Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018a.jpg" width="353">
In September, the composite index of leading economic indicators gained back 0.3% of the prior month&#39;s 0.8% decline. It was revised from the initial report of a 0.6% decline, according to the Conference Board. 
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month gains amongst the 10 components of the leading index improved to 75.0% from the abysmal 20% during August. Over a six month period, the breadth of gain amongst the leaders components was stable for the third month at 60%.
Higher stock prices, vendor performance and capital good orders made the largest positive contributions to the index&#39;s rise, offsetting a huge negative .20% contribution from lower building permits.
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018b.jpg" width="353">
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.2% after a 0.1% rise during August. Over the last ten years there has been a 86% correlation between the y/y change in the coincident indicators and real GDP growth.
The lagging index rose a firm 0.5% during August mostly due to higher C&amp;I loans and a longer duration of unemployment. Nevertheless, the ratio of coincident to lagging indicators (a measure of economic excess) fell to its lowest level since 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.3%</td>
<td>-0.8%</td>
<td>0.2%</td>
<td>1.2%</td>
<td>2.5%</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>2.1%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>3.0%</td>
<td>3.5%</td>
<td>0.6%</td>
</tr>
</tbody>
</table>


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In September, the composite index of leading economic indicators gained back 0.3% of the prior month's 0.8% decline. It was revised from the initial report of a 0.6% decline, according to the Conference Board. During the last ten [...]

U.S. Leading Economic Indicators Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018c.jpg" width="353">
Initial claims for unemployment insurance jumped 28,000 to 337,000 last week and reversed all of the improvement of the prior five weeks.
The latest figure covers the survey period for October nonfarm payrolls and claims rose 24,000 (7.7%) from the September period.
The rise by far exceeded Consensus expectations for a gain to 313,000 claims. The four-week moving average of initial claims rose sharply to 316,500 (1.9% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018d.jpg" width="353">
Continuing claims for unemployment insurance rose for the second week in the last five but it did not reverse the declines during the prior two.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment was stable at 1.9%, off the peaks in August of 2.0% held for two consecutive weeks at month- end.
The latest Beige Book covering regional economic activity from the Federal Reserve Board can be found <a href="http:/www.federalreserve.gov/fomc/beigebook/2007/20071017/default.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">10/13/07 </th>
<th scope="col">10/06/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;337</td>
<td>309</td>
<td>9.4%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,534</td>
<td>3.7%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance jumped 28,000 to 337,000 last week and reversed all of the improvement of the prior five weeks. The latest figure covers the survey period for October nonfarm payrolls and claims rose 24,000 [...]

