Carol Stone, CBE

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Initial claims for unemployment insurance rose to 214,000 (-11.2% y/y) during the week ended October 6 from 207,000 in the prior week, which was unrevised. The Action Economics Forecast Survey had expected a smaller increase to 210,000. The four-week moving average of initial claims was 209,500, up from the prior week's 207,000.

In the week ending September 29, continuing claims for unemployment insurance rose 4,000 to 1.660 million....





Data on weekly unemployment insurance 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>10/13/18</th>
 <th>10/06/18</th>
 <th>09/29/18</th>
 <th>Y/Y %</th>
 <th>2017</th>
 <th>2016</th>
 <th>2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Initial Claims</td>
 <td >214</td>
 <td >207</td>
 <td >215</td>
 <td >-11.2</td>
 <td >245</td>
 <td >262</td>
 <td >278</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Continuing Claims</td>
 <td >--</td>
 <td >1,660</td>
 <td >1,656</td>
 <td >-13.3</td>
 <td >1,961</td>
 <td >2,135</td>
 <td >2,266</td>
 </tr>
 <tr>
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td >--</td>
 <td >1.2</td>
 <td >1.2</td>
 <td >
 1.4 
 (Oct 2017)
 </td>
 <td >1.4</td>
 <td >1.6</td>
 <td >1.7</td>
 </tr>
 </tbody>
 </table>
 
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Initial claims for unemployment insurance rose to 214,000 (-11.2% y/y) during the week ended October 6 from 207,000 in the prior week, which was unrevised. The Action Economics Forecast Survey had expected a smaller increase to [...]

U.S. Initial Claims for Unemployment Insurance Show Modest Increase

Robert Brusca

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The U.K. is being buffeted by many forces these days. But the pummeling it is taking over Brexit is surely the number one feature being watched by the U.K. consumer/worker/citizen. Still, U.K. retail sales and growth have all held up remarkably well- so far. Depending on the deal that the U.K. gets, the jury is still out on what happens to investment in the U.K. although in banking a lot of firms already have left. Still, retail sales in September are up by 4.9% over 12 months and sales volume is up by 3%. Both of those are very respectable results. But in September, the monthly result is more of an eye-opener. Nominal September sales fell by 0.6% after a 0.7% rise in August. What’s worse is that sales volumes fell by 0.8% in September after a smaller 0.5% rise in August.

Still, in the quarter just completed (Q3 2018), nominal sales are up at a 7.1% pace and sales volumes are up at a very solid and strong 5.1% pace. If there is some slowing from those parameters, it is not a surprise or a problem. But retail sales are by their nature unruly, and despite the context whenever a sales figure moves lower abruptly, it rightly gains attention and garners some concern. No one knows what next month with bring. Will sales rebound or is there a problem, even one long in the making, cumulating?

U.K. passenger car registrations also have fallen sharply in September, but this was after a strong gain in August. Moreover, this is a European wide phenomenon as new emissions tests and standards are being phased in. Automakers ran promotions ahead of the new incentives to clear out noncompliant stocks. This had the effect of boosting August sales and robbing from September. So this is not a separate U.K. effect, but it is nonetheless real. It just is not part of a signaling mechanism about the health of the U.K. economy.

The CBI sales survey has been more suspect about retail sales with a small rise in September after two months of heavily negative readings for both nominal sales and sales volumes.

For their part, consumers are more of a drag in terms of their attitudes. Consumer confidence (GfK measure) fell in September but is unchanged over three months and 12 months. But the standing for the level of confidence is only in the 43rd percentile of its historic queue of values, a below-median showing. Clearly, consumers have been spending better than how they have been feeling.

Beyond sales trends and Brexit conditions 
With the U.K. in a stare-down contest with the EU over the terms of the Brexit divorce, there is persisting concern about how the economy is behaving in the presence of all the uncertainty that is generated. The reality is that the coming break up is more like Tammy Wynette’s heart rending ‘D-I-V-O-R-C-E’ than like Neil Sedaka’s light-hearted ‘Breaking up is hard to do.’ The Sedaka tune is intended more for a teenager with little at risk and a novice at love; while the Wynette song brings to bear all the separation anxiety of a pair joined for a long time with a lot of mutual assets and friends with clear dislocations to be dealt with. Surely, that is a better rendering of the conditions of separation under Brexit.

As for the Bank of England, it has steadied itself recently. Inflation seemed to be topping up, but it is now up by ‘only’ 2.4% over 12 months, an excessive rise that is made less painful by the fact that the inflation gauge rose by just 0.1% in September.

