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

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DLXVG3

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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:

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MATLAB

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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

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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

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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

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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 labor's share of total income at a series low

Sandy Batten

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The anxiously anticipated October CPI report was stronger than expected and was not received well by financial markets. The headline CPI increased 0.4% m/m following a 0.6% monthly decline in September. The core index (excluding food and energy prices) rose 0.3% m/m, the same monthly increase as in September. The Action Economics Forecast Survey looked for a 0.3% monthly gain in the headline index and a 0.2% m/m increase in the core rate. Due to the federal government shutdown at this time last year, there was no October 2025 CPI calculated. Consequently, a year/year rate for October 2026 was not released. However, Haver Analytics estimated an October 2025 value which then enables the calculation of a year/year change for October 2026. This calculated year/year rate increased in October for both the headline and the core indexes. The headline y/y rate rose to 4.1%, the highest since May, from 3.7% in September. The core y/y rate increased to 2.8%, also the highest since May, from 2.6% in September.

Combined with the much stronger-than-expected employment report released last week, today’s firmer-than-expected inflation report has convinced financial markets that a 25bps increase in the fed funds rate is all but assured at the next FOMC meeting on December 8-9. There will be one more employment report before the next FOMC meeting, but today’s CPI report was the last one before that meeting. The fed funds futures market is currently pricing in a 99% probability of a 25bps increase in December. Moreover, one Fed official has noted that the current inflation environment may even bring into consideration a larger than 25bps increase in December.

Increases in shelter and food prices were major factors behind the increase in the headline rate in October. Shelter prices increased 0.3% m/m while food prices jumped 0.5% m/m, the largest increase of this year. Together, the two increases accounted for almost 50% of the increase in the headline rate. Energy prices continued to rise in October but only by 0.7% m/m following a 5.2% m/m jump in September with gasoline prices up 1.0% m/m in October. Natural gas price eased 0.8% m/m in October, their second consecutive monthly decline.

Goods prices excluding food and energy rose 0.2% m/m in October, down slightly from a 0.3% monthly gain in September. A 1.2% m/m decline in prices of used cars and trucks tempered widespread increases in all other major components. Services prices excluding energy increased 0.3% m/m in October, down slightly from a 0.4% m/m gain in September. Prices of transportation services rose 0.8% m/m, their largest monthly increase since January, following a 0.6% m/m increase in September. Medical services prices rose 0.3% m/m in October, the same monthly gain as in September. The 0.3% m/m rise in shelter prices was led by a 0.7% m/m increase in other lodging away from home.

CPI services prices less energy services and the two rent measures is a relatively new core measure that is watched carefully by the Federal Reserve. It increased 0.4% m/m in October, the same monthly increase as in September, with the y/y rate rising to 3.5% from 3.1% in September, another bit of discouraging news for the Fed.

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 headline CPI increased 0.4% m/m in October with the core index rising 0.3% m/m, both slightly larger than expectations.
- Y/Y rates (calculated by Haver) continued to rise.
- Shelter prices rose 0.3% m/m, accounting for more than 30% of the increase in the headline rate.
- Food prices jumped 0.5% m/m, the largest increase this year, while the rise in energy prices slowed markedly.

U.S. Consumer Prices Increased More Than Expected in October

Winnie Tapasanun

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The NFIB Small Business Optimism Index slipped to 97.8 in October from 97.9 in September and 98.7 in August, according to the Small Business Economic Trends survey from the National Federation of Independent Business, indicating that small business sentiment was little changed and declined m/m for the third consecutive month. Job openings and reports that it is a good time to expand increased, while inventory components and earnings trends fell. The index was below its 53-year average of 98.0 for the second consecutive month; it was also below 98.2 in October 2025 and a peak of 105.1 in December 2024, albeit above a low of 88.5 in March 2024. Four of the 10 index components rose, five declined, and one was unchanged. The NFIB Small Business Uncertainty Index fell to 84 in October, matching the lowest level since December 2025, following a one-point rise to 90 in September, while remaining above its historical average of 68. The index was well above a low of 65 in November 2023 but below its record high of 110 in October 2024.

