Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline.
As a result of w/w declines during May, sales in the opening week of June were 1.0% below the May average which fell 0.4% from April. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose for the first time since early March. A 0.2% increase nevertheless left the series down 2.5% versus one year ago and 4.1% from the recent peak in January.
Comments on the Outlook for the U.S. Economy and Monetary Policy, remarks by Chairman Ben S. Bernanke at the International Monetary Conference in Washington, D.C. can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060605/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/03/06</th>
<th scope="col">05/27/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>468.1</td>
<td>467.5</td>
<td>3.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline. As a result of w/w declines during May, sales in the opening [...]

Chain Store Sales Stabilize

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported that chain store sales stabilized last week and ticked 0.1% higher following two weeks of sharp decline.
As a result of w/w declines during May, sales in the opening week of June were 1.0% below the May average which fell 0.4% from April. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose for the first time since early March. A 0.2% increase nevertheless left the series down 2.5% versus one year ago and 4.1% from the recent peak in January.
Comments on the Outlook for the U.S. Economy and Monetary Policy, remarks by Chairman Ben S. Bernanke at the International Monetary Conference in Washington, D.C. can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2006/20060605/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/03/06</th>
<th scope="col">05/27/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>468.1</td>
<td>467.5</td>
<td>3.4%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Gasoline Prices Rose Last Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606b.jpg" width="353">
Retail gasoline prices rose two cents last week to $2.89 per gallon (36.7% y/y). The rise left gas prices in early June off just slightly from an average $2.91 during May.
The spot market price for regular unleaded gasoline rose eight cents yesterday and that added to a four cent increase on Friday. As a result, the spot price at $2.09 per gallon in early June is up from $2.04 averaged during May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606c.jpg" width="353">
The price of West Texas Intermediate crude oil also moved up yesterday to $72.60 per barrel versus $70.94 averaged during May.
Demand for gasoline demand has begun its usual seasonal rebound. During the last four weeks the demand for gasoline is up 5.0% versus a January low. That increase, however, is somewhat less than the 6-9% recoveries during early 2004 and early 2005. As a result, the four week average of gasoline demand versus the year ago level was roughly unchanged (-0.1%).
The latest Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration can be found <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W403/@W40303/@W40303.HTM">US Weekly</a></th>
<th scope="col">06/05/06</th>
<th scope="col">05/29/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">U.S. Retail Gasoline, Regular per Gal.</td>
<td>$2.89</td>
<td>$2.87</td>
<td>36.7%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>
JOLTS: Job Openings Steady, Hires Rate Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606d.jpg" width="353">
The April job openings rate as reported by the Bureau of Labor Statistics in the Job Openings &amp; Labor Turnover Survey (JOLTS) was unchanged at 2.9%, where it has been all year. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The actual number of job openings, however, ticked 0.1% higher to 4.095 million. That added to strong monthly gains earlier in the year and pulled the number of openings up 14.1% y/y.
Moving in the other direction the hires rate fell to 3.4%, the lowest level in a year, from 3.6% in March. The hires rate is the number of hires during the month divided by employment. The actual number of hires fell a sharp 7.0% (-0.7% y/y) after a 1.4% March decline.
The job separations rate fell to 3.3% from 3.5% in March and 3.4% in February. Separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment. The level of job separations dropped 5.6% (-4.2% y/y) to 4.419 million.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.9%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.5%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Good News for the Service Industries in the Euro Zone from the May PMI Surveys 
by <a href="/comment/Curley.html">Louise Curley</a> June 6, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606e.jpg" width="353">