U.S. Initial Claims for Unemployment Insurance Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018a.jpg" width="353">
In September, the composite index of leading economic indicators gained back 0.3% of the prior month&#39;s 0.8% decline. It was revised from the initial report of a 0.6% decline, according to the Conference Board. 
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month gains amongst the 10 components of the leading index improved to 75.0% from the abysmal 20% during August. Over a six month period, the breadth of gain amongst the leaders components was stable for the third month at 60%.
Higher stock prices, vendor performance and capital good orders made the largest positive contributions to the index&#39;s rise, offsetting a huge negative .20% contribution from lower building permits.
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018b.jpg" width="353">
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.2% after a 0.1% rise during August. Over the last ten years there has been a 86% correlation between the y/y change in the coincident indicators and real GDP growth.
The lagging index rose a firm 0.5% during August mostly due to higher C&amp;I loans and a longer duration of unemployment. Nevertheless, the ratio of coincident to lagging indicators (a measure of economic excess) fell to its lowest level since 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.3%</td>
<td>-0.8%</td>
<td>0.2%</td>
<td>1.2%</td>
<td>2.5%</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>2.1%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.6%</td>
<td>3.0%</td>
<td>3.5%</td>
<td>0.6%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 18, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018g.jpg" width="353">
The Philadelphia Federal Reserve Bank&#39;s Index of General Business Conditions in the manufacturing sector dipped in October. The decline to 6.8 followed a great improvement in September to 10.9.
During the last ten years there has been a 59% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 42% correlation with q/q growth in real GDP.
Fewer new orders and shipments seemed to account for much of the overall decline in the general index while employment improved. During the last ten years there has been a 75% correlation between the employment index and the three-month growth in factory payrolls.
The business conditions index reflects a separate survey question, not the sub indexes.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018h.jpg" width="353">
The prices paid index improved to its highest level since August of last year. During the last ten years there has been a 76% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 85% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months fell slightly but remained near its best level since late in 2004. Expectations for new orders were quite firm and though expectations for the number of employees fell from its recent high, it remained firm.
Subprime Side Effects in the Federal Funds Market from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20071001/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/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">October</th>
<th scope="col">September &nbsp;</th>
<th scope="col">Oct. &#145;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>6.8</td>
<td>10.9</td>
<td>2.3&nbsp;</td>
<td>8.1</td>
<td>11.5</td>
<td>28.1</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>40.3&nbsp;</td>
<td>23.1&nbsp;</td>
<td>32.7&nbsp;</td>
<td>36.6</td>
<td>40.1</td>
<td>51.2</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for Unemployment Insurance Jump 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 18, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018c.jpg" width="353">
Initial claims for unemployment insurance jumped 28,000 to 337,000 last week and reversed all of the improvement of the prior five weeks.
The latest figure covers the survey period for October nonfarm payrolls and claims rose 24,000 (7.7%) from the September period.
The rise by far exceeded Consensus expectations for a gain to 313,000 claims. The four-week moving average of initial claims rose sharply to 316,500 (1.9% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018d.jpg" width="353">
Continuing claims for unemployment insurance rose for the second week in the last five but it did not reverse the declines during the prior two.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment was stable at 1.9%, off the peaks in August of 2.0% held for two consecutive weeks at month- end.
The latest Beige Book covering regional economic activity from the Federal Reserve Board can be found <a href="http:/www.federalreserve.gov/fomc/beigebook/2007/20071017/default.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">10/13/07 </th>
<th scope="col">10/06/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;337</td>
<td>309</td>
<td>9.4%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,534</td>
<td>3.7%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
</tr>
</tbody>
</table>
EMU Trade Surplus Grows as Imports Steady and Exports Accelerate 
by <a href="/comment/Brusca.html">Robert Brusca</a> October 18, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018e.jpg" width="353">
