Tom Moeller

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&bull; Spending cutbacks are widespread due to the
coronavirus.
&bull; Personal income declines with the fall in employment.
&bull; Pricing power weakens.

Personal consumption expenditures declined a record 7.5% (-3.8%
y/y) during March as hiring collapsed, businesses closed and government
stay-at-home guidelines were put in place. A 6.5% decline had been expected in
the Action Economics Forecast Survey. In constant dollars, total spending fell
7.3% (-5.0% y/y). Real durable goods spending declined 14.8% (-11.2% y/y) during
March. Spending on motor vehicles fell by roughly one-quarter both m/m and y/y,
the fourth consecutive monthly decline. Home furniture &amp; appliance buying
weakened 8.3% (-4.4% y/y) and recreational goods &amp; vehicles outlays fell 6.3%
(+3.0% y/y). Real nondurable goods buying surged a record 4.3% last month (6.6%
y/y). The jump came as food &amp; beverage sales strengthened 19.1% (20.9% y/y)
with the stay-at-home requirement. Apparel spending dropped 28.2% (-27.9% y/y) and
has been falling since early last year. Real gasoline outlays weakened 5.3% (-4.5%
y/y). Real spending on services plunged a record 9.5% (-7.5% y/y). The decline
was led by a 29.7% drop (-27.7% y/y) in sales of restaurants &amp; hotels.
Transportation services outlays weakened 23.7% (-22.2% y/y) and outlays on
health care fell 16.2% (-14.3% y/y). These declines were tempered by an
unchanged level (+1.3% y/y) of outlays on housing &amp; utilities.

Personal income declined 2.0% (+1.4% y/y) in March. A 1.8%
decline had been expected. Wages &amp; salaries fell 3.1% (-0.8% y/y) due to the
drastic cut in employment with the outbreak of the coronavirus. Proprietors
income plunged 8.2% (+0.4%% y/y) following two months of strong increase. Rental
incomes rose a steady 0.4% (4.0% y/y) while receipts on assets eased 0.1% (+1.8%
y/y), due to a 0.4% decline (0.0% y/y) in personal interest income. Dividend
income rose 0.3% (4.2% y/y). Transfer receipts improved 1.6% (6.3% y/y), the
largest gain since January of 2019.

Disposable personal weakened 2.0% (+1.4% y/y) last month, the
largest decline since January 2013. Adjusted for price inflation, take-home pay
fell 1.7% (+0.1% y/y) after two months of 0.4% improvement.

Last month's strength in income relative to spending caused
the personal savings rate to surge to 13.1%, the highest level since October
1975. The level of personal saving rose by nearly two-thirds y/y.

The PCE chain price index decreased 0.3% in March (+1.3%
y/y). The price index excluding food &amp; energy slipped 0.1% (+1.7% y/y).
Motor vehicle prices edged 0.4% lower (-0.9% y/y) and home furnishings &amp;
appliance prices also fell 0.4% both m/m and y/y. Apparel costs dropped 2.2%
(-1.6% y/y). Gasoline &amp; oil prices fell 10.4% (-10.7% y/y). Services costs
held steady (2.4% y/y). Housing &amp; utilities prices rose 0.2% (2.9% y/y) and
health care prices edged 0.1% higher (2.1% y/y). Energy prices were off 6.1% (6.7%
y/y), the third straight monthly decline. Food prices rose 0.6% (1.1% y/y), the
strongest increase since August 2011.

The personal income and consumption figures are available in
Haver's USECON database with detail in the USNA database. The
Action Economics figures are in the AS1REP NA database

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Personal Income &amp; Outlays
 (%)</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Mar Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 
 <tr class="odd">
 <td class="firstcol" >Personal Income</td>
 <td>-2.0</td>
 <td>0.6</td>
 <td>0.5</td>
 <td>1.4</td>
 <td>4.4</td>
 <td>5.6</td>
 <td>4.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Wages &amp; Salaries</td>
 <td>-3.1</td>
 <td>0.5</td>
 <td>0.4</td>
 <td>-0.8</td>
 <td>4.6</td>
 <td>5.0</td>
 <td>4.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Disposable Personal Income</td>
 <td>-2.0</td>
 <td>0.5</td>
 <td>0.5</td>
 <td>1.4</td>
 <td>4.3</td>
 <td>6.1</td>
 <td>4.7</td>
 </tr>
 <thead>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Personal Consumption Expenditures</td>
 <td>-7.5</td>
 <td>0.2</td>
 <td>0.4</td>
 <td>-3.8</td>
 <td>4.0</td>
 <td>5.2</td>
 <td>4.4</td>
 </tr>
 <tr>
 <td class="firstcol" >Personal Saving Rate</td>
 <td>13.1</td>
 <td>8.0</td>
 <td>7.7</td>
 <td>8.4 (Mar '19)</td>
 <td>7.9</td>
 <td>7.7</td>
 <td>7.0</td>
 </tr>
 <tr>
 <td class="firstcol" >PCE Chain Price Index</td>
 <td>-0.3</td>
 <td>0.1</td>
 <td>0.2</td>
 <td>1.3</td>
 <td>1.4</td>
 <td>2.1</td>
 <td>1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Less Food &amp; Energy</td>
 <td>-0.1</td>
 <td>0.2</td>
 <td>0.2</td>
 <td>1.7</td>
 <td>1.6</td>
 <td>2.0</td>
 <td>1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >Real Disposable Income</td>
 <td>-1.7</td>
 <td>0.4</td>
 <td>0.4</td>
 <td>0.1</td>
 <td>2.9</td>
 <td>4.0</td>
 <td>2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Real Personal Consumption Expenditures</td>
 <td>-7.3</td>
 <td>0.1</td>
 <td>0.3</td>
 <td>-5.0</td>
 <td>2.6</td>
 <td>3.0</td>
 <td>2.6</td>
 </tr>
 </tbody>
 
 

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• Spending cutbacks are widespread due to the coronavirus. • Personal income declines with the fall in employment. • Pricing power weakens. Personal consumption expenditures declined a record 7.5% (-3.8% y/y) during March as hiring [...]

U.S. Personal Spending & Income Collapse in March

Gerald D. Cohen

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&bull; Initial jobless claims declined to a still extremely-elevated 3.839 million in the week ending April 25.

&bull; Over the last six weeks 30.3 million people or 18.6% of the labor force have filed new claims.

&bull; Eleven states had over 100,000 new claims, led by Florida's 486,134.



Initial jobless claims for unemployment insurance declined to 3.839 million during the week ending April 25 from an upwardly-revised 4.442 million in the previous week (was 4.427 million). During the last six weeks 30.3 million people or 18.6% of the labor force have filed new jobless claims. The Action Economics Forecast Survey anticipated 3.3 million claims.

The four-week moving average of initial claims, which smooths out week-to-week volatility, but is less important at the moment because of the rapidity of changing conditions, declined to 5.033 million from 5.790 million.

Eleven states had over 100,000 in new claims in the week ending April 25, led by Florida (486,134), Georgia (347,393), California (330,155) and Texas (278,849). Claims increased the most in Washington (74,309 or 88.6% week-on-week) and Georgia (54,839 or 18.7% w/w). Meanwhile, California (-173,477 or -34.4% w/w), Florida (-78,275 or -13.9% w/w) and New Jersey (-68,299 or -49.5% w/w) showed notable declines. The state numbers are based on seasonally-adjusted data calculated by Haver Analytics. The Department of Labor notes that advance claims are not directly comparable to claims reported in prior weeks and a number of states, including Florida and Michigan, indicated these numbers are only estimates. A more accurate picture of state claims in the week ending April 25 will be available next week.

Continuing claims for unemployment insurance increased to a record 17.992 million in the week ending April 18, from a downwardly-revised 15.818 million (was 15.976 million). The insured rate of unemployment jumped to a new high of 12.4% (data goes back to 1971). The state insured rates of unemployment continued to show wide variation with Florida at just 2.06% and Michigan 21.8%. Twenty-six states had rates over 10%, with Vermont also above 20% (21.2%). 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>04/25/20</th>
 <th>04/18/20</th>
 <th>04/11/20</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>3,839</td>
 <td>4,442</td>
 <td>5,237</td>
 <td>1,569.1</td>
 <td>218</td>
 <td>221</td>
 <td>244</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; 4-wk Average</td>
 <td>5,033.25</td>
 <td>5,790.25</td>
 <td>5,506.50</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr>
 <td class="firstcol" >Continuing Claims</td>
 <td>--</td>
 <td>17,992</td>
 <td>15,818</td>
 <td>969.7</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>13,292.50</td>
 <td>9,559.25</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 <td>--</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>12.4</td>
 <td>10.9</td>
 <td>
 1.3 
 (Apr. 2019)
 </td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.4</td>
 </tr>
 </tbody>
 </table>
 
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• Initial jobless claims declined to a still extremely-elevated 3.839 million in the week ending April 25. • Over the last six weeks 30.3 million people or 18.6% of the labor force have filed new claims. • Eleven states had over [...]

