Haver’s data services are provided through the DLX platform; delivering tools for data management, visualization, modeling and publishing. DLX is designed to increase productivity and integrates with Excel, PowerPoint, and major statistical software packages; MatLab, R, Python, SAS, E-views and Stata. DLX component application DLXVG3 offers precision graphics, publishing, analytic tools, and easy navigation for all Haver databases.

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Chart and compare multiple data series with accompanying data table of values

Advanced functions (growth rates, moving averages, aggregation, seasonal adjustment)

Analytical tools (cycle charts, scatterplots, trend lines, and recession shading)

Complete graph customization (axis scaling, sizing, formatting, styles)

Excel and PowerPoint direct export and complete integration (dynamic spreadsheets and presentations update on a click)

DLXVG3

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DLX Add-ins for all versions of Excel provide instant data updates of entire workbooks

Use DLXVG3 to locate data series codes from within any file, easily creating new spreadsheets for analysis

Edit date ranges, archive data, apply functions

Excel Spreadsheet Add-ins

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Haver offers timely, accurate, and professionally supported data via an update service, meeting the strictest demands of the institutional research community

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Manual updates offer clients the independence to update data retrievals on any desired schedule

All database updates retrieve only the data series that have changed and send only the data points that have been updated; including revisions

Timely Updates

DLX software tools to convert data into many different formats needed for diverse analytical frameworks

Haver supports a DLX API permitting clients to leverage and build processes with DLX data

Database Compatibility

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Data Link Express

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HaverView

[Matlab](http://matlab.com) by The MathWorks lets you access, visualize, and analyze historic time-series data to identify patterns or uncover complex relationships. From within a single environment you can:

- Access data from multiple sources including files, spreadsheets, databases, data providers, and the Web
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- Create custom analysis routines and visualizations or animations to capture, present, and share your analysis processes and discoveries
- Customize your analysis environment with advanced functionality from signal processing, statistics, or econometrics

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MATLAB

[Stata Data Analysis and Statistical Software](https://www.stata.com) by StataCorp LP is an integrated statistical package designed for researchers of all disciplines. It provides the ability to do data analysis, data management and graphics and has features such as multiple imputation, factor variables, GMM, competing-risks regression, state-space modeling, predictive margins, and more.

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Stata

[SAS](https://www.sas.com) provides an integrated environment for predictive and descriptive modeling, data mining, text analytics, forecasting, optimization, simulation, experimental design and more. From predictive analytics to model deployment and process optimization, SAS provides a range of techniques and processes for the collection, classification, analysis and interpretation of data to reveal patterns, anomalies, key variables and relationships, leading ultimately to new insights and better answers faster.

[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

Session 1: Bootcamp Part 1

Visualization with GGPlot2 and data analysis

Session 2: Bootcamp Part 2

Session 3: Univariate Models Part 1

Session 4: Univariate Models Part 2

Session 5: Vector Autoregressions

Session 6: Cointegration and error-correction models

A popular open source option for statistical computing and graphics that is available on many UNIX platforms, Windows and MacOS

Estimating, evaluating, and forecasting ARIMA models

Understanding the concept of non-stationarity and testing for unit roots

Estimating autoregressions, granger causality tests, and impulse response functions

Understanding the concept of cointegration and testing using the Enger-Granger test

Estimating and forecasting with vector error correction models

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

Econometrics Training: Applied Time Series in R

Session 5: Multivariate Models Part 1

Session 6: Multivariate Models Part 2

Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

Proficiency working in Jupyter notebooks and the Python environment

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Remote Training: Applied Time Series in Python

US is big leader in global surge in private AI investment

Andrew Cates

**Inflation angst and renewed bond market jitters**
The recent rise in US Treasury yields has coincided with a renewed upswing in US economic surprises, particularly on the inflation and labour market fronts. As chart 1 illustrates below, our newly developed and combined Haver US Labour Market Surprise Index and Inflation Surprise Index (see methodological note at the end of this document) has moved back into positive territory, indicating that incoming data for labour market activity and inflation have, on balance, been coming in stronger than consensus expectations. This rebound has occurred against an increasingly fragile global backdrop marked by rising oil prices, shipping disruptions and renewed geopolitical tensions linked to the Middle East conflict. Markets are becoming increasingly concerned that higher energy costs could feed into broader inflation pressures at a time when underlying labour market momentum remains firmer than many expected. 

