Tom Moeller

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&bull; New single-family home sales firmed for second month.
&bull; Sales rose throughout the country.
&bull; Prices strengthen to four-month high.

Sales of new single-family homes increased 13.8% (6.9% y/y)
during June to 776,000 (AR) from 682,000 in May, revised up from 676,000. The
increase followed May's 19.4% rise and left sales at the highest level since
July 2007. The Action Economics Forecast Survey expected sales of 700,000 during June.

The rise in home sales occurred against the backdrop of a
decline in the 30-year fixed-rate mortgage to an average 3.16% in June from
3.23% averaged in May. Rates have since fallen to an average 3.02% so far this month.

Sales in the Northeast rose 89.7% to 55,000 and have
more-than-doubled y/y. Sales in the West strengthened 18.0% (4.1% y/y) to 203,000.
Sales in the Midwest improved 10.5% (33.3% y/y) to 84,000 while sales in the
South rose 7.2% (-1.8% y/y) to 434,000.

The median price of a new home increased 6.1% (5.6% y/y) to
$329,200 in June while the average price of a new home improved 6.2% (6.3% y/y)
to $384,700. Home prices, which are not seasonally adjusted, have been
range-bound for the past few years.

The months' supply of new homes on the market declined
sharply to 4.7 in June from May's 5.5 months. These figures remained down versus
a recent high of 6.8 months in April. The median number of months a new home
stayed on the market rose to 3.9, the longest since March 2018.

New home sales activity and prices are available in Haver's USECON
database, while MBA loan applications can be found in SURVEYW. The
consensus expectation figure from Action Economics is available in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >U.S. New Single-Family
 Home Sales (SAAR, 000s)</th>
 <th scope="col" >Jun</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Jun Y/Y %</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td>776</td>
 <td>682</td>
 <td>571</td>
 <td>6.9</td>
 <td>685</td>
 <td>614</td>
 <td>616</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Northeast</td>
 <td>55</td>
 <td>29</td>
 <td>22</td>
 <td>111.5</td>
 <td>30</td>
 <td>32</td>
 <td>40</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Midwest</td>
 <td>84</td>
 <td>76</td>
 <td>77</td>
 <td>33.3</td>
 <td>72</td>
 <td>75</td>
 <td>72</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; South</td>
 <td>434</td>
 <td>405</td>
 <td>337</td>
 <td>-1.8</td>
 <td>400</td>
 <td>347</td>
 <td>341</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; West</td>
 <td>203</td>
 <td>172</td>
 <td>135</td>
 <td>4.1</td>
 <td>183</td>
 <td>160</td>
 <td>164</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Median Price (NSA, $)</td>
 <td>329,200</td>
 <td>310,200</td>
 <td>307,100</td>
 <td>5.6</td>
 <td>319,267</td>
 <td>323,125</td>
 <td>321,633</td>
 </tr>
 </tbody>
 </table>
 
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• New single-family home sales firmed for second month. • Sales rose throughout the country. • Prices strengthen to four-month high. Sales of new single-family homes increased 13.8% (6.9% y/y) during June to 776,000 (AR) from 682,000 [...]

U.S. New Home Sales Strengthen Unexpectedly in June

Robert Brusca

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The PMI data for selected Europe and the U.S. join the already released PMI data for Japan in July. Results in July exceed expectations. EMU, German, French and U.K. composite PMIs all tipped over the 50 mark, indicating private sector expansion while the U.S. metric came in at 50 on the button – a dead neutral reading. Japan’s PMI, with already released results, stay below the 50 mark for its composite at 43.9.

The composite score not only has risen above 50 for most in the table indicating expansion after what has been a four-month drought for growth for most, but it also has produced readings that are strong by the standards of the past four and one-half years.

The EMU composite has a 68.5 queue percentile standing, Germany has a 74.1 queue standing, France has a 90.7 queue standing, and the U.K. has a 98.1 queue standing. The U.S. and Japan fit much farther down the scale with composite queue standings in the lower 10 percentile of their respective queues of data over the past four and half years.

Caveat PMI 
However, I caution on interpretation of these results. The diffusion gauges measure THE BREADTH of month–to-month changes. And on that basis, there is substantial widespread growth in manufacturing and services in Europe. But conditions are not strong. In vetting the consumer confidence results yesterday, we ranked confidence by its changes as well on the levels of its indexes. Although Germany had a huge strong rank based on change, it also had a weak-below median reading based on the level of its consumer climate reading by GfK. Diffusion is only a relative measure and so we have to be careful in how we apply it to ordinary real-world data. There was a sharp drop in the European PMIs. This is now a nice relatively broad rebound, but the EMU gauge was some 37 points below neutral at its worst and now it is less than five points above neutral. While that may stand as its best showing since June of 2018, the pattern of PMI increase by no means implies that overall output and growth has come that far back in general. That sense of rebound is only true of the simple month-to-month-change which is impressive but still has a long way to go to make up for what has been lost over a series of months.

Still, there is messaging in the PMI results. And that messaging shows the rebound is led by the service sector which means that Europe is getting back to business more like normal. What is driving the improvement in progress in containing the virus. The virus hits the service sectors the hardest since so much of that activity is face-to-face and of the virus-spreading friendly sort of activity that gets shut down when virus fighting gets going. The EMU services reading has a 79.6 percentile standing compared to a still weak 35.2 queue percentile standing for manufacturing. Germany, and to a lesser extent the U.K. and France have similar splits. The U.K. and France have a much stronger service sectors and with manufacturing showing an above median queue standing (above the 50% queue mark) unlike Germany and the EMU.

In contrast to Europe, Japan has similar weakness in manufacturing and service queue standings and in the U.S. the manufacturing’s standing is the stronger one at its 24.1 percentile compared to the 9.3 percentile for services. That configuration basically tells you what you need to know about progress vs. the virus. In the U.S. and Japan, progress is lagging. The U.S. is being led to higher ground by manufacturing which will not play well since manufacturing is not the job creating sector that the service sector is.



The PMI data on the month are impressive and better than expected. As always, the prospects for improvement will depend on the virus and how well behaved it is. The U.S. is struggling with some virus revival and at the same time some of its stimulus programs are running out and apparently are about to be renewed in some fashion. We will find out more over the next week. Meanwhile, the EU has just gotten a support deal that now must be vetted through the various parliaments.

These are support deals for sustenance more than for stimulus. The shutting down of a major modern economy is a hard thing to make up for. If people thought ahead of time, it was within the government’s grasp to compensate for a lockdown they now know different. Jobs, lives, health and, in the US, health care coverage, all are being lost. Personal finances are being put in ruin. The national debt is piling up. Some monies are going to people that do not need it. Some who need support are not getting it at all. And it is no longer your skill or hard-working nature that is responsible for how you are remunerated. It is fate, a fickle four-letter word. And for some time yet that will continue to be a fait accompli.

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The PMI data for selected Europe and the U.S. join the already released PMI data for Japan in July. Results in July exceed expectations. EMU, German, French and U.K. composite PMIs all tipped over the 50 mark, indicating private [...]

EMU PMIs Get a Leg Up on Growth As the Service Sector Sparkles

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The GfK consumer confidence index that projects German confidence for the month ahead is up by 9.1 points in August, the second strongest gain in its 223-month history. The strongest gain came last month at 9.2 points. After dropping for four months in a row culminating in a severe drop of 25.4 point in May 2020, the GfK climate index is now advancing rapidly.

