Carol Stone, CBE

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The Financial Accounts data are in Haver's FFUNDS database. Associated
information is compiled in the Integrated Macroeconomic Accounts produced
jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's
USNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col">Financial Accounts (SAAR, Bil.$)</th>
 <th>Q2'15</th>
 <th>Q1'15</th>
 <th>Q4'14</th>
 <th>2014</th>
 <th>2013</th>
 <th>2012</th>
 <th>2011</th>
 </tr>
 </thead>
 
 <tr>
 <td class="firstcol" scope="col">Total Borrowing*</td>
 <td>2422</td>
 <td>1234</td>
 <td>2481</td>
 <td>2316</td>
 <td>2149</td>
 <td>1734</td>
 <td>1176</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Federal Government</td>
 <td>350</td>
 <td>-156</td>
 <td>838</td>
 <td>736</td>
 <td>857</td>
 <td>1181</td>
 <td>1139</td>
 </tr>
 <tr>
 <td class="firstcol">Households</td>
 <td>548</td>
 <td>240</td>
 <td>301</td>
 <td>414</td>
 <td>240</td>
 <td>261</td>
 <td>-71</td>
 </tr>
 
 <td class="firstcol">Nonfinancial Corporate Business</td>
 <td>675</td>
 <td>636</td>
 <td>483</td>
 <td>489</td>
 <td>432</td>
 <td>364</td>
 <td>295</td>
 <tr>
 <td class="firstcol">Financial Sectors</td>
 <td>377</td>
 <td>-160</td>
 <td>478</td>
 <td>333</td>
 <td>284</td>
 <td>-386</td>
 <td>-310</td>
 </tr>
 
 
 
 *Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes noncorporate business, state and local government and foreign sectors, not shown separately.
 
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The Financial Accounts data are in Haver's FFUNDS database. Associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's USNA [...]

U.S. Financial Accounts Show Moderate Borrowing; Little Change in Net Wealth

Tom Moeller

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Import prices declined 0.4% during November following a 0.3% October drop,
revised from -0.5%. A 0.7% fall had been expected in the Action Economics
Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise,
revised from a 2.1% decline. Nonpetroleum import prices fell 0.3% (-3.4% y/y)
after an unrevised 0.4% decline. These prices have not risen m/m since March of
last year. A 1.0% decline (-11.2% y/y) in prices of nonoil supplies &amp;
materials led the way lower followed by a 0.5% drop (-5.0% y/y) in food &amp;
beverage costs. Capital goods prices eased 0.1% (-2.3% y/y) as did prices for
automotive vehicles &amp; sparts. Nonauto consumer goods prices remained
unchanged (-0.7% y/y) for a second straight month.

Export prices fell 0.6% (-6.3% y/y) following an unrevised 0.2% decline.
Expectations had been for a 0.2% shortfall. A 1.6% decline (-15.0% y/y) in
industrial supplies &amp; materials prices led the way lower. This drop
reflected lower fuels &amp; building materials costs, without which prices fell
0.4% (-8.4% y/y). Foods, feeds &amp; beverages prices were off 0.9% (-13.0% y/y)
and capital goods costs eased 0.1% (-0.2% y/y). Automotive vehicles &amp; parts
prices fell 0.2% (-0.5% y/y), but nonauto consumer goods prices improved 0.1%
(-2.1% y/y).

The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Imports - All Commodities</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >-1.1</td>
 <td >-9.4</td>
 <td >-1.1</td>
 <td >-1.1</td>
 <td >0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Petroleum</td>
 <td >-2.5</td>
 <td >0.4</td>
 <td >-9.4</td>
 <td >-44.5</td>
 <td >-5.6</td>
 <td >-2.6</td>
 <td >-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Nonpetroleum</td>
 <td >-0.3</td>
 <td >-0.4</td>
 <td >-0.2</td>
 <td >-3.4</td>
 <td >0.1</td>
 <td >-0.6</td>
 <td >0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Exports - All Commodities</td>
 <td >-0.6</td>
 <td >-0.2</td>
 <td >-0.6</td>
 <td >-6.3</td>
 <td >-0.5</td>
 <td >-0.4</td>
 <td >0.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Agricultural</td>
 <td >-1.1</td>
 <td >0.1</td>
 <td >-1.4</td>
 <td >-12.8</td>
 <td >-2.7</td>
 <td >1.6</td>
 <td >2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Nonagricultural</td>
 <td >-0.6</td>
 <td >-0.3</td>
 <td >-0.5</td>
 <td >-5.7</td>
 <td >-0.3</td>
 <td >-0.7</td>
 <td >0.1</td>
 </tr>
 </tbody>
 </table>
 
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Import prices declined 0.4% during November following a 0.3% October drop, revised from -0.5%. A 0.7% fall had been expected in the Action Economics Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise, revised [...]