Initial Jobless Claims Top 30 Million in Last Six Weeks

Sandy Batten

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&bull; Growth of overall compensation unexpectedly picked up to 0.8% q/q in 2020 Q1.


&bull; Wages and salaries growth accelerated while benefits slowed.



The employment cost index (ECI) for civilian workers rose 0.8% q/q in the first quarter of 2020, up slightly from a 0.7% q/q rise in last year's fourth quarter. This was contrary to the Action Economics Forecast Survey which had looked for compensation growth to slow to 0.6% q/q. Year-on-year growth of total compensation also picked up slightly to 2.8% y/y in Q1 versus 2.7% in Q4. Annual compensation growth hit a cycle high of 2.9% in 2018 Q4.

Wage and salaries increased 0.9% q/q in Q1 (3.1% y/y), a reacceleration from the 0.7% gain in Q4. Year-on-year growth rose to 3.1% from 2.9% in Q4 to match 2018 Q4 as the fastest pace of wage and salaries growth since 2008 Q2. In contrast, benefits growth slowed to 0.4% q/q (2.1% y/y) from 0.6% in Q4. The year-on-year gain in Q1 was the softest since 2016 Q4.

In the private sector, compensation also rose 0.8%, but this reflected a larger quarterly rise in wages and salaries than in the overall economy (1.0% q/q vs. 0.9%) and a larger slowdown in benefits (0.2% q/q vs. 0.4%). Compensation in goods-producing industries decelerated to 0.5% in Q1 from 0.7% in Q4 while compensation in service-providing industries picked up considerably to 0.9% in Q1 from 0.6% in Q4. The Q1 rise in service-sector compensation was the highest since 2007 Q3.

The employment cost index, which measures the change in the cost of labor, free from
the influence of employment shifts among occupations and industries, is available in Haver's
USECON database. Consensus estimates from the Action Economics survey are in Haver's AS1REPNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 
 <tr>
 <th class="firstcol" scope="col" >Civilian Workers (% chg)</th>
 <th scope="col" >Q1'20</th>
 <th scope="col" >Q4'19</th>
 <th scope="col" >Q3'19</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Compensation</td>
<td >0.8</td>
<td >0.7</td>
<td >0.7</td>
<td >2.8</td>
<td >2.7</td>
<td >2.8</td>
<td >2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Wages &amp; Salaries</td>
<td >0.9</td>
<td >0.7</td>
<td >0.8</td>
<td >3.1</td>
<td >2.9</td>
<td >2.9</td>
<td >2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Benefit Costs</td>
<td >0.4</td>
<td >0.6</td>
<td >0.6</td>
<td >2.1</td>
<td >2.4</td>
<td >2.7</td>
<td >2.4</td>
 </tr>
 <tr>
 <th class="firstcol" scope="col" >Private Industry Workers (%
 chg)</th>
 <th scope="col" ></th>
 <th scope="col" ></th>
 <th scope="col" ></th>
 <th scope="col" >&nbsp;</th>
 <th scope="col" ></th>
 <th scope="col" ></th>
 <th scope="col" >&nbsp;</th>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Compensation</td>
<td >0.8</td>
<td >0.7</td>
<td >0.7</td>
<td >2.8</td>
<td >2.7</td>
<td >2.9</td>
<td >2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Wages &amp; Salaries</td>
<td >1.0</td>
<td >0.7</td>
<td >0.8</td>
<td >3.3</td>
<td >3.0</td>
<td >3.0</td>
<td >2.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Benefit Costs</td>
<td >0.2</td>
<td >0.5</td>
<td >0.5</td>
<td >1.6</td>
<td >2.0</td>
<td >2.6</td>
<td >2.2</td>
 </tr>
 
 
 

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• Growth of overall compensation unexpectedly picked up to 0.8% q/q in 2020 Q1. • Wages and salaries growth accelerated while benefits slowed. The employment cost index (ECI) for civilian workers rose 0.8% q/q in the first quarter of [...]

Employment Cost Growth Edges Up

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• Spending cutbacks are widespread due to the
coronavirus.
• Personal income declines with the fall in employment.
• Pricing power weakens.
Personal consumption expenditures declined a record 7.5% (-3.8%
y/y) during March as hiring collapsed, businesses closed and government
stay-at-home guidelines were put in place. A 6.5% decline had been expected in
the Action Economics Forecast Survey. In constant dollars, total spending fell
7.3% (-5.0% y/y). Real durable goods spending declined 14.8% (-11.2% y/y) during
March. Spending on motor vehicles fell by roughly one-quarter both m/m and y/y,
the fourth consecutive monthly decline. Home furniture &amp; appliance buying
weakened 8.3% (-4.4% y/y) and recreational goods &amp; vehicles outlays fell 6.3%
(+3.0% y/y). Real nondurable goods buying surged a record 4.3% last month (6.6%
y/y). The jump came as food &amp; beverage sales strengthened 19.1% (20.9% y/y)
with the stay-at-home requirement. Apparel spending dropped 28.2% (-27.9% y/y) and
has been falling since early last year. Real gasoline outlays weakened 5.3% (-4.5%
y/y). Real spending on services plunged a record 9.5% (-7.5% y/y). The decline
was led by a 29.7% drop (-27.7% y/y) in sales of restaurants &amp; hotels.
Transportation services outlays weakened 23.7% (-22.2% y/y) and outlays on
health care fell 16.2% (-14.3% y/y). These declines were tempered by an
unchanged level (+1.3% y/y) of outlays on housing &amp; utilities. 
Personal income declined 2.0% (+1.4% y/y) in March. A 1.8%
decline had been expected. Wages &amp; salaries fell 3.1% (-0.8% y/y) due to the
drastic cut in employment with the outbreak of the coronavirus. Proprietors
income plunged 8.2% (+0.4%% y/y) following two months of strong increase. Rental
incomes rose a steady 0.4% (4.0% y/y) while receipts on assets eased 0.1% (+1.8%
y/y), due to a 0.4% decline (0.0% y/y) in personal interest income. Dividend
income rose 0.3% (4.2% y/y). Transfer receipts improved 1.6% (6.3% y/y), the
largest gain since January of 2019.
Disposable personal weakened 2.0% (+1.4% y/y) last month, the
largest decline since January 2013. Adjusted for price inflation, take-home pay
fell 1.7% (+0.1% y/y) after two months of 0.4% improvement.
Last month's strength in income relative to spending caused
the personal savings rate to surge to 13.1%, the highest level since October
1975. The level of personal saving rose by nearly two-thirds y/y.
The PCE chain price index decreased 0.3% in March (+1.3%
y/y). The price index excluding food &amp; energy slipped 0.1% (+1.7% y/y).
Motor vehicle prices edged 0.4% lower (-0.9% y/y) and home furnishings &amp;
appliance prices also fell 0.4% both m/m and y/y. Apparel costs dropped 2.2%
(-1.6% y/y). Gasoline &amp; oil prices fell 10.4% (-10.7% y/y). Services costs
held steady (2.4% y/y). Housing &amp; utilities prices rose 0.2% (2.9% y/y) and
health care prices edged 0.1% higher (2.1% y/y). Energy prices were off 6.1% (6.7%
y/y), the third straight monthly decline. Food prices rose 0.6% (1.1% y/y), the
strongest increase since August 2011.
The personal income and consumption figures are available in
Haver's USECON database with detail in the USNA database. The
Action Economics figures are in the AS1REP NA database

 <thead>
 <tr>
 <th class="firstcol" scope="col" width="909">Personal Income &amp; Outlays
 (%)</th>
 <th width="136">Mar</th>
 <th width="137">Feb</th>
 <th width="137">Jan</th>
 <th width="137">Mar Y/Y</th>
 <th width="137">2019</th>
 <th width="137">2018</th>
 <th width="137">2017</th>
 </tr>
 </thead>
 