However, if we rank the GfK index level rather than its change, the climate ranking is 205 out of 223 observations, still a very weak level of confidence. The mixed message is that while confidence has been rising rapidly in Germany in the wake of its massive decline it is still at level that should be construed as weak in an historic context. German optimism has a good way yet to run to register as a strong reading in an historic context.

The headline reading for climate in August is -0.3, not yet back to a net positive reading despite strong jumps in June and July.

Component readings for the GfK report lag by one month. Economic expectations have improved steadily and strongly after posting three sizable negative readings in March, April and May. In June economic expectations rose to 8.5 from May's -10.4 and now in July expectations are up more modestly to 10.6 from 8.5. Economic expectations still have a modest rank or count standing in their 56.4 percentile, just above their historic median as of July.

Income expectations are up strongly in July, rising to 18.6 from June's 6.6. In April and May income expectations logged sizable negative values; May's -5.7 was a sharp gain from April's -19.3. However, even with these gains, income expectations sit below their historic median at a rank standing of 41.7%.

The propensity to buy has behaved a bit differently. Even as income and economic expectations were poor, various government actions were in place to try to sustain spending. The buying index weakened in March to 31.4 from 53.6 then dropped to a negative reading of -4.6 in April. The month of May saw an improvement to 5.5 with June rising to 19.4 and July surging to 42.5. The 42.5 level has a rank standing at its 58th percentile and counts as a relatively firm standing overall.

Confidence levels elsewhere in Europe are not as timely as for the German GfK, a metric that actually looks ahead. For Italy, France and the United Kingdom, the most current metrics lag by two months and address the month of June (when the GfK German climate index still had a -18.6 reading). As of June, Italy's confidence has a 55th percentile standing, France has a 60.5 percentile standing and the U.K. has a 15.7 percentile standing. Italy and France have readings from June that rank as high or higher that the GfK components and are much higher than the GfK headline for August. Even the U.K.'s low percentile standing is above the climate standing for Germany in August.

These comparisons show how different countries are reacting to the virus and how consumers handicap differently their assessments of conditions and their government's prospects for handling them. The EU has been bargaining and only this week concluded negotiations for an EU-wide support package in the face of damage done by the virus. The virus continues to ebb and flow, creating hot spots and then receding. As it does this, it also turns the dial on growth in the opposite direction as every heating up of the virus requires a cooling down of the economy. As such the outlook continues to be muted and uncertain. What we see in Germany is that the economy was hit very hard, but confidence in the authorities' ability to corral the virus and restore growth is improving apace. Even so, it still has a long way to go to get Germans back where they were before the virus struck.


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The GfK consumer confidence index that projects German confidence for the month ahead is up by 9.1 points in August, the second strongest gain in its 223-month history. The strongest gain came last month at 9.2 points. After dropping [...]

German Confidence Makes Another Sharp Gain

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&bull; Component gains again are broad-based.
&bull; Coincident indicators improve as well.
&bull; Lagging indicators continue to indicate less economic stress.

The Conference Board reported that its Composite Index of
Leading Economic Indicators increased 2.0% during June (-8.6% y/y) following a
3.2% May rise, revised from 2.8%. A 2.1% gain had been expected in the Action
Economics Forecast Survey. The series is comprised of 10 components which tend
to precede changes in overall economic activity.

Last month's gain in the leading index again reflected
widespread improvement amongst the component series. Seven of the ten components
rose, as they did in May. The largest positive contributions came from fewer
initial unemployment insurance claims which accounted for 1.4 percentage points
of the total's increase. A longer factory sector workweek added 0.4 point.
Higher stock prices added 0.2 percentage point to the gain. More building
permits added 0.1 point to the total's rise as did the interest rate spread
between 10-year Treasury notes and Fed funds. These gains were offset by minimal
declines in other component series, including consumer expectations for
business/economic conditions, consumer goods orders and the leading credit index.

Three-month growth in the leading index of -5.3% (AR) in June
compared to a record decline of 44.0% in April.

The Index of Coincident Economic Indicators increased 2.5% in
June (-9.1% y/y) following a 1.6% May rise, revised from 1.1%. A gain in payroll
employment added 1.9 percentage points to the index rise. Industrial
production also rose and added 0.8 percentage points. Personal income less
transfer payments added minimally to the total's increase, and manufacturing
&amp; trade sales fell.

Three-month growth in the coincident index of -28.6% (AR)
ending in June followed two straight months of decline over 40%.

The Index of Lagging Economic Indicators fell 2.5% (+2.7%
y/y) in June after declining 1.2% in May, revised from -1.9%. Contributing
negatively to the index change was the average duration of unemployment which
subtracted 1.7 percentage points. Commercial &amp; industrial loans outstanding
subtracted 0.6 percentage points while the consumer installment credit/personal
income ratio sapped 0.5 percentage point. The business inventory/sales ratio
added slightly to the index change as did six-month growth in the services CPI.

Three-month growth in the lagging index in June dropped to
-2.5% (AR) from 18.0% in May.

The ratio of coincident-to-lagging economic indicators is
considered another leading indicator of economic activity. It rose sharply for a
second month from its near-record low.

The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA 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.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Business Cycle Indicators (%)</th>
 <th scope="col" >Jun</th>
 <th scope="col" >May</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Jun Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Leading</td>
 <td>2.0</td>
 <td>3.2</td>
 <td>-6.3</td>
 <td>-8.6</td>
 <td>1.6</td>
 <td>5.7</td>
 <td>3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Coincident</td>
 <td>2.5</td>
 <td>1.6</td>
 <td>-11.8</td>
 <td>-9.1</td>
 <td>1.8</td>
 <td>2.5</td>
 <td>2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >Lagging</td>
 <td>-2.5</td>
 <td>-1.2</td>
 <td>3.1</td>
 <td>2.7</td>
 <td>2.8</td>
 <td>2.5</td>
 <td>2.4</td>
 </tr>
 </tbody>
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• Component gains again are broad-based. • Coincident indicators improve as well. • Lagging indicators continue to indicate less economic stress. The Conference Board reported that its Composite Index of Leading Economic Indicators [...]

U.S. Leading Indicators Post Second Strong Increase in June

Sandy Batten

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&bull; Midwest economic activity increases for the second consecutive month.
&bull; New orders and production lead gains with employment turning positive.
&bull; Expectations also rise further.

The Federal Reserve Bank of Kansas City reported that its manufacturing business activity index increased to 3 in July from 1 in June. The two consecutive positive readings were after three consecutive negative readings. The index is a diffusion index with positive readings indicating that more respondents reported increases than reported decreases. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The index of expectations in six months also posted a second consecutive positive reading, rising to 14 in July from 9 in June following three consecutive months of declining activity.

The ISM-Adjusted Index (NSA) slipped to 51.5 in July from 52.4 in June but remained above the critical 50 value that separates expansion from contraction. While well off it May 2018 high, the July value was above the average for 2019 (50.0).