The outlook for business conditions in the next six months, up in the October survey, stayed positive for the 24th straight month. The net balance of respondents expecting the economy to improve rebounded to 8% in October following a four-point decline to 6% in September; these readings were far below a high of 52% in December 2024 but significantly above a record low of -61% in June 2022. Expected real sales held steady at a net 9% in October, matching the highest level since June; the latest result was below a high of 22% in December 2024 but above a low of -18% in August 2024. A net -4% of respondents reported higher nominal sales in the past three months, up from -8% in September and equaling the highest reading since July; the measure remained above a low of -20% in October 2024 but below the recent positive reading of 1% in February and a peak of 9% in June 2021.

Plans to expand the business advanced to 11% in October following a five-point drop to 7% in September (the lowest level since May); the latest figure was below a high of 20% in December 2024 but above a low of 2% in March 2023. Plans to make capital outlays edged down to 21% in October, the lowest level since June, from 22% in September; these numbers were above a low of 16% in May but below a high of 28% in November 2024 and a peak of 31% in October 2021. Expected credit conditions decreased to -5% in October, the lowest reading since June, from -3% in September; this result remained above a low of -11% in November 2023. Meanwhile, a net -3% of respondents viewed current inventory stocks as “too low” in October, down from 0% in September and marking the weakest reading since May; the series had been negative since June 2025, with zero readings only for three months (September 2026, June 2026, and August 2025); a positive reading of 1% was recorded in May 2025.

On the labor front, 48% of respondents reported that qualified workers to fill job openings were hard to find in October, up from 45% in September and posting a three-month high. These numbers were above a low of 43% in August 2025 but below a high of 56% in August 2024 and a peak of 62% in September 2021. A net 18% planned to increase employment in October, up from 17% in September and marking the highest level since July; it remained above a low of 9% in May but below a peak of 32% in August 2021. Notably, 36% reported positions not able to be filled in October, up from 32% in September and matching the highest reading since July; these figures remained above a low of 29% in May but below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The measure fell to -23% in October, the weakest reading since March, following a one-point decline to -20% in September. These readings were below a recent high of -14% in February and a high of -5% in June 2021 but above a low of -37% in August 2024.

On the pricing front, actual and expected selling prices remained at an elevated level, indicating continued inflationary pressures. The net percent of firms raising their average selling prices increased to 33% in October, the highest level since June, after holding at 31% for three successive months. The latest reading was up from a low of 20% in August 2024 but well below a peak of 66% in March 2022. The percentage planning to raise prices jumped to 37% in October, the highest reading since July 2022, following a three-point rise to 31% in September; these readings remained above a low of 21% in April 2023.

Wage inflation remained relatively high in the October survey. A net 29% of respondents raised compensation during the last three months, up from 28% in September. It was above a low of 26% in November 2025 but below a high of 46% in February 2023 and a peak of 50% in January 2022. A net 24% of firms planned to raise worker compensation in the next three months, up from 20% in September and equaling the highest level since December 2025; this was above a low of 17% in June but below its highs of 28% in November 2024, 30% in November 2023, and 32% in October 2022.

Labor quality was cited as the single most important problem facing small businesses for the fourth straight month, as reported by 25% of NFIB members in October, down from 26% in September. Taxes ranked second as the next most important problem, as reported by 21% of respondents in October, surging from 11% in September and representing the highest since May 2021. Inflation ranked third and remained a key challenge for small businesses, as reported by 17% of respondents in October, down from a three-month high of 20% in September; these readings were well below a peak of 37% in July 2022. Other concerns (in October vs. September) included government requirements (7% vs. 7%), labor costs (7% vs. 6%), insurance cost/availability (7% vs. 6%), poor sales (6% vs. 11%), and competition from large businesses (5% vs. 6%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- NFIB Small Business Optimism Idx down 0.1 pts. to 97.8 in Oct., slightly below its 53-year avg. of 98.0.
- Uncertainty Idx down 6 pts. to 84, lowest level since Dec. ’25.
- Expectations for economy up 2 pts. to 8%, positive for the 24th straight month.
- Expected real sales unchanged at 9%, matching highest level since June.
- Plans to expand business up to 11% from September’s 7% (lowest since May).
- Hiring plans up to 18%, highest since July; earnings trends down to -23%, lowest since March.
- Avg. selling prices up to 33%, highest since June; planned price hikes up to 37%, highest since July ’22.
- Top three business concerns: labor quality (25%), taxes (21%), and inflation (17%).

