Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213c.jpg" width="353">
Total business inventories rose an expected 0.4% in October, a bit above a downwardly revised 0.3% September increase. Over the last three months the 0.4% average increase was the slowest since March.
During the last ten years there has been a 57% correlation between the y/y change in business inventories and the change in factory sector industrial production. Using quarterly figures, there has been an 84% correlation between the change in real private nonfarm inventories and production.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213d.jpg" width="353">
Business sales fell 0.2% (+3.6% y/y) after a 2.3% September decline. Manufacturers&#39; sales recovered all of 0.1% after the 4.2% September drop. Retail sales fell 0.1% (+4.6% y/y) and wholesale sales fell 0.5% (+5.9% y/y) after a 1.5% September drop. As a result the inventory to sales ratio rose to 1.31. 
Retail inventories were unchanged but excluding autos they rose 0.3% after an upwardly revised 0.2% September gain. General merchandise inventories surged 1.2% (2.9% y/y) and have been accumulating strongly since May. Accumulation of clothing store inventories also was firm at 0.8% (7.2% y/y). Furniture inventories rose a moderate 0.3% (5.2% y/y).

<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/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">October</th>
<th scope="col">September</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>0.4%</td>
<td>0.3%</td>
<td>7.3%</td>
<td>4.4%</td>
<td>7.6%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>5.4%</td>
<td>2.7%</td>
<td>6.7%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>0.2%</td>
<td>4.8%</td>
<td>4.5%</td>
<td>7.1%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.8%</td>
<td>0.7%</td>
<td>10.1%</td>
<td>7.1%</td>
<td>9.8%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.4%</td>
<td>0.6%</td>
<td>7.1%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
</tbody>
</table>
</body>
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Total business inventories rose an expected 0.4% in October, a bit above a downwardly revised 0.3% September increase. Over the last three months the 0.4% average increase was the slowest since March. During the last ten years there [...]

U.S. Inventory Accumulation Continued Easier

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213a.jpg" width="353">
US retail sales last month recovered all of the weakness during the prior three months. Sales rose 1.0% following a 0.1% decline in October and a 0.6% shortfall in September which both were revised slightly shallower. The November increase easily beat Consensus expectations for a 0.2% rise.
Sales by motor vehicle &amp; parts dealers rose 0.9% (6.4% y/y) after an upwardly revised 1.0% October gain. New unit vehicle sales, however, fell 0.7% to 16.04M for the third decline in the last four months. Excluding autos, retail sales surged 1.1% after a slightly revised 0.3% October dip.
Sales of some discretionary items recovered. Sales at furniture, home furnishings &amp; appliance stores surged 2.1% (6.7% y/y) after an unrevised 0.4% October drop. Also up were building material sales which jumped 1.8% (4.2% y/y). Sales of nonstore retailers (internet &amp; catalogue) made up for weakness during the prior three months with a 1.3% (10.1% y/y) jump. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213b.jpg" width="353">
Restaurant and bar sales rose 0.7% (7.9% y/y) after firm gains during the prior four months.
Still lagging, however, were apparel store sales which fell marginally (+6.7% y/y) after a 0.6% decline during October and, with a 0.4% (3.8% y/y) increase, sales at general merchandise stores recovered an unrevised 0.3% October decline.
Sales at gasoline service stations recovered 2.3% after three months of decline though gasoline prices slipped another 0.7% last month to $2.23 per gallon.
Nonauto retail sales less gasoline in November jumped 0.9% (6.4% y/y), triple the 0.3% increases during each of the prior three months. During the last three months these sales rose at a 6.5% annual rate, the best since March.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">November</th>
<th scope="col">October</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.0%</td>
<td>-0.1%</td>
<td>5.6%</td>
<td>7.2%</td>
<td>6.2%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>5.3%</td>
<td>8.2%</td>
<td>7.2%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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US retail sales last month recovered all of the weakness during the prior three months. Sales rose 1.0% following a 0.1% decline in October and a 0.6% shortfall in September which both were revised slightly shallower. The November [...]