This month's survey included special questions about changes in business costs and the need for physical infrastructure since managing the effects of COVID-19. 67% of respondents reported that their need for physical infrastructure had not changed in the past six months, and 69% anticipated that that need would not change in the medium term (1-2 years). Additionally, 66% of respondents said they had utilized a work-from-home policy in the last six months, but very few said that any portion of their workforce will now permanently work from home. In terms of business costs, 42% of firms reported that their costs have increased in the past six months, 26% reported no change, and 21% reported decreases.

All of the current conditions components, including new orders, shipments and production strengthened again this month. Importantly, the employment index moved above zero to 3 in July after having been in negative territory for the preceding five months, indicating that employment across the Kansas City Fed district generally increased in July.

On the inflation front, the prices received index for finished products remained positive for the second consecutive month but slipped slightly to 6 in July from 7 in June. The prices paid for raw materials index edged up to 3 in July from 1 in June.

The index measuring expectations in six months was even more positive in July than in June, led by more positive expectations for shipments, new orders, employment and production each moved above zero.

The diffusion indexes are calculated as the percentage of total respondents reporting
increases minus the percentage reporting declines. The July survey was conducted over
a five-day period from July 15-20, 2020 and included 96 responses from plants in Colorado,
Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri. Data for
the Kansas City Fed Survey can be found in Haver's SURVEYS database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th>Jul</th>
 <th>Jun</th>
 <th>May</th>
 <th>Jul'19</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Conditions Versus One Month Ago (%
 Balance)&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td >3</td>
<td >1</td>
<td >-19</td>
<td >-2</td>
<td >0</td>
<td >17</td>
<td >14</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >ISM-Adjusted Composite Index (NSA)</td>
<td >51.5</td>
<td >52.4</td>
<td >42.4</td>
<td >49.1</td>
<td >50.0</td>
<td >58.9</td>
<td >56.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders Volume</td>
<td >9</td>
<td >7</td>
<td >-25</td>
<td >-2</td>
<td >-3</td>
<td >17</td>
<td >17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Number of&nbsp; Employees</td>
<td >3</td>
<td >-6</td>
<td >-13</td>
<td >-5</td>
<td >-1</td>
<td >17</td>
<td >15</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
<td >7</td>
<td >2</td>
<td >-25</td>
<td >-5</td>
<td >2</td>
<td >19</td>
<td >17</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
<td >6</td>
<td >7</td>
<td >-9</td>
<td >3</td>
<td >7</td>
<td >22</td>
<td >7</td>
 </tr>
 <tr>
 <td class="firstcol" >Expected Conditions in Six Months</td>
<td >14</td>
<td >9</td>
<td >-2</td>
<td >9</td>
<td >12</td>
<td >28</td>
<td >26</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; New Orders Volume</td>
<td >20</td>
<td >16</td>
<td >7</td>
<td >15</td>
<td >17</td>
<td >35</td>
<td >35</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Number of Employees</td>
<td >11</td>
<td >8</td>
<td >-4</td>
<td >8</td>
<td >15</td>
<td >33</td>
<td >39</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Production</td>
<td >25</td>
<td >14</td>
<td >-2</td>
<td >20</td>
<td >19</td>
<td >40</td>
<td >40</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
<td >13</td>
<td >13</td>
<td >-5</td>
<td >20</td>
<td >26</td>
<td >42</td>
<td >27</td>
 </tr>
 </tbody>
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• Midwest economic activity increases for the second consecutive month. • New orders and production lead gains with employment turning positive. • Expectations also rise further. The Federal Reserve Bank of Kansas City reported that [...]

Kansas City Fed Factory Index Edges Higher in July

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&bull; State initial jobless claims rise for the first time since March, as job reopenings are rolled back.
&bull; New filings for Federal Pandemic Unemployment Assistance rise.
&bull; Continuing claims for state programs slip.
&bull; The insured unemployment rate declines.

State initial jobless claims for unemployment insurance
increased to 1.416 million during the week ended July 18 from 1.307 million in
the prior week, revised from 1.300 million. The Action Economics
Forecast Survey anticipated 1.285 million claims. The four-week moving average of initial
claims eased to 1.360 million, the lowest level since April.

The latest figure covers the survey week for July nonfarm
payrolls and claims were 8.1% below the June period. During the last ten years
there has been a 70% correlation between the level of initial claims and the m/m
change in payroll employment.

Initial claims for the federal Pandemic Unemployment Assistance (PUA)
program, which covers individuals such as the self-employed who are not
qualified for regular/state unemployment insurance, increased to 974,999 in the
week ended July 18 from 955,272 in the prior week, revised from 928,488.
PUA claims peaked at 1.348 million in the week ending May 23. Data for
this and other federal programs are not seasonally adjusted.

Continuing claims for unemployment insurance declined to
16.197 million in the week ended July 11 from 17.304 million in the prior week,
revised from 17.338 million. Continuing PUA claims, which are lagged an
additional week, fell to 1.318 million from 1.428 million, revised from 14.283
million. Pandemic Emergency Unemployment Compensation claims increased to
940,113 in the week ending July 3. This program covers people who were
unemployed before COVID but exhausted their state benefits and are not eligible
to receive an additional 13 weeks of unemployment insurance, up to a total of 39
weeks. Including the latest data available, which is lagged one additional week,
the number of continuing claims eased to 31.8 million, or 19.9% of the labor force.

The state insured rate of unemployment, which does not
include federal programs, declined to 11.1% and remained below a mid-May peak of
17.1%. Individual state rates varied greatly. South Dakota at 4.5% was down from
a May peak of 6.03%. Nevada was highest at 21.3%, down from a June peak of
26.75%. New York stood at 16.1%, below last month's peak of 19.92%, California
at 16.9% was down from 20.57% and New Jersey stood at 12.2% versus 17.8% early
in May. The insured unemployment rate in Michigan of 14.1% compared to a
late-April peak of 23.14% and Ohio, at 8.1%, was down from 14.54% in mid-April.
The state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are
contained in Haver's WEEKLY database, and they are summarized monthly in USECON.
Data for individual states are in REGIONW. The expectations figure is
from the Action Economics Forecast Survey, carried in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Unemployment Insurance (SA, 000s)</th>
 <th>07/18/20</th>
 <th>07/11/20</th>
 <th>07/04/20</th>
 <th>Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Initial Claims</td>
 <td>1,416</td>
 <td>1,307</td>
 <td>1,310</td>
 <td>571</td>
 <td>218</td>
 <td>221</td>
 <td>244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; 4-week Average</td>
 <td>1,360</td>
 <td>1,377</td>
 <td>1,435</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >Initial Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td>975</td>
 <td>955</td>
 <td>1,046</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Continuing Claims</td>
 <td>--</td>
 <td>16,197</td>
 <td>17,304</td>
 <td>863</td>
 <td>1,701</td>
 <td>1,756</td>
 <td>1,961</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; 4-week Average</td>
 <td>--</td>
 <td>17,505</td>
 <td>18,262</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td>--</td>
 <td>--</td>
 <td>1,318</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>11.1</td>
 <td>11.8</td>
 <td>
 1.2 
 (Jul 2019)
 </td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.4</td>
 </tr>
	 </tbody>
	 </table>
	 
</body></html>

• State initial jobless claims rise for the first time since March, as job reopenings are rolled back. • New filings for Federal Pandemic Unemployment Assistance rise. • Continuing claims for state programs slip. • The insured [...]