U.S. NFIB Small Business Optimism Little Changed in October

Robert Brusca

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Japan’s economy watchers index slipped in October, falling to a 46.1 diffusion reading from 47.0 in September. Five of the 9 components of the index are weaker in October than in September; improving month-to-month are the assessments for eating and drinking places, for corporations, and for nonmanufacturers. Nonmanufacturers are showing a substantial improvement from September to October.

In September, four of the 9 categories slipped, although the headline improved in September. Over three months and six months, the index shows point-to-point improvement; however, the 12-month change still shows a decline for the headline of 2.1 points and for all the components except for eating and drinking places.

The current assessment from the economy watchers is mixed. Despite deterioration on the month, the period-to-period changes show a slow crawl up to better readings although failing to reach the year-ago mark.

If we look at the rank standings of the indexes, we find that the headline has only a 41.9 percentile standing; any percentile reading below 50% shows a standing below its historic median although four components have readings above the 50th percentiles: eating and drinking places have a 77.9 percentile standing, services have a 63.6 percentile standing, nonmanufacturers have a 59.7 percentile standing, and corporations have a 51.4 percentile standing.

The future economy watchers index slipped in October to a reading of 46.5 from 47.4 in September. It also slipped in September compared to August. In October, three of the 9 components improved: eating and drinking places, services, and manufacturers. In September, with the headline also falling month-to-month, there was only an improvement in retailing, which rose to 47.3 from 47.0 in August; that is thin gruel for good news.

In terms of point-to-point changes, the outlook is a little bit better, with the three-month change in the future index up by 0.7 points. The six-month change is up by a heartier 7.1 points, although the year-over-year change is lower by 5.7 points. Once again, we see this lower year-over-year assessment paired against some more modest increases over the last three and six months.

Over three months, the future index shows deterioration in only two categories, retailing and employment, with the other 7 components showing improvement. The six-month change is defined by a strong 7.1-point gain for the headline and shows positive results across all sectors on that time frame as they all improve, with the smallest improvement being a 4.9-point increase in retailing. The largest improvement is a gain of 10.6 diffusion points for manufacturers. However, the percentile standing results for the future index are poor, with the index headline and all components except one posting standings below the 50-percentile mark.

The levels of the diffusion readings are poor in October. The headline for the future index has a 37.5 percentile standing, with the current index at a 41.9 percentile standing; it also is below its median. Year-on-year, both indexes are lower and both are creeping higher over three months and six months. But the progression to higher ground is slow. The setbacks recorded in October month-to-month only serve to make us more wary about the state of this slow-motion economic recovery.

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Japan

Japan’s Economy Watcher Index Slips in October; Outlook Fades

Tian Yong Woon

In this week’s Letter, we look at Southeast Asia’s race to host the data centres behind the AI boom, and at how much of the gain stays at home. Asia already anchors the AI hardware supply chain, from Taiwan’s chip fabrication to South Korea’s memory, while Southeast Asia has centred on packaging, testing and assembly (chart 1). The region is now moving to the final stage: hosting the computing capacity itself. Malaysia offers the clearest example. National growth held above 5% in 2024 and 2025, but Johor grew 8.0% last year as its services sector expanded 9.9% (chart 2). Foreign direct investment underpins the boom, with Malaysia’s FDI position in information and communication tripling between 2022 and 2025 (chart 3). Strains on power and water have followed, prompting new tariffs and tighter approvals. Thailand is on a similar path. Digital industries, including data centres, took almost half of approved FDI in 2025, while approvals elsewhere fell (chart 4). Concentration in the water-stressed Eastern Economic Corridor and gaps in oversight have led the Board of Investment to pause new data centre applications. Singapore offers a cautionary tale. Operating surplus in its data processing and hosting industry rose roughly sevenfold between 2018 and 2024 (chart 5). Yet resource constraints prompted a moratorium on new data centres from 2019 to 2022, which partly redirected investment to Johor. Finally, we ask where the gains go (chart 6). Imported equipment absorbs much of the build phase, while foreign ownership, depreciation and thin staffing shrink what residents keep once facilities are running. The wedge between GDP and national income is largest where facilities are foreign-owned and capital-heavy, as under the region’s FDI-led model.

