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

AutoUpdate provides fast and reliable data updates within seconds of source releases

Timer service runs continuously on an hourly basis when DLX is running

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

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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

Platform Independent site delivering DLX Databases across any workstation or device.

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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
- Store data in financial time-series objects to simplify data management, data transformation, missing-data handling, and date-math calculations
- Perform technical analysis with moving averages, oscillators, stochastics, and indices
- 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

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Session 3: Univariate Models Part 1

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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

AI-related outperformance of IP in Advanced Asia ex Japan

Sandy Batten

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Industrial production (IP) rose a larger-than-expected 0.7% m/m (2.3% y/y) in January following downwardly revised readings for both December (0.2% m/m versus 0.4% m/m previously) and November (0.1% m/m versus 0.4% m/m previously) according to data released by the Federal Reserve Board. The Action Economics Survey looked for a 0.4% monthly gain. The 2.3% annual increase was the second highest since September 2022.

Manufacturing output increased 0.6% y/y (2.4% y/y) in January following a downwardly revised unchanged reading in December (previously +0.2% m/m). Weakness in mining output continued with a 0.2% m/m decline (+2.5%y/y) in January after a downwardly revised 0.9% monthly drop in December (previously -0.7% m/m). This was fourth monthly decline in mining output in the past five months. Reflecting continued unseasonably cold temperatures, utilities output jumped 2.1% m/m (1.1% y/y) in January on top of an upwardly revised 3.0% monthly gain in December (previously 2.6% m/m). This reflected 2.1% monthly gains in both electricity and natural gas distribution.

Within manufacturing, durable goods production rose 0.8% m/m (3.7% y/y) in January after a 0.2% monthly increase in December. Gains were widespread across sectors. Production of nonmetallic mineral products increased 2.2% m/m, the first monthly gain in four months. Machinery output increased 1.2% m/m; computer production gained 1.0% m/m; output of motor vehicles rose 1.3% m/m. By contrast, production of aerospace and miscellaneous transportation equipment slipped 0.2% m/m, the second monthly decline in the past three months. Output of nondurable goods increased 0.4% m/m (1.3% y/y) in January, more than reversing a 0.2% monthly decline in December. Performance by sector was varied. Output of plastics and rubber products rose 1.3% m/m in January; chemical production increased 1.1% m/m; paper production gained 0.8% m/m. By contrast, output of apparel and leather goods fell 0.7% m/m, their first monthly decline in three months; food output fell 0.4% m/m; textile output declined 0.3% m/m.

By market groups, output of consumer goods increased 0.7% m/m (1.3% y/y) in January on top of a 0.8% monthly gain in December. Production of business equipment gained 0.9% m/m (9.3% y/y) in January, the same monthly advance as in December. Output of construction supplies rose 0.5% m/m (1.2% y/y) in January, more than reversing the 0.4% monthly decline in December. Output of material increased 0.6% m/m (1.9% y/y) in January after having been unchanged in December from November.

In special classifications, output of selected high-tech industries jumped 1.9% m/m (8.9% y/y) in January, the fourth consecutive monthly gain, following a 0.2% monthly increase in December. Output of motor vehicles and parts rose 1.3% m/m (5.5% y/y) in January after having been unchanged in December. The January gain was led by a 1.9% monthly jump in motor vehicle production. Manufacturing output excluding selected high-tech industries was up 0.6% m/m (2.2% y/y) in January following an unchanged monthly reading in December. Manufacturing output excluding selected high-tech industries and motor vehicles and parts increased 0.5% m/m (2.0% y/y) in January versus unchanged in December.

Capacity utilization rose to 76.2% in January, 3.2%-points below its long-term (1972-2025) average, from a downwardly revised 75.7% in December (previously 76.3%). The January reading was the highest since July. Manufacturing capacity utilization increased to 75.6% in January, 2.6%-points below its long-term (1972-2025) average, from 75.2% in December.