State & Pandemic Assistance Unemployment Insurance Claims Increase Unexpectedly

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<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;&nbsp;July 23, 2020
• State initial jobless claims rise for the first time
since March, as job reopenings are rolled back.
• New filings for Federal Pandemic Unemployment
Assistance rise.
• Continuing claims for state programs slip.
• The insured unemployment rate declines.&nbsp;
State initial jobless claims for unemployment insurance
increased to 1.416 million during the week ended July 18 from 1.307 million in
the prior week, revised from 1.300 million. The Action Economics
Forecast Survey anticipated 1.285 million claims. The four-week moving average of initial
claims eased to 1.360 million, the lowest level since April.
The latest figure covers the survey week for July nonfarm
payrolls and claims were 8.1% below the June period. During the last ten years
there has been a 70% correlation between the level of initial claims and the m/m
change in payroll employment.
Initial claims for the federal Pandemic Unemployment Assistance (PUA)
program, which covers individuals such as the self-employed who are not
qualified for regular/state unemployment insurance, increased to 974,999 in the
week ended July 18 from 955,272 in the prior week, revised from 928,488.
PUA claims peaked at 1.348 million in the week ending May 23. Data for
this and other federal programs are not seasonally adjusted.
Continuing claims for unemployment insurance declined to
16.197 million in the week ended July 11 from 17.304 million in the prior week,
revised from 17.338 million. Continuing PUA claims, which are lagged an
additional week, fell to 1.318 million from 1.428 million, revised from 14.283
million. Pandemic Emergency Unemployment Compensation claims increased to
940,113 in the week ending July 3. This program covers people who were
unemployed before COVID but exhausted their state benefits and are not eligible
to receive an additional 13 weeks of unemployment insurance, up to a total of 39
weeks.
The state insured rate of unemployment, which does not
include federal programs, declined to 11.1% and remained below a mid-May peak of
17.1%. Individual state rates varied greatly. South Dakota at 4.5% was down from
a May peak of 6.03%. Nevada was highest at 21.3%, down from a June peak of
26.75%. New York stood at 16.1%, below last month's peak of 19.92%, California
at 16.9% was down from 20.57% and New Jersey stood at 12.2% versus 17.8% early
in May. The insured unemployment rate in Michigan of 14.1% compared to a
late-April peak of 23.14% and Ohio, at 8.1%, was down from 14.54% in mid-April.
The state rates are not seasonally adjusted.
Data on weekly unemployment claims going back to 1967 are
contained in Haver's WEEKLY database, and they are summarized monthly in USECON.
Data for individual states are in REGIONW. The expectations figure is
from the Action Economics Forecast Survey, carried in the AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <colgroup>
 </colgroup>
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" width="972">Unemployment Insurance (SA, 000s)</th>
 <th width="127">07/18/20</th>
 <th width="128">07/11/20</th>
 <th width="128">07/04/20</th>
 <th width="128">Y/Y %</th>
 <th width="128">2019</th>
 <th width="128">2018</th>
 <th width="128">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="972">Initial Claims</td>
 <td align="center" width="127">1,416</td>
 <td align="center" width="128">1,307</td>
 <td align="center" width="128">1,310</td>
 <td align="center" width="128">571</td>
 <td align="center" width="128">218</td>
 <td align="center" width="128">221</td>
 <td align="center" width="128">244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">&nbsp; 4-week Average</td>
 <td align="center" width="127">1,360</td>
 <td align="center" width="128">1,377</td>
 <td align="center" width="128">1,435</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="972">Initial Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td align="center" width="127">975</td>
 <td align="center" width="128">955</td>
 <td align="center" width="128">1,046</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">Continuing Claims</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">16,197</td>
 <td align="center" width="128">17,304</td>
 <td align="center" width="128">863</td>
 <td align="center" width="128">1,701</td>
 <td align="center" width="128">1,756</td>
 <td align="center" width="128">1,961</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">&nbsp; 4-week Average</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">17,505</td>
 <td align="center" width="128">18,262</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="972">Continuing Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">1,318</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">Insured Unemployment Rate (%)</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">11.1</td>
 <td align="center" width="128">11.8</td>
 <td align="center" width="128">
 1.2 
 (Jul 2019)
 </td>
 <td align="center" width="128">1.2</td>
 <td align="center" width="128">1.2</td>
 <td align="center" width="128">1.4</td>
 </tr>
 </tbody>
</table>


&nbsp;
U.S. Leading Indicators Increase in May 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;July 23, 2020
• Broad-based component gains lift the leading index.
• Coincident indicators rebound moderately.
• Lagging indicators indicate less economic stress.
The Conference Board reported that its Composite Index of
Leading Economic Indicators improved 2.8% during May (-10.6% y/y) following a
6.1% fall in April, revised from -4.4%. A 2.4% rise had been expected in the
Action Economics Forecast Survey. The series is comprised of 10 components which
tend to precede changes in the overall economy.
Last month's gain in the leading index reflected widespread
improvement amongst the component series. The largest positive contributions
came from fewer initial unemployment insurance claims which accounted for 1.9
percentage points of the total's increase. A longer factory sector workweek
added 0.7 points. More building permits added 0.4 points to the total's gain and
higher stock prices added 0.2 points. These gains were offset by a lower ISM new
orders reading which sapped 0.5 points from the index change. Consumer
expectations for business/economic conditions also eroded. The interest rate
spread between 10-year Treasuries and Fed funds added slightly to the index
while other components similarly had little effect.
Three-month growth in the leading index of -36.5% (AR)
compared to a record decline of 43.5% in April.
The Index of Coincident Economic Indicators increased 1.1%
(-10.3% y/y) last month after falling a record 10.4% in April, revised from
-8.9%. It was the first increase in three months. Gains in payroll employment
added one percentage point to the index. Industrial production also rose. These
increases were offset by declines in personal income less transfer payments and
manufacturing &amp; trade sales.
Three-month growth in the coincident index of -38.5% (AR)
followed the record 40.6% plunge in April.
The Index of Lagging Economic Indicators declined 1.9% during
May (+3.6% y/y) after rising 1.7% in April, revised from 4.1%. Contributing
negatively to the index change was the average duration of unemployment. It
accounted for virtually all of the index decline. Six-month growth in the
services CPI also subtracted slightly as it has for the last three months. Other
components of the series had little influence on the lagging index change.
Three-month growth in the lagging index fell to 9.1% (AR)
from the record 19.3% in April.
The ratio of coincident-to-lagging economic indicators is
considered another leading indicator of economic activity. It stabilized near
its record low.
The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA database. Visit the Conference
Board's <a href="http://www.conference-board.org/">site</a> for coverage of
leading indicator series from around the world.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="809">Business Cycle Indicators (%)</th>
 <th scope="col" width="153">Jun</th>
 <th scope="col" width="153">May</th>
 <th scope="col" width="153">Apr</th>
 <th scope="col" width="153">Jun Y/Y</th>
 <th scope="col" width="153">2019</th>
 <th scope="col" width="153">2018</th>
 <th scope="col" width="153">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="809">Leading</td>
 <td width="153" align="center"></td>
 <td width="153" align="center">2.8</td>
 <td width="153" align="center">-6.1</td>
 <td width="153" align="center">-10.6</td>
 <td width="153" align="center">1.6</td>
 <td width="153" align="center">5.7</td>
 <td width="153" align="center">3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="809">Coincident</td>
 <td width="153" align="center"></td>
 <td width="153" align="center">1.1</td>
 <td width="153" align="center">-10.4</td>
 <td width="153" align="center">-10.3</td>
 <td width="153" align="center">1.8</td>
 <td width="153" align="center">2.5</td>
 <td width="153" align="center">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="809">Lagging</td>
 <td width="153" align="center"></td>
 <td width="153" align="center">-1.9</td>
 <td width="153" align="center">1.7</td>
 <td width="153" align="center">3.6</td>
 <td width="153" align="center">2.8</td>
 <td width="153" align="center">2.5</td>
 <td width="153" align="center">2.4</td>
 </tr>
 </tbody>
</table>