Like the NTC Economics Ltd. surveys of the intentions of purchasing managers in the manufacturing industries, that Carol Stone commented on last week, theMay survey of purchasing managers in the service industries is another sign of more growth to come in the Euro Zone despite rising oil prices and a strong euro.Growth has been stronger in the service industries than in the manufacturing as can be seen in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606g.jpg" width="353">
For the Euro Zone, as a whole, the index rose to 58.69 in May from 58.33 in April. This is the highest value since November, 2003. (A value over 50 indicates expansion, one under 50, contraction.) PMI&#39;s are not available for all the individual members of the Euro Zone. For the service industries, only data for France, Germany, Ireland, Italy and Spain are available. Although the over-all index for the Euro Zone increased in May, the indexes for Spain and Germany fell. Some of the variations in purchasing managers intentions over the past year can be seen in the second chart. The intentions of purchasing managers in Italy have increased steadily and sharply over the past year while those in Spain have increased at slower rate and have had a more erratic path.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060606f.jpg" width="353">
In addition to the purchasing managers intentions, NTC Economics also publishes monthly GDP Indicators for selected countries and areas. These indicators are based on the data collected in the surveys of the intentions of the purchasing managers in the manufacturing, service and construction industries. In the latest surveys, the indicators point to a 2.9% year-over-year growth for the Euro Zone. This indicator has been a fairly good predictor of GDP growth as can be seen in the third chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PMI Survey of Service Industries &gt;50=Growth &lt;50=Contraction</th>
<th scope="col">May 06</th>
<th scope="col">Apr 06</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone</td>
<td>58.69</td>
<td>58.33</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>60.58</td>
<td>59.39</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>56.67</td>
<td>57.25</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>66.16</td>
<td>65.58</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>61.82</td>
<td>59.63</td>
</tr>
<tr>
<td class="firstcol">Spain&nbsp;</td>
<td>54.69</td>
<td>56.49</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605c.jpg" width="353">
Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver&#39;s Japan data base.
Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first quarter from the fourth quarter of last yearand were 4.05% above the first quarter of 2005. Profits as a percentage of sales reached are at an historically high level. To put the current data in perspective, we show, in the first chart, annual profits before taxes as a percentage of sales for the last fifty years. We use the annual data because of the seasonality in the quarterly data. In 2005, the percentage was 3.6% a figure not seen since the sixties and seventies. In the first quarter of this year, the ratio was 4.2%<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605d.jpg" width="353">
Reflecting the improved profitability, nonfinancial corporations have stepped up capital spending. The excess of capital spending over depreciation allowances continues to grow as can be seen in the second chart. In the first quarter, capital spending increased 29.07% over the fourth quarter of last year and was 13.93% above the first quarter of 2005.Again, in view of the seasonality of the data, the year to year comparison is the more meaningful.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">Japan:</a><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">&nbsp; Corporate Financial Statistics</a></th>
<th scope="col">Q1 06</th>
<th scope="col">Q4 05</th>
<th scope="col">Q1 05</th>
<th scope="col">Q/Q % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sales&nbsp;(Trillion Yen)</td>
<td>372.7</td>
<td>257.6</td>
<td>355.1</td>
<td>4.26</td>
<td>5.00</td>
<td>1378.1</td>
<td>1314.9</td>
<td>1257.1</td>
</tr>
<tr>
<td class="firstcol">Profits Before Taxes (Trillion Yen)</td>
<td>15.5</td>
<td>13.8</td>
<td>14.9</td>
<td>12.3</td>
<td>4.05</td>
<td>53.5</td>
<td>47.8</td>
<td>37.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Profits as Percent of Sales (%)</td>
<td>4.2</td>
<td>3.9</td>
<td>4.2</td>
<td>0.3*</td>
<td>0.0*</td>
<td>3.6</td>
<td>3.0</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Capital Expenditures (Trillion Yen)</td>
<td>15.6</td>
<td>12.1</td>
<td>13.7</td>
<td>29.07</td>
<td>13.93</td>
<td>48.8</td>
<td>45.0</td>
<td>41.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Depreciation Allowances (Trillion Yen)</td>
<td>11.5</td>
<td>10.1</td>
<td>11.4</td>
<td>13.98</td>
<td>0.96</td>
<td>40.5</td>
<td>40.1</td>
<td>28.4</td>
</tr>
</tbody>
</table>
</body>
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Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver's Japan data base. Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first [...]