U.S. Import Price Decline Led by Cheaper Oil

Robert Brusca

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French industrial production rose by 0.5% in October. This marks three straight months of IP increases in France and gains in nine of the last 12 months. With the fourth quarter having just begun, IP is advancing at a 7% annual rate over its third quarter level.

In October, the output gain was wholly on the back of consumer durable goods where output rose by 2.6% month-to-month. All other major categories of output, consumer nondurable goods, capital goods and intermediate goods showed output declines in October. In the quarter to date, consumer durable goods output is very strong, advancing at a 15.1% annual rate while nondurables output is shrinking at a 5.4% pace; capital goods output is falling at a 1% annual rate. The output of intermediate goods, however, is advancing in the new quarter.

The sequential growth rates from 12 months to six months to three months show acceleration for overall output as the pace rises steadily from 3.6% to 4.1% to a robust 9.7% over three months. Consumer durable goods trends are anchored by double digit growth over 12 months and three months with slightly slower growth over six months. Consumer nondurables show a deceleration to -0.4% from 0.5%. Capital goods output has an accelerating growth pattern with extremely strong growth over three months, at 9.6%. Intermediate goods also show a gain as the 1.9% growth rate for 12 months and six months rises to 5.5% over three months.

On balance, French IP shows a solid base of firm-to-strong growth rates. Only output for consumer nondurables is weak and that is likely due to the weakness in oil prices and in the energy sector at large.

French auto production has ramped up enormously, posting a 48% annual rate of change over three months. It posts a strong growth rate in two of the three recent months. Auto output has been underpinned by strong vehicle registrations. Registrations are up by 5% year-on-year and slow to 3.5% over three months. While registrations are up in two of the three most recent months, registrations fell off sharply in October, falling by 5.3%. This development and the weakness in nondurables are the sole indications of encroaching weakness for French industry.

In an unrelated report today, France posted a drop in its HICP of 0.1% in November, the same as for its domestic inflation reading. The domestic core index fell to flat from 0.2% in October. France saw consumer prices decelerate month-to-month in 6 of 11 categories with inflation rising monthly in only two. Weak and decelerating inflation generally is not a sign of an accelerating economy. However, with renewed weakness in global oil prices, we can expect many signs to be hard to read in the coming months.

For now, France is posting weak inflation numbers, but these are accompanied by firm industrial output trends. The recent weakness in motor vehicle registrations is something to keep an eye on. For the moment, France is in a bit of a sweet spot. The Bank of France projects only a slight negative impact from the recent Paris terrorist attacks.


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French industrial production rose by 0.5% in October. This marks three straight months of IP increases in France and gains in nine of the last 12 months. With the fourth quarter having just begun, IP is advancing at a 7% annual rate [...]