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<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;&nbsp;July 23, 2020
• State initial jobless claims rise for the first time
since March, as job reopenings are rolled back.
• New filings for Federal Pandemic Unemployment
Assistance rise.
• Continuing claims for state programs slip.
• The insured unemployment rate declines. 
State initial jobless claims for unemployment insurance
increased to 1.416 million during the week ended July 18 from 1.307 million in
the prior week, revised from 1.300 million. The Action Economics Forecast Survey
anticipated 1.285 million claims. The four-week moving average of initial claims
eased to 1.360 million, the lowest level since April.
The latest figure covers the survey week for July nonfarm
payrolls and claims were 8.1% below the June period. During the last ten years
there has been a 70% correlation between the level of initial claims and the m/m
change in payroll employment.
Initial claims for the federal Pandemic Unemployment
Assistance (PUA) program, which covers individuals such as the self-employed who
are not qualified for regular/state unemployment insurance, increased to 974,999
in the week ended July 18 from 955,272 in the prior week, revised from 928,488.
PUA claims peaked at 1.348 million in the week ending May 23. Data for this and
other federal programs are not seasonally adjusted.
Continuing claims for unemployment insurance declined to
16.197 million in the week ended July 11 from 17.304 million in the prior week,
revised from 17.338 million. Continuing PUA claims, which are lagged an
additional week, fell to 1.318 million from 1.428 million, revised from 14.283
million. Pandemic Emergency Unemployment Compensation claims increased to
940,113 in the week ending July 3. This program covers people who were
unemployed before COVID but exhausted their state benefits and are not eligible
to receive an additional 13 weeks of unemployment insurance, up to a total of 39
weeks.
The state insured rate of unemployment, which does not
include federal programs, declined to 11.1% and remained below a mid-May peak of
17.1%. Individual state rates varied greatly. South Dakota at 4.5% was down from
a May peak of 6.03%. Nevada was highest at 21.3%, down from a June peak of
26.75%. New York stood at 16.1%, below last month's peak of 19.92%, California
at 16.9% was down from 20.57% and New Jersey stood at 12.2% versus 17.8% early
in May. The insured unemployment rate in Michigan of 14.1% compared to a
late-April peak of 23.14% and Ohio, at 8.1%, was down from 14.54% in mid-April.
The state rates are not seasonally adjusted.
Data on weekly unemployment claims going back to 1967 are
contained in Haver's WEEKLY database, and they are summarized monthly in USECON.
Data for individual states are in REGIONW. The expectations figure is
from the Action Economics Forecast Survey, carried in the AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <colgroup>
 </colgroup>
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" width="972">Unemployment Insurance (SA, 000s)</th>
 <th width="127">07/18/20</th>
 <th width="128">07/11/20</th>
 <th width="128">07/04/20</th>
 <th width="128">Y/Y %</th>
 <th width="128">2019</th>
 <th width="128">2018</th>
 <th width="128">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="972">Initial Claims</td>
 <td align="center" width="127">1,416</td>
 <td align="center" width="128">1,307</td>
 <td align="center" width="128">1,310</td>
 <td align="center" width="128">571</td>
 <td align="center" width="128">218</td>
 <td align="center" width="128">221</td>
 <td align="center" width="128">244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">&nbsp; 4-week Average</td>
 <td align="center" width="127">1,360</td>
 <td align="center" width="128">1,377</td>
 <td align="center" width="128">1,435</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="972">Initial Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td align="center" width="127">975</td>
 <td align="center" width="128">955</td>
 <td align="center" width="128">1,046</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">Continuing Claims</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">16,197</td>
 <td align="center" width="128">17,304</td>
 <td align="center" width="128">863</td>
 <td align="center" width="128">1,701</td>
 <td align="center" width="128">1,756</td>
 <td align="center" width="128">1,961</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">&nbsp; 4-week Average</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">17,505</td>
 <td align="center" width="128">18,262</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr>
 <td class="firstcol" width="972">Continuing Claims Pandemic Unemployment
 Assistance (NSA)</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">1,318</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 <td align="center" width="128">--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="972">Insured Unemployment Rate (%)</td>
 <td align="center" width="127">--</td>
 <td align="center" width="128">11.1</td>
 <td align="center" width="128">11.8</td>
 <td align="center" width="128">
 1.2 
 (Jul 2019)
 </td>
 <td align="center" width="128">1.2</td>
 <td align="center" width="128">1.2</td>
 <td align="center" width="128">1.4</td>
 </tr>
 </tbody>
</table>


&nbsp;
U.S. Leading Indicators Post Second Strong Increase in
June 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;July 23, 2020
• Component gains again are broad-based.
• Coincident indicators improve as well.
• Lagging indicators continue to indicate less economic
stress.
The Conference Board reported that its Composite Index of
Leading Economic Indicators increased 2.0% during June (-8.6% y/y) following a
3.2% May rise, revised from 2.8%. A 2.1% gain had been expected in the Action
Economics Forecast Survey. The series is comprised of 10 components which tend
to precede changes in overall economic activity.
Last month's gain in the leading index again reflected
widespread improvement amongst the component series. Seven of the ten components
rose, as they did in May. The largest positive contributions came from fewer
initial unemployment insurance claims which accounted for 1.4 percentage points
of the total's increase. A longer factory sector workweek added 0.4 point.
Higher stock prices added 0.2 percentage point to the gain. More building
permits added 0.1 point to the total's rise as did the interest rate spread
between 10-year Treasury notes and Fed funds. These gains were offset by minimal
declines in other component&nbsp; series, including consumer expectations for
business/economic conditions, consumer goods orders and the leading credit index.
Three-month growth in the leading index of -5.3% (AR) in June
compared to a record decline of 44.0% in April.
The Index of Coincident Economic Indicators increased 2.5% in
June (-9.1% y/y) following a 1.6% May rise, revised from 1.1%. A gain in payroll
employment added 1.9&nbsp; percentage points to the index rise. Industrial
production also rose and added 0.8 percentage points. Personal income less
transfer payments added minimally to the total's increase, and manufacturing
&amp; trade sales fell.
Three-month growth in the coincident index of -28.6% (AR)
ending in June followed two straight months of decline over 40%.
The Index of Lagging Economic Indicators fell 2.5% (+2.7%
y/y) in June after declining 1.2% in May, revised from -1.9%. Contributing
negatively to the index change was the average duration of unemployment which
subtracted 1.7 percentage points. Commercial &amp; industrial loans outstanding
subtracted 0.6 percentage points while the consumer installment credit/personal
income ratio sapped 0.5 percentage point. The business inventory/sales ratio
added slightly to the index change as did six-month growth in the services CPI. 
Three-month growth in the lagging index in June dropped to
-2.5% (AR) from 18.0% in May.
The ratio of coincident-to-lagging economic indicators is
considered another leading indicator of economic activity. It rose sharply for a
second month from its near-record low.
The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA database. Visit the Conference
Board's <a href="http://www.conference-board.org/">site</a> for coverage of
leading indicator series from around the world.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="809">Business Cycle Indicators (%)</th>
 <th scope="col" width="153">Jun</th>
 <th scope="col" width="153">May</th>
 <th scope="col" width="153">Apr</th>
 <th scope="col" width="153">Jun Y/Y</th>
 <th scope="col" width="153">2019</th>
 <th scope="col" width="153">2018</th>
 <th scope="col" width="153">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="809">Leading</td>
 <td width="153" align="center">2.0</td>
 <td width="153" align="center">3.2</td>
 <td width="153" align="center">-6.3</td>
 <td width="153" align="center">-8.6</td>
 <td width="153" align="center">1.6</td>
 <td width="153" align="center">5.7</td>
 <td width="153" align="center">3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="809">Coincident</td>
 <td width="153" align="center">2.5</td>
 <td width="153" align="center">1.6</td>
 <td width="153" align="center">-11.8</td>
 <td width="153" align="center">-9.1</td>
 <td width="153" align="center">1.8</td>
 <td width="153" align="center">2.5</td>
 <td width="153" align="center">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="809">Lagging</td>
 <td width="153" align="center">-2.5</td>
 <td width="153" align="center">-1.2</td>
 <td width="153" align="center">3.1</td>
 <td width="153" align="center">2.7</td>
 <td width="153" align="center">2.8</td>
 <td width="153" align="center">2.5</td>
 <td width="153" align="center">2.4</td>
 </tr>
 </tbody>
</table>