First Quarter, 2006 Corporate Profitability in Japan At Peak Levels: Fuels Increase in Capital Spending

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605b.jpg" width="353">
The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was in line with Consensus expectations for a drop to 60.0.
For 2Q, the index has averaged 61.6 versus 59.1 during 1Q. Since the series&#39; inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
A five point decline in the new orders index to 59.6 gave back all of the prior month&#39;s improvement but the employment index rose for the second consecutive month to near the 2006 high. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605a.jpg" width="353">
Pricing power surged to the highest level (77.5) since last September. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
New Views on Immigration from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20060601/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>63.0</td>
<td>59.2</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>77.5</td>
<td>70.5</td>
<td>62.4</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>


</html>

The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was [...]

ISM Nonmanufacturing Index Decline As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605b.jpg" width="353">
The Business Activity Index for the non-manufacturing sector in May retraced all of the gains posted during the prior two months. The nearly three point m/m decline to 60.1, reported by the Institute for Supply Management (ISM), was in line with Consensus expectations for a drop to 60.0.
For 2Q, the index has averaged 61.6 versus 59.1 during 1Q. Since the series&#39; inception in 1997 there has been a 50% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
A five point decline in the new orders index to 59.6 gave back all of the prior month&#39;s improvement but the employment index rose for the second consecutive month to near the 2006 high. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605a.jpg" width="353">
Pricing power surged to the highest level (77.5) since last September. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
New Views on Immigration from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20060601/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.1</td>
<td>63.0</td>
<td>59.2</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>77.5</td>
<td>70.5</td>
<td>62.4</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>
First Quarter, 2006 Corporate Profitability in Japan At Peak Levels: Fuels Increase in Capital Spending  
by <a href="/comment/Curley.html">Louise Curley</a> June 5, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605c.jpg" width="353">
Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver&#39;s Japan data base.
Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first quarter from the fourth quarter of last yearand were 4.05% above the first quarter of 2005. Profits as a percentage of sales reached are at an historically high level. To put the current data in perspective, we show, in the first chart, annual profits before taxes as a percentage of sales for the last fifty years. We use the annual data because of the seasonality in the quarterly data. In 2005, the percentage was 3.6% a figure not seen since the sixties and seventies. In the first quarter of this year, the ratio was 4.2%<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060605d.jpg" width="353">
Reflecting the improved profitability, nonfinancial corporations have stepped up capital spending. The excess of capital spending over depreciation allowances continues to grow as can be seen in the second chart. In the first quarter, capital spending increased 29.07% over the fourth quarter of last year and was 13.93% above the first quarter of 2005.Again, in view of the seasonality of the data, the year to year comparison is the more meaningful.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">Japan:</a><a href="http://www.haverselect.com/dlx/JAPAN/@J1/@J105/@J105.HTM">&nbsp; Corporate Financial Statistics</a></th>
<th scope="col">Q1 06</th>
<th scope="col">Q4 05</th>
<th scope="col">Q1 05</th>
<th scope="col">Q/Q % </th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sales&nbsp;(Trillion Yen)</td>
<td>372.7</td>
<td>257.6</td>
<td>355.1</td>
<td>4.26</td>
<td>5.00</td>
<td>1378.1</td>
<td>1314.9</td>
<td>1257.1</td>
</tr>
<tr>
<td class="firstcol">Profits Before Taxes (Trillion Yen)</td>
<td>15.5</td>
<td>13.8</td>
<td>14.9</td>
<td>12.3</td>
<td>4.05</td>
<td>53.5</td>
<td>47.8</td>
<td>37.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Profits as Percent of Sales (%)</td>
<td>4.2</td>
<td>3.9</td>
<td>4.2</td>
<td>0.3*</td>
<td>0.0*</td>
<td>3.6</td>
<td>3.0</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Capital Expenditures (Trillion Yen)</td>
<td>15.6</td>
<td>12.1</td>
<td>13.7</td>
<td>29.07</td>
<td>13.93</td>
<td>48.8</td>
<td>45.0</td>
<td>41.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Depreciation Allowances (Trillion Yen)</td>
<td>11.5</td>
<td>10.1</td>
<td>11.4</td>
<td>13.98</td>
<td>0.96</td>
<td>40.5</td>
<td>40.1</td>
<td>28.4</td>
</tr>
</tbody>
</table>