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**Central banks face renewed inflation concern**
A rise in short-term government bond yields has become increasingly broad-based across the major developed economies, with UK, US and Japanese two-year yields all trending higher in recent weeks. Investors are increasingly concerned that renewed geopolitical instability in the Middle East and higher energy prices could prolong global inflation pressures just as many central banks had been preparing for a gradual easing cycle. UK yields remain elevated amid persistent domestic inflation concerns, while Japanese yields have also continued to edge higher as markets reassess the outlook for Bank of Japan policy normalization in a world of rising imported energy costs. The synchronized move higher in front-end yields reflects growing unease that central banks may ultimately face a more difficult trade-off between supporting growth and containing another inflationary impulse.

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**Weak labour bargaining power may limit inflation persistence**
Despite growing market anxiety about renewed inflation pressures, an important structural counterpoint comes from the continued weakness in labour’s share of US national income. As the next chart illustrates, labour’s share of nonfarm business income has declined to multi-decade lows. Historically, sustained inflation cycles have often been associated with stronger labour bargaining power, rising wage shares and the emergence of wage-price dynamics. Today, however, workers appear to retain relatively limited pricing power within the broader economy, particularly compared with earlier inflationary eras such as the 1970s. This may help explain why longer-term inflation expectations have, so far, remained relatively contained despite higher energy prices and geopolitical instability. 

At the same time as this, the prolonged decline in labour’s share of income may also help explain the broader rise of populist politics across many advanced economies. Weak wage growth relative to profits, rising inequality and a growing perception that the gains from globalization and asset appreciation have been unevenly distributed have contributed to mounting political dissatisfaction. 

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**Energy markets remain under strain**
Yet the principal counterargument to the more benign inflation outlook suggested by weak labour bargaining power lies on the supply side — most notably in energy markets. As the chart shows, oil prices have remained elevated even as broader measures of geopolitical risk have started to retreat from their recent extremes. The Caldara-Iacoviello Geopolitical Risk Index suggests that fears of a major regional escalation in the Middle East have eased somewhat. However, Brent crude prices continue to reflect persistent disruption to energy flows and shipping routes, particularly given the ongoing effective closure and disruption surrounding the Strait of Hormuz. This divergence matters because financial markets and central banks are increasingly confronting the possibility that supply-side inflation pressures may persist even without a further escalation in military conflict. In other words, fading war fears do not necessarily imply a normalization in energy markets. Instead, the global economy may be entering a more prolonged period of structurally higher energy and transport costs, adding to inflation pressures even as underlying demand conditions soften. The result is an increasingly uncomfortable backdrop for policymakers, combining weaker growth momentum with renewed upside risks to inflation and interest rates.

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**Benign Core CPI Inflation For Now**
Ultimately, what will matter most for central banks is not simply higher oil prices themselves, but the extent to which those higher costs feed through into broader underlying inflation. On that front, the recent inflation data from several advanced economies have, so far, remained remarkably benign. As the chart illustrates, core inflation measures pubished this week in the UK, Canada and Austria have all continued to moderate despite renewed geopolitical tensions and rising energy prices. This suggests that the broader inflationary impulse across goods, services and wages remains contained for now.

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**The AI Investment Boom**
Yet even as markets grapple with inflation risks, energy shocks and slowing global demand, financial markets continue to be dominated by one extraordinarily powerful countervailing force: the AI investment boom. As the chart illustrates, capital expenditure among the major technology firms — including Meta, Oracle, Amazon, Alphabet and Microsoft — has exploded higher over the past several years as the race to build generative AI infrastructure intensifies. Collectively, these firms have spent almost $1.5 trillion on capital expenditure since early 2021, with spending in Q1 2026 alone reaching an extraordinary $179 billion, nearly double the level of a year earlier.