U.K. trends for spending are a bit up in the air. The year-on-year trends look good, but the monthly result is weak and the three-month trend results are held up by previous months. So we can view retail sales as in play from a policy standpoint. There might be enough weakness to cause the BOE to have some forbearance in the event of continuing inflation overshooting.

Brexit in motion 
The British Brexit talks have not gone well. But even the Swiss have been finding the EU an immoveable object in their quest to become a full-blown EU member with four years of haggling under their belt and little to show for it. The EU is concerned with the potential for ‘rogue states’ within. Clearly, this set of negotiations being conducted by bureaucrats who are afraid of what comes next and are very aware that there is a lot of internal dissent in the EU. Their fear is a new song entitled ‘P-R-E-C-E-D-E-N-T.’ The U.K. referendum on leaving was a lone act not followed in any other EU member nation. And while a lot of polls show that EU/EMU members generally want to stay together despite some very deeply held concerns, the U.K. pre-referendum poll had offered up much the same of what turned out to be bad analysis. No EU member is eager to test those waters at home. In fact, many of them still are ‘angry’ that the U.K. offered its people such a choice and put each of them on the spot as well.

There is also a hot internal conflict currently underway in the EMU and the European Commission seems determined to firmly establish and enforce its authority. This one is in a somewhat subtle yet very much a knock-down drag-out fight with Italy over budget rules. Early in the EU, both Germany and France violated budget rules in 2003 and then banded together to avoid sanctions and then acted to up the ante should anyone else transgress <a href="https://www.ft.com/content/dfb8adf7-7ca4-384c-a737-f28c0dc46924">(here)</a>. They escaped any sanctions. Conversely, Italy has been under and long yoke of austerity and has said ‘basta.’

The U.K. left the EU because of its border rules. Italy is angry over the excessive burden of migrant care it has been left to absorb, buttressed by little support from the EU as well as with the legacy of austerity and what that has done to the Italian economy; net shrinking in GDP ten years after the financial crisis and Great Recession. In Alice in Wonderland, Alice had it easy she possessed a pill to shrink and another to reverse it. Italy does not possess a reversal pill.

In Germany Angela, Merkel’s coalition has gone to dust over migrant issues and the EU is nowhere close to solving its migrant problems. The EU Commission’s solution/approach is a heavy handed strict enforcement of rules that benefit some members and bury others. Italy, one of the two countries most buried by this rules enforcement scheme, has just lodged a complaint with France because French police drove two ‘foreigners’ over the border and dumped them in Italy…Ciao, Bella! President Macron has been very critical of Italy and of is closing its borders to any more migrants especially by sea. What is the trade-off here: two if by land, thousands if by sea?

The U.K. Brexit wrap 
The EU is apparently offering the U.K. an extra year extension to negotiate, but Teresa May only thinks a few months might be necessary. It all depends on what can be agreed too. May apparently feels a deal is close at hand while her EU counterparts apparently are not about to give in on what have been the last sticking points. And the EU is apparently very concerned lest it be viewed as putting up a weak front that might encourage other members to leave and take an external deal like the one the U.K. ‘might yet get’. So take all of this, package it up, and put in the consumer’s knapsack and ask what does it all mean to him or her? With all this going on, it is surprising that the U.K. consumer has done as well as he and she have done. And it is not surprising the confidence has been suppressed. As time passes, the future hardly gets any easier to see. It is strange to see what passes for progress here.


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The U.K. is being buffeted by many forces these days. But the pummeling it is taking over Brexit is surely the number one feature being watched by the U.K. consumer/worker/citizen. Still, U.K. retail sales and growth have all held up [...]

U.K. Retail Sales: Doing Well-As-Can-Be-Expected Despite September Drop

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Initial claims for unemployment insurance fell to 210,000 (-8.7% y/y) during the week ended October 13 from 215,000 in the prior week; the earlier figure was revised up 1,000. The latest report was in line with the Action Economics Forecast Survey at 210,000. The four-week moving average of initial claims was 211,750, up from the prior week's 209,750. The October 13 amount is the smallest since December 6, 1969, when there were 202,000 initial claims; the smallest on record was 162,000 the week ended November 30, 1968. These data begin January 7, 1967.

In the week ending October 6, 2018, continuing claims for unemployment insurance fell 13,000 to 1.640 million (-13.8% y/y) from 1.653 million a week earlier; that earlier number was revised down by 7,000. The 1.640 million is the smallest weekly amount since August 4, 1973. The four-week moving average of claimants declined to 1,653,000. This is again, as it was the previous week, the lowest four-week average since August 18, 1973, when it was 1,646,750.

The insured rate of unemployment remained at its record low of 1.2%, where it's been since early May.