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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/060602d.jpg" width="353">
For the last several months, we have been working to expand and reorganize Haver&#39;s EMPL database, which consists of the BLS&#39;s massive collection of details on the Household Employment Survey. We&#39;ve recoded the entire database, hopefully making the codes simpler, more intuitive and less like serial numbers. We&#39;ve added about 1,700 new series, including more detail on employment of various resident Hispanic groups, such as Puerto Ricans. There is also greater detail now on educational status, a topic that receives much attention among the BLS data offerings. The database&#39;s menus in DLXVG3 are being restructured so they follow more closely the logic of the tables in Employment and Earnings. This &quot;maintenance&quot; has achieved much in facilitating the use of this enormous database -- now running toward 12,000 series -- and the work continues. Obviously, if you have suggestions, please offer them at <a href="mailto:data@haver.com">data@haver.com</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602e.jpg" width="353">
Meantime, we can address numerous questions and topics in the relationships of people to the labor market. We picked something at random to illustrate: labor force participation by age and race, with a highlight on older workers. The first graph shows that in recent years, total labor force participation has decreased somewhat: from 67% of the civilian noninstitutional population in the late 1990s to 66% in 2004 and 2005; it stood at 66.1% in
May, according to the latest data, reported this morning.This modest decline masks widely varying trends among age groups. Teen-agers (16-19 years old) participation has plunged, from 52% at the turn of the decade to just 43.5% last month. This rate has stabilized, however, creeping up from a low of 42.8% in March 2004. So a larger proportion of kids is once again starting to want to work. Other parts of EMPL will tell you how many of kids aged 16-24 are in school, whether they&#39;ve graduated high school or are perhaps enrolled in college part-time. If they&#39;re unemployed, the data will tell you if how many are looking for full- or part-time work.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602f.jpg" width="353">
The opposite trend is seen in older workers. For people over age 65, labor force participation is rising; from an average of 12.2% of the population in 1995, the rate reached 15.5% in May. This is also seen in an almost parallel move among white workers in that age group. Other racial and ethnic groups have experienced even larger proportional increases. For blacks and Hispanics, this reflected lower participation in the mid-1990s, just around 10.5%. By now, that for Hispanics is as high as for whites, and blacks are not much below. Since 2000, the BLS has reported separate data for Asian workers. Their participation rates, at 13.7% for the 65 years &amp; older age category, were above the rate for the total labor force in 2000, and while those rates are still relatively high, they also have been more erratic, so it is hard to draw strong conclusions about their labor force status. Nonetheless, an uptrend is clearly identifiable.
Older workers are thus increasingly &quot;economically active&quot;, to apply the phrase used in several European countries. This could be simply because they are healthier than before. It could also be that basic living costs necessitate the earning of wage income. But there is one other policy factor that may be important. In April 2000, Congress and the President enacted a law repealing the earnings ceiling on social security benefits. Previously, a recipient&#39;s benefits were reduced $1 for every $3 they had in earnings above this ceiling, a clear disincentive to work in more than casual employment. Since then, however, there has been no such rule, and upturns in labor force participation can be marked to roughly the time of the law change. The increased participation even included the months of recession in 2001, a time when people usually pull back from job-hunting. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% of Noninstitutional Population</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2000</th>
<th scope="col">1995</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total*</td>
<td>66.1</td>
<td>66.1</td>
<td>66.0</td>
<td>66.0</td>
<td>66.2</td>
<td>67.1</td>
<td>66.6</td>
</tr>
<tr>
<td class="firstcol">Age 16-19*</td>
<td>43.5</td>
<td>43.4</td>
<td>43.7</td>
<td>43.8</td>
<td>44.5</td>
<td>52.0</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Age 25-54*</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>82.8</td>
<td>83.0</td>
<td>84.0</td>
<td>83.5</td>
</tr>
<tr>
<td class="firstcol">Age 65 &amp; Over</td>
<td>15.5</td>
<td>15.4</td>
<td>15.0</td>
<td>14.4</td>
<td>14.0</td>
<td>12.9</td>
<td>12.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; White</td>
<td>15.6</td>
<td>15.5</td>
<td>15.1</td>
<td>14.6</td>
<td>14.1</td>
<td>13.0</td>
<td>12.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Black</td>
<td>14.8</td>
<td>13.1</td>
<td>13.6</td>
<td>13.1</td>
<td>12.9</td>
<td>11.6</td>
<td>10.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asian</td>
<td>16.3</td>
<td>20.4</td>
<td>15.5</td>
<td>13.1</td>
<td>13.7</td>
<td>13.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Hispanic</td>
<td>15.5</td>
<td>15.8</td>
<td>13.9</td>
<td>14.5</td>
<td>12.8</td>
<td>12.2</td>
<td>10.5</td>
</tr>
</tbody>
</table>
</body>
</html>

For the last several months, we have been working to expand and reorganize Haver's EMPL database, which consists of the BLS's massive collection of details on the Household Employment Survey. We've recoded the entire database, [...]

EMPL Database Facilitates Labor Force Analysis; Example: Elderly Workers on the Rise

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602g.jpg" width="353">
Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised.
Machinery inventories rose 0.6% (4.9% y/y) while inventories of computers &amp; electronic products rose 1.2% (6.3% y/y) after a 2.9% March rise. Inventories of electrical equipment rose 0.6% (6.5% y/y) though inventories of furniture &amp; related products fell 0.2% (5.0% y/y) after the 2.1% jump during March. Primary metals inventories rose 1.2% (1.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602h.jpg" width="353">
Total factory orders gave back half of the prior month&#39;s jump with a 1.8% decline. Durable goods orders fell 4.4% and that was little revised from the advance report of a 4.8% slide. Factory orders less transportation rose 0.2% (7.9% y/y).
Factory shipments were unchanged following the 1.0% spike in March. Less transportation shipments added 0.6% (6.9% y/y) to the 0.9% March increase. Petroleum shipments rose 3.5% (20.5% y/y). Factory shipments less transportation &amp; petroleum rose 0.3% (5.4% y/y).
Unfilled orders increased another 1.5% due to a 3.7% (74.1% y/y) jump in civilian aircraft. Less the transportation sector altogether backlogs still rose a strong 1.1% (13.7% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.7%</td>
<td>0.9%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-1.8%</td>
<td>4.0%</td>
<td>8.7%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>1.0%</td>
<td>6.0%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.5%</td>
<td>3.0%</td>
<td>22.8%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
</body>
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Factory inventories rose 0.7% during April after an upwardly revised 0.9% gain during March. The back to back two-month gains were the strongest since early last year. Historical figures in this MSIO report were very much revised. [...]