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Ongoing geopolitical tensions in the Middle East and the associated surge in energy prices have pushed inflation and bond market concerns back to the forefront of global financial markets. Investors are increasingly worried that central banks may now face even greater difficulty in bringing inflation fully under control, particularly in economies where underlying price pressures had already remained sticky prior to the latest energy shock. Recent upside surprises in US labour market and inflation data have already contributed to higher Treasury yields and a broader global backup in short-term government bond yields across the major economies (charts 1 and 2). Yet the picture is not entirely one-sided. Labour’s share of US national income remains historically weak, suggesting limited underlying wage bargaining power and helping explain why broader inflation persistence could ultimately remain contained (chart 3). Meanwhile, oil prices have remained elevated despite some moderation in broader geopolitical risk indicators, reflecting persistent supply-side disruption and ongoing stress surrounding key global energy and shipping routes (chart 4). Even so, recent core inflation data from economies including the UK, Canada and Austria suggest that pass-through from higher energy costs into broader underlying inflation has so far remained relatively limited (chart 5). At the same time, financial markets continue to be supported by an extraordinary AI-driven investment boom, with technology firms engaged in an unprecedented surge in spending on data centres, semiconductors and energy infrastructure (chart 6). Increasingly, the global economy appears caught between two powerful and competing forces: renewed supply-side inflation risks on one side and a historic wave of AI-driven technological investment on the other.

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Charts of the Week: Surprise, Surprise

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 3,000 to 209,000 in the week ending May 16, from 212,000 in the week ending May 9, revised from 211,000. The four-week average declined by 1,500 to 202,500 in the week ending May 16, from 204,000 the May 9 week, revised marginally from 203,750. The Action Economics/Haver Analytics Survey looked for 210,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 6,000 to 1.782 million in the week ending May 9, from 1.776 million in the week ending May 2, revised from 1.782 million. The four-week moving average declined to 1.773 million in the latest week from 1.780 in the May 2 week, revised from 1.781 million. The four-week moving average reached the lowest level since January 2024. The insured unemployment rate was unchanged at 1.2% in the week of May 9. Except for a one-week dip to 1.1% in the week of April 25, the insured unemployment rate has been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending May 2, the highest unemployment rates were in New Jersey (2.17%) and Washington (2.11%). The lowest rates were in Florida and South Dakota (both 0.30%), Louisiana (0.32%), Alabama (0.35%), Arkansas (0.37%), North Carolina (0.38%), Tennessee (0.47%) and Iowa, Kansas, Virginia and Virgin Islands (all 0.48%). Rates in other notable states include California (1.97%), New York (1.61%), Illinois (1.51%), Pennsylvania (1.26%), and Texas (1.01%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.



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- New claims declined by 3,000 to 209,000 in the week ending May 16.
- Continuing claims rose by 6,000 to 1.782 million.
- The insured unemployment rate was unchanged at 1.2% in the week of May 9.


U.S. Initial Unemployment Claims Declined in the Week of May 16

Robert Brusca

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CPI inflation in the UK eased sharply in April with the headline making no change at all and the core rising by only 0.1%. The headline is a marked departures from March when the UK CPI rose by 0.4% as the core put in another good month, rising 0.1%. Sequentially, UK inflation as measured by the CPIH has been relatively stable with a 3% growth rate over 12 months, a 3% annual rate over three-months, and a gain of 2.9% annualized over six-months; it's about as steady as you can get. The core (CPH excluding energy, food, alcohol, and tobacco) rises 2.9% over 12 months, eases to a 2.7% annual rate over six-months, then rises at a 2% annual rate over three-months.

**Low inflation amid a global surge in oil prices**
The core is showing significant temperance and sequential improvement. Meanwhile, globally oil prices are flaring sharply, and most countries are seeing inflation rates rise. An energy cap in the UK is holding energy costs down and helping to keep the headline rate of inflation low. However, the cap can only work its magic for so long, eventually persisting strength in oil prices are going to show through into the headline index.