French IP Makes Surprise Gain

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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the
week ending December 5 from an unrevised 269,000 the previous week. The Action
Economics Forecast Survey expected 265,000 filings. The four-week moving average
rose slightly to 270,750 but remained near the 15-year low. During the last ten
years, there has been a 74% correlation between the level of initial claims and
the m/m change in payroll employment.
In the week ending November 28, continuing claims for unemployment insurance
edged up to 2.243 million, but were 18.7% lower than a year earlier. The
four-week moving average increased to 2.184 million and remained near the
15-year low.
The insured rate of unemployment notched higher to 1.7% but remained near the
cycle low.
The insured rate of unemployment across states continued to vary. The lowest
were South Dakota (0.4%), Nebraska (0.6%), Florida (0.6%), Indiana (0.7%),
Virginia (0.7%) and Tennessee (0.8%). At the other end of the spectrum were
California (1.7%), Illinois (1.8%), Massachusetts (1.9%), Connecticut (2.0%),
Pennsylvania (2.2%) and New Jersey (2.4%). The state data are not seasonally
adjusted and reported with a two-week lag versus the headline figure.
Data on weekly unemployment insurance are contained in Haver's WEEKLY
database and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action
Economics survey, carried in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" 0801 width="679">Unemployment Insurance (000s)</th>
 <th 0801 width="169">12/05/15</th>
 <th 0801 width="169">11/28/15</th>
 <th 0801 width="170">11/21/15</th>
 <th 0801 width="170">Y/Y %</th>
 <th 0801 width="170">2014</th>
 <th 0801 width="170">2013</th>
 <th 0801 width="170">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 width="679">Initial Claims</td>
 <td 0801 align="center" width="169">282</td>
 <td 0801 align="center" width="169">269</td>
 <td 0801 align="center" width="170">260</td>
 <td 0801 align="center" width="170">-1.2</td>
 <td 0801 align="center" width="170">307</td>
 <td 0801 align="center" width="170">342</td>
 <td 0801 align="center" width="170">372</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 width="679">Continuing Claims</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">2,243</td>
 <td 0801 align="center" width="170">2,161</td>
 <td 0801 align="center" width="170">-18.7</td>
 <td 0801 align="center" width="170">2,607</td>
 <td 0801 align="center" width="170">2,978</td>
 <td 0801 align="center" width="170">3,308</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 width="679">Insured Unemployment Rate (%)</td>
 <td 0801 align="center" width="169">--</td>
 <td 0801 align="center" width="169">1.7</td>
 <td 0801 align="center" width="170">1.6</td>
 <td 0801 align="center" width="170">
 1.8 
 (Nov. 2014)
 </td>
 <td 0801 align="center" width="170">2.0</td>
 <td 0801 align="center" width="170">2.3</td>
 <td 0801 align="center" width="170">2.6</td>
 </tr>
 </tbody>
</table>
&nbsp;
U.S. Import Price Decline Led By Cheaper Oil 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
10, 2015 
Import prices declined 0.4% during November following a 0.3% October drop,
revised from -0.5%. A 0.7% fall had been expected in the Action Economics
Forecast Survey. Petroleum prices fell 2.5% (-44.5% y/y) after a 0.4% rise,
revised from a 2.1% decline. Nonpetroleum import prices fell 0.3% (-3.4% y/y)
after an unrevised 0.4% decline. These prices have not risen m/m since March of
last year. A 1.0% decline (-11.2% y/y) in prices of nonoil supplies &amp;
materials led the way lower followed by a 0.5% drop (-5.0% y/y) in food &amp;
beverage costs. Capital goods prices eased 0.1% (-2.3% y/y) as did prices for
automotive vehicles &amp; sparts. Nonauto consumer goods prices remained
unchanged (-0.7% y/y) for a second straight month.
Export prices fell 0.6% (-6.3% y/y) following an unrevised 0.2% decline.
Expectations had been for a 0.2% shortfall. A 1.6% decline (-15.0% y/y) in
industrial supplies &amp; materials prices led the way lower. This drop
reflected lower fuels &amp; building materials costs, without which prices fell
0.4% (-8.4% y/y). Foods, feeds &amp; beverages prices were off 0.9% (-13.0% y/y)
and capital goods costs eased 0.1% (-0.2% y/y). Automotive vehicles &amp; parts
prices fell 0.2% (-0.5% y/y), but nonauto consumer goods prices improved 0.1%
(-2.1% y/y).
The import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT database. The
expectations figure from the Action Economics Forecast Survey is in the AS1REPNA
database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="854"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
 Prices (NSA, %)</a></th>
 <th scope="col" width="144">Nov</th>
 <th scope="col" width="144">Oct</th>
 <th scope="col" width="145">Sep</th>
 <th scope="col" width="145">Nov Y/Y</th>
 <th scope="col" width="145">2014</th>
 <th scope="col" width="145">2013</th>
 <th scope="col" width="145">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="854">Imports - All Commodities</td>
 <td width="144" align="center">-0.4</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">-1.1</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Petroleum</td>
 <td width="144" align="center">-2.5</td>
 <td width="144" align="center">0.4</td>
 <td width="145" align="center">-9.4</td>
 <td width="145" align="center">-44.5</td>
 <td width="145" align="center">-5.6</td>
 <td width="145" align="center">-2.6</td>
 <td width="145" align="center">-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonpetroleum</td>
 <td width="144" align="center">-0.3</td>
 <td width="144" align="center">-0.4</td>
 <td width="145" align="center">-0.2</td>
 <td width="145" align="center">-3.4</td>
 <td width="145" align="center">0.1</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">0.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">Exports - All Commodities</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.2</td>
 <td width="145" align="center">-0.6</td>
 <td width="145" align="center">-6.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-0.4</td>
 <td width="145" align="center">0.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="854">&nbsp;&nbsp;Agricultural</td>
 <td width="144" align="center">-1.1</td>
 <td width="144" align="center">0.1</td>
 <td width="145" align="center">-1.4</td>
 <td width="145" align="center">-12.8</td>
 <td width="145" align="center">-2.7</td>
 <td width="145" align="center">1.6</td>
 <td width="145" align="center">2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="854">&nbsp;&nbsp;Nonagricultural</td>
 <td width="144" align="center">-0.6</td>
 <td width="144" align="center">-0.3</td>
 <td width="145" align="center">-0.5</td>
 <td width="145" align="center">-5.7</td>
 <td width="145" align="center">-0.3</td>
 <td width="145" align="center">-0.7</td>
 <td width="145" align="center">0.1</td>
 </tr>
 </tbody>
</table>