U.S. Factory Inventory Accumulation Regained Momentum

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602b.jpg" width="353">
US light vehicle sales during May fell 3.9% m/m to 16.10M units according to the Autodata Corporation. The decline exceeded Consensus expectations for sales of 16.5M units and was to the lowest level since last November.
Overall light truck sales fell 4.9% (-9.6% y/y) last month. Sales of imported light trucks gave back some of the indication of holding up perhaps apparent in April and fell 10.6% m/m (+6.1% y/y). For the fourth month this year, sales of domestic trucks fell sharply. A 3.8% (-11.9% y/y) decline dropped sales to the lowest level since a very weak November. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060602a.jpg" width="353">
Some relief from the pressure on sales of relatively fuel in-efficient trucks may have been apparent in the modest three cent decline in retail gasoline prices last week to $2.87 per gallon.
Auto sales during May slipped 2.7% (+3.9% y/y) led by a 5.4% (-2.9% y/y) fall in domestic car sales. Sales of imported autos rose 2.9% (20.1% y/y).
Imports&#39; share of the US light vehicle market surged to another record level of 24.4% versus 20.4% during all of last year.

<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/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.10</td>
<td>16.74</td>
<td>-3.5%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.79</td>
<td>8.00</td>
<td>3.9%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.31</td>
<td>8.74</td>
<td>-9.6%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
</body>
</html>

US light vehicle sales during May fell 3.9% m/m to 16.10M units according to the Autodata Corporation. The decline exceeded Consensus expectations for sales of 16.5M units and was to the lowest level since last November. Overall light [...]

U.S. Vehicle Sales Down, Light Truck Sales Down Hard

US is big leader in global surge in private AI investment

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

Sharply rising share of AI-related jobs

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

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

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

Cost of transporting crude oil has soared to series high

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

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

Is recent drop in sentiment signaling softer growth ahead?

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

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

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

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Andrew Cates

**A Tug of War Between AI Hope and Geopolitical Shock**
The latest Blue Chip Economic Indicators survey highlights a growing divergence between economies benefiting from AI-driven optimism and those more exposed to the inflationary consequences of renewed geopolitical instability. Taiwan stands out as the clearest AI beneficiary, with growth forecasts revised sharply higher while inflation expectations have risen only modestly, reflecting surging semiconductor demand and continued investment in global technology supply chains. China also remains relatively resilient, supported by ongoing AI-related capital spending and stronger technology sectors. By contrast, the euro area and UK have seen much larger upward revisions to inflation forecasts alongside weaker or declining growth expectations, underscoring their greater vulnerability to the recent Middle East shock and higher energy costs. Korea sits somewhere in between: benefiting from the AI hardware cycle but still exposed to trade and energy headwinds. Overall, the chart illustrates the increasingly important push-and-pull shaping the global outlook: AI optimism and productivity hopes on one side, and geopolitical fragmentation, energy insecurity and supply-side inflation pressures on the other.

260513Z1.jpg

**Forecasters See Contained Pass-Through**
Against this backdrop, our latest Blue Chip special question sought to gauge whether economists believe the recent rise in energy prices will remain largely contained — or whether it risks spilling more meaningfully into underlying global inflation dynamics. The results suggest forecasters have become somewhat less concerned about a broad and persistent inflationary impulse since April. A larger share of respondents in the May survey now expect only a “limited and temporary” pass-through into core inflation, while the proportion anticipating “moderate and persistent” effects has declined noticeably. Very few panelists expect significant second-round effects, implying that most still believe inflation expectations and wage-setting behaviour remain relatively well anchored. In part, this reflects confidence in central bank credibility and the view that softer global demand conditions will constrain firms’ pricing power. Yet the persistence of a sizeable minority still expecting moderate pass-through underscores the uncomfortable tension facing policymakers. 