</body>

</html>

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

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Winnie Tapasanun

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The U.S. international trade deficit in goods ballooned to a larger-than-expected $105.75 billion in May after narrowing to $83.01 billion in April, according to the advance estimate from the U.S. Census Bureau. The May reading marked the third widening in the goods trade deficit in four months, exceeding a $91.55 billion shortfall in May 2025. A deficit of $84.0 billion for May had been expected by the Action Economics Forecast Survey. The deficit reached a low of $61.44 billion in October 2025 (the smallest since February 2020) and a record high of $158.73 billion in March 2025. On a quarterly basis, the deficit averaged $94.38 billion so far in Q2'26 versus $81.96 billion in Q1'26.

Total goods exports fell 5.4% m/m (+14.7% y/y) to $207.67 billion in May, the first monthly fall since December and a three-month low, following a 3.8% rise to a record-high $219.52 billion in April. Exports were up 27.7% from a June 2023 low. The m/m fall in exports in May reflected declines of 9.2% (-5.0% y/y) in nonfood consumer goods excluding autos, 7.0% (+23.2% y/y) in industrial supplies & materials, 6.8% (+19.5% y/y) in other goods, and 5.0% (+14.8% y/y) in capital goods excluding autos. To the upside, exports of foods, feeds & beverages (+3.9%; +19.1% y/y) and automotive vehicles & parts (+0.5%; -3.6% y/y) rebounded m/m in May.

Total goods imports, up for the fourth consecutive month, rose 3.6% m/m (15.0% y/y) to $313.43 billion in May, after a 2.0% increase to $302.53 billion in April, marking the highest level since the March 2025 record high of $340.11 billion. Imports were up 25.0% from a March 2023 low. The m/m rise in imports in May was broad-based across all end-use categories, led by an 11.5% gain (22.0% y/y) in other goods, followed by increases of 6.3% (1.4% y/y) in automotive vehicles & parts, 5.7% (-9.1% y/y) in nonfood consumer goods excluding autos, 4.8% (11.7% y/y) in industrial supplies & materials, 4.3% (-0.2% y/y) in foods, feeds & beverages, and 0.4% (41.9% y/y) in capital goods excluding autos. 

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $105.75 bil. in May, up $22.75 bil. (+27.4%) from April’s $83.01 bil.
- Exports -5.4%, first m/m decline since Dec., led by a 9.2% drop in nonauto consumer goods exports.
- Imports +3.6%, fourth straight m/m rise to highest level since Mar. ’25, driven by an 11.5% gain in imports of other goods.

U.S. Goods Trade Deficit Balloons in May, Largest Since March ’25

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In June, there's a slight divergence in the performance of industry climate and service sector climate, although broadly the two sectors have seen their composite indexes moving in more or less the same direction. Since 2024, the industry survey has moved up slightly after falling faster than the services gauge. The services survey has been locked in a slow trend of deterioration, largely since it reached a peak in 2021 in the wake of COVID.

The industry climate gauge has a 30.8 percentile standing, but the recent production trend, while declining, logs a more substantial 42.8 percentile standing. Contributing survey members find their own industry ‘likely trend’ much weaker, at a 21.2 percentile standing. Demand overall, however, has standings above the 50th percentile, putting overall and foreign orders & demand each above their respective medians for this period of ranking back to 2001. Inventories have a strong 81-percentile ranking. Prices are extremely strong, with 87-percentile and 86-percentile standings for respondents for their personal industry trend for prices as well as for the overarching manufacturing sector estimate of prices. Higher prices seem to be the one thing that everyone can agree on by a large margin.

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As for services, the service climate index improved slightly to 93.4 in June from 92.6 in May. The three-month moving average was weaker in June than in May as well; the 12-month moving average has been stuck at its current level for a number of months. The outlook in June improved slightly to a reading of -12 from -15 in May, but the outlook ranking is still a weak 26.8 percentile standing. The three-month expectations and observations of past sales trends haven't changed much in the last two months, but there has been a slight improvement for sales expectations. However, both sales metrics have low 20th percentile standings. Sales prices have deteriorated slightly in June compared to May for both the observed and the expected trends, but prices have standings above their 50th percentiles, logging above-median performance. Employment over the last three months has weakened noticeably, and expected employment is weaker by a small amount.

In terms of rankings, all of the sector rankings are below the 50th percentile on all of these observations, including the climate headline except for sales prices where both the past three-month observed trend and the expected trend have readings above their respective 50th percentiles, indicating past and expected price pressures in excess of normal.

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**Assessment**
On balance, the readings for the French industry, manufacturing sector and services are not encouraging. In addition, concerns about prices linger. The services sector, those concerns seem moderate compared to the concerns in manufacturing.

The hot war continues between Ukraine and Russia, while in the Middle East there was talk of some improvement and a potential peace deal between the United States and Iran, but every time there is some talk of a breakthrough, there appears to be a breakdown. In the most recent development, Iran has asserted its right to control traffic through the Strait of Hormuz, and it's not clear how that demand would ever be consistent with the U.S. allowing a ceasefire. It appears that Iran may have traded its irreconcilable demand for nuclear weapons for a more pragmatic and real-world argument—that it will control the traffic through the Strait of Hormuz simply because it can—and it still is doing exactly that, even after all the destruction it suffered.