U.S. Retail Sales Recovered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213a.jpg" width="353">
US retail sales last month recovered all of the weakness during the prior three months. Sales rose 1.0% following a 0.1% decline in October and a 0.6% shortfall in September which both were revised slightly shallower. The November increase easily beat Consensus expectations for a 0.2% rise.
Sales by motor vehicle &amp; parts dealers rose 0.9% (6.4% y/y) after an upwardly revised 1.0% October gain. New unit vehicle sales, however, fell 0.7% to 16.04M for the third decline in the last four months. Excluding autos, retail sales surged 1.1% after a slightly revised 0.3% October dip.
Sales of some discretionary items recovered. Sales at furniture, home furnishings &amp; appliance stores surged 2.1% (6.7% y/y) after an unrevised 0.4% October drop. Also up were building material sales which jumped 1.8% (4.2% y/y). Sales of nonstore retailers (internet &amp; catalogue) made up for weakness during the prior three months with a 1.3% (10.1% y/y) jump. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213b.jpg" width="353">
Restaurant and bar sales rose 0.7% (7.9% y/y) after firm gains during the prior four months.
Still lagging, however, were apparel store sales which fell marginally (+6.7% y/y) after a 0.6% decline during October and, with a 0.4% (3.8% y/y) increase, sales at general merchandise stores recovered an unrevised 0.3% October decline.
Sales at gasoline service stations recovered 2.3% after three months of decline though gasoline prices slipped another 0.7% last month to $2.23 per gallon.
Nonauto retail sales less gasoline in November jumped 0.9% (6.4% y/y), triple the 0.3% increases during each of the prior three months. During the last three months these sales rose at a 6.5% annual rate, the best since March.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">November</th>
<th scope="col">October</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.0%</td>
<td>-0.1%</td>
<td>5.6%</td>
<td>7.2%</td>
<td>6.2%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>5.3%</td>
<td>8.2%</td>
<td>7.2%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
U.S. Inventory Accumulation Continued Easier 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213c.jpg" width="353">
Total business inventories rose an expected 0.4% in October, a bit above a downwardly revised 0.3% September increase. Over the last three months the 0.4% average increase was the slowest since March.
During the last ten years there has been a 57% correlation between the y/y change in business inventories and the change in factory sector industrial production. Using quarterly figures, there has been an 84% correlation between the change in real private nonfarm inventories and production.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213d.jpg" width="353">
Business sales fell 0.2% (+3.6% y/y) after a 2.3% September decline. Manufacturers&#39; sales recovered all of 0.1% after the 4.2% September drop. Retail sales fell 0.1% (+4.6% y/y) and wholesale sales fell 0.5% (+5.9% y/y) after a 1.5% September drop. As a result the inventory to sales ratio rose to 1.31. 
Retail inventories were unchanged but excluding autos they rose 0.3% after an upwardly revised 0.2% September gain. General merchandise inventories surged 1.2% (2.9% y/y) and have been accumulating strongly since May. Accumulation of clothing store inventories also was firm at 0.8% (7.2% y/y). Furniture inventories rose a moderate 0.3% (5.2% y/y).