Insured rates of unemployment vary widely by state. During the week ended September 29, the lowest rates were in South Dakota (0.19%), North Dakota (0.30%), Nebraska (0.31%), Indiana (0.42%), and Florida (0.45%). The highest rates were in Pennsylvania (1.43%), Connecticut (1.58%), California (1.64%), Alaska (1.84%), and New Jersey (1.87%). Among other of the largest states by population, the rate was 1.14% in New York and 0.87% in Texas. These state data are not seasonally adjusted.

Data on weekly unemployment insurance 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>10/13/18</th>
 <th>10/06/18</th>
 <th>09/29/18</th>
 <th>Y/Y %</th>
 <th>2017</th>
 <th>2016</th>
 <th>2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Initial Claims</td>
 <td >210</td>
 <td >215</td>
 <td >207</td>
 <td >-8.7</td>
 <td >245</td>
 <td >262</td>
 <td >278</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Continuing Claims</td>
 <td >--</td>
 <td >1,640</td>
 <td >1,653</td>
 <td >-13.8</td>
 <td >1,961</td>
 <td >2,135</td>
 <td >2,266</td>
 </tr>
 <tr>
 <td class="firstcol" >Insured Unemployment Rate (%)</td>
 <td >--</td>
 <td >1.2</td>
 <td >1.2</td>
 <td >
 1.4 
 (Oct 2017)
 </td>
 <td >1.4</td>
 <td >1.6</td>
 <td >1.7</td>
 </tr>
 </tbody>
 </table>
 
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Initial claims for unemployment insurance fell to 210,000 (-8.7% y/y) during the week ended October 13 from 215,000 in the prior week; the earlier figure was revised up 1,000. The latest report was in line with the Action Economics [...]

U.S. Initial Claims for Unemployment Insurance Ease

Tom Moeller

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The Philadelphia Federal Reserve reported that its General
Factory Sector Business Conditions Index dipped to 22.2 during October following
a rise to 22.9 in September. The latest reading compared to expectations for a
greater decrease to 20.0 in the Action Economics Forecast Survey. The figures
are diffusion indexes where readings above zero indicate expansion. The
percentage of firms reporting an improvement in business activity fell to 35.9%,
down from the high of 48.2% in May of last year. The number reporting a
worsening eased to 13.7%, half the percentages early in 2016.

Haver Analytics constructs an ISM-Adjusted General Business
Conditions Index. The figure fell slightly this month to 55.7 and remained down
versus its March peak of 61.9. During the last ten years, there has been a 66%
correlation between the quarterly ISM-adjusted Philadelphia Fed Index and
quarterly real GDP growth.

Movement amongst the components of the survey was mixed last
month. To the down side were the new and the unfilled orders series. A sharp
decline in the delivery times series indicated the quickest product delivery
speeds in two years. Moving higher were the shipments and inventory figures.

Also showing improvement were the labor market readings. The
employment figure rose to its highest level since June. During the last ten
years there has been an 80% correlation between the employment index and the m/m
change in factory sector payrolls. A higher 30% of respondents reported
increased hiring while eleven percent indicated less. The index of future
employment slipped m/m and remained well below its May high. The average
workweek reading rose to its longest since June.

Pricing power slackened as the prices paid gauge fell to its
lowest level in nine months. A sharply lessened 42% of firms reported higher
prices while four percent reported a decline. The index of prices received rose
slightly m/m, but remained well below its high in May.

The index measuring expectations of future business
conditions eased m/m and remained well below the high reached in March of last
year. Expected employment, delivery times and unfilled orders fell, but the new
orders and shipments readings increased. Expected capital expenditures weakened.

The survey panel consists of 150 manufacturing companies in
the third Federal Reserve District (which consists of southeastern PA, southern
NJ and Delaware). The diffusion indexes represent the percentage of respondents
indicating an increase minus the percentage indicating a decrease in activity.
The ISM-adjusted figure, calculated by Haver Analytics, is the average of five
diffusion indexes: new orders, shipments, employment, delivery times and
inventories with equal weights (20% each). Each ISM-adjusted index is the sum of
the percent responding &quot;higher&quot; and one-half of the percent responding
&quot;same.&quot;

The figures from the Philadelphia Federal Reserve dating back
to 1968 can be found in Haver's SURVEYS database. The expectation from
the Action Economics Forecast Survey is available in AS1REPNA.

