European Research (ZEW) reported that the number of those [...]

Politics and Energy Prices Depress German Investor Confidence

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920i.jpg" width="353">
The Federal Open Market Committee increased the target rate for federal funds 25 basis points to 3.75%. The discount rate also was raised 25 basis points to 4.75%. This latest increase is the eleventh since June of 2004.
The action was generally expected, though some analysts suggested the Fed would opt for no change in rates given the economic uncertainties generated by Hurricane Katrina.
Voting against the otherwise unanimous decision was Mark W. Olson, who preferred no change in rates at this meeting.
Today&#39;s press release from the Fed indicated that &quot;While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee&#39;s view that they do not pose a more persistent threat.&quot;
Indicating its concern about price inflation, the FOMC statement indicated &quot;Higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920h.jpg" width="353">
For the complete text of the Fed&#39;s latest press release please click <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2005/20050920/default.htm">here</a>.
Has Monetary Policy Been More Accommodative Than Previously Believed? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20051001/cover.pdf">here</a>.
Targeting versus Instrument Rules for Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/05/09/McCallum.pdf">here</a>.

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The Federal Open Market Committee increased the target rate for federal funds 25 basis points to 3.75%. The discount rate also was raised 25 basis points to 4.75%. This latest increase is the eleventh since June of 2004. The action [...]

Fed Funds Rate Increased to 3.75%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920e.jpg" width="353">
Supply uncertainties have wreaked havoc on prices for crude oil and petroleum products. As of last week, the US average retail gasoline price fell to $2.79 per gallon, down from the weekly high of $3.07 set two weeks earlier and the NY harbor spot price for regular unleaded last Friday was down to $1.82 from a high of $3.13 just before Labor Day.
Demand strength, however, has left even these lower gasoline prices both up 40-50% versus the year ago levels.
Hurricane Katrina caused the initial anxiety over supply. Figures from the Oil &amp; Gas Journal Weekly indicate that in the first two weeks of September, US refining production of gasoline was off 5% versus August. Some of that decline is seasonal, but the threat from Hurricane Rita yesterday caused the spot gasoline price to jump 10% d/d to $2.00 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920g.jpg" width="353">
Alternatively, US gasoline demand has been consistent and strong. Through August demand was running 3-4% ahead of last year helped by a 1.5% y/y gain in the number of miles being driven. In September, demand is estimated to have fallen sharply, perhaps 10% m/m, in the wake of Hurricane Katrina, although the decline probably is temporary. Strong gasoline demand is a trademark of the United States. From 1994 to 2004, growth in US gasoline demand averaged 1.8% per year versus a 0.7% annual rate of decline in Europe during that ten year period. Some of that reflects differing economic fortunes, but ...<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920f.jpg" width="353">
Wholesale natural gas prices at $11.17/mmbtu last week were more than double the prior year&#39;s level and very much reflect the recent supply dislocations. Regulation, however, has limited the price increase for residential gas as measured by the Consumer Price Index. For the first eight months of 2005 versus 2004, gas prices rose 11.5% while the gain in household electricity costs also was limited to 4.6%. Further gains are in store if yesterday&#39;s gas price rise over $12/mmbtu holds. (Many plants which generate electricity are fired by natural gas.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920d.jpg" width="353">
Movement in crude oil prices has been similarly volatile with an upward bent. Yesterday&#39;s spot market price for West Texas Intermediate jumped 7% d/d to $67.40 though prices have eased a bit today. Under laying the strength has been a steady decline in US crude oil production, off 2.2% y/y through the first eight months of 2005 and off 38% versus twenty years ago.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
Oil Prices and Consumer Spending from the Federal Reserve Bank of Richmond can be viewed <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/summer2005/mehrapetersen.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">09/19/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.79</td>
<td>$1.79</td>
<td>49.3%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Natural Gas, Henry Hub, LA ($/mmbtu)</td>
<td>$11.17</td>
<td>$6.35</td>
<td>123.4%</td>
<td>$5.89</td>
<td>$5.47</td>
<td>$3.35</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$63.12</td>
<td>$41.78</td>
<td>42.2%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
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Supply uncertainties have wreaked havoc on prices for crude oil and petroleum products. As of last week, the US average retail gasoline price fell to $2.79 per gallon, down from the weekly high of $3.07 set two weeks earlier and the [...]