Stopping Iran from controlling the Strait would take a commitment to restart the war. All this makes me personally more pessimistic. I think Iran sees the need for Trump to cut a deal and stop the war before the U.S. mid-term elections, and it is pressing that need to its advantage. Trading its nuclear ambitions for real world control of the Strait would elevate Iran’s power from being dangerous but ethereal to a real world event with constant consequences.

France

French Industry and Services Confidence Diverge in June

Andrew Cates

**Equity Momentum and Global Surprises — Still Moving Together**
One of the more telling features of global equity markets in 2026 has been the persistence of the correlation between non-US equity momentum and global growth and inflation surprise indices. Equity markets outside the United States have generally prospered when economic data have beaten consensus expectations and when inflation surprises have been negative  — a combination that has historically been associated with stronger corporate earnings and a more benign policy backdrop in economies other than the US. That correlation has held reasonably well through the turbulence of the past few months, even as the Middle East conflict introduced significant noise into both the economic data and the financial market signal. What the chart reveals this week is a picture of moderate but not alarming deterioration: global growth surprises have softened at the margin, consistent with the energy cost headwinds that have weighed on European and Asian activity, but the relationship between equity momentum and the broader data pulse remains intact. It is a signal that market participants continue to track economic fundamentals rather than purely geopolitical newsflow — a modestly reassuring sign that the underlying framework for assessing the global cycle has not broken down.

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**The Fed Decouples: Why Oil and US Two-Year Yields Have Parted Ways**
For much of 2026, oil prices and US two-year Treasury yields moved in close alignment. The logic was straightforward: higher oil prices raised inflation expectations, which in turn pushed market participants to anticipate a more hawkish Federal Reserve, lifting short-dated yields in the process. That relationship held with notable consistency through the March escalation and the months that followed, as energy market shocks and monetary policy expectations fed off each other. What this week’s chart captures is a striking breakdown in that correlation. As oil prices have fallen on the back of the US-Iran memorandum of understanding and the associated unwinding of the geopolitical risk premium, US two-year yields have not followed them lower. The reason is last week’s Federal Reserve meeting. Under new chair Kevin Warsh, the Fed delivered a hawkish dot plot that shifted the median year-end projection to a hike, making clear that the easing cycle previously priced by some market participants is no longer the central scenario. The message is important: the deflationary impulse from lower oil prices is being offset — at least in the Fed’s framing — by persistent underlying inflation pressures and a commitment to keeping policy tight.

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**Flash PMIs Signal Easing Supply Chain Stress and Softer Price Pressures**
June’s flash PMI surveys, released this week across the major advanced economies, provide a timely read on how the global manufacturing and services sectors are absorbing the shifting macro backdrop. Two findings stand out. First, supplier delivery times have improved (or not lengthened as much as they had in the prior two months). This finding coheres naturally with the broader narrative: lower oil prices reduce transport and energy input costs, while the resumption of Strait of Hormuz shipping flows — examined in more detail in chart 4 — is beginning to reduce the freight disruption and re-routing costs that had been building since the conflict escalated. Second, output price inflation in manufacturing has softened, suggesting that some of the pipeline pressure from earlier energy cost spikes is beginning to fade.

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**Hormuz Traffic and Oil: A Coherent Story of Tentative Normalisation**
The recent US-Iran memorandum of understanding to work towards a final deal, though not without subsequent flare-ups, has already brought relief to markets, most visibly in crude oil prices. This should go a long way towards unwinding the inflation-related concerns that previously elevated oil prices had stoked. While the pullback has owed much to anticipation of the glut of pent-up supply expected to follow, certain trackers of shipping volume through the Strait of Hormuz, such as the IMF’s, already point to a marked pickup in traffic, even if it remains well below pre-conflict levels. Should this normalisation of shipping flows persist, it would lend continued justification to a corresponding easing in oil prices, energy-related inflation and, by extension, headline inflation — a welcome development for central banks grappling with the delicate balancing act of reining in price pressures without dampening growth too sharply.

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**South Korea’s Trade Data Flag a Modest Softening in Global Demand**
South Korea’s trade data serve as one of the global economy’s most useful early warning systems. As one of the world’s most open economies, with exports spanning semiconductors, petrochemicals, steel, automobiles and consumer electronics, South Korea’s monthly trade figures provide a timely and broad-based read on the state of global demand. This week’s data show a slightly softer picture than the strong prints that characterised much of the first quarter. Headline export growth has moderated at the margin, and crucially, semiconductor exports — which had been the most dynamic component of the trade data, propelled by AI-related chip demand — have also come in a touch below the exceptional run rates seen earlier in the year. This is not, in itself, alarming: some moderation from peak rates was always to be expected, and the semiconductor cycle remains structurally supported by the scale of AI infrastructure investment globally.

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**A Super El Niño on the Horizon — The Next Inflation Risk**
With that said, while one driver of price pressures seems to be ebbing for now — albeit not without the risk of future flare-ups — another potential inflationary risk looms on the horizon. The chart illustrates the transmission mechanism. It plots Thailand’s milled rice production (left axis) against Australia’s Southern Oscillation Index (right axis), a well-established barometer of El Niño and La Niña conditions. The convention is straightforward: SOI readings persistently above +8 indicate La Niña, associated with above-average rainfall across Southeast Asia and broadly supportive crop conditions; readings persistently below -8 signal El Niño, which brings drought stress and reduced water availability across the region. The historical relationship is striking. The sharp negative SOI troughs around 2002–03, 2009–10 and most dramatically around 2015 all coincide with visible falls in Thai milled rice output. The severe El Niño of 2014–16 produced both the deepest SOI trough in the series and the sharpest single drop in rice production, to below 24,000 thousand tonnes. As meteorological authorities have been warning for some time, the world appears to be facing an imminent Super El Niño event, with the SOI already drifting back towards negative territory in recent months. Were a significant El Niño to materialise in the second half of this year, the implications for Thai rice output — and by extension for Asian food price inflation — could be substantial. Central bankers, in other words, may find themselves having to wrestle with a new inflationary impulse just as they had begun to hope the worst was behind them.

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The mood in global financial markets this week is more settled, though “settled” should not be confused with resolved. The US-Iran memorandum of understanding, signed last week, has continued to do its work: oil prices have fallen further, Strait of Hormuz shipping traffic has picked up measurably, and the risk premium that had been embedded in energy markets since the conflict escalated in March is now visibly unwinding. That is a material development for the inflation outlook, and central bankers will be watching carefully. Yet the picture is not without its complications. Technology stocks — the most conspicuous beneficiary of the prevailing low-rate, high-growth narrative — have been subject to renewed jitters this week, as investors grow more attentive to stretched valuations and the implications of a Federal Reserve that, under new chair Kevin Warsh, is no longer signalling the easing cycle previously priced into markets. Against this backdrop, this week’s charts draw on the latest data to assess where the global economic cycle stands. Equity momentum outside the United States has tracked closely with global growth and inflation surprises, a correlation that tells us something important about how activity is being perceived (chart 1). Meanwhile, the breakdown of the previously tight relationship between oil prices and US two-year yields is arguably one of the more telling market signals of recent weeks (chart 2). June’s flash PMI surveys point to easing supply chain stress and softer output price inflation in manufacturing — a finding that chimes naturally with lower crude prices and the resumption of Hormuz flows (chart 3). The Strait of Hormuz itself deserves a closer look: traffic data and the mechanics of the oil price pullback are telling a coherent story that supports the PMI picture (chart 4). South Korea’s trade data, including semiconductors, offer a slightly softer read on global demand momentum at the margin (chart 5). And looming on the horizon, one new risk is drawing the attention of meteorological authorities: a Super El Niño event whose probability has been rising, with potentially significant implications for food commodity prices and Asian agriculture (chart 6).