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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" >Philadelphia Fed - Manufacturing
 Business Outlook Survey (%, SA)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Oct'17</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >General Factory Sector Business
 Conditions</td>
 <td >22.2</td>
 <td >22.9</td>
 <td >11.9</td>
 <td >28.8</td>
 <td >27.4</td>
 <td >4.8</td>
 <td >3.7</td>
 </tr>
 <tr>
 <td class="firstcol" >ISM-Adjusted Business Conditions</td>
 <td >55.7</td>
 <td >56.3</td>
 <td >55.6</td>
 <td >60.1</td>
 <td >57.2</td>
 <td >48.2</td>
 <td >49.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;New Orders</td>
 <td >19.3</td>
 <td >21.4</td>
 <td >9.9</td>
 <td >23.3</td>
 <td >25.4</td>
 <td >4.9</td>
 <td >3.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Shipments</td>
 <td >24.5</td>
 <td >19.6</td>
 <td >16.6</td>
 <td >26.0</td>
 <td >26.8</td>
 <td >6.9</td>
 <td >3.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Unfilled Orders</td>
 <td >-2.3</td>
 <td >12.6</td>
 <td >5.6</td>
 <td >12.1</td>
 <td >11.9</td>
 <td >-5.6</td>
 <td >-5.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Delivery Time</td>
 <td >0.2</td>
 <td >11.1</td>
 <td >6.4</td>
 <td >19.9</td>
 <td >10.6</td>
 <td >-4.6</td>
 <td >-4.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Inventories</td>
 <td >-0.8</td>
 <td >-3.5</td>
 <td >15.4</td>
 <td >-0.8</td>
 <td >2.8</td>
 <td >-9.6</td>
 <td >-1.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Number of Employees</td>
 <td >19.5</td>
 <td >17.6</td>
 <td >14.3</td>
 <td >30.7</td>
 <td >16.2</td>
 <td >-5.6</td>
 <td >3.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Average Workweek</td>
 <td >20.8</td>
 <td >14.6</td>
 <td >10.7</td>
 <td >18.5</td>
 <td >14.9</td>
 <td >-5.4</td>
 <td >-1.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Prices Paid</td>
 <td >38.2</td>
 <td >39.6</td>
 <td >55.0</td>
 <td >37.6</td>
 <td >30.4</td>
 <td >13.5</td>
 <td >1.5</td>
 </tr>
 <tr>
 <td class="firstcol" >Expectations - General Business
 Conditions; Six Months Ahead</td>
 <td >33.8</td>
 <td >36.3</td>
 <td >38.8</td>
 <td >47.2</td>
 <td >47.1</td>
 <td >33.7</td>
 <td >37.6</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Philadelphia Federal Reserve reported that its General Factory Sector Business Conditions Index dipped to 22.2 during October following a rise to 22.9 in September. The latest reading compared to expectations for a greater [...]