**The AI supply chain and Asia**
Asia already sits at the heart of the AI hardware supply chain (chart 1). Taiwan leads in logic fabrication, packaging, testing and server assembly, while South Korea leads in high-bandwidth memory. China holds leading positions in packaging, testing and data centres. Southeast Asia’s role has so far sat further along the chain. Malaysia plays a significant part in packaging and testing, Vietnam in testing and Thailand in server and rack assembly. The region’s ambitions are now moving to the final stage. Malaysia and Singapore already play a significant role in hosting data centres, while Thailand, Indonesia, Vietnam and the Philippines are emerging players. For economies that earned their place by assembling and testing chips, hosting the computing capacity those chips power is a natural next step. It is also a resource-hungry one, as the rest of this Letter shows.

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**Malaysia**
Malaysia’s economy has held up well. Real GDP grew above 5% in both 2024 and 2025, helped by electrical and electronics (E&E) exports, which rose 18.3% to MYR 711.6bn last year. Within that national picture, Johor stands out (chart 2). The state’s GDP grew 8.0% in 2025, outpacing Malaysia as a whole for a third straight year. The gap has also widened, from 0.6 percentage points in 2023 to 2.8 points in 2025. Services have done most of the work, and now make up 54.8% of Johor’s economy. Johor’s services output expanded 9.9% in 2025, against 4.0% for its manufacturing, and accounted for two-thirds of the state’s growth. The ongoing data centre boom has been a key driver, with the industry classified within information and communication services.

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Foreign direct investment underpins the boom. Malaysia’s FDI position in information and communication, the sector that includes data centres, tripled from MYR 39.0bn in 2022 to MYR 117.4bn in 2025 (chart 3). Net inflows over four quarters have climbed from MYR 2.9bn in 2022 to MYR 38.1bn in the year to Q2 2026. Johor is the main destination, hosting over 70% of Malaysia’s operational data centre capacity, and the Johor-Singapore Special Economic Zone offers preferential tax incentives for the sector. The facilities are hungry for power and water, and authorities have responded on both fronts. A dedicated ultra-high-voltage tariff took effect in July 2025, followed by a separate water tariff for data centres in August. Approvals have also tightened. Johor has capped water usage effectiveness, and the federal government said in October that states without sufficient water will not host new projects.

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**Thailand**
Thailand is on a similar path. Approved FDI applications in digital industries, which include data centres and cloud services, reached THB 553.0bn in 2025, up from THB 95.2bn in 2024 (chart 4). Their share of total approved FDI rose from 13.1% to 48.5%, and they more than accounted for the overall increase. Approvals outside digital industries fell 7.0%. The projects cluster in the Eastern Economic Corridor (EEC) south-east of Bangkok, notably in Chonburi and Rayong, where parts of the region already face water scarcity. The concerns echo Malaysia’s: strain on power and water, and gaps in oversight. Some operators can set up without seeking Board of Investment (BOI) promotion, and Thailand lacks a unified system for overseeing the industry. Policy has shifted accordingly. The BOI has accepted no new data centre applications since April 2026, and the cabinet approved a national data centre policy committee in August.