Petroleum Prices: Supply Uncertainty & US Demand Strength

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920b.jpg" width="353">
The full effect of Hurricane Katrina pushed chain store sales down 2.1% last week, according to the International Council of Shopping Centers (ICSC)-UBS survey, after a slight 0.2% decline the prior week. So far this month sales are 1.2% below the August average which fell 0.1% from July. 
The ICSC suggested that in addition to the Hurricane, higher gasoline prices and a drop in consumer confidence were responsible for the decline. 
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC cratered 2.0% in the latest week (-2.0% y/y) after a slight gain during the previous week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/17/05</th>
<th scope="col">09/10/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>445.0</td>
<td>454.6</td>
<td>2.4%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The full effect of Hurricane Katrina pushed chain store sales down 2.1% last week, according to the International Council of Shopping Centers (ICSC)-UBS survey, after a slight 0.2% decline the prior week. So far this month sales are [...]

Weekly Chain Store Sales Down Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920a.jpg" width="353">
Housing starts slipped 1.3% last month to 2.009M units versus a downwardly revised 2.035M units in July.The drop outpaced Consensus expectations for a decline to 2.025M starts.
Single-family starts inched 0.1% higher in this last report taken before Hurricane Katrina hit the US Gulf Coast. The rise was due to higher single family starts in the Northeast (1.5% y/y) and in the West (6.1% y/y). Single family starts in the South fell m/m (+1.4% y/y) and in the Midwest (-6.5% y/y).
Yesterday&#39;s report from the Nat&#39;l Association of Home Builders (NAHB) indicated slippage in their composite September index (-3.0% y/y) due to weaker current sales, weaker sales prospects and sharply lower buyer traffic. During the last twenty years there has been a 76% correlation between the y/y change in the NAHB index and the change in single family housing starts.
Multi family starts fell a sharp 8.5% m/m while building permits fell as well.
Assessing High House Prices: Bubbles, Fundamentals, and Misconceptions from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr218.pdf"> here</a>.

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,009</td>
<td>2,035</td>
<td>-0.8%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,709</td>
<td>1,707</td>
<td>1.2%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>300</td>
<td>328</td>
<td>-10.7%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,124</td>
<td>2,171</td>
<td>3.2%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
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Housing starts slipped 1.3% last month to 2.009M units versus a downwardly revised 2.035M units in July.The drop outpaced Consensus expectations for a decline to 2.025M starts. Single-family starts inched 0.1% higher in this last [...]

Housing Starts Slipped in August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920i.jpg" width="353">
The Federal Open Market Committee increased the target rate for federal funds 25 basis points to 3.75%. The discount rate also was raised 25 basis points to 4.75%. This latest increase is the eleventh since June of 2004.
The action was generally expected, though some analysts suggested the Fed would opt for no change in rates given the economic uncertainties generated by Hurricane Katrina.
Voting against the otherwise unanimous decision was Mark W. Olson, who preferred no change in rates at this meeting.
Today&#39;s press release from the Fed indicated that &quot;While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee&#39;s view that they do not pose a more persistent threat.&quot;
Indicating its concern about price inflation, the FOMC statement indicated &quot;Higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920h.jpg" width="353">
For the complete text of the Fed&#39;s latest press release please click <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2005/20050920/default.htm">here</a>.
Has Monetary Policy Been More Accommodative Than Previously Believed? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20051001/cover.pdf">here</a>.
Targeting versus Instrument Rules for Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/05/09/McCallum.pdf">here</a>.

