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Economy in Brief
Philadelphia Fed Manufacturing Index Jumps in January
The Federal Reserve Bank of Philadelphia Factory Sector Business Conditions Index jumped to January to 26.5...
U.S. Initial Jobless Claims Ease, but Are Still High
Initial claims for unemployment insurance fell to 900,000 in the week ended January 16...
French Surveys Improve Despite Ongoing Virus Issues
The spread of the virus in Franc is still untamed...
U.S. Home Builder Sentiment Slips in January
The Composite Housing Market Index from the NAHB-Wells Fargo declined 3.5% m/m (+10.7% y/y) in January...
Decline in Refinancing Drags Down U.S. Mortgage Applications
The MBA Mortgage Loan Applications Index fell 1.9% w/w (+56.2% y/y) in the weekend January 15...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Robert Brusca November 6, 2009
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas.
OECD leading indicators ... “point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added.
The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September.
Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany’s domestic orders
are not along for the ride.
The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism.
The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That’s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let’s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It’s a tall
order that we are falling short on despite the growth path endorsed by
the OECD.
OECD Trend-restored leading Indicators | ||||
---|---|---|---|---|
Growth progression-SAAR | ||||
3Mos | 6Mos | 12mos | Yr-Ago | |
OECD | 15.8% | 14.9% | 1.5% | -6.5% |
OECD7 | 16.8% | 15.3% | 0.5% | -6.9% |
OECD.Ezone | 16.9% | 16.6% | 4.0% | -7.9% |
OECD.Japan | 13.1% | 10.9% | -4.7% | -4.5% |
OECD US | 16.8% | 15.0% | -0.6% | -6.7% |
Six month readings at 6-Mo Intervals: | ||||
Recent six | 6Mo Ago | 12Mo Ago | 18MO Ago | |
OECD | 14.9% | -10.3% | -10.5% | -2.3% |
OECD7 | 15.3% | -12.3% | -10.7% | -3.0% |
OECD.Eur | 16.6% | -7.3% | -12.3% | -3.3% |
OECD.Japan | 10.9% | -18.1% | -9.2% | 0.4% |
OECD US | 15.0% | -14.2% | -9.8% | -3.5% |
Slowdowns indicated by BOLD RED |