Philadelphia Fed Manufacturing Growth Continues; Pricing Pressure Eases

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The Philadelphia Federal Reserve reported that its General
Factory Sector Business Conditions Index dipped to 22.2 during October following
a rise to 22.9 in September. The latest reading compared to expectations for a
greater decrease to 20.0 in the Action Economics Forecast Survey. The figures
are diffusion indexes where readings above zero indicate expansion. The
percentage of firms reporting an improvement in business activity fell to 35.9%,
down from the high of 48.2% in May of last year. The number reporting a
worsening eased to 13.7%, half the percentages early in 2016.
Haver Analytics constructs an ISM-Adjusted General Business
Conditions Index. The figure fell slightly this month to 55.7 and remained down
versus its March peak of 61.9. During the last ten years, there has been a 66%
correlation between the quarterly ISM-adjusted Philadelphia Fed Index and
quarterly real GDP growth.
Movement amongst the components of the survey was mixed last
month. To the down side were the new and the unfilled orders series. A sharp
decline in the delivery times series indicated the quickest product delivery
speeds in two years. Moving higher were the shipments and inventory figures.
Also showing improvement were the labor market readings. The
employment figure rose to its highest level since June. During the last ten
years there has been an 80% correlation between the employment index and the m/m
change in factory sector payrolls. A higher 30% of respondents reported
increased hiring while eleven percent indicated less. The index of future
employment slipped m/m and remained well below its May high. The average
workweek reading rose to its longest since June.
Pricing power slackened as the prices paid gauge fell to its
lowest level in nine months. A sharply lessened 42% of firms reported higher
prices while four percent reported a decline. The index of prices received rose
slightly m/m, but remained well below its high in May.&nbsp;&nbsp; 
The index measuring expectations of future business
conditions eased m/m and remained well below the high reached in March of last
year. Expected employment, delivery times and unfilled orders fell, but the new
orders and shipments readings increased. Expected capital expenditures
weakened.&nbsp; 
The survey panel consists of 150 manufacturing companies in
the third Federal Reserve District (which consists of southeastern PA, southern
NJ and Delaware). The diffusion indexes represent the percentage of respondents
indicating an increase minus the percentage indicating a decrease in activity.
The ISM-adjusted figure, calculated by Haver Analytics, is the average of five
diffusion indexes: new orders, shipments, employment, delivery times and
inventories with equal weights (20% each). Each ISM-adjusted index is the sum of
the percent responding &quot;higher&quot; and one-half of the percent responding
&quot;same.&quot;
The figures from the Philadelphia Federal Reserve dating back
to 1968 can be found in Haver's SURVEYS database. The expectation from
the Action Economics Forecast Survey is available in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1211">Philadelphia Fed - Manufacturing
 Business Outlook Survey (%, SA)</th>
 <th scope="col" width="93">Oct</th>
 <th scope="col" width="93">Sep</th>
 <th scope="col" width="94">Aug</th>
 <th scope="col" width="94">Oct'17</th>
 <th scope="col" width="94">2017</th>
 <th scope="col" width="94">2016</th>
 <th scope="col" width="94">2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1211">General Factory Sector Business
 Conditions</td>
 <td align="center" width="93">22.2</td>
 <td align="center" width="93">22.9</td>
 <td align="center" width="94">11.9</td>
 <td align="center" width="94">28.8</td>
 <td align="center" width="94">27.4</td>
 <td align="center" width="94">4.8</td>
 <td align="center" width="94">3.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">ISM-Adjusted Business Conditions</td>
 <td align="center" width="93">55.7</td>
 <td align="center" width="93">56.3</td>
 <td align="center" width="94">55.6</td>
 <td align="center" width="94">60.1</td>
 <td align="center" width="94">57.2</td>
 <td align="center" width="94">48.2</td>
 <td align="center" width="94">49.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">&nbsp;&nbsp;New Orders</td>
 <td align="center" width="93">19.3</td>
 <td align="center" width="93">21.4</td>
 <td align="center" width="94">9.9</td>
 <td align="center" width="94">23.3</td>
 <td align="center" width="94">25.4</td>
 <td align="center" width="94">4.9</td>
 <td align="center" width="94">3.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1211">&nbsp;&nbsp;Shipments</td>
 <td align="center" width="93">24.5</td>
 <td align="center" width="93">19.6</td>
 <td align="center" width="94">16.6</td>
 <td align="center" width="94">26.0</td>
 <td align="center" width="94">26.8</td>
 <td align="center" width="94">6.9</td>
 <td align="center" width="94">3.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">&nbsp;&nbsp;Unfilled Orders</td>
 <td align="center" width="93">-2.3</td>
 <td align="center" width="93">12.6</td>
 <td align="center" width="94">5.6</td>
 <td align="center" width="94">12.1</td>
 <td align="center" width="94">11.9</td>
 <td align="center" width="94">-5.6</td>
 <td align="center" width="94">-5.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1211">&nbsp;&nbsp;Delivery Time</td>
 <td align="center" width="93">0.2</td>
 <td align="center" width="93">11.1</td>
 <td align="center" width="94">6.4</td>
 <td align="center" width="94">19.9</td>
 <td align="center" width="94">10.6</td>
 <td align="center" width="94">-4.6</td>
 <td align="center" width="94">-4.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">&nbsp;&nbsp;Inventories</td>
 <td align="center" width="93">-0.8</td>
 <td align="center" width="93">-3.5</td>
 <td align="center" width="94">15.4</td>
 <td align="center" width="94">-0.8</td>
 <td align="center" width="94">2.8</td>
 <td align="center" width="94">-9.6</td>
 <td align="center" width="94">-1.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1211">&nbsp;&nbsp;Number of Employees</td>
 <td align="center" width="93">19.5</td>
 <td align="center" width="93">17.6</td>
 <td align="center" width="94">14.3</td>
 <td align="center" width="94">30.7</td>
 <td align="center" width="94">16.2</td>
 <td align="center" width="94">-5.6</td>
 <td align="center" width="94">3.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">&nbsp; Average Workweek</td>
 <td align="center" width="93">20.8</td>
 <td align="center" width="93">14.6</td>
 <td align="center" width="94">10.7</td>
 <td align="center" width="94">18.5</td>
 <td align="center" width="94">14.9</td>
 <td align="center" width="94">-5.4</td>
 <td align="center" width="94">-1.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">&nbsp; Prices Paid</td>
 <td align="center" width="93">38.2</td>
 <td align="center" width="93">39.6</td>
 <td align="center" width="94">55.0</td>
 <td align="center" width="94">37.6</td>
 <td align="center" width="94">30.4</td>
 <td align="center" width="94">13.5</td>
 <td align="center" width="94">1.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="1211">Expectations - General Business
 Conditions; Six Months Ahead</td>
 <td align="center" width="93">33.8</td>
 <td align="center" width="93">36.3</td>
 <td align="center" width="94">38.8</td>
 <td align="center" width="94">47.2</td>
 <td align="center" width="94">47.1</td>
 <td align="center" width="94">33.7</td>
 <td align="center" width="94">37.6</td>
 </tr>
 </tbody>
</table>