260513Z2.jpg

**Energy Reawakens as a US Inflation Driver**
While survey respondents generally expect only limited pass-through from higher energy prices into broader inflation, the latest US CPI data provide a reminder that the process may already be underway at the margin. April’s CPI report showed core inflation coming in slightly firmer than expected, suggesting underlying price pressures remain more persistent than many policymakers had hoped. The decomposition of CPI inflation highlights that services continue to dominate overall inflation dynamics, reflecting still-elevated wage and labour-intensive price pressures across the economy. However, the more notable recent development has been the renewed contribution from energy prices, which had previously acted as a disinflationary force through much of 2025. Food inflation has also remained comparatively steady, while non-energy goods prices continue to exert only modest upward pressure despite ongoing tariff and supply-chain concerns. Taken together, the data reinforce the idea that the US economy is not facing a classic demand collapse, but rather a more uncomfortable supply-side environment in which geopolitical energy shocks risk colliding with still-resilient domestic demand, AI-related investment spending and sticky service-sector inflation.

260513Z3.jpg

**AI: The Powerful Counterweight to Geopolitical Headwinds**
If rising energy prices and geopolitical instability represent one major force shaping the current macroeconomic outlook, the extraordinary surge in AI-related investment represents the other. The latest data from Our World in Data show global private investment in AI accelerating sharply again in 2025, reaching close to $300 billion — more than double the level seen just two years earlier. The United States continues to dominate the global AI landscape, accounting for the overwhelming majority of private investment spending, while China and Europe remain considerably smaller contributors despite continued growth. The scale and speed of the 2025 increase is particularly striking given the broader backdrop of elevated policy uncertainty, trade fragmentation and concerns about slowing global productivity growth. In effect, the global economy is now being pulled in two competing directions: on one side, geopolitical tensions, supply-chain fragilities and more recent energy shocks are weighing on confidence and raising supply-side costs; on the other, AI enthusiasm is driving an enormous wave of capital expenditure, infrastructure build-out and technology-related demand. This helps explain why growth expectations — particularly in the US and parts of Asia — have remained comparatively resilient despite an increasingly uncertain global environment.

260513Z4.jpg

**Industrial Winners and Losers in a Fragmenting Global Economy**
The divergence in industrial performance across advanced economies has become increasingly striking. Taiwan has emerged as one of the clearest beneficiaries of the global AI boom, with industrial production surging as semiconductor demand, data-centre investment and advanced electronics exports continue to accelerate. Denmark has also significantly outperformed, though for very different reasons, with the extraordinary global success of its pharmaceutical sector — particularly weight-loss and diabetes drugs — driving a powerful expansion in manufacturing output. By contrast, the UK and Germany have experienced a far weaker industrial recovery. In both cases, elevated energy costs and greater dependence on imported energy have weighed heavily on industrial competitiveness since the post-pandemic energy shock. Germany’s large manufacturing sector has been particularly exposed to higher natural gas prices and weaker external demand, while the UK has continued to struggle with a combination of high energy costs, weak productivity growth and subdued business investment. The chart highlights an increasingly important feature of the global economy: countries exposed to powerful structural growth themes such as AI or pharmaceuticals are pulling away from those still burdened by energy dependence and deteriorating industrial competitiveness.

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**China’s Pulse Is Picking Up Again**
China’s economic backdrop has shown clearer signs of improvement in recent months, with both the Citigroup Economic Surprise Index and the Yicai High Frequency Economic Activity Index moving higher. The rebound suggests that incoming data have begun consistently outperforming expectations after a prolonged period of disappointment. Part of the recent improvement likely reflects the cumulative effects of policy easing, including targeted fiscal support, infrastructure spending and further efforts to stabilise the property sector. Export demand has also remained more resilient than many expected, helped in part by the continued strength of global technology and AI-related supply chains. At the same time, improving domestic mobility and energy usage indicators point to firmer underlying activity momentum. The Yicai index itself is designed to provide a near real-time pulse of the Chinese economy using a basket of high-frequency indicators including subway usage, air pollution, coal consumption, freight activity, unemployment and bankruptcy trends. While China still faces significant structural headwinds — including weak household confidence, property-sector fragilities and deflationary pressures — the recent pickup suggests that growth momentum may be stabilising at a time when several other major economies are becoming more vulnerable to geopolitical and energy-related shocks.

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The global economy is still caught between two powerful and competing forces. On one side, the AI investment boom continues to support growth, industrial activity and equity markets, particularly in the US and parts of Asia. On the other, renewed Middle East tensions and higher energy prices are adding to inflation risks and broader policy uncertainty. The latest Blue Chip survey reflects this divide clearly: growth expectations have generally held up best in economies tied to AI-related investment and technology supply chains, while inflation forecasts have risen more sharply in more energy-exposed economies such as the UK and euro area (chart 1). Forecasters still largely expect only limited pass-through from higher energy prices into core inflation, although recent US CPI data suggest underlying price pressures remain somewhat sticky (charts 2 and 3). At the same time, the extraordinary continued surge in global AI investment — now approaching $300 billion annually — highlights the sheer scale of capital being deployed into semiconductors, data centres and digital infrastructure, particularly in the United States (chart 4). The divergence in industrial production trends also reinforces the growing gap between economies benefiting from structural growth drivers — such as Taiwan’s semiconductor sector and Denmark’s pharmaceutical industry — and those struggling with higher energy costs and weaker competitiveness, notably Germany and the UK (chart 5). Meanwhile, improving Chinese activity indicators suggest policy support and stronger technology demand may finally be helping to stabilise growth (chart 6). Overall, the world economy remains resilient, but increasingly uneven, with AI-related investment continuing to offset — though not eliminate — the drag from geopolitical fragmentation and rising energy insecurity.