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 larger-than-expected 0.7% m/m in January.
- However, there were meaningful downward revisions to the previous two months.
- Manufacturing output increased 0.6% m/m, mining declined 0.2% m/m, and utilities production jumped 2.1% m/m.
- Rates of capacity utilization edged up in January but remained well below their long-term averages.

U.S. Industrial Production Jumped in January

Winnie Tapasanun

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Total housing starts rose 6.2% m/m in December to a seasonally adjusted annual rate of 1.404 million units—above expectations—following a 3.9% increase to 1.322 million in November and an upwardly revised 4.2% decline to 1.272 million in October (-4.6% m/m, 1.246 mil. previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected 1.320 million starts for December. The latest figure marked the third m/m rise in four months and the highest level since July. The year-on-year rate was at -7.3% in December, the steepest y/y drop since November 2024, following +2.1% in November and -0.5% in December 2024. Overall, starts remained 22.9% below the April 2022 peak of 1.820 million. For all of 2025, housing starts declined 0.9% after decreases of 3.5% in 2024 and 8.4% in 2023.

Single-family starts, up for the third straight month, increased 4.1% (-9.0% y/y) to 981,000 in December, the highest level since February 2025, after rises of 5.4% to 942,000 in November and 6.9% to 894,000 in October (874,000 previously). They reached a high of 1.218 million in November 2021 and a peak of 1.273 million in December 2020. Multi-family starts jumped 11.3% (-3.0% y/y) to 423,000, the third m/m gain in four months and the highest level since September, following a 0.5% November increase to 380,000 and a 23.2% October plunge to 378,000 (372,000 previously). They reached a peak of 629,000 units in November 2022 and a high of 616,000 units in April 2022.

By region, December housing starts mostly increased m/m. Starts in the West surged 37.4% (19.7% y/y) to 334,000 in December after a 5.8% decrease in November, registering the largest m/m gain since January 2025 and the highest level since February 2025. Starts in the Northeast rose 5.6% (2.7% y/y) to 152,000 after holding at 144,000 in November and October. Starts in the Midwest grew 2.3% (-13.2% y/y) to 177,000 following a 14.8% November slump. To the downside, starts in the South fell 2.8% (-16.1% y/y) to 741,000 in December, the first m/m fall since September, after a 14.2% advance in November. Despite the m/m pullback, the South continued to lead all regions, accounting for 52.8% of total U.S. housing starts; the region previously peaked at 1.044 million in April 2022.

Building permits recovered 4.3% (-2.2% y/y) to 1.448 million in December, the highest level since March 2025, after declines of 1.6% to 1.388 million in November and 0.3% to 1.411 million in October. They remained well below a high of 1.920 million in January 2022 and a high of 1.855 million in January 2021. Single-family permits slid 1.7% (-10.9% y/y) to 881,000 following a 2.1% November rebound to 896,000. They reached highs of 1.243 million in both January 2022 and January 2021. Multi-family permits jumped 15.2% (15.5% y/y) to 567,000, the highest level since August 2023, after a 7.7% November decline to 492,000. They reached a peak of 817,000 units in February 2023 and a high of 787,000 units in June 2022. Regionally, permits rebounded m/m in the Northeast (+44.4%; +17.4% y/y), West (+8.0%; +13.5% y/y), and Midwest (+6.6%; -5.0% y/y), but fell m/m in the South (-4.1%; -10.9% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

The minutes to the latest **FOMC** meeting are available [here](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20260128.pdf).

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- Housing starts +6.2% (-7.3% y/y) to 1.404 mil. in Dec.; third m/m gain in four months.
- Single-family starts up to a 10-month high; multi-family starts up to a three-month high.
- Housing starts m/m up in the West, Northeast, and Midwest, but down in the South.
- Building permits recover to a nine-month high, led by a rebound in multi-family permits.