 <tr class="odd">
 <td class="firstcol" width="909">Personal Income</td>
 <td align="center" width="136">-2.0</td>
 <td align="center" width="137">0.6</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">1.4</td>
 <td align="center" width="137">4.4</td>
 <td align="center" width="137">5.6</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">&nbsp;&nbsp;Wages &amp; Salaries</td>
 <td align="center" width="136">-3.1</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">-0.8</td>
 <td align="center" width="137">4.6</td>
 <td align="center" width="137">5.0</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">Disposable Personal Income</td>
 <td align="center" width="136">-2.0</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">&nbsp;1.4</td>
 <td align="center" width="137">4.3</td>
 <td align="center" width="137">6.1</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <thead>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="909">Personal Consumption Expenditures</td>
 <td align="center" width="136">-7.5</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">-3.8</td>
 <td align="center" width="137">4.0</td>
 <td align="center" width="137">5.2</td>
 <td align="center" width="137">4.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">Personal Saving Rate</td>
 <td align="center" width="136">&nbsp;13.1</td>
 <td align="center" width="137">8.0</td>
 <td align="center" width="137">7.7</td>
 <td align="center" width="137">8.4 (Mar '19)</td>
 <td align="center" width="137">7.9</td>
 <td align="center" width="137">7.7</td>
 <td align="center" width="137">7.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">PCE Chain Price Index</td>
 <td align="center" width="136">-0.3</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">1.3</td>
 <td align="center" width="137">1.4</td>
 <td align="center" width="137">2.1</td>
 <td align="center" width="137">1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">&nbsp;&nbsp;Less Food &amp; Energy</td>
 <td align="center" width="136">-0.1</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">1.7</td>
 <td align="center" width="137">1.6</td>
 <td align="center" width="137">2.0</td>
 <td align="center" width="137">1.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">Real Disposable Income</td>
 <td align="center" width="136">-1.7</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">2.9</td>
 <td align="center" width="137">4.0</td>
 <td align="center" width="137">2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">Real Personal Consumption Expenditures</td>
 <td align="center" width="136">-7.3</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">0.3</td>
 <td align="center" width="137">-5.0</td>
 <td align="center" width="137">2.6</td>
 <td align="center" width="137">3.0</td>
 <td align="center" width="137">2.6</td>
 </tr>
 </tbody>


&nbsp;
U.S. Chicago Business Barometer Fell in March 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp; April 30, 2020
• Chicago PMI fell to 47.8 in March, the ninth
consecutive month below 50 growth mark.
• ISM-Adjusted measure calculated by Haver Analytics
fell even more to 46.9.
• Survey extended only to March 16; so it doesn't
capture most of the coronavirus impact.
The Chicago Purchasing Managers Business Barometer fell to
47.8 in March from 49.0 in February. A reading below 50 for this diffusion index
suggests contracting activity in the Chicago area. The Action Economics Forecast
Survey expected a larger decline to 41.0, likely reflecting the adverse impact
of the spreading coronavirus. However, the survey period ended on March 16. So,
the March results don't capture the massive slowdown in economic activity that
transpired over the second half of March.
Haver Analytics constructs an ISM-Adjusted Chicago Business
Barometer with similar methodology to the ISM Composite Index. This measure fell
to 46.9 in March from 50.8 in February. The February reading had been the first
one above the key 50 mark in the previous eight months. The Chicago ISM-Adjusted
index has a 78% correlation with the national ISM Manufacturing Index, which is
scheduled for release tomorrow.
Of the five main indicators, production and new orders posted
monthly declines and were well below the 50 mark. In contrast, supplier
deliveries recorded a significant increase, moving even further above 50.
Extended supplier deliveries are typically seen as indicating demand putting
pressure on supply. However, in the current environment, they probably point to
strained supply chains. The employment index edged up in March but remained well
below 50, indicating that employment in the Chicago area was being challenged
even before the big layoffs from the coronavirus that the economy experienced in
the second half of March.
The MNI Chicago Report is produced by MNI in partnership with
ISM-Chicago. The survey covers a sample of over 200 purchasing professionals in
the Chicago area with a monthly response rate of about 50%. Summary data are
contained in Haver's USECON database, with detail including the ISM-style
index in the SURVEYS database. The Action Economics Forecast Survey is
available in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1023">Chicago Purchasing Managers Index (%,
 SA)</th>
 <th scope="col" width="120">Apr</th>
 <th scope="col" width="120">Mar</th>
 <th scope="col" width="120">Feb</th>
 <th scope="col" width="121">Apr '19</th>
 <th scope="col" width="121">2019</th>
 <th scope="col" width="121">2018</th>
 <th scope="col" width="121">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1023">General Business Barometer</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">47.8</td>
 <td align="center" width="120">49.0</td>
 <td align="center" width="121">57.2</td>
 <td align="center" width="121">51.3</td>
 <td align="center" width="121">62.4</td>
 <td align="center" width="121">60.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">ISM-Adjusted General Business Barometer</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">46.9</td>
 <td align="center" width="120">50.8</td>
 <td align="center" width="121">56.3</td>
 <td align="center" width="121">51.4</td>
 <td align="center" width="121">60.8</td>
 <td align="center" width="121">59.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Production</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">44.4</td>
 <td align="center" width="120">51.0</td>
 <td align="center" width="121">60.3</td>
 <td align="center" width="121">51.2</td>
 <td align="center" width="121">64.5</td>
 <td align="center" width="121">64.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; New Orders</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">45.2</td>
 <td align="center" width="120">49.1</td>
 <td align="center" width="121">58.0</td>
 <td align="center" width="121">52.0</td>
 <td align="center" width="121">63.8</td>
 <td align="center" width="121">63.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Order Backlogs</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">40.3</td>
 <td align="center" width="120">38.2</td>
 <td align="center" width="121">44.9</td>
 <td align="center" width="121">46.9</td>
 <td align="center" width="121">58.0</td>
 <td align="center" width="121">55.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; Inventories</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">34.6</td>
 <td align="center" width="120">48.1</td>
 <td align="center" width="121">48.4</td>
 <td align="center" width="121">48.7</td>
 <td align="center" width="121">55.4</td>
 <td align="center" width="121">54.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Employment</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">44.9</td>
 <td align="center" width="120">44.5</td>
 <td align="center" width="121">54.1</td>
 <td align="center" width="121">49.6</td>
 <td align="center" width="121">55.3</td>
 <td align="center" width="121">52.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; Supplier Deliveries</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">65.3</td>
 <td align="center" width="120">61.3</td>
 <td align="center" width="121">60.7</td>
 <td align="center" width="121">55.6</td>
 <td align="center" width="121">64.8</td>
 <td align="center" width="121">59.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Prices Paid</td>
 <td align="center" width="120"></td>
 <td align="center" width="120">56.7</td>
 <td align="center" width="120">52.9</td>
 <td align="center" width="121">63.7</td>
 <td align="center" width="121">58.5</td>
 <td align="center" width="121">73.9</td>
 <td align="center" width="121">64.0</td>
 </tr>
 </tbody>
</table>





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• Spending cutbacks are widespread due to the coronavirus.