Charts of the Week: The Tug of War

Sandy Batten

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Total retail sales rose a solid 0.5% m/m (4.9% y/y) in April on top of a slightly downwardly revised 1.6% monthly jump in March (previously 1.7%), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 05% m/m gain. Excluding autos, other sales increased 0.7% m/m (6.3% y/y) in April following an unrevised 1.9% monthly jump in March. Expectations were for a 0.6% monthly increase. The strong performance in March and the additional solid gain in April put the April level up 7.8% at an annual rate from the Q1 average, providing a very solid start for Q2.

As expected, the continued rise in retail gasoline prices boosted gasoline sales further in April. Gasoline sales increased 2.8% m/m in April following a 13.7% m/m surge in March and accounted for more than 40% of the April increase in total sales. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.3% m/m in April versus a 0.7% monthly gain in March. Sales excluding both autos and gasoline increased 0.5% m/m in April following a 0.7% m/m rise in March.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in March, rising 0.5% m/m in April following an upwardly revised 0.8% m/m increase in March (previously (0.7% m/m). The solid performances of the control group sales in March and April provide a strong start to Q2. April control-group sales are 5.4% at an annual rate above the Q1 average, in line with the 5.7% annualized increase in Q1. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales across major sectors were varied in April. Consumers clearly spent more on necessities, owing largely to higher prices. Food sales increased 0.8% m/m in April on top of a 1.0% m/m rise in March. And as already noted, gasoline sales posted another outsized monthly increase. By contrast, department store sales slumped 3.2% m/m, clothing sales fell 1.5% m/m, auto sales declined 0.4% m/m and furniture sales fell 2.0% m/m. More encouragingly, sales of nonstore retailers rose 1.1% m/m, their fourth consecutive solid monthly gain. And sales at restaurants increased 0.6% m/m in April, their third consecutive monthly rise. Analysts frequently use restaurant sales as a barometer of consumer attitudes, believing that consumers would not eat out regularly if they were under serious financial stress.

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


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- Total sales increase 0.5% m/m in April after a 1.6% monthly jump in March.
- Gasoline sales rose 2.8% m/m in April on top of a 13.7% surge in March.
- Auto sales fell 0.4% m/m after a 0.6% m/m rise in March.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in April versus a 0.7% m/m rise in March.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in April and are 5.4% annualized above the Q1 average, providing a good start to Q2.


U.S. Retail Sales Slowed in April But Remained Solid

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance rose by 12,000 to 211,000 in the week ending May 9, from 199,000 in the week ending May 2, revised from 200,000. The four-week average rose 750 to 203,750 in the week ending May 9, from 203,000 the May 2 week, revised from 203,250. The Action Economics/Haver Analytics Survey looked for 205,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 24,000 to 1.782 million in the week ending May 2, from 1.758 million in the week ending April 25, revised from 1.766 million. The four-week moving average declined to 1.781 million in the latest week from 1.788 million in the April 25 week. The four-week moving average reached the lowest level since May 2024. The insured unemployment rate rose back to 1.2% in the week of May 2 from the one-week dip to 1.1% in the April 25 week. It had been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 25, the highest unemployment rates were in Rhode Island (2.29%), New Jersey and Massachusetts (both 2.20%), and Washington (2.15%). The lowest rates were in Florida and Louisiana (both 0.31%), South Dakota (0.32%), Alabama and Arkansas (both 0.36%), North Carolina (0.38%), Tennessee (0.47%) and Iowa, Kansas and Virginia (all 0.48%). Rates in other notable states include California (1.99%), New York (1.66%), Illinois (1.56%), Pennsylvania (1.28%), and Texas (1.03%). 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 **USECON**. Data for individual states are in **REGIONW** back to December 1986.


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- New claims rose by 12,000 to 211,000.
- Continuing claims rose by 24,000 to 1.782 million.
- The insured unemployment rate was back up to 1.2% in the week of May 2, from the one-week dip to 1.1% the prior week.