**Acceleration tendencies abate**
In April, 50% of the categories of the CPI H showed acceleration compared to March; in March only 41% had accelerated compared to February; in February only 41% had accelerated compared to January. On a broad basis, inflation acceleration has been substantially neutralized or controlled. Sequential calculations show that over three-months acceleration has occurred in 50% of the categories, over six-months and 12-months, however, acceleration has occurred in only 33% of the categories, indicating that there has been a relatively long-lived environment of inflation temperance.

**Still Too high**
However, inflation in the UK remains relatively high. The HICP measure, which is comparable to the measures used on the continent by the European Central Bank, has a 69th-percentile standing when ranked on data back to 2000. The CPIH has a 75.1-percentile standing and the CPIH-core has an 81.5 percentile standing. These are based on year-over-year percent changes and the two inflation gauges.

Inflation rankings tell us that inflation in the UK is still relatively high compared to how it has performed over the last 25 years. However, what's most important is inflation relative to the target of 2%. At 3% the inflation rate is too high and at 2.9% the core inflation rate is too-high as well. However, we see the shorter-term inflation rates particularly for the core have come down. The core rate over three-months has even reached the 2% mark, which is both encouraging and surprising. The UK economy has been performing poorly. The Bank of England will certainly be making its next monetary policy decision based on the performance of inflation with some assessment and how the trend is faring as well as with reference to economic performance which has been marginal. We will have to see how the BOE looks at the effect of the energy cap. At the same time there's a great deal of political turmoil in the UK to pair with difficult global geopolitical conditions


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United Kingdom

UK CPIH Eases Amid Global Oil Price Shock 

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Mortgage applications declined 2.3% w/w (+18.9% y/y) in the week ending May 15, after rising 1.7% w/w (15.5% y/y) in the week ending May 8, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house dropped 4.1% w/w (+8.0% y/y) in the May 15 week, following a rise of 3.9% w/w (6.7% y/y) in the May 8 week.  Applications for loan refinancing edged down 0.1% w/w (+34.8% y/y) in the latest week after declining 0.8% w/w (+28.3% y/y) in the May 8 week.

The effective interest rate on a 30-year fixed-rate loan rose 9bps to 6.73% in the week ending May 15 from 6.64% in the week ending May 8. The rate on 15-year fixed-rate mortgages rose 12bps to 6.11% in the latest week from 5.99% in the week ending May 8. The 30-year Jumbo rate rose 5bps to 6.69% in the May 15 week from 6.64% in the May 8 week. The rate on a 5-year ARM also rose 5bps to 6.07% in the latest week from 6.02% in the week ending May 8.

The share of applications for refinancing an existing loan rose to 41.9% of total applications in the week of May 15 from 40.8% in the May 8 week. The adjustable-rate mortgage (ARM) share of activity rose to 9.6% in the May 15 week from 8.8% in the week ending May 8.

The average size of a mortgage loan declined 1.4% w/w (+3.5% y/y) to $403,200 in the week ending May 15, after retrenching 0.5% w/w (+2.9% y/y) to $409,000 in the week ending May 8. The average size of a purchase loan edged down 0.1% w/w (+4.6% y/y) to $466,900 in the latest week from $467,200 in the May 8 week. The average size of a loan to refinance a mortgage declined 3.0% w/w (+8.1% y/y) to $314,700 in the May 15 week from $324,500 in the May 8 week. 

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.


- Both applications for loans to purchase and applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 9bps to 6.73%. 
- Average loan size declined.


U.S. Mortgage Applications dropped in the May 15 Week 

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Japan’s GDP rose 2.1% annualized in 2026-Q1. The gain beat expectations for the quarter. The 2.1% rise was the largest gain since a 2.7% rise in 2024-Q3. However, it still leaves the year-on-year gain for GDP at 0.4%, the same as for 2025-Q4. And these are the weakest growth rates since Q1 and Q2 of 2024 when Japan’s GDP was declining. 

Private consumption in 2026-Q1 rose by 1.1% quarterly at an annualized rate, its strongest gain in a year. Still, the year-on-year rise in private consumption slowed to 1% from 1.4% in 2025 Q4. Growth in private consumption on a year-on-year basis is the weakest it has been since 2024-Q4. 