European trade is proving to be resilient in the face of a strongly rising euro currency. Some of this is undoubtedly the reflection of true strength, but some is also the acumen of the European exporters who have learned to use markets to hedge and some perhaps to giving back some profit margins as the euro puts an increasingly strong squeeze on margins and makes even hedging less of a dodge for foreign exchange rate induced pressures. Euro area data show that foreign orders have been slipping and remarks by policymakers and businesses leaders indicate that businesses are feeling the pinch. So far the data only show that exports are not just growing but also accelerating. Imports have slowed and that is particularly clear in the six-month growth rates. Over three months both exports and imports are locked into some real strength. The growing surplus is again poised to augment EMU growth in Q3.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
E-zone 13-Trade Trends for Goods
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey3">
<td class="firstcol">Balance*</td>
<td>&#128;&#128; 4,345</td>
<td>&#128;&#128; 809</td>
<td>&#128;&#128; 3,301</td>
<td>&#128;&#128; 3,650</td>
<td>&#128;&#128; 2,679</td>
</tr>
<tr class="grey2">
<td colspan="6">Exports</td>
</tr>
<tr class="grey1">
<td class="firstcol">All exports</td>
<td>4.9%</td>
<td>-0.9%</td>
<td>28.9%</td>
<td>11.9%</td>
<td>12.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food and drinks</td>
<td>2.8%</td>
<td>2.5%</td>
<td>36.5%</td>
<td>10.7%</td>
<td>13.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Raw materials</td>
<td>-0.6%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>9.5%</td>
<td>12.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">MFG</td>
<td>2.8%</td>
<td>-0.3%</td>
<td>26.1%</td>
<td>6.3%</td>
<td>11.5%</td>
</tr>
<tr class="grey2">
<td colspan="6">Imports</td>
</tr>
<tr class="grey1">
<td class="firstcol">All imports</td>
<td>2.0%</td>
<td>2.4%</td>
<td>27.7%</td>
<td>7.1%</td>
<td>6.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food and drinks</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>22.7%</td>
<td>-2.7%</td>
<td>6.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Raw materials</td>
<td>0.2%</td>
<td>2.3%</td>
<td>19.5%</td>
<td>2.1%</td>
<td>6.1%</td>
</tr>
<tr class="grey1">
<td class="firstcol">MFG</td>
<td>0.5%</td>
<td>1.5%</td>
<td>23.3%</td>
<td>-0.8%</td>
<td>8.7%</td>
</tr>
<tr class="grey1">
<td colspan="6">*Million Euros; mo or period average</td>
</tr>
</tbody>
</table>
UK Retail Sales Accelerate  
by <a href="/comment/Brusca.html">Robert Brusca</a> October 18, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071018f.jpg" width="353">
UK retail sales are accelerating. The acceleration is real as the volume graph on the left shows. The table&#146;s growth calculations show that upsurge has not been steadily building but is nonetheless across the main categories over the past three months with food sales leading the nominal acceleration part of that due to prices, no doubt. Clothing sales are accelerating too, but that is after a flat six-month growth rate, and to a growth rate marginally stronger than the 12-month rate. The surge in volume growth in the last three months is striking. In the quarter now complete sales volumes are up at a 7.1% annualized pace.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK Real and Nominal Retail Sales
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
</tr>
<tr>
<td class="firstcol">Retail Total</td>
<td>0.5%</td>
<td>0.9%</td>
<td>-0.4%</td>
<td>4.1%</td>
<td>3.2%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>0.9%</td>
<td>1.8%</td>
<td>-0.5%</td>
<td>8.8%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>0.6%</td>
<td>1.3%</td>
<td>-0.4%</td>
<td>6.0%</td>
<td>0.0%</td>
<td>5.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Retail Ex Auto</td>
<td>0.6%</td>
<td>0.7%</td>
<td>0.7%</td>
<td>7.9%</td>
<td>5.6%</td>
<td>6.2%</td>
<td>2.4%</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/071017g.jpg" width="353">
News stories have already highlighted the substantial liquidation of US securities by foreign investors that is portrayed in the monthly Treasury International Capital System (TIC) data for August. As reported yesterday, investors from outside the US were net sellers of $34.9 billion worth of US long-term securities during the financial market chaos that plagued much of that month. By type, they sold equities most, $40.6 billion, and also Treasuries, $2.6 billion, and corporates, $1.2 billion; they bought $9.6 billion in Agency notes and bonds. Several aspects of this and other segments of the Treasury&#39;s TIC release are worthy of note.
First, we, as others, must comment on the dramatic change these figures show from the record net purchases in May. Then, foreign investors scooped up $170.1 billion in US securities, including sizable purchases of all four categories, especially equities at $42.0 billion and corporate bonds at $78.3 billion. Obviously the environment was different then.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017h.jpg" width="353">