&nbsp;
<div id="content">
 <div id="rightside">
 <div class="col" id="entire">
 U.S. Leading Economic Indicators Strengthen 
 by <a href="http://haver.com/comment/Moeller.html">Tom
 Moeller</a>&nbsp;&nbsp;October 18, 2018
 The Conference Board's Composite Index of Leading
 Economic Indicators increased 0.5% (7.0% y/y) during September following
 an unrevised 0.4% June gain. A 0.5% rise had been expected in the Action
 Economics Forecast Survey. The index is comprised of 10 components which
 tend to precede changes in the overall economy.
 Movement amongst the components of the index remained
 mixed last month. Improvement was paced by a rise in consumer expectations
 for business/economic conditions, a higher ISM new orders index, the
 leading credit index and a steeper interest rate spread between 10-Year
 Treasuries &amp; Fed funds. Initial claims for unemployment insurance, stock
 prices, orders for nondefense capital goods excluding aircraft, as well as
 orders for consumer goods &amp; materials also improved. The length of the
 average workweek for production workers and building permits had negative
 effects. 
 Three-month growth in the leading index held steady at
 6.7% (AR), but remained below its 10.3% December 2017 peak.
 The Index of Coincident Economic Indicators increased a
 lessened 0.1% (2.4% y/y) in September. Each of the index components
 contributed positively, but minimally, to the index including changes in
 personal income less transfer payments, industrial production,
 nonagricultural payroll employment and manufacturing &amp; trade sales.
 Three-month growth in the coincident index of 1.9% (AR)
 remained improved from 1.6% growth early in the year, but below its 3.6%
 peak as of December.
 The Index of Lagging Economic Indicators eased 0.1%
 last month (+2.4% y/y) following an unrevised 0.2% August gain. The
 average prime rate charged by banks and the ratio consumer installment
 credit-to-income contributed positively to the index change. The average
 duration of unemployment, the change in unit labor costs, the change in
 commercial &amp; industrial loan outstanding and the change in the
 services CPI contributed negatively to the index change. The ratio of
 business inventories-to-sales had no effect on the index change.
 The three-month change in the lagging index fell to -0.4%,
 down from a high of 5.1% growth in February.
 The ratio of coincident-to-lagging indicators is often
 considered to be another leading indicator of economic activity. As
 economic slack diminishes relative to current performance, the ratio will
 rise. It improved slightly to 99.1 last month.
 The Conference Board figures are available in Haver's BCI
 database; the components are available there, and most are also in USECON.
 The expectations are in the AS1REPNA database. Visit the Conference
 Board's <a href="http://www.conference-board.org/">site</a> for coverage
 of leading indicator series from around the world.
 Modernizing Monetary Policy Rules from St. Louis
 Fed President &amp; CEO James Bullard is available here&nbsp; <a href="https://www.stlouisfed.org/~/media/files/pdfs/bullard/remarks/2018/bullard_memphis_economic_club_18_october_2018.pdf?la=en">https://www.stlouisfed.org/~/media/files/pdfs/bullard/remarks/2018/bullard_memphis_economic_club_18_october_2018.pdf?la=en</a>
 <table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="836">Business Cycle
 Indicators (%)</th>
 <th scope="col" width="147">Sep</th>
 <th scope="col" width="147">Aug</th>
 <th scope="col" width="147">Jul</th>
 <th scope="col" width="147">Sep Y/Y</th>
 <th scope="col" width="147">2017</th>
 <th scope="col" width="148">2016</th>
 <th scope="col" width="148">2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="836">Leading</td>
 <td align="center" width="147">0.5</td>
 <td align="center" width="147">0.4</td>
 <td align="center" width="147">0.7</td>
 <td align="center" width="147">7.0</td>
 <td align="center" width="147">4.1</td>
 <td align="center" width="148">1.2</td>
 <td align="center" width="148">4.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="836">Coincident</td>
 <td align="center" width="147">0.1</td>
 <td align="center" width="147">0.3</td>
 <td align="center" width="147">0.1</td>
 <td align="center" width="147">2.4</td>
 <td align="center" width="147">1.8</td>
 <td align="center" width="148">1.3</td>
 <td align="center" width="148">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="836">Lagging</td>
 <td align="center" width="147">-0.1</td>
 <td align="center" width="147">0.2</td>
 <td align="center" width="147">-0.2</td>
 <td align="center" width="147">2.4</td>
 <td align="center" width="147">2.6</td>
 <td align="center" width="148">2.9</td>
 <td align="center" width="148">3.7</td>
 </tr>
 </tbody>
 </table>
 
 </div>
 </div>
</div>


</body>

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The Mortgage Bankers Association reported that its total
Mortgage Applications Index fell 7.1% (-23.3% y/y) in the week ending October 12
following a 1.7% fall during the prior week. Purchase loan applications declined
5.9% (-7.8% y/y), while applications to refinance fell 9.0% (-40.1% y/y).

