Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216e.jpg" width="353">
Business is looking better in Germany. Just three days ago, Louise Curley discussed the ZEW Investor Survey, which showed a surprising gain. Now we have the parallel business confidence data compiled by Ifo, a German economic research institute, from a survey of 7,000 business firms in manufacturing, construction and trade. This survey, too, as the ZEW, turned in a favorable performance for December, better than market expectations. The &quot;Business Climate Index&quot; is 99.6 (2000=100), with the component &quot;Business Situation&quot; and Business Expectations also both at 99.6. All three indicators improved from 97.8 in November. The improvement was shared by all major industry segments in the survey, manufacturing, construction, wholesale and retail trade.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216f.jpg" width="353">
Accompanying these indexes are diffusion measures showing the balance of better and worse conditions. These diffusion gauges have generally been negative, that is, more business managers continue to experience deterioration than growth. Still, there is considerably less deterioration than in the recent past. The overall business climate gauge is -1.7% in December, its best level since August 2000 and up from -14.9% last May. Current conditions are -6.0%, the best since January 2001 and much better than April&#39;s -18.7%. Expectations are +2.6. This last, reflecting business leaders&#39; persistent hopes for better times, has frequently been positive, most recently in late 2003 and early 2004.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216g.jpg" width="353">
These improvements seem stronger than some views expressed recently -- prompted perhaps by the riots in neighboring France, by recent political uncertainty and by high energy costs -- that Germany is mired in a distressing economic morass. But the upturns in these confidence measures began about mid-year and survived all those negative weights on the economy. Offsetting these factors has been the weaker euro and commensurate advance in German competitiveness. Further, even employment has been increasing. Since bottoming in April, employment has risen 164,000 and the locally defined unemployment rate has eased from 12.0% in March to 11.5% in November, still high but well below the peak. Thus, the German economy looks better, and this week investors in the ZEW survey and business leaders in the Ifo poll have agreed with that perspective.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/@D8/@D8.HTM">Ifo Indexes</a>, 2000=100, SA</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Climate</td>
<td>99.6</td>
<td>97.8</td>
<td>98.8</td>
<td>96.0</td>
<td>95.7</td>
<td>91.7</td>
<td>89.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>-1.7</td>
<td>-5.3</td>
<td>-3.4</td>
<td>-8.8</td>
<td>-9.6</td>
<td>-17.5</td>
<td>-22.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Situation</td>
<td>99.6</td>
<td>97.8</td>
<td>98.9</td>
<td>95.8</td>
<td>94.0</td>
<td>88.3</td>
<td>85.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>-6.0</td>
<td>-9.5</td>
<td>-7.3</td>
<td>-13.4</td>
<td>-17.0</td>
<td>-27.9</td>
<td>-34.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Expectations</td>
<td>99.6</td>
<td>97.8</td>
<td>98.6</td>
<td>96.3</td>
<td>97.4</td>
<td>95.1</td>
<td>93.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>+2.6</td>
<td>-1.1</td>
<td>+0.6</td>
<td>-4.1</td>
<td>-1.8</td>
<td>-6.5</td>
<td>-9.1</td>
</tr>
</tbody>
</table>
</body>
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Business is looking better in Germany. Just three days ago, Louise Curley discussed the ZEW Investor Survey, which showed a surprising gain. Now we have the parallel business confidence data compiled by Ifo, a German economic research [...]

German Ifo Business Climate Index Approaches Balance in December as Business Confidence Improves

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216a.jpg" width="353">
The December Index of General Business Conditions in the manufacturing sector from the Philadelphia Fed rose slightly to 12.6 from 11.5 the prior month. Consensus expectations had been for improvement to 14.0.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
The sub index measuring new orders fell sharply as did the shipments index though both remained positive. The index covering the number of employees and delivery times also fell. These declines were offset by increases in unfilled orders and inventories. During the last ten years there has been a 64% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216b.jpg" width="353">
The separate index of expected business conditions in six months improved a sharp 10 points to 39.0 and was at its best level in a year. Expectations for employment also jumped to the highest level since January but capital spending intentions fell.
The prices paid index fell for the second month to a still high reading of 49.0. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it&#39;s been 43%.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally. How Well Do Diffusion Indexes Capture Business Cycles? A Spectral Analysis from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/fall2005/sarte_owens.pdf"> here</a>.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos1205.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>12.6</td>
<td>11.5</td>
<td>12.5</td>
<td>28.1</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>49.0</td>
<td>56.8</td>
<td>43.6</td>
<td>51.3</td>
<td>16.8</td>
</tr>
</tbody>
</table>
</body>
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The December Index of General Business Conditions in the manufacturing sector from the Philadelphia Fed rose slightly to 12.6 from 11.5 the prior month. Consensus expectations had been for improvement to 14.0. During the last ten [...]