Second, the behavior of private and official foreign investors differed considerably from each other in August. While each group has its own investment objectives, we are impressed with how this led them to act then. The net sales of Treasury securities were concentrated at foreign official institutions, at $29.7 billion. In almost a mirror image, private investors abroad were net purchasers of $27.3 billion. We&#39;d attribute the private purchases to the risk-aversion that became so important during the month, favoring the least risky assets, but that can&#39;t quite explain the net sales by central banks and governmental accounts elsewhere. A puzzle, like much of financial market activity in that period.
Third, there were also dramatic differences among countries. Investors in the UK remained net purchasers of total US securities, to the tune of $31.7 billion; as ever, this reflects the &quot;clearinghouse&quot; nature of the London markets, crisscrossing trades from around the world. Among other countries, the Chinese were net sellers, as might be expected, but &quot;just&quot; $10.1 billion. International parties in the offshore market centers of Bermuda and the Cayman Islands were also sizable sellers, as were the Japanese.
Fourth, through it all, Americans continued to buy foreign securities. See in the table, there was even a mild pickup in August relative to the previous couple of months.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017i.jpg" width="353">
Fifth, besides long-term securities, of course, foreigners can certainly also invest in short-term securities. The TIC data system doesn&#39;t emphasize this, perhaps because those investments are, by definition, short-term. The recently revised format of the TIC press release does give this information. Sure enough, August &ndash; and even more in July &ndash; saw net purchases of short-term instruments, $33.9 billion in August and $56.2 billion in July. These compare with an average of $11.3 billion monthly during 2006 and net disinvestment of $4.0 billion in 2005. Private investors moved into Treasury bills in August while selling other short-term items.
Finally, the Treasury also reports monthly data on banks&#39; net dollar-denominated liabilities. These had a net reduction of $111.4 billion in August, a swing from an increase of $40.9 billion in July. We point this out to grab still another opportunity to repeat our own mantra about capital flows and the nation&#39;s current account. The differential pattern of all these assets movements compared to each other and to prior months should indicate that a variety of motives influence funds flows in world markets and among world institutions. During August, foreign investors were net sellers of US long-term securities, but so were US investors. Private foreign investors and US investors ran to Treasuries, both long-term and Treasury bills. There is no specific aspect of any of these flows that relates to financing of US trade activity. There is lots of it that relates to the financing of US housing markets and corporate activities. Those had been attractive investment sectors for everyone; they are less so now, regardless of where investors are domiciled.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Net Foreign Purchases from US Residents, Bil $</th>
<th scope="col">August 2007</th>
<th scope="col">July &nbsp; 2007</th>
<th scope="col">June &nbsp; 2007</th>
<th scope="col">May &nbsp; 2007</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Last 12 Months</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol">&quot;Headline&quot;: Net Foreign Purchases = 1 + 2 + Other*</td>
<td>-85.5</td>
<td>-2.7</td>
<td>84.4</td>
<td>117.2</td>
<td>49.5</td>
<td>62.0</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">1. Domestic Securities</td>
<td>-34.9</td>
<td>25.0</td>
<td>121.7</td>
<td>170.1</td>
<td>92.1</td>
<td>97.2</td>
<td>84.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Treasuries</td>
<td>-2.6</td>
<td>-9.4</td>
<td>24.7</td>
<td>22.7</td>
<td>15.3</td>
<td>17.3</td>
<td>28.2</td>
</tr>
<tr>
<td class="firstcol"> Agencies</td>
<td>9.6</td>
<td>8.7</td>
<td>35.6</td>
<td>27.0</td>
<td>22.3</td>
<td>24.5</td>
<td>18.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Corporate Bonds</td>
<td>-1.2</td>
<td>4.5</td>
<td>28.5</td>
<td>78.3</td>
<td>41.0</td>
<td>42.8</td>
<td>31.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Equities</td>
<td>-40.6</td>
<td>21.2</td>
<td>28.8</td>
<td>42.0</td>
<td>13.4</td>
<td>12.6</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">2. Foreign Securities&nbsp;</td>
<td>-34.5</td>
<td>-5.5</td>
<td>-21.8</td>
<td>-37.6</td>
<td>-26.6</td>
<td>-21.0</td>
<td>-14.4</td>
</tr>
<tr>
<td class="firstcol">3. Short-Term Sec&#39;s &amp; Custody Holdings</td>
<td>33.9</td>
<td>56.2</td>
<td>-16.0</td>
<td>2.5</td>
<td>11.1</td>
<td>11.3</td>
<td>-4.0</td>
</tr>
<tr>
<td class="firstcol">4. Banks&#39; Liabilities</td>
<td>-111.4</td>
<td>40.9</td>
<td>-15.4</td>
<td>-3.6</td>
<td>-4.7</td>
<td>15.4</td>
<td>1.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Total TIC Flows**&nbsp; </td>
<td>-163.0</td>
<td>94.3</td>
<td>53.1</td>
<td>116.0</td>
<td>55.9</td>
<td>88.6</td>
<td>55.4</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>-10.1</td>
<td>4.5</td>
<td>21.2</td>
<td>11.1</td>
<td>10.0</td>
<td>9.7</td>
<td>7.4</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>31.7</td>
<td>25.1</td>
<td>55.4</td>
<td>65.5</td>
<td>35.7</td>
<td>26.5</td>
<td>26.4</td>
</tr>
<tr>
<td class="firstcol">Cayman Islands</td>
<td>-14.7</td>
<td>-16.4</td>
<td>9.6</td>
<td>1.0</td>
<td>7.3</td>
<td>12.1</td>
<td>4.1</td>
</tr>
</tbody>
</table>
</body>
</html>