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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the week ending December 5 from an unrevised 269,000 the previous week. The Action Economics Forecast Survey expected 265,000 filings. The four-week moving [...]

U.S. Initial Unemployment Insurance Claims Increase

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Initial claims for unemployment insurance rose to 282,000 (-1.2% y/y) in the
week ending December 5 from an unrevised 269,000 the previous week. The Action
Economics Forecast Survey expected 265,000 filings. The four-week moving average
rose slightly to 270,750 but remained near the 15-year low. During the last ten
years, there has been a 74% correlation between the level of initial claims and
the m/m change in payroll employment.

In the week ending November 28, continuing claims for unemployment insurance
edged up to 2.243 million, but were 8.7% lower than a year earlier. The
four-week moving average increased to 2.183 million and remained near the
15-year low.

The insured rate of unemployment notched higher to 1.7% but remained near the
cycle low.

The insured rate of unemployment across states continued to vary. The lowest
were South Dakota (0.4%), Nebraska (0.6%), Florida (0.6%), Indiana (0.7%),
Virginia (0.7%) and Tennessee (0.8%). At the other end of the spectrum were
California (1.7%), Illinois (1.8%), Massachusetts (1.9%), Connecticut (2.0%),
Pennsylvania (2.2%) and New Jersey (2.4%). The state data are not seasonally
adjusted and reported with a two-week lag versus the headline figure.

Data on weekly unemployment insurance are contained in Haver's WEEKLY
database and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action
Economics survey, carried in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" 0801 >Unemployment Insurance (000s)</th>
 <th 0801 >12/05/15</th>
 <th 0801 >11/28/15</th>
 <th 0801 >11/21/15</th>
 <th 0801 >Y/Y %</th>
 <th 0801 >2014</th>
 <th 0801 >2013</th>
 <th 0801 >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 >Initial Claims</td>
 <td 0801 >282</td>
 <td 0801 >269</td>
 <td 0801 >260</td>
 <td 0801 >-1.2</td>
 <td 0801 >307</td>
 <td 0801 >342</td>
 <td 0801 >372</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Continuing Claims</td>
 <td 0801 >--</td>
 <td 0801 >2,243</td>
 <td 0801 >2,161</td>
 <td 0801 >-8.7</td>
 <td 0801 >2,607</td>
 <td 0801 >2,978</td>
 <td 0801 >3,308</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 >Insured Unemployment Rate (%)</td>
 <td 0801 >--</td>
 <td 0801 >1.7</td>
 <td 0801 >1.6</td>
 <td 0801 >
 1.8 
 (Nov. 2014)
 </td>
 <td 0801 >2.0</td>
 <td 0801 >2.3</td>
 <td 0801 >2.6</td>
 </tr>
 </tbody>
 </table>
 
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Inventories at the wholesale level dipped 0.1% during October following a
0.2% September rise, revised from 0.5%. The decline reflected a 1.1% drop (-9.5%
y/y) in metals &amp; minerals (excl. petroleum) and a 0.5% decline (+12.9% y/y) in automotive
inventories. Computer &amp; peripherals inventories also fell 0.7% (+0.1% y/y). Electrical
goods inventories increased 0.6% (5.1% y/y) as did furniture inventories (9.9% y/y). Nondurable
goods inventories ticked 0.1% lower (+5.6% y/y). The decline reflected a 0.7% drop (-16.6% y/y)
in petroleum inventories. Chemical inventories were off 0.1% (+5.2% y/y) but apparel inventories
gained 0.4% (14.1% y/y).