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• Spending cutbacks are widespread due to the
coronavirus.
• Personal income declines with the fall in employment.
• Pricing power weakens.
Personal consumption expenditures declined a record 7.5% (-3.8%
y/y) during March as hiring collapsed, businesses closed and government
stay-at-home guidelines were put in place. A 6.5% decline had been expected in
the Action Economics Forecast Survey. In constant dollars, total spending fell
7.3% (-5.0% y/y). Real durable goods spending declined 14.8% (-11.2% y/y) during
March. Spending on motor vehicles fell by roughly one-quarter both m/m and y/y,
the fourth consecutive monthly decline. Home furniture &amp; appliance buying
weakened 8.3% (-4.4% y/y) and recreational goods &amp; vehicles outlays fell 6.3%
(+3.0% y/y). Real nondurable goods buying surged a record 4.3% last month (6.6%
y/y). The jump came as food &amp; beverage sales strengthened 19.1% (20.9% y/y)
with the stay-at-home requirement. Apparel spending dropped 28.2% (-27.9% y/y) and
has been falling since early last year. Real gasoline outlays weakened 5.3% (-4.5%
y/y). Real spending on services plunged a record 9.5% (-7.5% y/y). The decline
was led by a 29.7% drop (-27.7% y/y) in sales of restaurants &amp; hotels.
Transportation services outlays weakened 23.7% (-22.2% y/y) and outlays on
health care fell 16.2% (-14.3% y/y). These declines were tempered by an
unchanged level (+1.3% y/y) of outlays on housing &amp; utilities. 
Personal income declined 2.0% (+1.4% y/y) in March. A 1.8%
decline had been expected. Wages &amp; salaries fell 3.1% (-0.8% y/y) due to the
drastic cut in employment with the outbreak of the coronavirus. Proprietors
income plunged 8.2% (+0.4%% y/y) following two months of strong increase. Rental
incomes rose a steady 0.4% (4.0% y/y) while receipts on assets eased 0.1% (+1.8%
y/y), due to a 0.4% decline (0.0% y/y) in personal interest income. Dividend
income rose 0.3% (4.2% y/y). Transfer receipts improved 1.6% (6.3% y/y), the
largest gain since January of 2019.
Disposable personal weakened 2.0% (+1.4% y/y) last month, the
largest decline since January 2013. Adjusted for price inflation, take-home pay
fell 1.7% (+0.1% y/y) after two months of 0.4% improvement.
Last month's strength in income relative to spending caused
the personal savings rate to surge to 13.1%, the highest level since October
1975. The level of personal saving rose by nearly two-thirds y/y.
The PCE chain price index decreased 0.3% in March (+1.3%
y/y). The price index excluding food &amp; energy slipped 0.1% (+1.7% y/y).
Motor vehicle prices edged 0.4% lower (-0.9% y/y) and home furnishings &amp;
appliance prices also fell 0.4% both m/m and y/y. Apparel costs dropped 2.2%
(-1.6% y/y). Gasoline &amp; oil prices fell 10.4% (-10.7% y/y). Services costs
held steady (2.4% y/y). Housing &amp; utilities prices rose 0.2% (2.9% y/y) and
health care prices edged 0.1% higher (2.1% y/y). Energy prices were off 6.1% (6.7%
y/y), the third straight monthly decline. Food prices rose 0.6% (1.1% y/y), the
strongest increase since August 2011.
The personal income and consumption figures are available in
Haver's USECON database with detail in the USNA database. The
Action Economics figures are in the AS1REP NA database

 <thead>
 <tr>
 <th class="firstcol" scope="col" width="909">Personal Income &amp; Outlays
 (%)</th>
 <th width="136">Mar</th>
 <th width="137">Feb</th>
 <th width="137">Jan</th>
 <th width="137">Mar Y/Y</th>
 <th width="137">2019</th>
 <th width="137">2018</th>
 <th width="137">2017</th>
 </tr>
 </thead>
 
 <tr class="odd">
 <td class="firstcol" width="909">Personal Income</td>
 <td align="center" width="136">-2.0</td>
 <td align="center" width="137">0.6</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">1.4</td>
 <td align="center" width="137">4.4</td>
 <td align="center" width="137">5.6</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">&nbsp;&nbsp;Wages &amp; Salaries</td>
 <td align="center" width="136">-3.1</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">-0.8</td>
 <td align="center" width="137">4.6</td>
 <td align="center" width="137">5.0</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">Disposable Personal Income</td>
 <td align="center" width="136">-2.0</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">0.5</td>
 <td align="center" width="137">&nbsp;1.4</td>
 <td align="center" width="137">4.3</td>
 <td align="center" width="137">6.1</td>
 <td align="center" width="137">4.7</td>
 </tr>
 <thead>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="909">Personal Consumption Expenditures</td>
 <td align="center" width="136">-7.5</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">-3.8</td>
 <td align="center" width="137">4.0</td>
 <td align="center" width="137">5.2</td>
 <td align="center" width="137">4.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">Personal Saving Rate</td>
 <td align="center" width="136">&nbsp;13.1</td>
 <td align="center" width="137">8.0</td>
 <td align="center" width="137">7.7</td>
 <td align="center" width="137">8.4 (Mar '19)</td>
 <td align="center" width="137">7.9</td>
 <td align="center" width="137">7.7</td>
 <td align="center" width="137">7.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">PCE Chain Price Index</td>
 <td align="center" width="136">-0.3</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">1.3</td>
 <td align="center" width="137">1.4</td>
 <td align="center" width="137">2.1</td>
 <td align="center" width="137">1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">&nbsp;&nbsp;Less Food &amp; Energy</td>
 <td align="center" width="136">-0.1</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">0.2</td>
 <td align="center" width="137">1.7</td>
 <td align="center" width="137">1.6</td>
 <td align="center" width="137">2.0</td>
 <td align="center" width="137">1.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="909">Real Disposable Income</td>
 <td align="center" width="136">-1.7</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">0.4</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">2.9</td>
 <td align="center" width="137">4.0</td>
 <td align="center" width="137">2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="909">Real Personal Consumption Expenditures</td>
 <td align="center" width="136">-7.3</td>
 <td align="center" width="137">0.1</td>
 <td align="center" width="137">0.3</td>
 <td align="center" width="137">-5.0</td>
 <td align="center" width="137">2.6</td>
 <td align="center" width="137">3.0</td>
 <td align="center" width="137">2.6</td>
 </tr>
 </tbody>


&nbsp;
U.S. Chicago Business Barometer Weakens Drastically in
April 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp; April 30, 2020
• Chicago PMI fell to the lowest level since March 2009.
• ISM-Adjusted measure similarly weakened due to the
coronavirus.&nbsp;&nbsp;&nbsp; 
• Lower orders and production led this month's decline.
The Chicago Purchasing Managers Business Barometer fell to
35.4 in April from 47.8 in March, reflecting the depressing effects of the
coronavirus on business around the world. A reading below 50 for this diffusion
index suggests contracting activity in the Chicago area. The Action Economics
Forecast Survey expected a reading of 37.7.
Haver Analytics constructs an ISM-Adjusted Chicago Business
Barometer with similar methodology to the ISM Composite Index. This measure fell
to 42.1 in April, the lowest reading since July 2009. The Chicago ISM-Adjusted
index has a 78% correlation with the national ISM Manufacturing Index, which is
scheduled for release tomorrow.
Of the five main indicators, production and new orders posted
the largest declines. A lessened 15% (NSA) of respondents reported higher orders
and a greatly increased 64% reported a decline. These were offset by a surge in
the supplier delivery measure. It indicated slower delivery speeds and stress in
the supply chain. The inventories measure also surged and reversed the prior
month's decline. 
The employment index plunged to 33.8, the lowest level since
June 2009. Just two percent of survey respondents reported a rise in hiring
while an increased 33% reported a decline.
The index of prices paid fell to 48.4 indicating that, on
balance, lower prices were realized by most survey respondents for the first
time in four years. 
The MNI Chicago Report is produced by MNI in partnership with
ISM-Chicago. The survey covers a sample of over 200 purchasing professionals in
the Chicago area with a monthly response rate of about 50%. Summary data are
contained in Haver's USECON database, with detail including the ISM-style
index in the SURVEYS database. The Action Economics Forecast Survey is
available in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1023">Chicago Purchasing Managers Index (%,
 SA)</th>
 <th scope="col" width="120">Apr</th>
 <th scope="col" width="120">Mar</th>
 <th scope="col" width="120">Feb</th>
 <th scope="col" width="121">Apr '19</th>
 <th scope="col" width="121">2019</th>
 <th scope="col" width="121">2018</th>
 <th scope="col" width="121">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1023">General Business Barometer</td>
 <td align="center" width="120">35.4</td>
 <td align="center" width="120">47.8</td>
 <td align="center" width="120">49.0</td>
 <td align="center" width="121">53.6</td>
 <td align="center" width="121">51.3</td>
 <td align="center" width="121">62.4</td>
 <td align="center" width="121">60.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">ISM-Adjusted General Business Barometer</td>
 <td align="center" width="120">42.1</td>
 <td align="center" width="120">46.9</td>
 <td align="center" width="120">50.8</td>
 <td align="center" width="121">52.9</td>
 <td align="center" width="121">51.4</td>
 <td align="center" width="121">60.8</td>
 <td align="center" width="121">59.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Production</td>
 <td align="center" width="120">25.3</td>
 <td align="center" width="120">44.4</td>
 <td align="center" width="120">51.0</td>
 <td align="center" width="121">51.6</td>
 <td align="center" width="121">51.2</td>
 <td align="center" width="121">64.5</td>
 <td align="center" width="121">64.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; New Orders</td>
 <td align="center" width="120">24.2</td>
 <td align="center" width="120">45.2</td>
 <td align="center" width="120">49.1</td>
 <td align="center" width="121">55.1</td>
 <td align="center" width="121">52.0</td>
 <td align="center" width="121">63.8</td>
 <td align="center" width="121">63.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Order Backlogs</td>
 <td align="center" width="120">37.3</td>
 <td align="center" width="120">40.3</td>
 <td align="center" width="120">38.2</td>
 <td align="center" width="121">49.8</td>
 <td align="center" width="121">46.9</td>
 <td align="center" width="121">58.0</td>
 <td align="center" width="121">55.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; Inventories</td>
 <td align="center" width="120">48.2</td>
 <td align="center" width="120">34.6</td>
 <td align="center" width="120">48.1</td>
 <td align="center" width="121">50.4</td>
 <td align="center" width="121">48.7</td>
 <td align="center" width="121">55.4</td>
 <td align="center" width="121">54.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Employment</td>
 <td align="center" width="120">33.8</td>
 <td align="center" width="120">44.9</td>
 <td align="center" width="120">44.5</td>
 <td align="center" width="121">51.2</td>
 <td align="center" width="121">49.6</td>
 <td align="center" width="121">55.3</td>
 <td align="center" width="121">52.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="1023">&nbsp;&nbsp; Supplier Deliveries</td>
 <td align="center" width="120">78.9</td>
 <td align="center" width="120">65.3</td>
 <td align="center" width="120">61.3</td>
 <td align="center" width="121">56.4</td>
 <td align="center" width="121">55.6</td>
 <td align="center" width="121">64.8</td>
 <td align="center" width="121">59.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1023">&nbsp;&nbsp; Prices Paid</td>
 <td align="center" width="120">48.4</td>
 <td align="center" width="120">56.7</td>
 <td align="center" width="120">52.9</td>
 <td align="center" width="121">51.8</td>
 <td align="center" width="121">58.5</td>
 <td align="center" width="121">73.9</td>
 <td align="center" width="121">64.0</td>
 </tr>
 </tbody>
</table>