U.S. Housing Starts Advance in December to a Five-Month High

Kathleen Stephansen, CBE

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Mortgage applications rose 2.8% w/w (57.7% y/y) in the week ending February 13, following a decline of 0.3% w/w (+43.4% y/y) in the week ending February 6, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house declined 2.7% w/w (+9.1% y/y) in the latest week, after a decline of 2.4% w/w (+5.5% y/y) in the week ending February 6.  Applications for loan refinancing rose 7.1% w/w (131.8% y/y) in the February 13 week after a rise of 1.2% w/w (100.5% y/y) in the February 6 week.

The effective interest rate on a 30-year fixed-rate loan edged down 5bps to 6.33% in the week ending February 13 from 6.38% in the week ending February 6. The rate on 15-year fixed-rate mortgages dropped 14bps to 5.68% in the latest week from 5.82% in the prior week. The 30-year Jumbo rate fell 11bps to 6.29% in the February 13 week from 6.40% in the February 6 week, reaching its lowest level since the week of February 10, 2023. The rate on a 5-year ARM dropped 6bps to 5.52% in the latest week from 5.58% in the week ending February 6.

The share of applications for refinancing an existing loan rose to 57.4% of total applications in the February 13 week from 56.4% in the February 6 week. The adjustable-rate mortgage (ARM) share of activity rose to 8.2% in the February 13 week from 8.0% in the week ending February 6.

The average size of a mortgage loan rose 2.3% w/w (8.6% y/y) to $415,100 in the week ending February 13, after a decline of 1.2% w/w (+3.1% y/y) to $405,700 in the week ending February 6. The average size of a purchase loan edged up 0.7% w/w (2.0% y/y) to $448,000 in the latest week, following a decline of 1.6% w/w (-2.4% y/y) to $445,000 in the week ending February 6. The average size of a loan to refinance a mortgage rose 4.1% w/w (34.1% y/y) to $390,700 in the week ending February 13, following a decline of 1.2% w/w (+24.9% y/y) to $375,200 in the week ending February 6.

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.

- Applications for loans to purchase declined in the latest week while refinancing loan applications rose.
- Effective interest rate on 30-year fixed loans declined 5bp to 6.33%.
- Average loan size rose.

U.S. Mortgage Applications Rose in the February 13 Week

Robert Brusca

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Inflation in the United Kingdom has irregularly downshifted over the past two months. In January, consumer price inflation remained steady at 2.8% over three months, the same pace as over six months. Core inflation ticked up to 3.3% over three months from 3.1% over six months but settled below the 12-month pace of 3.4%. Yet another measure, the HICP, comparable to the inflation rates reported by ECB numbers, logs 2.5% over three months, a slight uptick from six-month pace but less than the 12-month pace of 3%.

**Diffusion**
The diffusion statistics that measure the breadth of acceleration of inflation across categories month-to-month came in at only 16.7% in January, down from 66.7% in December and compared to 33.3% in November. Diffusion readings below 50% indicate more deceleration than acceleration. So, inflation has been under control, with recent results showing more deceleration for inflation monthly than to accelerate. December was an exception. Over the 3 , 6 , and 12 month periods, inflation shows some acceleration tendency over 3 months, with diffusion at 58.3%; but that compares to 6-month diffusion at 16.7% and 12-month diffusion at 25%. Once again, the broad stroke for inflation, trending from 12 months to 6 months to 3 months, is showing more categories decelerating than accelerating.

**Inflation rate ranking**
The final right-hand column ranks inflation rates on data back to 2000 based on their year-over-year performance. The current HICP, at 3%, has a 73.8 percentile standing among inflation rates back to 2000, marking it near the upper 25 percentile of the collection of results. The CPIH has a 79.6 percentile standing, putting it closer to the top 20% of observations over that same span. Core inflation at 3.4% has an 83.7 percentile standing, putting it in nearly the top 15% of results on data back to 2000.

**Convergence around 2.8%**
The chart, supplemented by diffusion data, clearly shows that there is some inflation deceleration in progress; however, the level of year-over-year inflation still shows inflation among the upper ranges of what it's been over the last 25 years.

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**BOE**
A lot of attention is focused on the Bank of England and when it will cut rates. While there is some evidence of near term softness in inflation and certainly there is an evenness in economic growth and reason to wonder about the strength of economic growth, inflation results are still probably a little bit too high to allow for rate cuts at this point.