Sales in the wholesale sector were little-changed (-5.8% y/y) following a
0.5% rise. Furniture purchases rose 3.4% (3.9% y/y) and recovered a September
decline, but a 2.6% drop (-1.2%y/y) in motor vehicle sales offset this gain. Machinery
equipment sales fell 0.7% (-6.5% y/y) while electrical goods inventories rose 0.1% (2.7% y/y).
Nondurable goods sales declined 0.7% (-6.9% y/y) as chemical sales fell 1.3%
(-8.4% y/y). Petroleum sales gained 2.9% (-33.3% y/y). Apparel sales increased
2.6% (5.8% y/y) but grocery product sales fell 1.2% (-3.3% y/y).

The inventory-to-sales ratio held steady at 1.31, up sharply from 1.14
averaged in 2010 and 2011. The motor vehicle ratio increased to 1.77, the expansion's
high. The ratio for furniture &amp; home furnishings offset this rise with a decline to
1.63, and has moved erratically sideways during the economic expansion. The nondurable
goods ratio was stable m/m at 0.98, the highest level since 2001.

The wholesale trade figures are available in Haver's USECON database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Wholesale Sector - NAICS
 Classification (%)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >-0.1</td>
 <td >0.2</td>
 <td >0.3</td>
 <td >3.6</td>
 <td >6.7</td>
 <td >4.1</td>
 <td >6.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Sales</td>
 <td >-0.0</td>
 <td >0.5</td>
 <td >-0.9</td>
 <td >-5.8</td>
 <td >4.3</td>
 <td >3.0</td>
 <td >6.2</td>
 </tr>
 <tr>
 <td class="firstcol" >I/S Ratio</td>
 <td >1.31</td>
 <td >1.31</td>
 <td >1.31</td>
 <td >1.22 (Oct. '14)</td>
 <td >1.20</td>
 <td >1.18</td>
 <td >1.16</td>
 </tr>
 </tbody>
 </table>
 
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Inventories at the wholesale level dipped 0.1% during October following a 0.2% September rise, revised from 0.5%. The decline reflected a 1.1% drop (-9.5% y/y) in metals & minerals (excl. petroleum) and a 0.5% decline (+12.9% y/y) in [...]

U.S. Wholesale Inventories Ease

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German export and import flows continued to compress in October. Imports in October plunged by 3.4% as exports fell by 1.2%. Exports and imports each are falling over three months and six months; sequential growth rates in the table from 12 months through three months show ongoing deceleration. The sharp rebound in trade flows in September has been offset by October's drops and a declining profile is now firmly in place.

The ratio of export values to import values is above its level of one year ago and above its levels of 24 months and 36 months ago. Exports continue to be stronger than imports even when they both are falling.

German real export orders are up in October but also falling on balance over three months, six months and 12 months. While they are not progressively weaker, orders are falling faster over three months and six months than they are over 12 months.

Global growth remains on edge. As we saw in yesterday's OECD LEIs, there are no major countries or country groups that show much strength on the OECD format. Everyone is on that same razor's edge of growth or no growth.

We see record numbers of mergers as companies struggle to find ways to reduce costs and make profits in this weak global environment that some central banks want to construe as `normal.' Much of what these companies do does not turn out to be that successful for the economy at large since cutting employees weakens the economic fabric even if it lowers a company's costs. Between international competition and technology, labor has been under a great deal of pressure.

Some laud the drop in the unemployment rate in the EMU and in the U.S. But for the EMU, much of the drop is Germany alone. Falling labor force participation rates generally dress up unemployment statistics. This is a major factor in the U.S. If you calculate unemployment in the U.S. and hold the participation rate steady at its pre-recession level, the current U.S. unemployment rate (yes, the U3 rate) comes in around 10%. I do not argue that this is the right way to calculate it; I just mean to focus on how important the participation rate is to our understanding of what unemployment really is. If central banks focus on the labor market, are they getting the right signal?

German exports and imports both are weak. While the German economy is doing relatively well (including having its lowest unemployment rate since the EMU was formed), domestic demand is still not pulling in much in the way of imports. Three-month import growth was last weaker in January 2012. German trade data echo old concerns about global growth with export weakness and raise new concerns about German domestic demand on import weakness.