Despite some signs of GDP/Consumption stirring, the quarterly performance is not enough to boost the year-on-year growth rates to a position of strength, let alone firmness. Japan has simply been struggling for a while. And now with inflation bulging the BoJ has been super careful to move rates exceptionally slowly so that real interest rates in Japan remain exceptionally low (negative, still) and the prospect of rate normalization in Japan still seems to be a distant dream. 

New PM Sanae Takaichi called her snap election and improved her grip on government and is still looking to stimulate the economy, but Japan’s fiscal position is now so precarious that even the usual incantation that Japan owns most of its debt to itself (its own residents) has not been reassuring. Japan has become wary of is debt-to-GDP ratio. The time for a fiscal surge has passed and there is talk instead of a new industrialization policy to try to stimulate the economy within the realm of current spending trends by offering improved incentives for growth. 

Capital formation in GDP grew by 2.1% in 2026-Q1, a down shift for 2025-Q4, but capital spending is in a period of some volatility. The year-on-year gains show a step up in Q1 spending to a pace of 1.5% from 1.2% in the previous quarter. The five-year growth rate for capital spending is only 0.8% per year. Still there is not much here to build economic revival on. 

Plant and equipment spending has weakened in Q1, showing an annualized Q/Q gain of 1.1% and that compares to five-year annualized growth of 1.8%. Year-on-year plant and equipment growth is at 2.8%. 

Spending on housing turned sharply higher in Q4 with a smaller continued gain Q/Q in 2026-Q1. Still, after some considerable weakness quarterly, the year-on-year gain in housing spending in Japan in 2026-Q1 is -3.1% marking the third quarter in a row of declining spending on housing year-over-year. 

Net exports in Japan turned sharply higher in 2026-Q1 and year-on-year the change in the GDP-net exports balance swung from negative to positive. The annual improvement in the net export position is still only half of what it had been over the last five years. Export growth spiked while import growth stepped up in 2025-Q1. Exports and imports over the past year both growth more slowly than their 5-year averages.

Domestic demand picked up a bit Q/Q in 2026, but the year-on-year growth slipped to 0.3% compared to a gain of 1.2% in the previous quarter. 

Japanese officials are engaged in active market talk to try to restrain further slippage in the yen. Markets buzz with rumors of intervention that has not happened for over a month. Japan’s decision on interest rate is also caught up in its concerns about the yen. Meanwhile, as Japan imports all its fuel and rising energy prices are a concern in Japan. Yet the concern is about the future more than anything else since Japan tends to sign long-dated energy contracts and likely has locked up its oil price costs for this year. Still, the ongoing pressure has put conditions in doubt for the year ahead. 

On balance Japan growth in 2026-Q1 was somewhat better than expected but it has done nothing to assuage concerns about the way forward. Ongoing inflation and a reticence to hike rates to address inflation continue to stalk the policy outlook as PM Takaichi looks for a way out of Japan’s weak growth trap. 









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Japan

Japan GDP Outperforms Expectations

Tian Yong Woon

In this week’s Letter, we review the key outcomes from last week’s US–China summit, which, while largely symbolic as a reset in bilateral relations, also yielded several notable trade-related agreements (chart 1). We also examine China’s latest monthly data releases, which extended last month’s moderation in growth and further highlighted the increasingly two-speed nature of its economy (chart 2). Turning to Japan, we look ahead to this week’s key data releases. Q1 GDP growth appears likely to be supported by resilient exports, while the domestic picture—reflected in indicators such as household spending—continues to lag (chart 3). On the inflation front, upcoming CPI readings will be closely watched; if price pressures accelerate further alongside continued yen weakness, this could revive a policy dilemma for the Bank of Japan (chart 4). Zooming out, inflation appears to have reasserted itself as the dominant market driver, with nominal yields rising across markets (chart 5). At the same time, AI-related optimism has taken a back seat for now, as equity markets pull back from recent rallies (chart 6).