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**Singapore**
Singapore offers a cautionary tale. Data centres sit within its information and communications (ICT) sector, which grew at double-digit rates around the turn of the decade and peaked at around 18% in 2021 (chart 5). The industry that houses them, data processing and hosting, also includes internet search. Its operating surplus, the profit component of value added, rose roughly sevenfold from SGD 1.1bn in 2018 to SGD 7.6bn in 2024, with the sharpest jump in 2019. That growth came up against resource constraints. Singapore imposed a moratorium on new data centres from 2019 to 2022, yet the industry’s surplus still nearly doubled over the period, to SGD 5.9bn. The cap on new capacity was also a partial driver of data centre investment into neighbouring Johor. For its neighbours, Singapore’s experience shows that the gains from data centres eventually run up against the resources needed to host them.

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**Gains from data centres**
Then there is the question of where the gains go (chart 6). The build phase is a one-off. Headline investment looks large, but much of it goes on imported servers, chips and equipment, which higher imports offset in GDP. What remains is domestic value added from construction, fit-out and local services, which fades once building is complete. The operating phase recurs each year, but less of it accrues to residents than GDP implies. If a facility is foreign-owned, the after-tax profits accruing to its owners are counted in GDP but not in gross national income (GNI). Depreciation is further excluded from net national income (NNI), and both measures sit closer to resident welfare than GDP. What stays is local wages and taxes, including corporate tax. Data centres need few staff once running, so their labour share is low and the lasting employment gain small. The wedge between GDP and NNI is therefore largest where facilities are foreign-owned and capital-heavy, as under the FDI-led model above. The chart captures direct effects only, leaving aside supply-chain spillovers and crowding out.

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Asia

Economic Letter from Asia: AI and Data Centres

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Wholesale inventories rose a slightly more-than-expected 0.7% (7.6% y/y) in September, the eighth straight m/m gain, after rises of 0.6% in August and 1.2% in July, indicating wholesalers continued to accumulate inventories at a solid pace. A 0.6% m/m September increase had been expected in the Informa Global Markets survey. The year-on-year rate rose to 7.6% in September, the 21st consecutive y/y rise and the fastest pace since March 2023, from 7.5% in August (1.8% in September 2025), remaining well above a low of -0.9% y/y in December 2024 but far below a peak of 25.5% y/y in June 2022.

Durable goods inventories grew 0.6% (8.0% y/y) in September, up for the 11th month running, after a 0.9% rise in August. The September m/m gain in durable goods inventories was led by a 2.5% advance (23.8% y/y) in electrical & electronic goods, followed by increases of 1.3% (4.5% y/y) in hardware, plumbing & heating equipment, 1.3% (4.6% y/y) in miscellaneous durable goods, 0.7% (4.1% y/y) in lumber & other construction materials, 0.5% (15.9% y/y) in professional & commercial equipment, and 0.4% (-2.4% y/y) in furniture & home furnishings. In contrast, durable goods wholesale inventories for metals & minerals (-0.9%; +2.7% y/y), motor vehicles & parts (-0.5%; +0.9% y/y), and machinery (-0.2%; +4.6% y/y) declined m/m in September.

Nondurable goods inventories climbed 0.9% (7.0% y/y) in September, the third successive m/m rise and the seventh in eight months, after a 0.1% uptick in August. The September m/m increase in nondurable goods inventories was driven by a 10.6% rebound (51.9% y/y) in petroleum & petroleum products, followed by rises of 2.6% (3.9% y/y) in apparel, 1.4% (2.7% y/y) in miscellaneous nondurable goods, 1.3% (9.1% y/y) in chemicals, 0.7% (0.6% y/y) in drugs, and 0.2% (4.6% y/y) in paper & paper products. To the downside, nondurable goods wholesale inventories for farm products (-7.4%; +18.9% y/y), alcoholic beverages (-1.8%; -3.3% y/y), and groceries (-0.8%; +1.5% y/y) fell m/m in September.