The effective interest rate on a 15-year fixed-rate mortgage
increased to 4.64%, up sharply from 3.01% averaged in July 2016. The effective
rate on a 30-year fixed-rate loan increased to 5.26%. The rate on a Jumbo
30-year loan was steady at 5.08%. For adjustable 5-year mortgages, the effective
interest rate was steady at 4.47%.

The average mortgage loan size eased to $288,400 (+1.9% y/y).
For purchases, the average loan size declined to $306,300 (-1.2% y/y); for
refinancings, it fell to $259,400 (+1.9% y/y).

Applications for fixed-rate loans fell 24.1% y/y while
applications for adjustable-rate loans declined 10.8% y/y.

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 all indexes is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW database.

<a href="/comment/181017h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181017h.png"></a>
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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >MBA Mortgage Applications (%,
 SA)</th>
 <th scope="col" >10/12/18</th>
 <th scope="col" >10/05/18</th>
 <th scope="col" >09/28/18</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td >-7.1</td>
 <td >-1.7</td>
 <td >0.0</td>
 <td >-23.3</td>
 <td >-17.8</td>
 <td >15.6</td>
 <td >17.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Purchase</td>
 <td >-5.9</td>
 <td >-1.1</td>
 <td >0.1</td>
 <td >-7.8</td>
 <td >5.6</td>
 <td >13.3</td>
 <td >15.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Refinancing</td>
 <td >-9.0</td>
 <td >-2.6</td>
 <td >-0.1</td>
 <td >-40.1</td>
 <td >-34.0</td>
 <td >17.3</td>
 <td >19.7</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Mortgage Effective Interest Rate
 (%)</td>
 <td >4.64</td>
 <td >4.58</td>
 <td >4.52</td>
 <td >3.57 (Oct'17)</td>
 <td >3.59</td>
 <td >3.22</td>
 <td >3.47</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Mortgage Bankers Association reported that its total Mortgage Applications Index fell 7.1% (-23.3% y/y) in the week ending October 12 following a 1.7% fall during the prior week. Purchase loan applications declined 5.9% (-7.8% [...]

U.S. Mortgage Loan Applications Continue to Decline As Interest Rates Rise

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New inspection regulations push leads and lags behavior through new car sales trends 
New car sales in the European Union in September plunged after registrations had ramped up ahead of the introduction of new emissions inspection rules.

New car registrations fell 23% across the EU compared with a year earlier in September. New registrations had surged by 30% year-on-year in August. Month-to-month registrations plunged 44.3% after soaring by 24.8% in August. The introduction of the new WLTP (Worldwide Harmonized Light Vehicle Test Procedure) at the beginning of last month caused an exceptional surge in registrations in August. In September, that surge unwound.

European car makers had offered large discounts to offload noncompliant vehicles ahead of new emissions rules which came into effect in September, leading to increased competition and pricing pressure. Those discounts were responsible for the surge in August registrations.

The data show that these regulation effects dominate trends across markets as all EU members in the table show highly similar patterns of registrations surging in August then plunging in September.

The trends are present in the year-over-year data as well in the month-to-month behavior of buyers. By comparison, retail sale volume trends have been showing signs of topping, but looked at more broadly, retail sales are still on a trend rise. The trend for vehicle sales is a bit harder to pin down at the moment given its volatility.

While some data for Europe have been showing a slowing, for the most part growth is still in train. Fresh final inflation data released on the day show EMU inflation trends. The EMU HICP is at a 12-month gain of 2.1%, over the top of the EMU’s slightly less than 2% objective. But inflation, excluding food and energy (core inflation), has been dead flat at zero for two months in a row and the core is up by just 1.1% over 12 months. During the period, oil prices have been volatile and rising; the ECB has informally shifted its focus to core inflation from the headline. While the headline is just a bit more than a tick excessive, the core rate is undershooting by a wide margin. Still, there are disagreements within the ECB about how to proceed. Bundesbank purists will probably still be taken in by headline inflation excess. But the excessive headline for inflation in Germany itself has inflation up by 2.2% over 12 months; in France, it is up by 2.5%. But inflation excluding energy for both German and French inflation rates is well below the 2% mark.