**The US-China summit**
The highly anticipated US–China summit concluded last week, with few details released immediately afterward. More information emerged early this week, as the White House outlined several key developments. Perhaps most importantly, though largely symbolic at this stage, the two sides agreed to build a “constructive relationship of strategic stability.” While the phrase does not imply any concrete policy actions, it may signal a shift away from the repeated tensions and frictions that have characterized recent interactions. The US and China also agreed that the Strait of Hormuz should be reopened, although no specific measures were announced to achieve this. On more tangible outcomes, the White House said China approved an initial purchase of 200 Boeing aircraft for Chinese airlines and committed to buying at least $17 billion of US agricultural products annually from 2026 to 2028. China also restored market access for US beef by renewing expired registrations for more than 400 US beef facilities and adding new listings, while resuming imports of US poultry.

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**China’s latest data releases**
Overall, the US–China summit signalled a more conciliatory tone between the world’s two largest economies, with the initially announced agreements broadly reinforcing that shift, including plans to establish two new boards focused on trade and investment. Meanwhile, China’s latest data releases offered further insight into the economy’s performance amid the ongoing oil supply squeeze linked to disruptions in the Strait of Hormuz. Extending the slowdown already evident in March, April data showed weaker growth in retail sales, industrial production, and fixed asset investment, as illustrated in chart 2. In the case of fixed asset investment, year-to-date growth slipped into contraction territory. The increasingly two-speed nature of China’s economy is becoming more apparent. On one hand, robust exports and still-solid manufacturing activity continue to support overall growth. On the other, softer retail sales and broader domestic demand remain a persistent drag on the economy.

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**Japan**
Beyond China, Japan will also be in focus this week, with several key indicators on growth and inflation due for release. Most notably, Japan’s preliminary Q1 GDP reading, due Tuesday, will provide the first comprehensive snapshot of the economy after incorporating the initial effects of the Middle East conflict. As with China, Japan’s economy exhibits a two-speed dynamic. Strong export growth is likely to have supported Q1 activity, reflecting resilient external demand. However, domestic indicators such as household spending continue to point to a fragile underlying picture (chart 3). This leaves Japan exposed to a similar risk as China: If external demand weakens under the weight of rising oil prices and broader uncertainty stemming from disruptions in the Strait of Hormuz, growth could come under significant pressure in the absence of secondary growth drivers.

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Inflation will also be a key focus in Japan this week, given its implications for household purchasing power, real economic growth, and monetary policy. While inflation is not yet showing a full resurgence, nationwide consumer price inflation picked up in March (chart 4), and Tokyo CPI data pointed to a modest firming in price pressures in April. These developments have coincided with a prolonged weakening of the yen, which, while supportive of exports, also raises inflationary pressures by increasing the cost of imported goods. If inflation were to return to the peaks seen in previous years, the Bank of Japan could once again face a policy dilemma, particularly if economic growth slows at the same time. In that scenario, the BoJ would need to balance the risks of persistent inflation against the need to support a weakening economy.

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**Market shifts**
Zooming out to broader market developments, and taking into account the recent US–China summit, the ongoing closure of the Strait of Hormuz, and earlier AI-driven optimism, it appears that AI enthusiasm has, for now, ceded its role as the dominant market driver. In its place, renewed inflation concerns have taken centre stage, weighing on bond prices and pushing yields higher, as shown in chart 5. This dynamic is particularly evident in some economies, such as Japan. While nominal government bond yields have risen sharply, real yields have edged lower, implying that inflation expectations have increased. These rising inflation expectations likely reflect the continued apparent impasse in US–Iran negotiations, along with the absence of concrete actions to reopen the Strait of Hormuz and ease pressure on global energy markets.

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At the same time, AI optimism—which had previously underpinned equity market performance—has appeared to lose some momentum as a dominant price driver, with inflation concerns moving to the forefront. As shown in chart 6, after months of seemingly uninterrupted gains, equity indices in advanced Asian economies—typically heavy in technology and semiconductor exposure—pulled back last Friday, with further declines observed in Monday’s trading session. This shift has coincided with firmer crude oil prices, reinforcing the narrative that inflation risks and supply-side pressures linked to the Strait of Hormuz disruption are now firmly back in focus.

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Asia

Economic Letter from Asia: After the Summit

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Confidence for Turkey in April improved rising by 1.5% month-to-month to an index value of 96.42.  Services and retail confidence both rose on the month as confidence in Construction fell by a sharp 3.6%, partly reversing an even sharper gain form a month ago. 