France has reworked its GDP outlook to account for the damage caused by the Paris terror attack. We do not know about knock on effects or even if the French authorities have their estimates right. But there is plenty of reason to look at each growth disappointment coming out of Europe and wondering if it is real or if it will magnify. Germany's export weakness is one such development; but import weakness is another. We can hope that this is just trade volatility. But both German exports and imports sketch out a path of weakness that is compelling in its message. Now we must watch to see how the situation develops. There is not a lot of reason for optimism. Every firm and country has been doing its best to squeezes blood out of a stone. At some point all the efficiencies and growth have been squeezed out the system and a new fundamental push is required. Where will it come from?


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German export and import flows continued to compress in October. Imports in October plunged by 3.4% as exports fell by 1.2%. Exports and imports each are falling over three months and six months; sequential growth rates in the table [...]

German Trade Flows Continue on Sinking Trends

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The Mortgage Bankers Association reported that its total Mortgage Market
Volume Index gained 1.2% last week (12.5% y/y). Purchase applications were
unchanged w/w (28.6% y/y) following a recent surge. Refinancing applications
increased 3.5% (3.4% y/y), continuing a sideways trend since the end of 2013.

The effective interest rate on a 15-year mortgage was little-changed at
3.49%, but remained up from the October low of 3.28%. The effective rate on a 30-year
fixed rate loan held w/w at 4.27% but the rate on a Jumbo 30-year loan notched up to
4.14%. For adjustable 5-year mortgages, the effective interest rate fell to
3.10%, down from its high of 3.34% four weeks ago.

The average mortgage loan size rose slightly to $270,800 (6.0% y/y. For purchases,
it fell to $295,100 (+6.9% y/y). For refinancings it rose to $253,700 (4.1% y/y).

Applications for fixed interest rate loans increased 14.8% y/y, while
adjustable rate loan applications improved 1.8% y/y.

The survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990. Respondents include
mortgage bankers, commercial banks and thrifts. The base period and value for
all indexes is March 16, 1990=100. The figures for weekly mortgage applications
and interest rates are available in Haver's SURVEYW database.

U.S. Banks' Changing Footprint at Home and Abroad from the Federal Reserve
Bank of New York can be found <a href="http://libertystreeteconomics.newyorkfed.org/2015/11/us-banks-changing-footprint-at-home-and-abroad.html#.Vmg7hXarRD8">here</a>.

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 <a href="/comment/151209d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/151209d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >MBA Mortgage Applications
 (SA, 3/16/90=100)</th>
 <th scope="col" >12/04/15</th>
 <th scope="col" >11/27/15</th>
 <th scope="col" >11/20/15</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td >424.1</td>
 <td >418.9</td>
 <td >419.9</td>
 <td >12.5</td>
 <td >361.5</td>
 <td >616.6</td>
 <td >813.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Purchase</td>
 <td >228.2</td>
 <td >228.1</td>
 <td >211.7</td>
 <td >28.6</td>
 <td >172.1</td>
 <td >197.5</td>
 <td >187.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Refinancing</td>
 <td >1,570.1</td>
 <td >1,516.9</td>
 <td >1,612.9</td>
 <td >3.4</td>
 <td >1,449.8</td>
 <td >3,070.0</td>
 <td >4,505.0</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Mortgage Effective Interest Rate
 (%)</td>
 <td >3.49</td>
 <td >3.47</td>
 <td >3.50</td>
 <td >3.40</td>
 <td >3.54</td>
 <td >3.42</td>
 <td >3.25</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Mortgage Bankers Association reported that its total Mortgage Market Volume Index gained 1.2% last week (12.5% y/y). Purchase applications were unchanged w/w (28.6% y/y) following a recent surge. Refinancing applications increased [...]

U.S. Mortgage Loan Applications Improve Slightly

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

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Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

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

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

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

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

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

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

250501H20.jpg

250501I20.jpg

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

U.S. Light Vehicle Sales Fall in April

250501J5.jpg

250501K5.jpg

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

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

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

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

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

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

250501L5.jpg

250501M5.jpg

- 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

250501N.jpg

250501O.jpg

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: 2015

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U.S. Financial Accounts Show Moderate Borrowing; Little Change in Net Wealth

U.S. Import Price Decline Led by Cheaper Oil

French IP Makes Surprise Gain

U.S. Initial Unemployment Insurance Claims Increase

U.S. Initial Unemployment Insurance Claims Increase

U.S. Wholesale Inventories Ease

German Trade Flows Continue on Sinking Trends

U.S. Mortgage Loan Applications Improve Slightly