**Summing up**
The Bank of England has a 2% inflation target and current numbers are hovering around or just below 3%. The only reading as low as 2.5% is the 3 month measure. The collection of results simply doesn’t show enough downward movement or stability at lower levels for the BOE to be taken seriously and for the bank to cut rates. Remember, of course, that when the central bank cuts rates, it's taking away some of the braking effects for interest rates on inflation. So, if inflation isn't where you want it and you cut rates, you're taking away a tool that is promoting the reduction of inflation to a lower level closer to your target. When you take that away, you’re acknowledging that you're going to allow inflation to progress more slowly toward the target. I'm not sure that's the signal that the Bank of England would like to make at this time.

United Kingdom

U.K. Inflation Waffles and Percolates

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The Housing Market Index (HMI) from the National Association of Home Builders/Wells Fargo fell 2.7% m/m (-14.3% y/y) to a lower-than-expected 36 in February following a 5.1% decline to 37 in January (unrevised) and a 2.6% rise to 39 in December (unrevised). February marked the second successive m/m decline after three straight m/m increases. A reading of 38 had been expected in the INFORMA Global Markets survey. The HMI had been below the breakeven 50 level since May 2024. The February index, lower than 42 in February 2025, was 35.7% below a high of 56 in July 2023 and 60.0% below a record-high 90 in November 2020.

Notably, the average rate on a 30-year fixed rate mortgage fell to 6.09% in the February 12 week, the lowest in three weeks, from 6.11% in the February 5 week, according to Freddie Mac. The rate was below a high of 7.22% in the week of May 2, 2024 and a peak of 7.79% in the week of October 26, 2023.

Two of the three HMI components decreased this month. The index of present single-family sales conditions was unchanged m/m at 41 (-10.9% y/y) in February after a 2.4% decline in January. The index was 33.9% below a high of 62 in July 2023 and 57.3% below a record-high 96 in November 2020. The index of expected single-family sales for the next six months fell 6.1% (-2.1% y/y) to 46 in February after a 5.8% decrease to 49 in January, marking the third m/m fall in four months and the lowest level since September 2025. The index was 30.3% below a high of 66 in December 2024 and 48.3% below a peak of 89 in November 2020. The index measuring traffic of prospective buyers slid 8.3% (-24.1% y/y) to a five-month-low 22 in February on top of a 7.7% drop to 24 in January. The index was 45.0% below a high of 40 in July 2023 and 71.4% below a record-high 77 in November 2020.

By region, the HMIs mostly fell m/m this month. The index for the West dropped 11.8% (-14.3% y/y) to 30 in February, the lowest level since September 2025, after a 5.6% decline to 34 in January. The index for the Northeast decreased 10.6% (-16.0% y/y) to 42, down for the third time in four months, following a 14.6% January rebound to 47. The index for the Midwest fell 2.4% (-4.7% y/y) to 41 after a 10.6% January fall to 42, registering the third m/m decline in four months and the lowest reading since November. Meanwhile, the index for the South held steady at 35 for three consecutive months (-14.6% y/y).

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low". The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database. The Informa Global Markets survey is in Haver's **MMSAMER** database.

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- HMI continues to weaken in Feb., indicating most builders remain pessimistic about the current and near-term housing outlook.
- Two of three HMI components fall, w/ the steepest m/m decline in potential buyers' traffic (-8.3%).
- Regional weakness continues, w/ the sharpest m/m drop in the West (-11.8%).