News stories have already highlighted the substantial liquidation of US securities by foreign investors that is portrayed in the monthly Treasury International Capital System (TIC) data for August. As reported yesterday, investors [...]

TIC Data Show Foreign Investors Made the Same Kinds of Decisions in August that Domestic Investors Did

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017f.jpg" width="353">
Japan&#146;s economic signals took a turn for the better in August as the sector indexes for manufacturing and mining as well as for the services sector (the tertiary index) advanced strongly in August. Each of these sectors show the highest readings in their respective ranges since February 1993. The manufacturing and mining index is on a strong surge. The tertiary index is slower but steadily gaining trend.These readings come as the IMF in its twice-yearly World Economic Outlook (WEO) warned the BOJ not to hike rates too soon. Japan&#146;s recent economic readings have been erratic. Its price trends have not completely set the event of deflation behind it. So while these sector readings are good news they do not yet make the needed clear case for solid growth in Japan. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Japan Industry Surveys
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Aug-2007</td>
<td>Jul-2007</td>
<td>Jun-2007</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">Mining and MFG</td>
<td>111.9</td>
<td>108.1</td>
<td>108.5</td>
<td>109.5</td>
<td>108.4</td>
<td>108.2</td>
<td>111.9</td>
<td>87.7</td>
<td>100.0%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>111.3</td>
<td>109.9</td>
<td>110.3</td>
<td>110.5</td>
<td>110.1</td>
<td>109.7</td>
<td>111.3</td>
<td>91.0</td>
<td>100.0%</td>
</tr>
<tr>
<td colspan="10">Ranges, Max, Min since 1993</td>
</tr>
</tbody>
</table>
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Japans economic signals took a turn for the better in August as the sector indexes for manufacturing and mining as well as for the services sector (the tertiary index) advanced strongly in August. Each of these sectors show the [...]