Philadelphia Fed Business Activity Up a Bit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216d.jpg" width="353">
The US current account deficit improved slightly last quarter to $195.8B but it was from a 2Q deficit that was revised deeper. Also lessening the economic significance of the improvement, it was entirely due to a narrower unilateral transfers deficit caused by private transfers associated with hurricanes and homeland security.
The 3Q current account deficit amounted to 6.2% of GDP and is averaging 6.4% this year versus 5.7% in 2004. Consensus expectations had been for a deepening of the 3Q deficit to $204.6B.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216c.jpg" width="353">
The deficit in merchandise trade deteriorated to a record $197.9B from $186.9B in 2Q. Exports grew just 0.8% (10.0% y/y), held back by the damage to Gulf Coast port facilities caused by Hurricane Katrina. Imports, meanwhile, rose 3.1% (13.6% y/y) in large part due to the 17% surge in value of petroleum products.
The surplus on services improved for the fourth consecutive quarter to $15.1B and rose versus a surplus of $10.3B a year ago. Exports of services grew 1.9% (11.7% y/y and imports were roughly flat q/q (6.8% y/y).
From the capital account, net US foreign direct investment abroad was positive for the first time since 1982 while foreign direct investment in the US surged to its highest since 2001.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">3Q &#39;05</th>
<th scope="col">2Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$195.8B</td>
<td>$197.8B</td>
<td>$167.0B</td>
<td>$668.1B</td>
<td>$519.7B</td>
<td>$475.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$182.3B</td>
<td>$175.1B</td>
<td>$151.2B</td>
<td>$587.1B</td>
<td>$448.5B</td>
<td>$411.2B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.6%</td>
<td>3.6%</td>
<td>13.9%</td>
<td>14.9%</td>
<td>6.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>3.0%</td>
<td>3.0%</td>
<td>15.8%</td>
<td>18.1%</td>
<td>7.3%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$13.5B</td>
<td>$22.6B</td>
<td>$20.5B</td>
<td>$80.9B</td>
<td>$71.2B</td>
<td>$64.0B</td>
</tr>
</tbody>
</table>
</body>
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The US current account deficit improved slightly last quarter to $195.8B but it was from a 2Q deficit that was revised deeper. Also lessening the economic significance of the improvement, it was entirely due to a narrower unilateral [...]