Housing Starts Slipped in August 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920a.jpg" width="353">
Housing starts slipped 1.3% last month to 2.009M units versus a downwardly revised 2.035M units in July.The drop outpaced Consensus expectations for a decline to 2.025M starts.
Single-family starts inched 0.1% higher in this last report taken before Hurricane Katrina hit the US Gulf Coast. The rise was due to higher single family starts in the Northeast (1.5% y/y) and in the West (6.1% y/y). Single family starts in the South fell m/m (+1.4% y/y) and in the Midwest (-6.5% y/y).
Yesterday&#39;s report from the Nat&#39;l Association of Home Builders (NAHB) indicated slippage in their composite September index (-3.0% y/y) due to weaker current sales, weaker sales prospects and sharply lower buyer traffic. During the last twenty years there has been a 76% correlation between the y/y change in the NAHB index and the change in single family housing starts.
Multi family starts fell a sharp 8.5% m/m while building permits fell as well.
Assessing High House Prices: Bubbles, Fundamentals, and Misconceptions from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr218.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<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/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,009</td>
<td>2,035</td>
<td>-0.8%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,709</td>
<td>1,707</td>
<td>1.2%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>300</td>
<td>328</td>
<td>-10.7%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,124</td>
<td>2,171</td>
<td>3.2%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920b.jpg" width="353">
The full effect of Hurricane Katrina pushed chain store sales down 2.1% last week, according to the International Council of Shopping Centers (ICSC)-UBS survey, after a slight 0.2% decline the prior week. So far this month sales are 1.2% below the August average which fell 0.1% from July. 
The ICSC suggested that in addition to the Hurricane, higher gasoline prices and a drop in consumer confidence were responsible for the decline. 
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC cratered 2.0% in the latest week (-2.0% y/y) after a slight gain during the previous week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/17/05</th>
<th scope="col">09/10/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>445.0</td>
<td>454.6</td>
<td>2.4%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Petroleum Prices: Supply Uncertainty & US Demand Strength 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920e.jpg" width="353">
Supply uncertainties have wreaked havoc on prices for crude oil and petroleum products. As of last week, the US average retail gasoline price fell to $2.79 per gallon, down from the weekly high of $3.07 set two weeks earlier and the NY harbor spot price for regular unleaded last Friday was down to $1.82 from a high of $3.13 just before Labor Day.
Demand strength, however, has left even these lower gasoline prices both up 40-50% versus the year ago levels.
Hurricane Katrina caused the initial anxiety over supply. Figures from the Oil &amp; Gas Journal Weekly indicate that in the first two weeks of September, US refining production of gasoline was off 5% versus August. Some of that decline is seasonal, but the threat from Hurricane Rita yesterday caused the spot gasoline price to jump 10% d/d to $2.00 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920g.jpg" width="353">
Alternatively, US gasoline demand has been consistent and strong. Through August demand was running 3-4% ahead of last year helped by a 1.5% y/y gain in the number of miles being driven. In September, demand is estimated to have fallen sharply, perhaps 10% m/m, in the wake of Hurricane Katrina, although the decline probably is temporary. Strong gasoline demand is a trademark of the United States. From 1994 to 2004, growth in US gasoline demand averaged 1.8% per year versus a 0.7% annual rate of decline in Europe during that ten year period. Some of that reflects differing economic fortunes, but ...<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920f.jpg" width="353">
Wholesale natural gas prices at $11.17/mmbtu last week were more than double the prior year&#39;s level and very much reflect the recent supply dislocations. Regulation, however, has limited the price increase for residential gas as measured by the Consumer Price Index. For the first eight months of 2005 versus 2004, gas prices rose 11.5% while the gain in household electricity costs also was limited to 4.6%. Further gains are in store if yesterday&#39;s gas price rise over $12/mmbtu holds. (Many plants which generate electricity are fired by natural gas.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920d.jpg" width="353">
Movement in crude oil prices has been similarly volatile with an upward bent. Yesterday&#39;s spot market price for West Texas Intermediate jumped 7% d/d to $67.40 though prices have eased a bit today. Under laying the strength has been a steady decline in US crude oil production, off 2.2% y/y through the first eight months of 2005 and off 38% versus twenty years ago.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
Oil Prices and Consumer Spending from the Federal Reserve Bank of Richmond can be viewed <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/summer2005/mehrapetersen.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"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">09/19/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.79</td>
<td>$1.79</td>
<td>49.3%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Natural Gas, Henry Hub, LA ($/mmbtu)</td>
<td>$11.17</td>
<td>$6.35</td>
<td>123.4%</td>
<td>$5.89</td>
<td>$5.47</td>
<td>$3.35</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$63.12</td>
<td>$41.78</td>
<td>42.2%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Politics and Energy Prices Depress German Investor Confidence 
by <a href="/comment/Curley.html">Louise Curley</a> September 20, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050920c.jpg" width="353">
Political considerations apparently weighed heavily on the economic expectations of German institutional investors and analysts in September. The Frankfurt based, Center for European Research (ZEW) reported that the number of those expecting better conditions six months from now over those expecting worse conditions fell from 50% in August to 38.6% in September. Although most of the 309 respondents to the survey reported before the election took place, the 44 replies that were received after the September 18 election showed a significantly lower reading than the overall September results.