Wholesale sales jumped a larger-than-expected 2.8% (19.8% y/y) in September, the third straight m/m increase and the 12th in 13 months, on top of a 2.0% gain in August, indicating wholesale demand strengthened further. A 1.1% m/m September increase had been expected in the Action Economics Forecast Survey. Durable goods sales rose 1.3% (23.8% y/y) in September, the third consecutive m/m rise and the 10th in 11 months, after a 2.4% increase in August. The September m/m gain in durable goods sales was led by a 6.7% advance (37.5% y/y) in metals & minerals, followed by increases of 2.7% (19.8% y/y) in machinery, 2.6% (42.9% y/y) in electrical & electronic goods, 0.7% (19.5% y/y) in miscellaneous durable goods, and 0.2% (34.0% y/y) in professional & commercial equipment. In contrast, durable goods wholesale sales for motor vehicles & parts (-1.2%; +1.5% y/y), furniture & home furnishings (-1.0%; +12.5% y/y), hardware, plumbing & heating equipment (-0.5%; +6.8% y/y), and lumber & other construction materials (-0.1%; +6.6% y/y) decreased m/m in September.

Nondurable goods sales surged 4.4% (15.9% y/y) in September, the largest m/m gain since March, stronger than a 1.5% rebound in August. The September m/m increase in nondurable goods sales was driven by an 18.8% surge (62.8% y/y) in petroleum & petroleum products, followed by rises of 4.4% (26.5% y/y) in farm products, 2.3% (-2.6% y/y) in miscellaneous nondurable goods, 1.2% (19.0% y/y) in chemicals, 0.5% (-2.5% y/y) in alcoholic beverages, and 0.1% (2.4% y/y) in groceries. To the downside, nondurable goods wholesale sales for drugs (-1.5%; +4.7% y/y), paper & paper products (-0.8%; +4.9% y/y), and apparel (-0.6%; +1.3% y/y) fell m/m in September.

Wholesale sales outpaced inventory growth in September, pushing the inventory-to-sales ratio in the wholesale sector down to 1.21 in September, matching its lowest reading since May, from 1.23 in August (1.34 in September 2025); it was below a high of 1.42 in June 2023. The durable goods I/S ratio dipped to 1.49 in September, the lowest since July 2021, from 1.50 in August; it was below a high of 1.87 in March 2024. The durable goods I/S ratio ranged from 2.65 for machinery to 0.98 for electrical & electronic goods. The nondurable goods I/S ratio eased to 0.92 in September, the lowest since May, from 0.95 in August; it was below a high of 1.06 in March 2023. The nondurable goods I/S ratio ranged from 2.41 for apparel to 0.39 for petroleum & petroleum products.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

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- Wholesale inventories +0.7% in Sept., eighth straight m/m gain; +7.6% y/y, highest y/y pace since March ’23.
- Durable goods inventories +0.6% (+8.0% y/y), 11th consecutive m/m increase.
- Nondurable goods inventories +0.9% (+7.0% y/y), seventh m/m rise in eight mths.
- Wholesale sales +2.8% (+19.8% y/y), 12th m/m gain in 13 mths., w/ durable goods sales up 1.3% and nondurable goods sales up 4.4%.
- I/S ratio down to 1.21, matching its lowest level since May.

U.S. Wholesale Inventories Increase in September; Sales Jump

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Japan's leading economic index, released by the Cabinet Office, has moved up from much lower readings in mid-2025. In July and August, it made two sizable moves higher, reaching a peak in August at an index level of 118. However, in September, the index fell sharply to a level of 116.4, a sharper fall than had been expected (but this reading is still preliminary). After the fall, the September reading is only marginally higher than its readings in May and June of this year. 

The leading index has been boosted by rising share prices until recently, and the interest rate spread has also signaled advance as the Bank of Japan has been raising rates.

As a reference, I include the consumer confidence indicator where we see that confidence has been mildly rising since April of this year; yet, the gradient has been extremely mild and it comes after a more lengthy period of weakness for that indicator, so that the year-over-year increase in confidence shows a 1.1% rise. However, the change over 24 months for consumer confidence is negative. But over the same 24 months, the May index is up by 7.4%, and share prices and the interest rate spread also show increases over that two-year span.

Through September, the Economy Watchers index is showing modest contraction in its headline and modest expected contraction in its future index, with a percentile standing for the Economy Watchers current index in its 47th percentile, whereas the outlook index is only in its 41st percentile; neither one of those is registering much strength. Both of those readings are below their historic medians; the median on ranking data occurs at a percentile standing of 50%.