U.S. Current Account Deficit Improved Slightly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216d.jpg" width="353">
The US current account deficit improved slightly last quarter to $195.8B but it was from a 2Q deficit that was revised deeper. Also lessening the economic significance of the improvement, it was entirely due to a narrower unilateral transfers deficit caused by private transfers associated with hurricanes and homeland security.
The 3Q current account deficit amounted to 6.2% of GDP and is averaging 6.4% this year versus 5.7% in 2004. Consensus expectations had been for a deepening of the 3Q deficit to $204.6B.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216c.jpg" width="353">
The deficit in merchandise trade deteriorated to a record $197.9B from $186.9B in 2Q. Exports grew just 0.8% (10.0% y/y), held back by the damage to Gulf Coast port facilities caused by Hurricane Katrina. Imports, meanwhile, rose 3.1% (13.6% y/y) in large part due to the 17% surge in value of petroleum products.
The surplus on services improved for the fourth consecutive quarter to $15.1B and rose versus a surplus of $10.3B a year ago. Exports of services grew 1.9% (11.7% y/y and imports were roughly flat q/q (6.8% y/y).
From the capital account, net US foreign direct investment abroad was positive for the first time since 1982 while foreign direct investment in the US surged to its highest since 2001.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">3Q &#39;05</th>
<th scope="col">2Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$195.8B</td>
<td>$197.8B</td>
<td>$167.0B</td>
<td>$668.1B</td>
<td>$519.7B</td>
<td>$475.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$182.3B</td>
<td>$175.1B</td>
<td>$151.2B</td>
<td>$587.1B</td>
<td>$448.5B</td>
<td>$411.2B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.6%</td>
<td>3.6%</td>
<td>13.9%</td>
<td>14.9%</td>
<td>6.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>3.0%</td>
<td>3.0%</td>
<td>15.8%</td>
<td>18.1%</td>
<td>7.3%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$13.5B</td>
<td>$22.6B</td>
<td>$20.5B</td>
<td>$80.9B</td>
<td>$71.2B</td>
<td>$64.0B</td>
</tr>
</tbody>
</table>
Philadelphia Fed Business Activity Up a Bit  
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216a.jpg" width="353">
The December Index of General Business Conditions in the manufacturing sector from the Philadelphia Fed rose slightly to 12.6 from 11.5 the prior month. Consensus expectations had been for improvement to 14.0.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
The sub index measuring new orders fell sharply as did the shipments index though both remained positive. The index covering the number of employees and delivery times also fell. These declines were offset by increases in unfilled orders and inventories. During the last ten years there has been a 64% correlation between the employment index and the three month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216b.jpg" width="353">
The separate index of expected business conditions in six months improved a sharp 10 points to 39.0 and was at its best level in a year. Expectations for employment also jumped to the highest level since January but capital spending intentions fell.
The prices paid index fell for the second month to a still high reading of 49.0. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it&#39;s been 43%.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally. How Well Do Diffusion Indexes Capture Business Cycles? A Spectral Analysis from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/fall2005/sarte_owens.pdf"> here</a>.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos1205.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>12.6</td>
<td>11.5</td>
<td>12.5</td>
<td>28.1</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>49.0</td>
<td>56.8</td>
<td>43.6</td>
<td>51.3</td>
<td>16.8</td>
</tr>
</tbody>
</table>
German Ifo Business Climate Index Approaches Balance in December as Business Confidence Improves 
by <a href="/comment/Stone.html">Carol Stone</a> December 16, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216e.jpg" width="353">
Business is looking better in Germany. Just three days ago, Louise Curley discussed the ZEW Investor Survey, which showed a surprising gain. Now we have the parallel business confidence data compiled by Ifo, a German economic research institute, from a survey of 7,000 business firms in manufacturing, construction and trade. This survey, too, as the ZEW, turned in a favorable performance for December, better than market expectations. The &quot;Business Climate Index&quot; is 99.6 (2000=100), with the component &quot;Business Situation&quot; and Business Expectations also both at 99.6. All three indicators improved from 97.8 in November. The improvement was shared by all major industry segments in the survey, manufacturing, construction, wholesale and retail trade.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216f.jpg" width="353">
Accompanying these indexes are diffusion measures showing the balance of better and worse conditions. These diffusion gauges have generally been negative, that is, more business managers continue to experience deterioration than growth. Still, there is considerably less deterioration than in the recent past. The overall business climate gauge is -1.7% in December, its best level since August 2000 and up from -14.9% last May. Current conditions are -6.0%, the best since January 2001 and much better than April&#39;s -18.7%. Expectations are +2.6. This last, reflecting business leaders&#39; persistent hopes for better times, has frequently been positive, most recently in late 2003 and early 2004.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051216g.jpg" width="353">
These improvements seem stronger than some views expressed recently -- prompted perhaps by the riots in neighboring France, by recent political uncertainty and by high energy costs -- that Germany is mired in a distressing economic morass. But the upturns in these confidence measures began about mid-year and survived all those negative weights on the economy. Offsetting these factors has been the weaker euro and commensurate advance in German competitiveness. Further, even employment has been increasing. Since bottoming in April, employment has risen 164,000 and the locally defined unemployment rate has eased from 12.0% in March to 11.5% in November, still high but well below the peak. Thus, the German economy looks better, and this week investors in the ZEW survey and business leaders in the Ifo poll have agreed with that perspective.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/@D8/@D8.HTM">Ifo Indexes</a>, 2000=100, SA</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Climate</td>
<td>99.6</td>
<td>97.8</td>
<td>98.8</td>
<td>96.0</td>
<td>95.7</td>
<td>91.7</td>
<td>89.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>-1.7</td>
<td>-5.3</td>
<td>-3.4</td>
<td>-8.8</td>
<td>-9.6</td>
<td>-17.5</td>
<td>-22.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Situation</td>
<td>99.6</td>
<td>97.8</td>
<td>98.9</td>
<td>95.8</td>
<td>94.0</td>
<td>88.3</td>
<td>85.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>-6.0</td>
<td>-9.5</td>
<td>-7.3</td>
<td>-13.4</td>
<td>-17.0</td>
<td>-27.9</td>
<td>-34.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Expectations</td>
<td>99.6</td>
<td>97.8</td>
<td>98.6</td>
<td>96.3</td>
<td>97.4</td>
<td>95.1</td>
<td>93.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Diffusion %</td>
<td>+2.6</td>
<td>-1.1</td>
<td>+0.6</td>
<td>-4.1</td>
<td>-1.8</td>
<td>-6.5</td>
<td>-9.1</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215f.jpg" width="353">
Three diverse countries which reported their latest labor fore data today, have shown improving trends in the last couple of months. In the Netherlands, Sweden and South Korea, the most current unemployment rates have decreased and employment, while not reaching records, also appears to be on a firm uptrend in each region.
In the Netherlands, employment gained 4,000 in October, following an increase of 33,000 in August and September combined. These data are quoted as 3-month centered moving averages. As shown in the first graph, the first half of 2005 saw a flat pattern for employment, so the recent rise is encouraging even though the level remains well below prior years. The Dutch labor force survey only began in 2000, so there is little history to compare. Unemployment has begun an ever so gradual decline after reaching a high of 6.7% in February and March. Although down only 0.2 percentage point, the improvement looks to be sustainable, since it accompanies rising employment, not the &quot;discouraged worker&quot; syndrome of a shrinking labor force. Indeed, using Excel to calculate a labor force participation rate (those in labor force as a percentage of the sum of the labor force and those not in labor force), we find it at 67.44% in September and October, up from a low of 67.16% in April and the highest so far this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215g.jpg" width="353">
In Sweden, employment was up in November by 117,500 from a year ago, in data that are not seasonally adjusted; this extends a firming trend that began in May and represents 2.8% growth in the number of people with jobs. The unemployment rate, at 5.0% last month, is up 0.1% from the year-ago amount, but it accompanies a participation rate that is also rising and is the highest in more than 3-1/2 years. So, here, as in Holland, people are not backing off from the labor force, but joining it. Indeed, the labor force is growing at a record rate by far. In the second graph, we show a six-month moving average of year-to-year growth rates. For November this was 2.2%, a record for this 30-year-old survey. It looks impressive together with the employment growth, indicating resilience of the Swedish labor market.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215h.jpg" width="353">
The situation in South Korea looks a bit different than might be expected. Employment is growing, although not as rapidly as before the currency crisis period of the late 1990s or in the immediate recovery from that in 1999 and 2000. At the same time, a broad industry breakdown into manufacturing and services shows that manufacturing jobs are actually declining and have been all this year, so that the November figure is 107,000 below a year earlier. However, the service sector has been expanding by more than enough to make up for that -- 482,000 over the last 12 months. The unemployment rate has thus been able to come down, reaching 3.5% in November, the lowest since January 2004.