U.S. Housing Market Index Falls for Second Consecutive Month in February

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The Empire State Manufacturing Index of General Business Conditions slipped to 7.1 in February from 7.7 in January, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 8.0 for February had been expected by the Action Economics Forecast Survey. The positive February figure indicated that the business activity in the New York Fed district expanded for the fourth time in the past five months, though at a slightly slower pace than in January. The percentage of respondents reporting an increase in general business conditions rose to 36.0% in February from 34.2% in January and 31.7% in December; the percentage reporting a decrease increased to 28.9% in February from 26.5% in January but down from 35.4% in December. The latest survey was conducted between February 2 and February 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. In contrast to the small decline in the headline index, the ISM counterpart index increased to 52.0 in February, the highest reading since November, from 51.2 in January, indicating that the pace of economic activity picked up slightly in February. The ISM counterpart index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index came in at 5.8, pointing to an ongoing increase in orders in February, though this was down from 6.6 in January. The shipments index dropped seventeen points to -1.0, indicating shipments were little changed in February. Twenty-seven percent of respondents reported an increase in shipments, down from 39% in January while 28% reported a decrease, up from 22% in January. The unfilled orders index rose 17 points to 9.1, and delivery times were slightly longer. Inventories rose. The supply availability index came in at -1.0, suggesting supply availability was little changed in February, up from -4.1 in January.

On the labor front, the labor market indicators rebounded into positive territory in February. The number of employees index increased to 4.0 from -9.0 in January. Sixteen percent of respondents reported an increase in employment, up from 7.9% in January, while 11.8% reported a decrease, down from 16.8% in January. The average workweek index rose to 2.1 in February from -5.4 in January.

Inflation pressures intensified somewhat in February. The prices paid index rose to 49.1 in February, its highest reading in three months, from 42.8 in January. Fifty percent of respondents reported paying higher input prices in February, up from 44.5% in January, while only 1.2% reported paying lower input prices versus 1.7% in January. The prices received index jumped to 22.2 in February from 14.4 in January. Twenty-eight percent of respondents reported receiving higher prices, up from 18.9% in January, while 6.1% reported receiving lower prices, up from 4.4% in January. February readings for both indexes are well below those in late 2021 and early 2022 when general inflation soared but are meaningfully higher than in 2024.

Firms continued to be optimistic about the outlook. The index for future business conditions rose four points to 34.7, its highest reading since November 2024. New orders and shipments are expected to increase, and employment is expected to grow. The capital expenditures index rose eight points to 18.2, its highest reading since February 2023, indicating a marked strengthening in capital spending plans.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- The headline index edged down to 7.1 from 7.7 in January but continued to point to expansion.
- New orders slowed slightly while shipments plunged 17 points into negative territory.
- Prices paid and received both rebounded in February.
- Expected capital expenditures rose to a three-year high.

FRBNY Empire State Manufacturing Index Slipped Slightly in February

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Industrial output in the European monetary union fell by 1.4% in December. Manufacturing output fell by 1.3%. Output of consumer goods fell by 0.3%, output of intermediate goods fell by 0.1%, and output of capital goods fell by 1.9% in December. The subsector, consumer durables, showed an increase in output of 0.2% in December. Headline and manufacturing output in December reversed the increases seen in October and November. However, consumer goods, consumer nondurables, and intermediate goods saw two consecutive months of output declines for November and December.

Turning to sequential trends, overall industrial output rises by 1.1% over 12 months, falls at a 0.8% annual rate over six months, and then falls at a 1.2% annual rate over three months showing a tendency for deceleration. Manufacturing shows the same pattern of eroding growth rates for the one-year and shorter horizons.

**Sector stories**
However, for consumer goods, manufacturing output is accelerating steadily from a growth rate of 2% over 12 months, to a 7% pace over six months, and to a 16.6% annual rate over three months; the inclusion of ‘semi-durables’ in this category total makes it stronger than the two detailed subcategories of durable and nondurable goods. Consumer durables output transitions from falling 2.3% over 12 months to growing at a 3% pace over three months. Consumer nondurables output shows persistent declines, with slightly more intense over shorter periods, echoing the deceleration phenomenon. Intermediate goods and capital goods do not show clear sequential trends, but both categories show increases in output over all three horizons.