<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/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">October</th>
<th scope="col">September</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>0.4%</td>
<td>0.3%</td>
<td>7.3%</td>
<td>4.4%</td>
<td>7.6%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>5.4%</td>
<td>2.7%</td>
<td>6.7%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>0.2%</td>
<td>4.8%</td>
<td>4.5%</td>
<td>7.1%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.8%</td>
<td>0.7%</td>
<td>10.1%</td>
<td>7.1%</td>
<td>9.8%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.4%</td>
<td>0.6%</td>
<td>7.1%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
</tbody>
</table>
Mortgage Applications Rose Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213f.jpg" width="353">
The total number of mortgage applications rose 11.4% last week after an 8.1% rise during the prior period, according to the Mortgage Bankers Association.
Purchase applications continued firm and posted an 8.7% jump after the 4.9% rise during the prior week. The increases lifted purchase applications in December 9.7% above the November average which rose 6.4% from the October level.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance logged another double digit increase and jumped 15.8% on the heels of the prior week&#39;s 13.7% spike.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213e.jpg" width="353">
The effective interest rate on a conventional 30-year mortgage increased slightly w/w to 6.22% but the average of 6.19% so far in December is down versus 6.36% during November. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing also increased to 6.00% and averaged 6.13% last month. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/08/06</th>
<th scope="col">12/01/06</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>721.2</td>
<td>647.6</td>
<td>16.5%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>463.8</td>
<td>426.6</td>
<td>-3.0%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,304.4</td>
<td>1,989.7</td>
<td>59.8%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
</table>
JOLTS: Job Openings & Hires Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213g.jpg" width="353">
The Bureau of Labor Statistics reported in the Job Openings &amp; Labor Turnover Survey (JOLTS) that the October job openings rate was stable with the prior month at an elevated 3.0%. 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 increased 1.3% m/m to 4.207 million (8.8% y/y) and three month growth surged.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213h.jpg" width="353">
The hires rate improved m/m to 3.6%, the same as averaged during 2Q &amp; 3Q. The hires rate is the number of hires during the month divided by employment. 
The actual number of hires increased 1.9% (1.5% y/y) to 4.893 million but it was the first increase in the last three months.
The job separations rate was stable for the third month in October at 3.2%. 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 increased a very slight 0.1% (0.6% y/y) for only the first increase in the last five months.
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">October</th>
<th scope="col">September</th>
<th scope="col">Oct &#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>3.0%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.6%</td>
<td>3.5%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>3.5%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Japan Current Account Hits Record ¥2.02 Trillion in October; Trade, Services & Income All Contribute 
by <a href="/comment/Stone.html">Carol Stone</a> December 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213l.jpg" width="353">
Japan&#39;s current account surplus rose &yen;611.4 billion in October, according to data reported December 13 by the Ministry of Finance, reaching a record &yen;2,020.1 billion (seasonally adjusted).The previous record was &yen;2,015.1 billion in December 2005.
The month-to-month increase in the surplus included favorable moves in every segment of the current account.The goods balance increased to &yen;852.7 billion from &yen;437.2 billion, more than reversing September&#39;s shrinkage.Exports rose &yen;113.0 billion or 1.9% and imports fell &yen;302.5 billion or 5.4%.The merchandise trade data reported earlier indicate that just under half of the fall in imports was in &quot;mineral fuels&quot;, including petroleum and natural gas products.Among exports, the strongest items appear to be motor vehicles and metals, as suggested by year/year gains in not-seasonally-adjusted data.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213k.jpg" width="353">
There is a deficit in services, but it shrank markedly in October, to &yen;122.8 billion from &yen;208.5 billion in September.It is erratic on a monthly basis, but the October reading compares favorably with an average for all of last year of &yen;219.4 billion and with &yen;308.3 billion in 2004.
The balance on income flows grew as well in October, as gains in assets held abroad are bringing in increased portfolio income. The monthly change in October portfolio income was small, just to &yen;1,071.0 billion from &yen;1,038.4 billion in September, but these are both up from &yen;852.4 billion in October a year ago and &yen;737.6 billion for all of 2005.Total income includes interest on bank loans, profits from direct investments, and wage income; the October total was &yen;1,374.9 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061213j.jpg" width="353">
All together in Japan&#39;s current account performance for October, the balance of trade in goods showed the largest improvement, but the largest net surplus is in income.As world capital markets become more and more integrated and direct investment becomes more diversified around the world, swings in both goods and income balances are likely to be wider and more frequent.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J9/@J9.HTM">JAPAN</a><a href="http://www.haverselect.com/dlx/JAPAN/@J9/@J9.HTM">: SA, Bil.&yen;</a></th>
<th scope="col">Oct 2006</th>
<th scope="col">Sept 2006</th>
<th scope="col">Aug 2006</th>
<th scope="col">Year-Ago</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">Current Account Balance</td>
<td>2020.1</td>
<td>1408.7</td>
<td>1605.0</td>
<td>1739.6</td>
<td>1537.7</td>
<td>1557.4</td>
<td>1316.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods Exports</td>
<td>6134.1</td>
<td>6021.1</td>
<td>6170.0</td>
<td>5510.8</td>
<td>5212.5</td>
<td>4841.6</td>
<td>4303.3</td>
</tr>
<tr>
<td class="firstcol">Goods Imports</td>
<td>-122.8</td>
<td>-208.5</td>
<td>-169.8</td>
<td>-54.1</td>
<td>-219.4</td>
<td>-308.3</td>
<td>-300.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Services</td>
<td>1374.9</td>
<td>1266.0</td>
<td>105.73</td>
<td>1099.3</td>
<td>966.2</td>
<td>776.9</td>
<td>692.4</td>
</tr>
<tr>
<td class="firstcol">Balance on Income</td>
<td>1374.9</td>
<td>1266.0</td>
<td>1057.3</td>
<td>1099.3</td>
<td>966.2</td>
<td>776.9</td>
<td>692.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Portfolio Income</td>
<td>1071.0</td>
<td>1038.4</td>
<td>838.2</td>
<td>852.4</td>
<td>737.6</td>
<td>622.8</td>
<td>569.9</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/061212i.jpg" width="353">
The ZEW institute which polls institutional investors and analysts regarding their opinions on the current state of the German economy and the outlook six months ahead announced today that in December the balance of pessimists over optimists declined from 28.5% to 19.0%. Investors and analysts have been more pessimistic than the managers of firms in manufacturing, construction and wholesale and retail trade polled in the broader IFO survey. The latter began to show a more positive outlook in October and increased their optimism in November when optimists exceeded pessimists by 2.7%. The first chart shows the percent balances of opinions of investors and analysts in the ZEW survey and of the managers in the IFO survey regarding the six months outlook.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212j.jpg" width="353">
Both investors and managers have shown increasing confidence in their current situations. However, it is among the investors and analysts that more optimists than pessimists prevail regarding the current situation. In November, the excess of optimists among managers was 23.4% and among investors and analysts, 53.0%. The excess of optimists among the latter increased to 63% in December. The second chart shows the percent balances of the investors and analysts in the ZEW survey and the managers in the IFO survey regarding current conditions.
The improvement in confidence shown by both the IFO and ZEW polls is another sign that, although some slowdown is expected in the first quarter of 2007, there is a growing consensus that the current German expansion is strong enough to weather the impact of a strong euro and a tighter fiscal policy. Several of the six institutes that regularly monitor the German economy, have increased their forecasts for 2007. The Kiel based IfW institute, for example, announce today that it has doubled its estimate of German growth in 2007 from 1.0% to 2.1%. 