The sequential performance of confidence in Turkey finds overall, services and retail sector confidence accelerating. Construction confidence is stronger over 3-months than over 12-months but its six-month gain shows slowing. Performance is still getting settled and the service and retail sector readings are still lower on balance over 12-months, even as they show acceleration and growth in train. Turky is a work in progress. 

The individual sector standings of the confidence metrics by sector are surprisingly similar and cluster around the 20-percentile mark. Overall confidence at 22.7% has the strongest reading while the weakest sector reading is 17.4-percent and it finds construction and services in a tie for the lowest index rank standing. 

The table also ranks confidence by growth rates, comparing growth over the past year across the sector readings. The growth sectors have relatively strong reading that the sector index standings. That is an admission that conditions currently have, when compared back to 2012, ranked weaker than the level of economic conditions (as proxied by confidence, of course) evaluated over the same period. It is evidence that some improvement in conditions (perceived improvement) is underway. The growth rate rankings stretch from the 32nd percentile to the 53rd percentile- all the growth standings exceed the index standings. 

The growth in construction at a 53.5-perntiel standing is above its median growth rate since January 2012. Overall confidence still has a growth rate below its median at a 41.9 percentile standing; the shortfall is significant but not severe. Services and retail are more significant laggard with growth rate standings in their respective 32nd- and 33rd-percentiles – historically, reading that are higher about two-thirds of the time on the timeline back to early 2012.

Turkey continues to experience high inflation at 33% over the last year, a small deceleration from the month before. With global energy price pressures rising, Turkey’s central bank has recently lifted its outlook for inflation hear as well. The economy grew about 3.6% this year; it is on track for about 3% growth. Confidence readings suggest some ambivalence to these conditions. By this time, the population has gotten used to the high inflation. But growth has not stepped up significantly. That could be the key driver for improved expectations and confidence. But it is not yet a reality. Turkey is still, affected, of course, by the war-time conditions in Iran that is right on its border. 


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Turkey

Confidence in Turkey Advances 

Sandy Batten

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Industrial production (IP) rose a much larger-than-expected 0.7% m/m in April, rebounding from an upwardly revised 0.3% m/m decline in March (previously -0.5% m/m), according to data released by the Federal Reserve Board. The Action Economics Survey looked for a 0.2% monthly gain. The y/y rate also rebounded in April, rising to 1.4% y/y after having fallen to 0.7% in March. IP has clearly trended up since late last year. Since November 2025, it has grown at a 3.6% annual rate. The current level of output is the highest since August 2019 but is still 1.5% below the November 2018 series peak.

Manufacturing output led the April rebound, rising 0.6% m/m (1.3% y/y) following an upwardly revised 0.1% monthly increase in March (previously -0.1% m/m). Mining output fell in April for the second consecutive month, edging down 0.1% m/m (+0.2% y/y) after a 1.6% monthly drop in March (revised down from -1.2% m/m). Utilities production rebounded in April, jumping 1.6% m/m (2.7% y/y) and more than offsetting a 1.4% monthly decline in March (revised up from -2.3% previously). The rebound in utilities output reflected a 1.1% rise in electricity production and a 7.3% monthly jump in natural gas distribution, the first monthly gain in four months.

Within manufacturing, durable goods production jumped 1.2% m/m (3.2% y/y) in April after having been unchanged in March. A 3.7% m/m rebound in motor vehicles and parts production, the largest monthly gain since May 2025, led the April increase. Motor vehicles and parts production had fallen 2.4% m/m in March. Production of computers and electronic products increased 1.5% m/m, the fourth consecutive monthly rise. Aerospace output rose 1.6% m/m in April, the third consecutive monthly gain and the largest since July 2025. By contrast, furniture production fell 1.8% m/m, the third consecutive monthly decline. 

Output of nondurable manufactured goods edged down 0.1% m/m (-0.6% y/y) in April, the first monthly decline in four months. Production of apparel and leather goods slumped 2.2% m/m on top of a 2.0% monthly fall in March. Chemical output fell 0.9% m/m in April, its first monthly decline in four months. Output of plastics and rubber products fell 0.9% m/m, the first monthly fall in four months. By contrast, production of petroleum and coal products rose 1.0% m/m in April, the same monthly increase as in March.