The detail from the Economy Watchers index tells us that households are expressing some degree of normalcy in current conditions that is showing contraction but that nonetheless has a historic percentile standing above its median, ranking in its 53.4 percentile. The eating and drinking places category is a reading that tends to be volatile and depends on the overall state of the economy. It is showing less shrinkage in September than in August, but it has a queue standing that is elevated, in its 60th percentile, relatively firm. Manufacturers also have a queue percentile standing above neutral. But the overall picture remains modest.

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**Summing up**
The leading index reflects these modest conditions for growth. However, even with these cooling LEI readings, the Bank of Japan is still set for a rate hike, perhaps as soon as its next meeting. While the Cabinet Office leading index has declined, the current conditions index continues to improve in September. Thus, growth in Japan is balanced and strong enough that action against too-high inflation remains likely. The economy also will be benefiting from some fiscal stimulus. But financial conditions and particularly foreign exchange rate behavior could shift and set a new background and create a new policy dilemma at the drop of a hat.

Japan’s LEI Weakens in September

Michael J. Moran

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Nonfarm payrolls rose 165K in October, marking one of the best readings of the past few years and easily beating the expected increase of 65K. Moreover, the results in August and September were revised upward by a combined total of 84K. The new figures left the six-month average at 82K, a far better performance than the average monthly increase of only 10K in all of 2025.

Several sectors stood out on the strong side of job growth. Employment in the business-service category jumped 70K, the strongest showing since mid-2022, when the economy was still experiencing the post-Covid boom. In addition, business services contributed importantly to the upward revisions in August and September (an additional 52K jobs). Manufacturing industries are showing signs of life, as they posted their fifth consecutive monthly gain (up 19K) and added 10K to the revisions total. The health-care sector, a reliable area for job growth, had posted below-average results in the prior five months, but the gain of 55K in October brought it close to its long-run average.

The headline unemployment rate dipped 0.1 percentage point to 4.1%, a reading comfortably within the range of 4.0-4.5% seen in the past two years (although above readings in the neighborhood of 3.5% in the latter part of 2022 and the early months of 2023). It was a “strong” drop in unemployment in the sense that job growth as measured by the household survey exceeded the increase in the size of the labor force (463K versus 421K). October marked the third consecutive month of strong gains for employment and the labor force in the household survey, ending a string of eight months of generally negative results.

Although the headline unemployment rate eased in October, the broad unemployment rate (the so-called U-6 measure) rose 0.3 percentage point to 7.9%. This measure includes individuals working part-time involuntarily and individuals who would like a job and have searched for employment in the past 12 months but have not looked in the past four weeks. Both of these metrics rose in October, contributing to the increase in broad unemployment. The jump in the U-6 measure reversed a good portion of the noticeable improvement since late last year.

Average hourly earnings rose 0.4% in October, matching the firmest increase of the year thus far. The latest results left the year-over-year change at 3.1%, about equal to the readings in the prior two months, suggesting that the downward trend in wage growth may be starting to stabilize.

The surge in energy prices this year has pushed CPI inflation above the annual increase in average hourly earnings, leaving a drop in aggregate real wage income. However, the financial position of the typical wage earner is difficult to assess because the recent period of negative real wage growth followed several years of real gains, which followed sharp real declines during the inflation burst in 2021-22. The ups and downs over the past several years have been largely offsetting, but individuals in total have registered real wage gains. Still, the surge in prices this year has been sharp enough to generate strains for many households. The strains certainly seem to have had an influence on the midterm elections.

The average workweek is an underappreciated element of the monthly employment report; it receives little attention in the financial press and is not scrutinized by financial market participants. However, it is an important indicator. The current workforce comprises more than 159 million individuals, and thus a change of just a few tenths of an hour can have a noticeable effect on production. The average workweek remained at 34.4 hours for the third consecutive month in October, a better showing than readings of 34.2 to 34.3 in the prior two years or so.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Payrolls posted a solid gain; Aug/Sep revised upward.
- Headline unemployment edged lower, although broad unemployment rose.
- Average hourly earnings exceeded expectations.