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U.S. GDP declined 4.8% (SAAR) last quarter following a 2.1%
Q4 2019 rise. A 3.8% fall had been expected in the Action Economics Forecast
Survey. The decline was the first since Q1'14 and the largest since an 8.4% drop
in Q4'08. The work stoppages which caused the decline began only at the end of
the quarter, so much larger negative effects can be expected in Q2.

The decline in activity came as domestic final sales fell
5.4% (+0.4% y/y). The shortfall was paced by a 7.6% drop (+0.4% y/y) in personal
spending which reflected a 16.1% decline in durable goods outlays. Business
fixed investment declined 8.6% (-3.6% y/y), but residential investment rose
21.0% (7.0% y/y).

The GDP price index rose at a steady 1.3% annual rate (1.7% y/y) in Q1.

The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts. Both databases include tables of the newly
published not seasonally adjusted data. The Action Economics consensus estimates
can be found in AS1REPNA.

<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" >Chained 2012 $ (%, AR)</th>
 <th>Q1'20</th>
 <th>Q4'19</th>
 <th>Q3'19</th>
 <th>Q1'20 Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Gross Domestic Product</td>
 <td>-4.8</td>
 <td>2.1</td>
 <td>2.1</td>
 <td>0.3</td>
 <td>2.3</td>
 <td>2.9</td>
 <td>2.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Inventory Effect (%-point)</td>
 <td>-0.5</td>
 <td>-1.0</td>
 <td>0.0</td>
 <td>-0.6</td>
 <td>0.1</td>
 <td>0.1</td>
 <td>0.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Final Sales</td>
 <td>-4.3</td>
 <td>3.1</td>
 <td>2.1</td>
 <td>0.9</td>
 <td>2.2</td>
 <td>2.8</td>
 <td>2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Foreign Trade Effect (%-point)</td>
 <td>1.3</td>
 <td>1.5</td>
 <td>-0.1</td>
 <td>0.5x</td>
 <td>-0.1</td>
 <td>-0.2</td>
 <td>-0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Domestic Final Sales</td>
 <td>-5.4</td>
 <td>1.5</td>
 <td>2.2</td>
 <td>0.4</td>
 <td>2.3</td>
 <td>3.0</td>
 <td>2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
 <td>-7.6</td>
 <td>1.8</td>
 <td>3.1</td>
 <td>0.4</td>
 <td>2.6</td>
 <td>3.0</td>
 <td>2.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Fixed Investment</td>
 <td>-8.6</td>
 <td>-2.5</td>
 <td>-2.3</td>
 <td>-3.6</td>
 <td>2.1</td>
 <td>6.4</td>
 <td>4.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td>21.0</td>
 <td>6.5</td>
 <td>4.6</td>
 <td>7.0</td>
 <td>-1.5</td>
 <td>-1.5</td>
 <td>3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td>0.7</td>
 <td>2.5</td>
 <td>1.7</td>
 <td>2.4</td>
 <td>2.3</td>
 <td>1.7</td>
 <td>0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Chain-Type Price Index</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
 <td>1.3</td>
 <td>1.3</td>
 <td>1.8</td>
 <td>1.7</td>
 <td>1.8</td>
 <td>2.4</td>
 <td>1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditure</td>
 <td>1.3</td>
 <td>1.4</td>
 <td>1.5</td>
 <td>1.6</td>
 <td>1.4</td>
 <td>2.1</td>
 <td>1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Less Food &amp; Energy</td>
 <td>1.8</td>
 <td>1.3</td>
 <td>2.1</td>
 <td>1.8</td>
 <td>1.6</td>
 <td>1.9</td>
 <td>1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
 <td>1.2</td>
 <td>0.4</td>
 <td>0.5</td>
 <td>1.0</td>
 <td>1.2</td>
 <td>1.4</td>
 <td>1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
 <td>2.0</td>
 <td>2.4</td>
 <td>3.4</td>
 <td>2.4</td>
 <td>2.9</td>
 <td>5.6</td>
 <td>4.5</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

U.S. GDP declined 4.8% (SAAR) last quarter following a 2.1% Q4 2019 rise. A 3.8% fall had been expected in the Action Economics Forecast Survey. The decline was the first since Q1'14 and the largest since an 8.4% drop in Q4'08. The [...]

U.S. GDP Growth Declines 4.8% during Q1 2020 due to Coronavirus Work Stoppages

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<a href="/comment/200429h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429h.png"></a>
 <a href="/comment/200429i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429i.png"></a>

U.S. GDP declined 4.8% (SAAR) last quarter following a 2.1%
Q4 2019 rise. A 3.8% fall had been expected in the Action Economics Forecast
Survey. The decline was the first since Q1'14 and the largest since an 8.4% drop
in Q4'08. The work stoppages which caused the decline began only at the end of
the quarter, so much larger negative effects can be expected in Q2.

The decline in activity came as domestic final sales fell
5.4% (+0.4% y/y). The shortfall was paced by a 7.6% drop (+0.4% y/y) in personal
spending which reflected a 16.1% decline (+1.3% y/y) in durable goods outlays.
Motor vehicle outlays fell by one-third at an annual rate (-4.3% y/y) while home
furnishings &amp; appliances outlays dropped 6.4% (+2.3% y/y) after a 1.1% rise.
Spending on recreational goods &amp; vehicles eased 0.1% (+8.8% y/y) following
last year's 12.1% increase. A 6.9% improvement (4.1% y/y) in nondurable goods
purchases was led by a 25.1% rise (8.2% y/y) in outlays on food &amp; beverages.
That increase was offset by a 35.9% drop (-6.9% y/y) in apparel outlays and a
5.5% decline (-2.0% y/y) in spending on gasoline &amp; oil. Purchases of
services fell an aberrant 10.2% (-0.9% y/y) as health care outlays weakened by a
record 18.0% (-2.8% y/y). Recreational spending fell by roughly one-third (-6.5%
y/y) while food services &amp; hotel outlays weakened 29.7% (-6.3% y/y). Running
counter to this weakness was a 2.8% rise (2.5% y/y) in spending on financial
services &amp; insurance.