U.S. Initial Unemployment Claims rose in the Week of May 9

Robert Brusca

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UK GDP grew by 2.5% in 2026-Q1. GDP growth quarterly was last this strong in 2024-Q2 and last stronger in 2024-Q1. This is the strongest quarterly growth in about two years. Private consumption surged in 2026-Q1, rising at a 2.4% annual rate. Capital formation and housing each backed off in the last two quarters. This is the opposite form the US where investment is strongly pushing growth ahead.

On the international side of the ledger, UK exports rose at a 0.4% annualized rate in the quarter while imports rose by a strong 2.6% annual rate, still, viewed on its own, domestic demand rose at a 3.2% annual rate.

Domestic demand growth has picked up to over 1% at 1.5% on a year-over-year basis. That is a good development. However, it is still a weak showing. Over the last 26 years domestic demand’s Year-on-year gain ranks at its 30th-percentiel; it has been weaker than this only about 30% of the time. But over the last nearly four-years the 1.5% gain is just below its median. This gives some indication of how weak growth has been in the post-Covid period. The UK was still in a post Brexit environment, when it had to deal with Covid, the invasion of Ukraine, and now the Middle East. At the same time, it has had a considerable amount of its own political turmoil and still does. 

The chart above shows the snake crawl of GDP that continues to depict growth in the EMU area. That is a continuing weak environment- one of the UK’s important export markets. Europe’s fixation on social welfare spending and the need to tax to pay for it has robbed the economy of its dynamism. Still, both the UK and the Euro-Area continue to have lingering inflation issues. And both show current inflation in an upswing. 

**Central bankers' inflation and growth** 
Central banks are playing a waiting game, the best that they can. Major money center country central banks have been consistently overshooting their inflation targets since Covid. And despite excess inflation banks have been reluctant to hike rates and have instead pursued a strategy of persisting slow rate reduction. It has been a curious period in which central banks have kept their inflation target goals but simply have been content to miss their targets in the short run and promise to thit them in the long run. This is clearly a policy of only temporary usefulness because it is bound to blow up, the longer inflation fails to be controlled at its targeted pace. For now, UK interest rates remain higher than in Europe, closer to the level in the US and with a monetary policy committee that seems determined to stop the overshoot as oil prices flare. We’ll see if the BOE MPC members are really ready to pull the trigger on higher rates as UK GDP growth looks firmer. 



United Kingdom

UK Q1 GDP Growth Steps Up  

Michael J. Moran

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The Producer Price Index surged 1.4% in April, far in excess of the expected increase of 0.5%. Energy prices accounted for much of the increase with a jump of 7.8%, a much sharper change than the advance of 3.8% in the CPI. The marked difference between the energy components of the CPI and the PPI was primarily due to the nature of the customers. The Consumer Price Index, naturally, collects prices paid by individuals; the PPI, in addition to individuals, collects prices paid by businesses, governments, and exporters. Energy prices paid by governments and exporters rose sharply (12.1% and 15.8%, respectively). The PPI also showed a sharp increase in energy prices paid by individuals (6.1% versus 3.8% in the CPI).

Service prices also contributed to the high-side surprise in the PPI, posting an increase of 1.2%. This area often moves erratically, but still the latest move can be viewed as unusual, as it marked the second largest increase in service prices since the current structure of the PPI began in 2010 (three other observations were close with increases of 1.1%; the largest increase was 1.3% during the inflation burst in 2022).

Goods prices other than energy items were tame compared with service prices, but they too were unsettling. This grouping posted an increase of 0.6%, a reading in the upper end of the range from the past few years. The increase, although pronounced, was not broadly based. In a list of 53 non-energy goods provided by the BLS, only 13 posted increases of 0.4% or more, although a handful were especially sharp (electronic components 8.1%, industrial chemicals 4.4%, household furniture 1.8%).

Food represented the only major grouping that was not troubling, registering an increase of 0.2%. 


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- The energy component led the sharp increase in the PPI, but it had support from many other areas
- Excluding energy, most service prices rose sharply; prices of non-energy goods also were under pressure
- The food component went against the grain with an increase of only 0.2%


Economy in Brief: 2006

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Chain Store Sales Stabilize

Chain Store Sales Stabilize

First Quarter, 2006 Corporate Profitability in Japan At Peak Levels: Fuels Increase in Capital Spending

ISM Nonmanufacturing Index Decline As Expected

ISM Nonmanufacturing Index Decline As Expected

EMPL Database Facilitates Labor Force Analysis; Example: Elderly Workers on the Rise

U.S. Factory Inventory Accumulation Regained Momentum

U.S. Vehicle Sales Down, Light Truck Sales Down Hard