By market group, output of consumer goods rebounded in April, increasing 0.9% m/m (-0.2% y/y) following a 0.8% m/m decline in March. Production of business equipment surged 1.5% m/m (+6.0% y/y) in April, the largest monthly gain since March 2025. Output of construction supplies was unchanged in April from March (+1.2% y/y) following a 0.9% m/m gain in March. Materials production rebounded in April, rising 0.5% m/m (1.2% y/y) after a 0.4% m/m decline in March.

In special classifications, output of selected high-tech industries increased 1.0% m/m (+9.2% y/y) in April following a 0.5% monthly gain in March. The rebound in motor vehicles and parts production reflected a 5.3% monthly surge in vehicle output, the largest monthly gain since May 2025. Manufacturing output excluding selected high-tech industries rose 0.6% m/m in April, the largest increase since February 2025, following a 0.1% m/m increase in March. Manufacturing output excluding both selected high-tech industries and motor vehicles and parts advanced 0.3% m/m in April, the same monthly gain as in March.

Capacity utilization rose to 76.1% in April from 75.7% in March. The April reading was the highest since last August but was still 3.3%-points below its long-term (1972-2025) average. Manufacturing capacity utilization increased to 75.8% in April from 75.4% in March, 2.4%-points below its long-term average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Total industrial output increased a much larger-than-expected 0.7% m/m in April with a small upward revision to March.
- Manufacturing output increased 0.6% m/m, led by a 5.3% m/m rebound in vehicle production.
- Mining output edged down 0.1% m/m, while utilities production rose 1.9% m/m.
- The headline rate of capacity utilization rose to 76.1% in April, its highest reading since last August but still well below its long-term average.


U.S. Industrial Production Jumped in April

Michael J. Moran

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The Conference Board’s index of Consumer Confidence inched lower in May (off 0.7%), but the change occurred from an upward revised level in April (firmer by 1.1%). These changes continued the recent pattern of modest month-to-month shifts, although the headline index lost noticeable ground during 2025, leaving recent readings in the low end of the range for the current expansion. From a long-term perspective, the current index value of 93.1 was nearly equal to the average of 92.9 from 2000-2025.

A drop in assessments of the present situation led the decline in May, with this component falling 2.6%. The expectations index improved slightly, increasing 1.4%. This pattern matches the usual cyclical shifts, as the index for the present situation shows wide swings between peaks and troughs. Usually, however, the pronounced declines do not occur until the economy has entered a recession. The change in the past year or so has been large for an economy still in a business expansion.

The uncomfortable inflation setting has most likely influenced the views of consumers, which is evident in the inflation expectations question in the survey. The median view on inflation 12 months hence totaled 5.2% in May, down 0.1 percentage point from April, but well above readings near 4% in 2024 and in the calmer environment before the pandemic. Inflation concerns were more intense last year when tariffs were in the news (median inflation expectation of 5.9% in April 2025), but 5.2% is still hefty.

The labor market does not have the vigor it did in 2024 and early 2025, and that change has probably influenced assessments of the present situation. However, individuals still have a slightly favorable view of the job market. The share of respondents viewing jobs as plentiful totaled 25.5% in May, while 18.6% viewed jobs as hard to get. The differential of 6.9 percentage points, like the present-situation index, is low for an expanding economy, but it is far above readings seen in past recessions.

The results from the Conference Board survey of consumers differ markedly from those of the University of Michigan Survey Research Center. The Michigan results show consumer sentiment at a record low, while the Conference Board index essentially matches its long-run average. The difference most likely reflects the nature of the questions in the surveys. The Conference Board focuses on business and employment conditions, while Michigan emphasizes personal finances. The focus on finances, along with questions on inflation, probably picks up concerns about affordability.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Assessments of the present situation slipped, but views were still above long-run norms.
- Expectations improved slightly in April, but they are still below the long-run average.

Consumer Confidence: Slightly lower in May

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