Japan’s MFG and Services Sectors Show Some Strength

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017d.jpg" width="353">
With a 10.2% m/m decline last month, housing starts at 1.191M units fell to the lowest level since 1992. Consensus expectations had been for a lesser drop to 1.29M starts. The August figure was little revised.
Single-family starts fell hard for the sixth straight month. At 963M units single family also fell to their lowest since 1992 with a 1.7% fall.
In September, the decline in single family starts was led by an 11.5% (-28.0 y/y) drop in the Midwest. In the West single family starts fell 1.4% (-32.2% y/y) and in the South the m/m decline was limited to 0.2% (-32.4% y/y). Single family starts in the Northeast actually posted a rise of 9.6% (-20.0% y/y) but that is no sign of stabilization as the level was still one third below the the 3Q average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017e.jpg" width="353">
Starts of multi-family structures fell by one third, month to month to the lowest level since 1994.
Building permits also were weak and fell 7.3% (-25.9% y/y) with single-family permits off a similar 7.1% (-28.6% y/y).
A Tale of Two Crisis from the Federal Reserve Board of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20071101/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,191</td>
<td>1,327</td>
<td>1,371</td>
<td>-30.8%</td>
<td>1,812</td>
<td>2,073</td>
<td>1,950</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>963</td>
<td>980</td>
<td>1,058</td>
<td>-30.8%</td>
<td>1,474</td>
<td>1,719</td>
<td>1,604</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>228</td>
<td>347</td>
<td>313</td>
<td>-30.9%</td>
<td>338</td>
<td>354</td>
<td>345</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,226</td>
<td>1,322</td>
<td>1,389</td>
<td>-25.9%</td>
<td>1,842</td>
<td>2,159</td>
<td>2,058</td>
</tr>
</tbody>
</table>
</body>
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With a 10.2% m/m decline last month, housing starts at 1.191M units fell to the lowest level since 1992. Consensus expectations had been for a lesser drop to 1.29M starts. The August figure was little revised. Single-family starts [...]

U.S. Housing Starts Lowest Since 1992

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017a.jpg" width="353">
The consumer price index (CPI-U) rose 0.3% last month and that was the quickest since May. At 2.8%, the y/y rise also picked up and was the fastest since March. The September increase was slightly ahead of expectations for a 0.2% gain.
Food &amp; beverage prices continued with a pattern of steadily increasing rates of change with a 0.5% (4.4% y/y) rise. That y/y increase is double the rate of last December. Prices for meats, poultry &amp; fish firmed by 0.5% (5.5% y/y) and prices of dairy product prices jumped another 1.0% with the y/y gain a whopping 13.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017b.jpg" width="353">
Energy prices were somewhat tame last month, rising just 0.3%, but gasoline prices (+8.7% y/y y/y) rose slightly for the first month in the last four. Fuel oil prices jumped 1.0% (6.5% y/y) but natural gas &amp; electricity prices rose 0.1% (1.4% y/y) after five consecutive months of decline.
Core consumer price inflation held stable at 0.2% for the fifth month in the last six and the y/y increase held stable with August at 2.1%.
Core goods prices fell just slightly as they did in August. Apparel prices again reversed direction and rose 0.3% (-1.7% y/y) after a 0.5% August decline and a 0.4% July increase. New &amp; Used motor vehicle prices were under pressure and fell 0.2% (-1.3% y/y) while prices of household furnishings &amp; operation fell for the third straight month by 0.2% (-0.7% y/y).Tobacco prices again provided much of the lift to goods price inflation with an accelerated 0.8% (7.5% y/y) rise.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017c.jpg" width="353">
Core services prices rose slightly faster than in August by 0.3% (3.3% y/y) following four consecutive months at 0.3%. Shelter prices rose 0.3% (3.5% y/y) reflecting a 0.3% (2.9% y/y) rise in owners equivalent rent of primary residence, a measure not at all equivalent to straight house price measures. Inflation of public transportation prices has picked up recently and showed a second straight 0.5% (0.5% y/y) increase while medical care services prices rose a somewhat diminished 0.4% (5.6% y/y). Education service prices rose just 0.2% (5.3% y/y) but communication prices were unchanged (-0.6% y/y).
The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.3% (2.3% y/y) the core measure also rose 0.3%, 1.7% y/y.
Minutes of the Federal Reserve Board Discount Rate Meetings, August 16 through September 18, 2007 are available <a href="http://www.federalreserve.gov/newsevents/press/monetary/monetary20071016a1.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> </th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>2.8%</td>
<td>3.2%</td>
<td>3.4%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.5%</td>
<td>2.2%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods less Food &amp; Energy</td>
<td>-0.0%</td>
<td>-0.0%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>0.2%</td>
<td>0.5%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Energy</td>
<td>0.3%</td>
<td>-3.2%</td>
<td>-1.0%</td>
<td>5.4%</td>
<td>11.1%</td>
<td>16.9%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food &amp; Beverages</td>
<td>0.5%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>4.4%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a> </td>
<td>0.3%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.7%</td>
<td>2.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>


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The consumer price index (CPI-U) rose 0.3% last month and that was the quickest since May. At 2.8%, the y/y rise also picked up and was the fastest since March. The September increase was slightly ahead of expectations for a 0.2% [...]