Preliminary results of the September 18 election indicate that the CDU/CSU, (The Christian Democratic Union and The Christian Social Union) won 225 seats; the SPD (Social Democratic Party), 222; the FDP (The Free Democratic Party), 61; the Left Party, 54 and the Greens, 51. The Left Party, formerly known as Party for Democratic Socialism consists largely of former communists and former SPD members who disagreed with the party&#39;s plans for reform. The inconclusive results of the election will have to be resolved by some sort of a coalition or, if that fails before October 18 when Parliament is set to open, by another election. Political uncertainty is likely to continue to cast a cloud over the economic outlook.
Important as the effects of political uncertainty on confidence may be, the rise in energy prices resulting from hurricane Katrina has also had a depressing effect. In spite of the deterioration in expectations, investors reported a slight improvement in what they judged to be, according to the negative figures, depressing current conditions. In September, there was a three percentage point improvement in the appraisal of current conditions as the excess of pessimists over optimists (noted by a negative) went to -58.1% from -61.1% in August.
The attached chart shows the month-to-month changes in the German investors&#39; appraisal of current conditions and their expectation of conditions six months from now.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Zew Indicators</a></th>
<th scope="col">Sep 05&nbsp;</th>
<th scope="col">Aug&nbsp; 05</th>
<th scope="col">Sep 04</th>
<th scope="col">M/M DIF</th>
<th scope="col">Y/Y DIF</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current conditions</td>
<td>-58.1</td>
<td>-61.1</td>
<td>-61.5</td>
<td>3.0</td>
<td>3.4</td>
<td>-67.7</td>
<td>-92.6</td>
<td>-83.3</td>
</tr>
<tr>
<td class="firstcol">Expectations 6 mo. ahead</td>
<td>38.6</td>
<td>50.0</td>
<td>38.4</td>
<td>-11.4</td>
<td>0.2</td>
<td>44.6</td>
<td>38.4</td>
<td>45.3</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919e.jpg" width="353">
August exports of goods from the Republic of China recorded a 32% increase over the year ago figure according to the CEIC data that are available in Haver&#39;s CEIC China Premium Database. At this pace, it is not surprising that OECD (Organization for Economic and Development) in its first Survey of China suggests that China could overtake the United States and Germany as the world&#39;s largest exporter, in the next five years. A summary of the OECD Economic Survey of China can be found at <a href="http://www.oecd.org/document/45/0,2340,en_2649_34111_35344877_1_1_1_1,00.html">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919f.jpg" width="353">
The growth in China&#39;s exports of goods compared with that of the U.S. is shown in the first chart, and with that of Germany in the second chart. The data for Germany and the U. S. are only through July. The differences between the growth rates of China versus the U. S. and China versus Germany have been consistently large over the past few years. Exports of goods and the annual growth rates for the three countries are shown below for the past five years. In 2004, exports of goods from the U. S., Germany and China were, respectively, $816 billion, $912 billion and $593 billion.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">(Million of U. S. Dollars)</th>
<th scope="col">Aug 05&nbsp;</th>
<th scope="col">Jul&nbsp; 05</th>
<th scope="col">Aug 04</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2004&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Chinese exports of goods</td>
<td>67820</td>
<td>65584</td>
<td>51400</td>
<td>3.41</td>
<td>31.95</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
</tr>
<tr>
<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="odd">
<td class="firstcol">Total Exports of Goods&nbsp;</td>
<td>2004&nbsp;</td>
<td>2003</td>
<td>2002&nbsp;</td>
<td>2001</td>
<td>2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">United States</td>
<td>816395</td>
<td>723611</td>
<td>693123</td>
<td>730906</td>
<td>771991</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>911889</td>
<td>742063</td>
<td>612794</td>
<td>570275</td>
<td>548785</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>593232</td>
<td>438250</td>
<td>325711</td>
<td>266698</td>
<td>249195</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Annual Percent Change</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>
<td class="firstcol">United States</td>
<td>12.82</td>
<td>4.40</td>
<td>-5.17</td>
<td>-5.32</td>
<td>11.27</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>22.86</td>
<td>21.10</td>
<td>7.45</td>
<td>3.92</td>
<td>2.48</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>35.36</td>
<td>34.55</td>
<td>22.13</td>
<td>7.02</td>
<td>27.84</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
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August exports of goods from the Republic of China recorded a 32% increase over the year ago figure according to the CEIC data that are available in Haver's CEIC China Premium Database. At this pace, it is not surprising that OECD [...]

Chinese Exports of Goods on the Way to Surpass Those of the U. S. and Germany in the Next Five Years

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050919g.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) Composite Housing Market Index fell for the third straight month in September to 65 from an unrevised 67 in August. The latest was the lowest level since July 2003.
During the last twenty years, year to year changes in the annual composite index had an 85% correlation with the change in single family housing starts.
The m/m decline was spread throughout the country.
The September index for sales of single family homes in six months fell sharply to 69 (-8.0% y/y) while the index for current sales fell moderately to 72 (-1.4% y/y).
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</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">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
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<td class="firstcol">Composite Housing Market Index</td>
<td>65</td>
<td>67</td>
<td>67</td>
<td>68</td>
<td>64</td>
<td>61</td>
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The National Association of Home Builders' (NAHB) Composite Housing Market Index fell for the third straight month in September to 65 from an unrevised 67 in August. The latest was the lowest level since July 2003. During the last [...]

NAHB Housing Market Index Lowest in Over Two Years

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.

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.

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Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

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

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%.

Economy in Brief: September 2005

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