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<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment (thous) Unemployment Rate (%)</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Netherlands*: Employment </td>
<td>--</td>
<td>6,937</td>
<td>6,933</td>
<td>6,914</td>
<td>7,037</td>
<td>7,114</td>
<td>7,125</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>--</td>
<td>6.5</td>
<td>6.5</td>
<td>6.6</td>
<td>6.4</td>
<td>5.3</td>
<td>4.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Sweden**: Employment</td>
<td>4,304</td>
<td>4,238</td>
<td>4,259</td>
<td>4,186</td>
<td>4,213</td>
<td>4,232</td>
<td>4,242</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>5.0</td>
<td>5.6</td>
<td>5.4</td>
<td>4.9</td>
<td>5.5</td>
<td>4.9</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea***: Employment</td>
<td>23,030</td>
<td>22,914</td>
<td>22,836</td>
<td>22,639</td>
<td>22,557</td>
<td>22,139</td>
<td>22,169</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>3.5</td>
<td>3.9</td>
<td>4.0</td>
<td>3.7</td>
<td>3.7</td>
<td>3.6</td>
<td>3.3</td>
</tr>
</tbody>
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Three diverse countries which reported their latest labor fore data today, have shown improving trends in the last couple of months. In the Netherlands, Sweden and South Korea, the most current unemployment rates have decreased and [...]