U.S. CPI Gain Quickest Since May, Core Rate 0f 0.2% Stable

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017a.jpg" width="353">
The consumer price index (CPI-U) rose 0.3% last month and that was the quickest since May. At 2.8%, the y/y rise also picked up and was the fastest since March. The September increase was slightly ahead of expectations for a 0.2% gain.
Food &amp; beverage prices continued with a pattern of steadily increasing rates of change with a 0.5% (4.4% y/y) rise. That y/y increase is double the rate of last December. Prices for meats, poultry &amp; fish firmed by 0.5% (5.5% y/y) and prices of dairy product prices jumped another 1.0% with the y/y gain a whopping 13.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017b.jpg" width="353">
Energy prices were somewhat tame last month, rising just 0.3%, but gasoline prices (+8.7% y/y y/y) rose slightly for the first month in the last four. Fuel oil prices jumped 1.0% (6.5% y/y) but natural gas &amp; electricity prices rose 0.1% (1.4% y/y) after five consecutive months of decline.
Core consumer price inflation held stable at 0.2% for the fifth month in the last six and the y/y increase held stable with August at 2.1%.
Core goods prices fell just slightly as they did in August. Apparel prices again reversed direction and rose 0.3% (-1.7% y/y) after a 0.5% August decline and a 0.4% July increase. New &amp; Used motor vehicle prices were under pressure and fell 0.2% (-1.3% y/y) while prices of household furnishings &amp; operation fell for the third straight month by 0.2% (-0.7% y/y).Tobacco prices again provided much of the lift to goods price inflation with an accelerated 0.8% (7.5% y/y) rise.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017c.jpg" width="353">
Core services prices rose slightly faster than in August by 0.3% (3.3% y/y) following four consecutive months at 0.3%. Shelter prices rose 0.3% (3.5% y/y) reflecting a 0.3% (2.9% y/y) rise in owners equivalent rent of primary residence, a measure not at all equivalent to straight house price measures. Inflation of public transportation prices has picked up recently and showed a second straight 0.5% (0.5% y/y) increase while medical care services prices rose a somewhat diminished 0.4% (5.6% y/y). Education service prices rose just 0.2% (5.3% y/y) but communication prices were unchanged (-0.6% y/y).
The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.3% (2.3% y/y) the core measure also rose 0.3%, 1.7% y/y.
Minutes of the Federal Reserve Board Discount Rate Meetings, August 16 through September 18, 2007 are available <a href="http://www.federalreserve.gov/newsevents/press/monetary/monetary20071016a1.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> </th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>2.8%</td>
<td>3.2%</td>
<td>3.4%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.5%</td>
<td>2.2%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods less Food &amp; Energy</td>
<td>-0.0%</td>
<td>-0.0%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>0.2%</td>
<td>0.5%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>2.8%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Energy</td>
<td>0.3%</td>
<td>-3.2%</td>
<td>-1.0%</td>
<td>5.4%</td>
<td>11.1%</td>
<td>16.9%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food &amp; Beverages</td>
<td>0.5%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>4.4%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a> </td>
<td>0.3%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.7%</td>
<td>2.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
U.S. Housing Starts Lowest Since 1992 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 17, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017d.jpg" width="353">
With a 10.2% m/m decline last month, housing starts at 1.191M units fell to the lowest level since 1992. Consensus expectations had been for a lesser drop to 1.29M starts. The August figure was little revised.
Single-family starts fell hard for the sixth straight month. At 963M units single family also fell to their lowest since 1992 with a 1.7% fall.
In September, the decline in single family starts was led by an 11.5% (-28.0 y/y) drop in the Midwest. In the West single family starts fell 1.4% (-32.2% y/y) and in the South the m/m decline was limited to 0.2% (-32.4% y/y). Single family starts in the Northeast actually posted a rise of 9.6% (-20.0% y/y) but that is no sign of stabilization as the level was still one third below the the 3Q average.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017e.jpg" width="353">
Starts of multi-family structures fell by one third, month to month to the lowest level since 1994.
Building permits also were weak and fell 7.3% (-25.9% y/y) with single-family permits off a similar 7.1% (-28.6% y/y).
A Tale of Two Crisis from the Federal Reserve Board of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20071101/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,191</td>
<td>1,327</td>
<td>1,371</td>
<td>-30.8%</td>
<td>1,812</td>
<td>2,073</td>
<td>1,950</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>963</td>
<td>980</td>
<td>1,058</td>
<td>-30.8%</td>
<td>1,474</td>
<td>1,719</td>
<td>1,604</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>228</td>
<td>347</td>
<td>313</td>
<td>-30.9%</td>
<td>338</td>
<td>354</td>
<td>345</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,226</td>
<td>1,322</td>
<td>1,389</td>
<td>-25.9%</td>
<td>1,842</td>
<td>2,159</td>
<td>2,058</td>
</tr>
</tbody>
</table>
Japan’s MFG and Services Sectors Show Some Strength 
by <a href="/comment/Brusca.html">Robert Brusca</a> October 17, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017f.jpg" width="353">
Japan&#146;s economic signals took a turn for the better in August as the sector indexes for manufacturing and mining as well as for the services sector (the tertiary index) advanced strongly in August. Each of these sectors show the highest readings in their respective ranges since February 1993. The manufacturing and mining index is on a strong surge. The tertiary index is slower but steadily gaining trend.These readings come as the IMF in its twice-yearly World Economic Outlook (WEO) warned the BOJ not to hike rates too soon. Japan&#146;s recent economic readings have been erratic. Its price trends have not completely set the event of deflation behind it. So while these sector readings are good news they do not yet make the needed clear case for solid growth in Japan. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Japan Industry Surveys
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Aug-2007</td>
<td>Jul-2007</td>
<td>Jun-2007</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">Mining and MFG</td>
<td>111.9</td>
<td>108.1</td>
<td>108.5</td>
<td>109.5</td>
<td>108.4</td>
<td>108.2</td>
<td>111.9</td>
<td>87.7</td>
<td>100.0%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>111.3</td>
<td>109.9</td>
<td>110.3</td>
<td>110.5</td>
<td>110.1</td>
<td>109.7</td>
<td>111.3</td>
<td>91.0</td>
<td>100.0%</td>
</tr>
<tr>
<td colspan="10">Ranges, Max, Min since 1993</td>
</tr>
</tbody>
</table>
TIC Data Show Foreign Investors Made the Same Kinds of Decisions in August that Domestic Investors Did 
by <a href="/comment/Stone.html">Carol Stone</a> October 17, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017g.jpg" width="353">