Business fixed investment fell 8.6% (-3.6% y/y), down for the
fourth straight quarter. Outlays of structures dropped 9.7% (-9.5% y/y), also
the fourth straight quarterly decline. Investment in equipment fell 15.3% (-5.8%
y/y), the fourth decline in the last five quarters. Outlays on information
processing equipment weakened 15.4% (-3.9% y/y) while investment in industrial
equipment declined 7.1% (-3.1% y/y), off for the second straight period. A 30.6%
decline (-13.7% y/y) in transportation equipment investment was accompanied by a
0.4% rise (2.9% y/y) in intellectual property products investment, which came
after 5.4% growth during the prior four quarters.

<a href="/comment/200429j.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429j.png"></a>
 <a href="/comment/200429k.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429k.png"></a>

Residential investment rose 21.0% (7.0% y/y), the largest of
three straight quarterly increases.

Outlays by government edged 0.7% higher (2.4% y/y), the
weakest of five consecutive quarterly gains. Federal government spending rose a
weakened 1.7% (4.1% y/y) as defense investment edged 0.8% higher (2.7% y/y).
Nondefense outlays strengthened 3.1% (6.4% y/y). Spending by state &amp; local
government improved a negligible 0.1% (1.4% y/y) after last year's 1.6% gain.

Inventory liquidation subtracted 0.5 percentage points from
GDP growth and has been holding back growth for four consecutive quarters. Net
exports added 1.3 percentage points to growth as an 8.7% decline (-2.9% y/y) in
exports was outpaced by a 15.3% drop (-5.8% y/y) in imports.

The GDP price index rose at a steady 1.3% annual rate (1.7%
y/y) in Q1. The PCE price index also rose at a fairly steady 1.3% rate (1.6%
y/y). The business fixed investment price index rose 1.2% (1.0% y/y). The
residential investment price index gained 2.0% and a weakened 2.4% y/y. The
government price index rose 3.2% (2.1% y/y).

The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts. Both databases include tables of the newly
published not seasonally adjusted data. The Action Economics consensus estimates
can be found in AS1REPNA.

<a href="/comment/200429l.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429l.png"></a>
 <a href="/comment/200429m.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429m.png"></a>

<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" >Chained 2012 $ (%, AR)</th>
 <th>Q1'20</th>
 <th>Q4'19</th>
 <th>Q3'19</th>
 <th>Q1'20 Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Gross Domestic Product</td>
 <td>-4.8</td>
 <td>2.1</td>
 <td>2.1</td>
 <td>0.3</td>
 <td>2.3</td>
 <td>2.9</td>
 <td>2.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Inventory Effect (%-point)</td>
 <td>-0.5</td>
 <td>-1.0</td>
 <td>0.0</td>
 <td>-0.6</td>
 <td>0.1</td>
 <td>0.1</td>
 <td>0.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Final Sales</td>
 <td>-4.3</td>
 <td>3.1</td>
 <td>2.1</td>
 <td>0.9</td>
 <td>2.2</td>
 <td>2.8</td>
 <td>2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Foreign Trade Effect (%-point)</td>
 <td>1.3</td>
 <td>1.5</td>
 <td>-0.1</td>
 <td>0.5</td>
 <td>-0.1</td>
 <td>-0.2</td>
 <td>-0.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Domestic Final Sales</td>
 <td>-5.4</td>
 <td>1.5</td>
 <td>2.2</td>
 <td>0.4</td>
 <td>2.3</td>
 <td>3.0</td>
 <td>2.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
 <td>-7.6</td>
 <td>1.8</td>
 <td>3.1</td>
 <td>0.4</td>
 <td>2.6</td>
 <td>3.0</td>
 <td>2.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nonresidential Fixed Investment</td>
 <td>-8.6</td>
 <td>-2.5</td>
 <td>-2.3</td>
 <td>-3.6</td>
 <td>2.1</td>
 <td>6.4</td>
 <td>4.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td>21.0</td>
 <td>6.5</td>
 <td>4.6</td>
 <td>7.0</td>
 <td>-1.5</td>
 <td>-1.5</td>
 <td>3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td>0.7</td>
 <td>2.5</td>
 <td>1.7</td>
 <td>2.4</td>
 <td>2.3</td>
 <td>1.7</td>
 <td>0.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Chain-Type Price Index</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
 <td>1.3</td>
 <td>1.3</td>
 <td>1.8</td>
 <td>1.7</td>
 <td>1.8</td>
 <td>2.4</td>
 <td>1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditure</td>
 <td>1.3</td>
 <td>1.4</td>
 <td>1.5</td>
 <td>1.6</td>
 <td>1.4</td>
 <td>2.1</td>
 <td>1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 Less Food &amp; Energy</td>
 <td>1.8</td>
 <td>1.3</td>
 <td>2.1</td>
 <td>1.8</td>
 <td>1.6</td>
 <td>1.9</td>
 <td>1.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
 <td>1.2</td>
 <td>0.4</td>
 <td>0.5</td>
 <td>1.0</td>
 <td>1.2</td>
 <td>1.4</td>
 <td>1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
 <td>2.0</td>
 <td>2.4</td>
 <td>3.4</td>
 <td>2.4</td>
 <td>2.9</td>
 <td>5.6</td>
 <td>4.5</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

U.S. GDP Growth Declines 4.8% During Q1 2020 Due to Coronavirus Work Stoppages

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<html><head>
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<body>
	 
 
 
 

 <a href="/comment/200429a.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429a.png"></a>
	 <a href="/comment/200429b.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429b.png"></a>

&bull;


&bull;


PREVIOUS>>>>The Mortgage Bankers Association reported that its Mortgage
Loan Application Index eased 0.3% (+70.0% y/y) in the week ended April 17 .........



The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for each index is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW database.

<a href="/comment/200429c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429c.png"></a>
 <a href="/comment/200429d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200429d.png"></a>

<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" >MBA Mortgage Applications (%,
 SA)</th>
 <th>04/24/20</th>
 <th>04/17/20</th>
 <th>04/10/20</th>
 <th>Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td>-0.3</td>
 <td>7.3</td>
 <td>-17.9</td>
 <td>70.0</td>
 <td>32.4</td>
 <td>-10.4</td>
 <td>-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Purchase</td>
 <td>2.1</td>
 <td>-1.8</td>
 <td>-12.2</td>
 <td>-31.1</td>
 <td>6.6</td>
 <td>2.1</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Refinancing</td>
 <td>-0.8</td>
 <td>10.1</td>
 <td>-19.4</td>
 <td>225.3</td>
 <td>71.1</td>
 <td>-24.3</td>
 <td>-34.0</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Effective Mortgage Interest Rate
 (%)</td>
 <td>3.12</td>
 <td>3.11</td>
 <td>3.10</td>
 <td>3.98</td>
 <td>3.71</td>
 <td>4.35</td>
 <td>3.59</td>
 </tr>
 <tr>
 <td class="firstcol" >30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td>3.54</td>
 <td>3.53</td>
 <td>3.57</td>
 <td>4.59</td>
 <td>4.34</td>
 <td>4.94</td>
 <td>4.32</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• • PREVIOUS>>>>The Mortgage Bankers Association reported that its Mortgage Loan Application Index eased 0.3% (+70.0% y/y) in the week ended April 17 ......... The survey covers over 75% of all U.S. retail residential mortgage [...]

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

Accelerating positive economic surprises in the G10 are boosting the global economy

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Robert Brusca

260622E.jpg

Danish consumer confidence rose to -14 in June from -19.8 in May, a small pickup for a still-negative net reading. In June, the reading has a standing at its 7.9 percentile on data back to 1995. So, this confidence headline still has a lower 8% reading overall.

On the month, all seven component readings improved compared to May, although the environmental assessments were little changed across four components. As for the environment, the most changed reading is the improved favorability of the time to save, a metric that is not always a positive category.

As for the seven categories, the readings on the financial situation, general economy and the unemployment rate all improved month-to-month, while the inflation metrics both backed down sharply.

These changes show the financial situation and general economy gauges all at rankings in the lower 20th percentiles, with the outlook for the next 12 months having a standing in their lower 10th percentiles and lower for both the financial situation and the general economy.

Consumer prices, despite a strong monthly step-back, have a 90.2 percentile standing for prices over the past 12 months and a 94.3 percentile standing for the CPI over the next 12 months. Despite some let-up in concerns about unemployment, the unemployment gauge has an 85.1 percentile standing, still substantially elevated.