**Cross currents**
These cross currents among sectors make it hard to characterize what's happening with output trends in the European Monetary Union. The country detail shows a good deal of turbulence, with a number of countries showing decelerating output trends and others showing accelerating output trends. It's fair to say that manufacturing in the EMU continues in the grip of cross currents. While the short-term data in the table that look at growth rates from 12-months to 6-months to 3-months show more weakening than strengthening, the trends in the graph across recent 12-month growth rates seem to show a little more solidifying and expanding behavior – albeit with confusing volatility as well.

**Quarter-to-date (concluded Q4)**
In the quarter to date, all of the sectors and subsectors show output rising except for the aggregate for manufacturing that is flat, and consumer nondurables that show a decline at 6.7% at an annual rate.  In the quarter to date, overall output is growing at a 1.4% annual rate, while consumer goods output is expanding at a 13.8% annual rate, immediate goods output is expanding at 1.5% annual rate, and capital goods output is expanding at a 3.7% annual rate. Those sector numbers look exceptionally healthy.

**Ranking the trends**
The far-right hand column analyzes the 12-month growth rates comparing them to historic growth rates since 2006. Most of the growth rate rankings over this span are moderate, with standings above their respective 50th percentiles, placing them above their historic medians. However, consumer durable goods and nondurable goods are exceptions, with rankings in their 31st percentile and 10th percentile, respectively. Consumer nondurables output is particularly weak in comparison with historical trends. On the other hand, intermediate goods and capital goods output have rankings in their 60th percentile, and for all consumer goods output, the ranking is near its 60th percentile. Looking only at manufacturing, the ranking slips to its 52.9 percentile; for the headline series which excludes construction, the ranking is at its 53.8 percentile.

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**Summing up**
On balance, it's the consumer sector that is holding back the advancements of output, and this is not surprising with such weak conditions in Europe for consumer confidence. However, in another respect, it's somewhat surprising because unemployment rates remain historically low in the European Monetary Union - and for Europe generally - and typically jobs are one of the more important ingredients in consumer confidence. Some of this disconnect could be because of the war on Europe's doorstep, and some of it may also be concern about the current rough spot the NATO is experiencing and that's reflected in the relations between Europe and the United States. Globally, growth is beginning to look a little bit more solid, but industrial production in the EMU continues to be touch-and-go, in part, because its largest economy, Germany, continues to struggle.

Europe

IP in EMU Weakens in December; Sector Trends Show Slow or Erratic Improvements

Michael J. Moran

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The consumer price index rose 0.2% in January, slower than the expected increase of 0.3% (and it rounded up to reach the published advance – 0.17% when calculated with more precision; annual rate of 2.04%). The latest monthly increase left the year-over-year at 2.4%, down from a recent high of 3.0% in September and bested by only one other recent reading: 2.3% in April of last year.

A drop of 1.5% in energy prices helped to contain the headline index. The drop was led by sharp retreats in the prices of both fuel oil and gasoline (off 5.7% and 3.2%, respectively). Energy prices have jumped around from month-to-month, but they have stayed within a narrow range in the past two years. Food prices rose 0.2% in January after a surge of 0.7% in the prior month. The food category experienced severe pressure during the inflation burst in 2022 (peak of 11.4%). Pressure settled in 2024, with annual food inflation easing to a low of 2.0% in August of that year. However, prices picked up again in 2025, with the year-over-year increase moving to 3.2% in August and staying close to that pace in subsequent months. The year-over-year increase in January totaled 2.9%.

The core component (ex food and energy) rose 0.3% in January, one of the sharpest advances of the past year or so. However, the increase was not especially troubling, as it was influenced by a jump of 6.5% in airfares, which added nearly a full tenth percentage point to the core component (0.08%). Airfares often move erratically, and the ups and downs in the past few years have left little net change. Discounting, most likely, will unfold in coming months. Even with the jump in airfares, the year-over-year increase in core prices moved to a new low for the current period of deceleration (2.5%). Core inflation appeared to be picking up in the spring and summer of last year (a recent peak of 3.1% in August), but pressure has eased since then.