Europe may be on the edge of a policy dilemma.


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New inspection regulations push leads and lags behavior through new car sales trends New car sales in the European Union in September plunged after registrations had ramped up ahead of the introduction of new emissions inspection [...]

European Vehicle Registrations Plunge After Soaring

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Total housing starts fell 5.3% during September to 1.201 million units (AR) from 1.268 million
in August, revised from 1.282 million. The decline compared to an estimate of
1.228 million starts in the Action Economics Forecast Survey.

Last month's shortfall reflected a 13.7% drop in the South to
567,000 units from 657,000, as Hurricane Florence made landfall. Nevertheless,
starts remained 4.4% higher than twelve months earlier. In the Midwest, housing
starts also were weak and posted a 14.0% decline to 160,000 units (-14.0% y/y)
from 186,000. In the Northeast, housing starts improved 29.0% (18.8% y/y) to
120,000 units, the highest level in six months. Housing starts in the West
increased 6.6% (7.9% y/y) to 354,000, also the highest level in six months.

Starts of single-family homes eased 0.9% (+4.8% y/y) last
month to 871,000 units following a 2.1% rise to 879,000. Starts of multi-family
units declined 15.2% (+0.9% y/y) to 330,000 and reversed most of their rise during August.

Building permits slipped 0.6% (-1.0% y/y) to 1.241 million,
the lowest level since May 2017, from 1.249 million, revised from 1.229 million.
Single-family permits increased 2.9% (2.4% y/y) to 851,000. Permits to build
multi-family homes declined 7.6% (-7.8% y/y) to 390,000, the lowest level since March 2016.

The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA database.

The minutes to the latest FOMC meeting can be found
<a href="https://www.federalreserve.gov/monetarypolicy/fomcminutes20180926.htm">here</a>.

<a href="/comment/181017c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181017c.png"></a>
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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Housing Starts (000s, SAAR)</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Sep Y/Y %</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >1,201</td>
 <td >1,268</td>
 <td >1,184</td>
 <td >3.7</td>
 <td >1,208</td>
 <td >1,177</td>
 <td >1,107</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Single-Family</td>
 <td >871</td>
 <td >879</td>
 <td >861</td>
 <td >4.8</td>
 <td >852</td>
 <td >785</td>
 <td >713</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Multi-Family&nbsp;</td>
 <td >330</td>
 <td >389</td>
 <td >323</td>
 <td >0.9</td>
 <td >356</td>
 <td >393</td>
 <td >394</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Starts By Region</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Northeast</td>
 <td >120</td>
 <td >93</td>
 <td >103</td>
 <td >18.8</td>
 <td >111</td>
 <td >116</td>
 <td >135</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Midwest</td>
 <td >160</td>
 <td >186</td>
 <td >178</td>
 <td >-14.0</td>
 <td >180</td>
 <td >185</td>
 <td >150</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;South</td>
 <td >567</td>
 <td >657</td>
 <td >624</td>
 <td >4.4</td>
 <td >603</td>
 <td >585</td>
 <td >557</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;West</td>
 <td >354</td>
 <td >332</td>
 <td >279</td>
 <td >7.9</td>
 <td >314</td>
 <td >292</td>
 <td >265</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Building Permits</td>
 <td >1,241</td>
 <td >1,249</td>
 <td >1,303</td>
 <td >-1.0</td>
 <td >1,286</td>
 <td >1,206</td>
 <td >1,178</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Total housing starts fell 5.3% during September to 1.201 million units (AR) from 1.268 million in August, revised from 1.282 million. The decline compared to an estimate of 1.228 million starts in the Action Economics Forecast Survey. [...]

U.S. Housing Starts Decline

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.

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**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.

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**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.

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**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.

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**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.

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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

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

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

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

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

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

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

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

U.S. Light Vehicle Sales Fall in April

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

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

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

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

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

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

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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

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

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

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

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

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

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

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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

Jump to:

U.S. Initial Claims for Unemployment Insurance Show Modest Increase

U.K. Retail Sales: Doing Well-As-Can-Be-Expected Despite September Drop

U.S. Initial Claims for Unemployment Insurance Ease

Philadelphia Fed Manufacturing Growth Continues; Pricing Pressure Eases

Philadelphia Fed Manufacturing Growth Continues; Pricing Pressure Eases

U.S. Mortgage Loan Applications Continue to Decline As Interest Rates Rise

European Vehicle Registrations Plunge After Soaring

U.S. Housing Starts Decline