<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/GERMANY/@D8/@D8.HTM">ZEW INDICATOR&nbsp; (% balance)</a>&nbsp;</th>
<th scope="col">Dec&nbsp; 06</th>
<th scope="col">Nov 06</th>
<th scope="col">Dec 05</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</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">Current Conditions</td>
<td>63.5</td>
<td>53.0</td>
<td>-44.4</td>
<td>10.5</td>
<td>107.9</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
<tr>
<td class="firstcol">Conditions 6 Months Ahead</td>
<td>-19.0</td>
<td>-28.5</td>
<td>61.6</td>
<td>9.5</td>
<td>-80.6</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td>Nov&nbsp; 06</td>
<td>Oct 06</td>
<td>Nov 05</td>
<td>M/M dif</td>
<td>Y/Y dif</td>
<td>2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr>
<td class="firstcol"> <a href="http://www.haverselect.com/dlx/GERMANY/@D8/@D8.HTM">IFO INDICATOR&nbsp; (% balance)&nbsp;</a> </td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>23.4</td>
<td>19.4</td>
<td>-9.7</td>
<td>4.0</td>
<td>33.1</td>
<td>n.a</td>
<td>-14.2</td>
<td>-17.4</td>
</tr>
<tr>
<td class="firstcol">Conditions 6 Months Ahead</td>
<td>2.7</td>
<td>0.7</td>
<td>-0.8</td>
<td>2.0</td>
<td>3.5</td>
<td>n.a</td>
<td>-5.0</td>
<td>-2.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The ZEW institute which polls institutional investors and analysts regarding their opinions on the current state of the German economy and the outlook six months ahead announced today that in December the balance of pessimists over [...]

German Investors and Analysts Less Pessimistic About the Outlook: IfW Institute Doubles its 2007 Growth Estimate

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212l.jpg" width="353">
The U.S. federal government&#39;s budget deficit in November fell to $75.6B versus a deficit of $83.1B last November. That pulled the figure for the first two months of FY07 to $124.9B against $130.3B during last fiscal year&#39;s first two months. The Congressional Budget Office expects the FY 2007 deficit to total $286B, up slightly from last year&#39;s deficit of $247.7B.
As a percentage of GDP, the U.S. budget deficit fell last year to 1.9% from 2.6% in FY2005.
Net revenues grew 8.8% y/y during the first two months of FY07. Individual income tax receipts (44% of total receipts) grew 11.8% as withheld taxes rose 9.7% due to employment growth and non-withheld taxes (primarily on capital gains) surged 45.8%. Corporate income taxes (13% of total receipts) surged 21.5% as corporate profits grew. Estate &amp; gift taxes fell 1.1% while higher employment levels raised social insurance &amp; retirement receipts by 4.2%.
U.S. net outlays grew 4.7% during this fiscal year&#39;s first two months versus last year. Defense spending (19% of total outlays) grew 13.6% and Medicare expenditures (12% of outlays) surged 42.5%. Social security spending (21% of outlays) rose 6.0% but the recent bond market rally dropped the government&#39;s interest expense by 11.0% y/y.
Middle-Income Tax Rates: Trends and Prospects from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q06davig.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/@E1/@E106/@E10602/@E106021.HTM">US Government Finance</a> &nbsp;</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005</th>
<th scope="col">FY 2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-$75.6B</td>
<td>-$49.3B</td>
<td>-$83.1B (11/05)</td>
<td>-$247.7</td>
<td>-$318.7B</td>
<td>-$412.7B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$145.9B</td>
<td>$167.7B</td>
<td>5.1%</td>
<td>11.8%</td>
<td>14.5%</td>
<td>5.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$221.5B</td>
<td>$217.0B</td>
<td>-0.2%</td>
<td>7.4%</td>
<td>7.8%</td>
<td>6.2%</td>
</tr>
</tbody>
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The U.S. federal government's budget deficit in November fell to $75.6B versus a deficit of $83.1B last November. That pulled the figure for the first two months of FY07 to $124.9B against $130.3B during last fiscal year's first two [...]