Employment Conditions Firm in Netherlands, Sweden & Korea in October, November Data

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215e.jpg" width="353">
The Empire State Index of General Business Conditions in New York&#39;s manufacturing industries rose further in December. The 5.92 point gain to 28.74 followed a 10.7 point increase last month. Consensus expectations had been for a decline to 18.5.
Since the series&#39; inception in 2001 there has been a close 80% correlation between the index level and the three month change in factory sector production.
The new orders index surged 4.3 points to the highest level since August though shipments fell as did the employment index to its lowest level since July.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The index of expectations for business conditions in six months slipped one point after a 14 point jump in November. Expectations for future capital spending also added to a strong gain in November.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html">here</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a> </th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;04 </th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>28.74</td>
<td>22.82</td>
<td>27.07</td>
<td>15.59</td>
<td>28.76</td>
<td>16.17</td>
</tr>
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The Empire State Index of General Business Conditions in New York's manufacturing industries rose further in December. The 5.92 point gain to 28.74 followed a 10.7 point increase last month. Consensus expectations had been for a [...]

Empire State Index Rose Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215c.jpg" width="353">
Initial claims for unemployment insurance inched up 1,000 to 329,000 last week following a little revised 7,000 increase the prior week. Consensus expectations had been for 320,000 claims.
Hurricane related claims dropped to 3,000 and brought the total of the three storms during the last fifteen weeks to 603,000.
The four-week moving average of initial claims rose slightly to 328,750 (-1.9% y/y).
Continuing unemployment insurance claims rose 21,000 following a revised 156,000 decline the prior week which was deeper than initially reported.
The insured rate of unemployment was stable at 2.0%. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/10/05</th>
<th scope="col">12/03/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>329</td>
<td>328</td>
<td>2.5%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,606</td>
<td>-5.2%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance inched up 1,000 to 329,000 last week following a little revised 7,000 increase the prior week. Consensus expectations had been for 320,000 claims. Hurricane related claims dropped to 3,000 and [...]

Initial Claims for Jobless Insurance Inched Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051215d.jpg" width="353">
A surprising 4.8% jump in mining output pushed the gain in overall industrial output last month to 0.7% and that exceeded Consensus expectations for a 0.5% rise.
Factory sector production rose a moderate 0.4% (4.1% y/y) on the heels of the 1.9% spike in October which followed curtailments due to hurricanes.
Higher output of business equipment again led the strength in factory output. A 0.9% (10.4% y/y) increase last month reflected strong gains in transit equipment (12.8% y/y), information processing equipment (19.4% y/y) and industrial &amp; other (5.0% y/y). Excluding the high tech sector altogether, factory output gained 0.1% (2.5% y/y).
Consumer goods output fell by 0.8% (+1.4% y/y) led by a 5.2% decline (+0.2% y/y) fall in automotive products. Output of appliances, furniture &amp; carpeting also fell hard by 1.6% (+2.0% y/y) but output of computers, video &amp; audio equipment output rose 4.2% (2.4% y/y). Nondurables output inched up 0.1% with apparel output up 0.8% (-2.6% y/y).
Total capacity utilization rose to 80.2% and capacity grew 1.6% y/y. Factory sector utilization rose to 79.4% while capacity rose 2.1% y/y.

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</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>0.7%</td>
<td>1.2%</td>
<td>2.8%</td>
<td>4.1%</td>
<td>0.6%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>2.1%</td>
<td>1.0%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business Equipment</td>
<td>0.9%</td>
<td>7.4%</td>
<td>10.4%</td>
<td>9.3%</td>
<td>0.0%</td>
<td>-7.8%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>80.2%</td>
<td>79.8%</td>
<td>79.3% (11/04)</td>
<td>78.6%</td>
<td>75.7%</td>
<td>75.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

A surprising 4.8% jump in mining output pushed the gain in overall industrial output last month to 0.7% and that exceeded Consensus expectations for a 0.5% rise. Factory sector production rose a moderate 0.4% (4.1% y/y) on the heels [...]

Industrial Output Up

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

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Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

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

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

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

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

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

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

250501H20.jpg

250501I20.jpg

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

U.S. Light Vehicle Sales Fall in April

250501J5.jpg

250501K5.jpg

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

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

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

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

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

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

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- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

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Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in U**SECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

Economy in Brief: December 2005

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German Ifo Business Climate Index Approaches Balance in December as Business Confidence Improves

Philadelphia Fed Business Activity Up a Bit

U.S. Current Account Deficit Improved Slightly

U.S. Current Account Deficit Improved Slightly

Employment Conditions Firm in Netherlands, Sweden & Korea in October, November Data

Empire State Index Rose Further

Initial Claims for Jobless Insurance Inched Up

Industrial Output Up