News stories have already highlighted the substantial liquidation of US securities by foreign investors that is portrayed in the monthly Treasury International Capital System (TIC) data for August. As reported yesterday, investors from outside the US were net sellers of $34.9 billion worth of US long-term securities during the financial market chaos that plagued much of that month. By type, they sold equities most, $40.6 billion, and also Treasuries, $2.6 billion, and corporates, $1.2 billion; they bought $9.6 billion in Agency notes and bonds. Several aspects of this and other segments of the Treasury&#39;s TIC release are worthy of note.
First, we, as others, must comment on the dramatic change these figures show from the record net purchases in May. Then, foreign investors scooped up $170.1 billion in US securities, including sizable purchases of all four categories, especially equities at $42.0 billion and corporate bonds at $78.3 billion. Obviously the environment was different then.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017h.jpg" width="353">
Second, the behavior of private and official foreign investors differed considerably from each other in August. While each group has its own investment objectives, we are impressed with how this led them to act then. The net sales of Treasury securities were concentrated at foreign official institutions, at $29.7 billion. In almost a mirror image, private investors abroad were net purchasers of $27.3 billion. We&#39;d attribute the private purchases to the risk-aversion that became so important during the month, favoring the least risky assets, but that can&#39;t quite explain the net sales by central banks and governmental accounts elsewhere. A puzzle, like much of financial market activity in that period.
Third, there were also dramatic differences among countries. Investors in the UK remained net purchasers of total US securities, to the tune of $31.7 billion; as ever, this reflects the &quot;clearinghouse&quot; nature of the London markets, crisscrossing trades from around the world. Among other countries, the Chinese were net sellers, as might be expected, but &quot;just&quot; $10.1 billion. International parties in the offshore market centers of Bermuda and the Cayman Islands were also sizable sellers, as were the Japanese.
Fourth, through it all, Americans continued to buy foreign securities. See in the table, there was even a mild pickup in August relative to the previous couple of months.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071017i.jpg" width="353">
Fifth, besides long-term securities, of course, foreigners can certainly also invest in short-term securities. The TIC data system doesn&#39;t emphasize this, perhaps because those investments are, by definition, short-term. The recently revised format of the TIC press release does give this information. Sure enough, August &ndash; and even more in July &ndash; saw net purchases of short-term instruments, $33.9 billion in August and $56.2 billion in July. These compare with an average of $11.3 billion monthly during 2006 and net disinvestment of $4.0 billion in 2005. Private investors moved into Treasury bills in August while selling other short-term items.
Finally, the Treasury also reports monthly data on banks&#39; net dollar-denominated liabilities. These had a net reduction of $111.4 billion in August, a swing from an increase of $40.9 billion in July. We point this out to grab still another opportunity to repeat our own mantra about capital flows and the nation&#39;s current account. The differential pattern of all these assets movements compared to each other and to prior months should indicate that a variety of motives influence funds flows in world markets and among world institutions. During August, foreign investors were net sellers of US long-term securities, but so were US investors. Private foreign investors and US investors ran to Treasuries, both long-term and Treasury bills. There is no specific aspect of any of these flows that relates to financing of US trade activity. There is lots of it that relates to the financing of US housing markets and corporate activities. Those had been attractive investment sectors for everyone; they are less so now, regardless of where investors are domiciled.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Net Foreign Purchases from US Residents, Bil $</th>
<th scope="col">August 2007</th>
<th scope="col">July &nbsp; 2007</th>
<th scope="col">June &nbsp; 2007</th>
<th scope="col">May &nbsp; 2007</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Last 12 Months</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol">&quot;Headline&quot;: Net Foreign Purchases = 1 + 2 + Other*</td>
<td>-85.5</td>
<td>-2.7</td>
<td>84.4</td>
<td>117.2</td>
<td>49.5</td>
<td>62.0</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">1. Domestic Securities</td>
<td>-34.9</td>
<td>25.0</td>
<td>121.7</td>
<td>170.1</td>
<td>92.1</td>
<td>97.2</td>
<td>84.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Treasuries</td>
<td>-2.6</td>
<td>-9.4</td>
<td>24.7</td>
<td>22.7</td>
<td>15.3</td>
<td>17.3</td>
<td>28.2</td>
</tr>
<tr>
<td class="firstcol"> Agencies</td>
<td>9.6</td>
<td>8.7</td>
<td>35.6</td>
<td>27.0</td>
<td>22.3</td>
<td>24.5</td>
<td>18.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Corporate Bonds</td>
<td>-1.2</td>
<td>4.5</td>
<td>28.5</td>
<td>78.3</td>
<td>41.0</td>
<td>42.8</td>
<td>31.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Equities</td>
<td>-40.6</td>
<td>21.2</td>
<td>28.8</td>
<td>42.0</td>
<td>13.4</td>
<td>12.6</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">2. Foreign Securities&nbsp;</td>
<td>-34.5</td>
<td>-5.5</td>
<td>-21.8</td>
<td>-37.6</td>
<td>-26.6</td>
<td>-21.0</td>
<td>-14.4</td>
</tr>
<tr>
<td class="firstcol">3. Short-Term Sec&#39;s &amp; Custody Holdings</td>
<td>33.9</td>
<td>56.2</td>
<td>-16.0</td>
<td>2.5</td>
<td>11.1</td>
<td>11.3</td>
<td>-4.0</td>
</tr>
<tr>
<td class="firstcol">4. Banks&#39; Liabilities</td>
<td>-111.4</td>
<td>40.9</td>
<td>-15.4</td>
<td>-3.6</td>
<td>-4.7</td>
<td>15.4</td>
<td>1.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Total TIC Flows**&nbsp; </td>
<td>-163.0</td>
<td>94.3</td>
<td>53.1</td>
<td>116.0</td>
<td>55.9</td>
<td>88.6</td>
<td>55.4</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>-10.1</td>
<td>4.5</td>
<td>21.2</td>
<td>11.1</td>
<td>10.0</td>
<td>9.7</td>
<td>7.4</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>31.7</td>
<td>25.1</td>
<td>55.4</td>
<td>65.5</td>
<td>35.7</td>
<td>26.5</td>
<td>26.4</td>
</tr>
<tr>
<td class="firstcol">Cayman Islands</td>
<td>-14.7</td>
<td>-16.4</td>
<td>9.6</td>
<td>1.0</td>
<td>7.3</td>
<td>12.1</td>
<td>4.1</td>
</tr>
</tbody>
</table>


</html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

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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: October 2007

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U.S. Leading Economic Indicators Rose

U.S. Initial Claims for Unemployment Insurance Jump

U.S. Leading Economic Indicators Rose

TIC Data Show Foreign Investors Made the Same Kinds of Decisions in August that Domestic Investors Did

Japan’s MFG and Services Sectors Show Some Strength

U.S. Housing Starts Lowest Since 1992

U.S. CPI Gain Quickest Since May, Core Rate 0f 0.2% Stable

U.S. CPI Gain Quickest Since May, Core Rate 0f 0.2% Stable