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Charts of the Week: Calmer Waters, New Currents

Michael J. Moran

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The price index for personal consumption expenditures rose 0.4% in May, although the measure almost rounded up to 0.5% (0.4498%). May marked the sixth consecutive month with headline prices increasing 0.3% or more. This series of changes has pulled the year-over-year inflation rate to 4.1%, up from 2.3% just over one year ago (April 2025). Energy prices, of course, have been the most important factor behind the acceleration in inflation, and they remained an issue in May, increasing 4.0% after advances of 3.9% and 11.6% in the prior two months. Food prices have moved erratically in the past year, with jumps and lulls leaving an average monthly increase of 0.2%. The noise was evident in recent months, with food prices increasing only 0.1% in May after a jump of 0.5% in April.

Core prices also have contributed to the pickup in inflation. After averaging monthly increases of 0.24% during 2025, core prices have increased at an average rate of 0.34% so far this year. The year-over-year increase in core inflation totaled 3.4% in May, up from a recent low of 2.6% in April of last year. Both the headline and core inflation rates are uncomfortably above the Federal Reserve’s target of 2.0%.

Total personal income rose briskly in May (0.7%). A surge in farm income played an important role (up 125% month-to-month, most likely reflecting government support payments), but nominal results also were firm elsewhere (up 0.5% ex farm income). Inflation reduced the purchasing power of this income gain, but aggregate income still advanced slightly in real terms (0.2%).

Given the recent surge in energy-driven inflation, May marked only the second monthly increase in real income so far this year. Tight budgets have dampened consumer spending, but individuals have not pulled to the sidelines. Real consumption expenditures rose 0.5% (annual rate) in the first quarter, and results for April and May suggest that real PCE is on track to increase 1.5% to 2.0% in the second quarter.

Households have managed to remain moderately active in their spending by limiting their saving. The saving rate has drifted lower since early 2024 moving to 3.0% in May (chart, below right). The erosion in saving perhaps seems reckless, but some of the reduction could be a response to the strength in the equity market, where wealth gains have possibly limited the incentive to save. Also, larger-than-normal tax refunds this year because of tax cuts in the One Big Beautiful Budget Act have allowed many households to spend actively despite modest increases in real income.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Energy prices rose sharply for the third consecutive month; core prices were unsettling as well.
- A jump in nominal income translated to a modest advance in real terms, allowing consumers to remain reasonably active.

Personal Income, Consumption, and Prices in May

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New orders for durable goods fell 4.5% m/m in May, the first monthly fall in three months, following an upwardly revised 8.5% gain in April (+7.9% initially reported on May 28) and a 1.3% increase in March (unrevised), according to today’s advance report by the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 4.4% m/m May decrease. The year-on-year rate decelerated to -3.5% in May from +17.7% in April (+20.0% in May 2025), marking the first negative reading since December 2024 (-4.5%). Excluding transportation, durable goods orders rose 1.3% (10.2% y/y) in May, the 13th consecutive m/m rise, after a 1.4% increase in April. Meanwhile, durable goods orders excluding defense dropped 4.6% (-5.0% y/y), down for the third time in four months, following an 8.4% April rebound.

The m/m fall in May durable goods orders was driven by a 51.8% m/m plunge in orders for nondefense aircraft & parts, following a 167.4% surge in April and a 23.0% slump in March. Orders for defense aircraft & parts rose 7.9% (63.5% y/y), the fourth successive m/m increase, after gains of 2.5% in April and 23.7% in March. Orders excluding aircraft climbed 1.0% (9.8% y/y), the six straight m/m rise and the 10th in 11 months, after a 1.3% April increase.

Durable goods orders for transportation dropped 14.0% (-22.1% y/y) in May, the first m/m decline since February, following a 22.4% gain in April. In addition to May’s m/m plunge in nondefense aircraft orders and increase in defense aircraft orders, motor vehicles & parts orders rose 1.1% (12.4% y/y), the sixth straight m/m rise, after a 0.7% April increase. Orders for primary metals advanced 3.0% (15.9% y/y), the largest of six successive m/m gains, after a 2.6% April rise. Machinery orders climbed 1.9% (14.0% y/y), up for the 13th straight month, on top of a 1.3% April rise. Orders for fabricated metal products grew 1.5% (11.2% y/y), the third m/m increase in four months, following a 4.1% April gain. Orders for all other durable goods rose 0.8% (3.2% y/y), the strongest of nine consecutive m/m increases, after a 0.1% April uptick. Orders for computers & electronic products rebounded 0.3% (13.3% y/y), the eighth m/m gain in nine months, following a 0.4% April decrease. Orders for electrical equipment, appliances & components recovered 0.3% (5.8% y/y), the second increase in three months, after a 0.2% April decline.

Capital goods orders fell 13.6% (-21.1% y/y) in May, the first m/m fall in three months and the deepest since June 2025, following a 22.2% jump in April. Nondefense capital goods orders dropped 15.7% (-26.4% y/y), the fifth m/m decrease in six months, after a 24.9% April rebound. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) rose 1.6% (10.5% y/y), the third m/m gain in four months, reversing a 0.7% April decline. Defense capital goods orders slid 3.4% (+14.4% y/y), the first m/m slide since January, after a 10.4% April gain. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 0.3% (7.6% y/y), the eighth m/m rise in nine months, after a 0.5% April increase.

Shipments of all manufactured goods climbed 1.6% (8.9% y/y) in May following a 1.3% gain in April. Durable goods shipments rose 1.0% (8.9% y/y) after a 0.7% April increase. Nondurable goods shipments advanced 2.2% (9.0% y/y), building on a 1.9% April gain. All three series posted the sixth consecutive m/m increase.

Unfilled orders of durable goods rose 0.6% (8.5% y/y) in May, the 10th straight m/m rise, after a 1.8% gain in April. Excluding transportation, unfilled orders increased 0.9% (4.3% y/y), also up for the 10th consecutive month, following a 0.7% April rise.

Manufacturing inventories edged up 0.2% (1.9% y/y) in May, the seventh successive m/m gain, after a 0.3% rise in April. Durable goods inventories grew 0.2% (2.1% y/y), the eighth straight m/m increase, after rising 0.3% in April and March. Nondurable goods inventories, up for the fourth consecutive month, rose 0.3% (1.6% y/y), matching April's pace.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- May headline orders -4.5% m/m, first fall in three mths.; -3.5% y/y, first negative reading since Dec. ’24.
- Nondefense aircraft & parts -51.8% m/m vs. April’s +167.4%.
- Transportation orders -14.0%, first m/m drop since Feb.; orders ex transp. +1.3%, 13th straight m/m rise.
- Core capital goods shipments +0.3%, eighth gain in nine mths., pointing to a moderate contribution to Q2’26 GDP from business equipt. spending.
- Durable goods shipments +1.0%; unfilled orders +0.6%; inventories +0.2%.

Economy in Brief

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