The environmental readings are less negative, starting with the ‘favorability of the time to purchase,’ a bit weaker month-to-month but improved on balance over two months. The June reading is slightly better than its 12-month average but still has a ranking only in its 21st percentile. The favorability of the time to purchase over the next 12 months is a tick weaker month-to-month and about a point worse than its 12-month average. Its June ranking is in its lower 10th percentile of its historic queue. The favorability of the time to save has a stronger ranking, but this is a more equivocal category. It is improved month-to-month and only slightly stronger over two months The June reading is stronger than its 12-month average, with a ranking in its 47.6 percentile—improved compared to previous categories but still worse than its historic median since 1995 (the median occurs at a ranking of 50%). The ‘general financial situation of households now’ ticked lower in June from May but is stronger on balance over two months. The June reading is above its 12-month average and has a 59.2 percentile standing—above its median.

On balance, Denmark shows improving confidence, progressing slowly but on the right path. There is a sharp downward adjustment in inflation, especially over the next 12 months, despite global conditions. Still, the ranking of the confidence metrics are uniformly weak.

260622.jpg

Denmark

Danish Confidence Improves As Inflation Expectations Pull Back Sharply

Andrew Cates

**US Outperformance Holds; Europe and China Continue to Disappoint**
One of the most persistent features of the global macro landscape in 2026 has been the widening divergence between growth outcomes in the United States and those in Europe and China. Citigroup’s global growth surprise indices—which measure the gap between actual economic releases and consensus expectations—capture this divergence with unusual clarity. US data have continued to surprise on the upside, supported by resilient consumer spending, a stronger-than-expected labour market and the ongoing AI-driven capital spending boom. The picture elsewhere is less encouraging. Growth surprises have turned negative across the euro area, reflecting the cumulative toll of elevated energy costs, weak industrial activity and subdued business confidence. And China's growth surprise index has also fallen sharply in recent weeks, with weaker-than-expected retail sales and fixed asset investment data for May this week reinforcing concerns that domestic demand remains fragile and that policy support is yet to gain meaningful traction.

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**The Oil Risk Premium in the UK Has Been Fading**
One of the more notable features of UK markets this year has been the close relationship between oil prices and two-year gilt yields. The link is not mechanical, but in an economy heavily exposed to imported energy, swings in oil prices can materially alter the inflation outlook and, by extension, expectations for Bank of England policy. That relationship was on display again this week. A softer-than-expected UK CPI reading for May—helped in part by easing energy price pressures—led investors to scale back expectations that inflation would remain persistently above target, pushing two-year gilt yields to their lowest level in six weeks. The question now is whether this marks the start of a more sustained easing in inflation pressures or merely a temporary reprieve. Much will depend on whether the recent decline in oil prices following the US-Iran ceasefire agreement proves durable.

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**The AI Investment Boom Is Rewriting the Rule Book for the Chip Industry**
If the divergence in global growth surprises noted above tells a story of a world economy under strain, the semiconductor sales data tell a very different one — of a technology-driven investment cycle that is accelerating almost regardless of the broader macro environment. Global semiconductor sales have surged to record levels over the past twelve months, driven primarily by insatiable demand for the chips that underpin AI infrastructure: graphics processing units, high-bandwidth memory, and advanced logic chips. Data centre capital expenditure from the hyperscalers continues to exceed even the most optimistic forecasts from a year ago, and the investment pipeline shows no sign of moderating. The gains are concentrated in AI-adjacent products; legacy chips for consumer electronics and industrial applications remain relatively soft.

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**Copper Holds Firm As Oil Retreats**
The commodity markets are telling two quite different stories this week, and the contrast is instructive. Oil has moved sharply lower on the US-Iran MoU news as investors trim the conflict risk premium that has been embedded in energy markets since March — a welcome development for inflation and central bank optionality alike. But the three commodities shown in this chart tell a different story. Copper, one of the most reliable proxies for global electricity infrastructure investment, remains near multi-year highs, reflecting the extraordinary volume of data centre construction, grid expansion and electrification spending flowing through the global economy. Aluminium — energy-intensive to produce and increasingly in demand for the structural components of both data centres and electric vehicles — has, until quite recently, held its ground. Lithium hydroxide, the battery-grade refining product that sits at the heart of the energy storage supply chain, has seen some cyclical softness but remains structurally underpinned by the scale of demand being projected for grid-scale storage and electric mobility over the next decade.

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**Is Energy Availability a Binding Constraint on Growth?**
This next chart is a scatter plot that maps electricity generation per capita against GDP growth per capita across a broad sample of countries over the past five years. The positive relationship is striking. Economies with higher electricity generation per capita, including the United States, have generally delivered stronger GDP growth, while those with more constrained electricity systems have tended to lag. The obvious objection is reverse causality: richer economies generate more electricity because they have more to power. That is partly true. But the broader evidence is difficult to dismiss. The US shale revolution delivered an abundance of cheap energy that supported a sustained period of industrial outperformance relative to many advanced economies. Mainstream commentary often attributed this advantage to factors such as labour market flexibility or technological innovation, but energy costs were arguably at least as important.

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**Corporate America Is Investing from a Position of Unusual Financial Strength**
The surge in US corporate investment—particularly in AI infrastructure, data centres and semiconductors—has inevitably drawn comparisons with the late-1990s dot-com boom. Yet the financial balance data suggest an important difference. During the dot-com era, US non-financial corporates moved into a financial deficit approaching 4% of GDP, relying heavily on external financing to fund investment. Today, despite another ambitious investment cycle, the sector remains in surplus, currently around 1.8% of GDP. Corporate America is investing aggressively, but it is still generating more cash than it is spending. The boom is being financed largely through profits rather than debt. Risks remain—not least the growing fiscal burden on the federal government—but the balance-sheet fragilities that turned previous investment booms into systemic crises appear far less pronounced. If a major constraint emerges in the years ahead, it may be energy and resources rather than leverage.

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The signing of a Memorandum of Understanding (MoU) between the United States and Iran earlier this week has offered financial markets their most significant moment of geopolitical relief since the Middle East conflict escalated in early March. Oil prices fell sharply on the news, short-dated bond yields moved lower across several major economies, and risk assets recovered ground. But relief, as investors have learnt repeatedly over the past three months, is arguably not the same as resolution. The MoU sets a framework for negotiations rather than a final settlement, and the history of US-Iran diplomacy is not one that encourages complacency. Meanwhile, the Federal Reserve — concluding its June meeting yesterday under new chair Kevin Warsh — held rates steady but delivered a distinctly hawkish dot plot that shifted the median year-end projection from a cut to a hike, a reminder that the easing cycle the market had been pricing is no longer the base case. Against this backdrop, this week's charts take stock of where the global economy presently stands — and what the underlying data, beneath the geopolitical noise, are telling us. The picture that emerges is one of divergence. The United States continues to outperform consensus growth expectations while Europe and China disappoint (chart 1). UK short-dated yields have tracked oil prices with unusual consistency this year, and today's softer-than-expected CPI print for May — arriving just as the MoU has knocked crude lower — potentially changes the policy calculus for the Bank of England (chart 2). Global semiconductor sales, meanwhile, are storming ahead regardless of the geopolitical noise, powered by AI infrastructure spending that shows no sign of fatigue (chart 3). A cross-section of commodity prices tells two stories simultaneously: the geopolitical risk premium is draining out of oil, but the metals and materials the AI economy actually needs — copper, uranium, critical minerals — are holding firm (chart 4). Meanwhile a cross-country scatter of electricity generation and GDP growth over the past five years raises a question that deserves more attention than it typically gets: is energy availability a constraint on growth, or merely a consequence of it? The evidence, we would argue, points firmly in one direction (chart 5). And finally, for all the comparisons being drawn between the current investment boom and the late 1990s, the financial balance of the US corporate sector tells a rather different story — one that matters for how any correction might unfold (chart 6).

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Charts of the Week: Between Relief and Reality

Winnie Tapasanun

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The current general activity diffusion index rebounded to a slightly stronger-than-expected 10.3 in June following a 27.1-point drop to -0.4 in May, the latest Manufacturing Business Outlook Survey (MBOS) from the Federal Reserve Bank of Philadelphia showed, indicating a return to expansion in manufacturing activity in the Third Federal Reserve District this month. A reading of 10.0 for June had been expected by the Action Economics Forecast Survey. June marked the fifth m/m increase in six months, showing a sharp improvement from -1.4 in June 2025. In June, 32.1% of firms reported increases in current general activity (up from 22.5% in May), while 21.9% reported decreases (down from 22.9%); 45.4% reported no change (down from 54.6%). Survey responses were collected from June 8 to June 15.

Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology along the lines of the national ISM index. The index rose to 53.1 in June after a 4.8-point decline to a contraction-level 49.7 in May, indicating manufacturing activity expanded for the third time in four months; it was slightly above 51.0 in June 2025.

In the latest survey, the new orders index surged to 27.3 in June following a 34.7-point plunge to -1.7 in May, signaling new orders expanded for the sixth time in seven months. The shipments index rebounded to 14.9 this month from 4.9 in May, registering the seventh consecutive expansion. The unfilled orders index advanced to 10.5 from -2.5, indicating expansion for the first time since July 2025 and the highest level since January 2025. In contrast, the inventories index dropped to -8.5 in June from 6.6 in May, showing inventories contracted for the second time in three months and at the lowest level since July 2024. Meanwhile, the delivery times index increased to -2.6 this month from -10.4 in May (the lowest reading since March 2024).

On the labor front, the number of employees index climbed to 7.9 in June from -2.8 in May, indicating employment expanded for the first time in three months and at the highest level since January. In June, a higher 17.0% of respondents reported increases in employment, while 9.2% reported declines; 73.8% reported no change in employment levels. The average employee workweek index fell to -6.5 this month, the first negative reading and lowest since February, from 1.2 in May.

Inflation indicators were mixed in June. The prices paid index rose to 53.2 this month following an 11.4-point drop to 47.9 in May. A higher 53.5% of respondents reported increases in input prices in June, while only 0.4% reported decreases. The prices received index fell to 20.3, a four-month low, after a 7.2-point May decline to 26.3. In June, 20.3% of respondents reported increases in prices received, while 0.0% reported decreases.

The future indexes remained in positive territory, signaling continued overall growth over the next six months, with most future indicators rising. The future general activity diffusion index edged down to 50.2 in June from 53.2 in May, staying positive since February 2024. Future indexes for new orders (60.8 vs. 53.5) and shipments (60.3 vs. 45.7) increased in June (vs. May) and remained positive. Notably, the future capital expenditures index rose to 41.2 this month, the highest level since June 2021, from 30.9 in May. The following future indexes slipped in June (vs. May) but stayed in positive territory: employment (30.8 vs. 31.7), unfilled orders (17.3 vs. 19.2), and inventories (10.0 vs. 11.8). Prices continued to increase, with the future prices paid index easing to a still-elevated 63.2 in June from 70.0 in May and the future prices received index rising to 67.2, the highest level since August 2021, from 60.5.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The indexes range from -100 to +100 with positive values indicating an increase in activity. The series from the survey dating back to May 1968 can be found in Haver’s **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Current General Activity Index up 10.7 pts. to 10.3 in June; fifth rise in six months.
- New Orders (27.3), sixth expansion in seven mths.; Shipments (14.9), seventh straight expansion; Unfilled Orders (10.5), first expansion since July ’25.
- Employment (7.9), a five-month high after two mths. of contraction.
- Inflation indicators: Prices Paid up (53.2); Prices Received down (20.3, a four-month low).
- Future General Activity Index down to a still-expansion-level 50.2; most subindexes up and positive; future price indexes remaining above long-run avgs.

U.S. Philadelphia Fed Index Returns to Positive Territory in June

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Unemployment in the European Monetary Union stayed at 6.3% in April, just a tick above its all-time low. In the more inclusive EU, the unemployment rate hovered at 6%, just two tenths of a percentage point above its all-time low. Unemployment conditions in the monetary union remain low without many signs of acceleration.

The unemployment rate in April fell in Italy, Ireland, Greece, Portugal, and the Netherlands. The unemployment rate increased month-to-month in Finland.

In March, the unemployment rate declined in Austria, Belgium, Germany, Finland, Italy, and the Netherlands. It rose month-to-month in Greece and Luxembourg.

Over three months, the unemployment rate in these 12-early reporting monetary union members fell in five countries: Belgium, Germany, Italy, Ireland, and the Netherlands. In contrast, unemployment rose in five countries: Portugal, Greece, France, Finland, and Austria.

Over six months, unemployment rates fell in six countries: the Netherlands, Portugal, Italy, Germany, Belgium, and Austria. This was against increases in six countries: Greece, Finland, France, Luxembourg, Spain, and Ireland.

Year over year, the degree of inflation progress is much thinner, with the unemployment rates falling in only three countries Italy, Spain, and Portugal with increases in unemployment for all the other countries in the table.

Unemployment rates continue to rank low in the monetary union, with only three monetary union countries having their unemployment rates ranked above 50%, putting them above their respective medians on data back to the year 2000. Those three countries are Luxembourg, Finland, and Austria. For the remaining countries, the rankings of their unemployment rates over this period are not even as high as their 30th percentiles. Italy, at present, is experiencing its lowest unemployment rate of the period.

Unemployment conditions in the monetary union remain solid. The past two weeks were significant for monetary policy and global economics, with the ECB raising rates, Japan raising rates, and the United States keeping rates unchanged but moving away from an easing bias in policy that had been in effect for quite a number of months. Today the Bank of England, after experiencing some significant inflation progress, decided to keep its policy on hold for another session. An agreement between the U.S. and Iran securing an opening of the Strait of Hormuz was signed, paving the way for potentially improved oil flows, lower inflation, and less uncertainty in the period ahead.

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Europe

EMU Unemployment Remains Low

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Total retail sales rose a much larger-than-expected 0.9% m/m (6.9%y/y) in May following a slightly downwardly revised 0.4% monthly gain in April (previously 0.5% m/m), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 0.5% m/m gain. Excluding autos, other sales increased 0.8% m/m (7.5% y/y) after an unrevised 0.7% m/m increase in April. Expectations were for a 0.5% monthly rise.

Elevated retail gasoline prices continued to boost the value of gasoline sales in May. Gasoline sales increased 3.4% m/m (26.5% y/y) in May on top of a 2.8% m/m increase in April. However, both monthly increases were slower than the 14.2% monthly jump reported in March. Gasoline sales accounted for 31% of total sales in May. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.7% m/m in April, up from 0.2% m/m in April. Sales excluding both autos and gasoline increased 0.5% m/m in May, the same monthly gain as in April.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in May, rising 0.7% m/m (6.3% y/y) following an unrevised 0.5% monthly increase in April. The strong performance at the end of Q1 followed by solid gains in April and May put the April-May level of control group sales up 8.6% at an annual rate from the Q1 average, pointing to another solid contribution by consumption to overall GDP growth in Q2. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales generally increased across major sectors in May. Auto sales rebounded, rising 1.2% m/m in May and more than reversing the 0.9% monthly decline in April. This was the third gain in auto sales in the past four months. Furniture sales rose 1.0% m/m but sales at electronics and appliance stores slipped 0.5% m/m. Building material sales gained 1.0% m/m on top of a 1.1% monthly increase in April. Clothing sales rose 0.3% m/m. Sales at general merchandise stores gained 0.4% m/m in May. Miscellaneous sales jumped 2.3% m/m in May, their first monthly gain in three months. Sales by nonstore retailers continued their strong performance, increasing 1.5% m/m in May on top of a 1.1% monthly rise in April. Over the first five months of this year, nonstore retail sales have risen 7.2%, not annualized. By contrast, food sales were unchanged in May from April while sales at restaurants edged down 0.1% m/m in May, their first monthly decline in four months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total sales increased 0.9% m/m in May, nearly twice expectations.
- Auto sales rebounded, rising 1.2% m/m in May, more than reversing a 0.9% monthly decline in April. 
- Gasoline sales rose 3.4% m/m in May.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in May, the same monthly increase as in April.
- Sales of the retail control group that is used to construct PCE rose 0.7% m/m in May and are 8.6% annualized above the Q1 average.

Economy in Brief

Jump to:

U.S. Personal Spending & Income Collapse in March

Initial Jobless Claims Top 30 Million in Last Six Weeks

Employment Cost Growth Edges Up

U.S. Personal Spending & Income Collapse in March

U.S. Personal Spending & Income Collapse in March

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U.S. GDP Growth Declines 4.8% During Q1 2020 Due to Coronavirus Work Stoppages

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