The source of the waxing and waning in core prices lies primarily in the goods component of the CPI. Goods prices were declining noticeably in the first half of 2024 (deflation!), but, they began to shift direction in the second half of 2024 and moved to price increases in 2025. The upward trend seems to have peaked at 1.5% in September and October, with the year-over-year change easing to 1.1 percent in January. Service prices have been decelerating over the past few years, but the rate of decline began to slow last year, and the latest months have shown no further improvement, stuck at 3.0% in the past three months.

Within the core component, the movement of housing costs is notable. Rental rates rose 0.2% in January, a marked shift from the experience in 2022 and 2023, when increases in excess of 0.6% were common.  This component jumps around from month-to-month, but the downtrend is unmistakable. After peaking at 8.2% in 2022, the latest year-over-increase totaled 3.0% in January.

The cost of electricity is now gathering the attention of the public and politicians because of the pressure being exerted by the infrastructure requirements of artificial-intelligence. Costs were tame in January (down 0.1%), but increases have largely been the norm in the past year or so. The year-over-year increase totaled 6.3% in January, down from 7.0% in November but still a challenge for many households. Many observers are expecting more upward pressure down the road. Some observers perhaps recall (and fear) the experience in 2022, when electricity inflation touched 15.8%.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- The year-over-year change in the headline index moved to the bottom of its recent range.
- The annual change in the core index moved to a new low for the current cycle.

Consumer Price Index: Slow, but Steady, Deceleration

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Real Gross Domestic Product rose 1.4% in the fourth quarter of 2025, slower than the recent average but no doubt influenced by the government shutdown. Federal spending often moves erratically, but the tumble of 16.6% in the final months of last year was unusually large. Indeed, one has to go back to 1972 to find a sharper decline (and to the 1950s before that), and these results were only slightly weaker than the Q4 decline.

Even allowing for the government shutdown, the latest results were a bit shy of expectations. Without the drop in federal outlays, which subtracted 1.2 percentage points from GDP growth, the economy would have expanded 2.6% in Q4, still shy of most surveys that showed consensus forecasts in the neighborhood of 3.0%. A downside surprise of sorts occurred in net exports. Monthly figures through November had suggested that international trade would provide strong support, but this sector added only 0.1 percentage point to GDP growth.

Other areas posted nondescript results. Consumer spending and business fixed investment were less vigorous than the best results of the past two years, but the latest growth rates were comfortably within recent ranges. Housing activity remained soft, making the sixth negative contribution to GDP growth in the past seven quarters. However, the constraints from housing over this span have generally been small.

The fourth quarter, and most of last year, were oddities because of the government shutdown in Q4 and the imposition of tariffs in April followed by marked adjustments in subsequent months. Such changes can lead to pronounced swings in economic activity and leave a muddled picture on underlying trends. In such environments, a different perspective on economic output can be helpful. Specifically, private domestic final demand (PDFD, GDP less government spending, net exports, and inventory investment) excludes areas that often move erratically, thus removing random shifts and reducing volatility.

PDFD was especially useful last year because tariffs generated pronounced shifts in net exports and inventory investment, and the government shutdown distorted activity in the fourth quarter. As shown in the chart below (left), quarterly variations in private domestic final demand were modest last year. The underlying trend decelerated, but the slowing was modest and growth in the fourth quarter was respectable at 2.4%.

The GDP price index rose at an annual rate of 3.6% in the fourth quarter of the year, one of the heftier advances of the past three years. A surge of 15.6 percent in the prices paid by the federal government had a strong influence on this result (shutdown related?), but readings of 3.9% for business equipment and 2.9% for consumer goods and services also were suggestive of an inflation impulse in the economy.

The increase in consumer prices was evident in the December report on personal income and consumption, which showed month-to-month increases of 0.4% for both headline and core price indexes for personal consumption expenditures. Year-over-year readings inched higher to 2.9% for all items and 3.0% for prices excluding food and energy. The latest results will no doubt leave Fed officials uncomfortable.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Non-federal activity was lighter than expected, but still respectable.
- PCE inflation remains stubborn.

Q4 GDP: Constrained by Federal Spending

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