U.S. Budget Deficit Continued to Shrink

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212h.jpg" width="353">
The November index of small business optimism gave back most of its October rise and fell 1.0% to 99.7, according to the National Federation of Independent Business (NFIB). Nevertheless the figure remained well up from its June low of 96.7.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212g.jpg" width="353">
Respondents expecting the economy to improve held at a recent high but the percentage of firms with job openings fell sharply.
During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.
The percent planning to raise capital expenditures remained at a firm 31%, about the same as during the last two years..The percentage of firms planning to raise average selling prices ticked back up to a still low 22%. The percentage of firms actually raising prices also rose to a low 17%. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">November</th>
<th scope="col">October</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">Small Business Optimism Index (1986=100)</td>
<td>99.7</td>
<td>100.7</td>
<td>-1.5%</td>
<td>101.6</td>
<td>104.6</td>
<td>101.3</td>
</tr>
</tbody>
</table>
</body>
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The November index of small business optimism gave back most of its October rise and fell 1.0% to 99.7, according to the National Federation of Independent Business (NFIB). Nevertheless the figure remained well up from its June low of [...]

Small Business Optimism Slipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212k.jpg" width="353">
At today&#39;s Federal Open Market Committee meeting the target interest rate for Federal funds was held steady at 5.25%. The rate was increased to the current level at the FOMC meeting in late June.
Voting against the decision for the fourth consecutive meeting was Richmond Federal Reserve Bank President Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target.
The discount rate also was held steady at 6.25%.
Today&#39;s decision was widely expected by analysts.
For the economy today&#39;s press release indicated that &quot;Economic growth has slowed ....&quot; but that &quot;the economy seems likely to expand at a moderate pace on balance over coming quarters.&quot;
Regarding inflation the Fed indicated that &quot;... core inflation (readings) have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time ...&quot;
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/BoardDocs/press/monetary/2006/20061212/default.htm">link</a>.
Trend Inflation and Inflation Persistence in the New Keynesian Phillips Curve from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr270.pdf"> here</a>.

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At today's Federal Open Market Committee meeting the target interest rate for Federal funds was held steady at 5.25%. The rate was increased to the current level at the FOMC meeting in late June. Voting against the decision for the [...]

FOMC: Funds Rate Steady, Economy OK, Inflation Risks Remain

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061212f.jpg" width="353">
 Pump prices for regular unleaded gasoline slipped a penny last week to an average $2.29 per gallon after the nickel increase during the prior week. That left this month&#39;s average price for gasoline up seven cents from the November average of $2.23.
Some relief from higher gas prices may be signaled by yesterday&#39;s spot market (NY harbor) price for a gallon of regular gasoline which fell sharply to $1.59 per gallon, the lowest in a month.
Crude oil prices also fell yesterday but at $61.23 (-0.1% y/y) prices were still above the $59.37 average for WTI crude during November and the $58.88 in October.
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <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/surveyw/@S2/@S2.HTM">Weekly Energy Prices</a></th>
<th scope="col">12/11/06</th>
<th scope="col">12/04/06</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">US Retail Gasoline Price, Regular</td>
<td>$2.29</td>
<td>$2.30</td>
<td>4.9%</td>
<td>$2.27</td>
<td>$1.85</td>
<td>$1.56</td>
</tr>
</tbody>
</table>


</html>

Pump prices for regular unleaded gasoline slipped a penny last week to an average $2.29 per gallon after the nickel increase during the prior week. That left this month's average price for gasoline up seven cents from the November [...]

Gasoline Prices Slip a Penny

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

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Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

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

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

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

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

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

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

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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

Carol Stone, CBE

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

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

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

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

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

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

Economy in Brief: December 2006

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U.S. Inventory Accumulation Continued Easier

U.S. Retail Sales Recovered

U.S. Retail Sales Recovered

German Investors and Analysts Less Pessimistic About the Outlook: IfW Institute Doubles its 2007 Growth Estimate

U.S. Budget Deficit Continued to Shrink

Small Business Optimism Slipped

FOMC: Funds Rate Steady, Economy OK, Inflation Risks Remain

Gasoline Prices Slip a Penny