October Employment Report: Firm in Most Respects

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German industrial production rose by 0.7% in September after rising 1% in August. Consumer goods and capital goods sectors also had strong gains in each of the last two months. Intermediate goods showed milder and more erratic output results and trends.

Sequentially, IP headline gains are 0.5% over 12 months; that rises to a 1.5% annualized pace over six months but edges slightly lower to a 1.3% pace over three months. Still, there are output gains on all horizons, and the three-month and six-month gains are each stronger than the year-on-year.

Consumer goods output sequentially is less buoyant even over three months, largely because of a huge drop in July that gains in August and September could not erase. So, the sequential output trend for consumer goods is erratic despite two solid months of back-to-back gains. Capital goods output shows acceleration and building momentum, with its annualized pace at 8% over three months. Intermediate goods output shows contractions over each of the sequential horizons and a tendency toward deceleration.

September data conclude the data for Q3. On a full quarter-over-quarter basis, output is falling in two of three sectors. The exception is capital goods, where output posts a quarterly gain of just 0.4% at an annual rate.

To put growth in a greater perspective, annual growth rates of output ranked on data back to 2006 place total German IP growth at a 50.8 percentile standing. Capital goods have a 52.4 percentile standing for growth, while consumer goods growth is a laggard at a 36.7 percentile standing and intermediate goods at a 42.7 percentile standing. Only total IP growth and capital goods have standings above their respective 50% mark, placing them above their median gain on this horizon.

German manufacturing output, real orders, and real sales show erratic-to-weaker trends. Manufacturing output shows gains on all sequential horizons, while real orders and real sales are both showing significant declines as well as a pattern of deceleration. Manufacturing output and real sales are falling in Q3. But in terms of ranked year-over-year growth rates, real orders and real sales have standings above their historic median rates.

The survey indicators for the German economy show a progression toward strength over the last three months, and so do the sequential readings, for the most part. All the indicators are higher month-to-month. But their percentile standings, conducted on levels of these survey data, all register below median standings on data back to 2006. Recent performance is good, but it is weak in a historic context.

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Data for three early reporting EMU members, France, Spain, and Portugal, show output increases in September. However, their respective sequential footprints are not as upbeat. France shows output declines over each sequential horizon; Spain and Portugal are erratic. However, Spain’s IP growth rate over 12 months is above its median result, while France and Portugal have IP growth rates ranking near the lower third of their respective historic queues of growth rates for output.

On balance, the German data reported are fairly solid, with the surveys being quite upbeat. Real orders and real sales trends are cautionary and must be monitored. The three European reporters underline the fact that Europe is faring less well than Germany. Just another reason to be wary of good news. But what we do have here is a nice slug of good news. Maybe it can last?

Germany

German IP: Solid Gains in September; Strong Survey Results

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The Producer Price Index for final demand rose 0.3% in October, less than the expected increase of 0.4%. The surprise occurred in the energy sector, where prices dipped 0.1%. This decline, while welcome, followed increases of 10.0% in September and 4.2% in August, and thus did little to temper the pronounced year-over-year change. In fact, the latest 12-month reading of 37.0% was the sharpest increase since energy became an issue in the early months of the year. Food prices jumped 1.3% after an increase of 1.1% in September, but these increases followed declines in the prior three months, and the year-over-year change was tame at 1.7%.

Prices excluding food and energy rose 0.3%, in line with expectations. Although this component did not involve a surprise, it could still be viewed as unsettling, as it left the year-over-year change at 5.0%, the same as in September and matching the fastest pace in the past few years.

In addition to the prices of food and energy, the Bureau of Labor Statistics recommends excluding the prices of trade services to smooth the noise in monthly changes and to better gauge underlying inflation. This component is indeed volatile, as shown by the sharp ups and downs in the chart below. Prices of trade services fell 0.2% in October, which left a jump of 0.5% in the PPI excluding food, energy, and trade services. The year-over-year change totaled 4.9%, just shy of the recent high of 5.0% and a sign of a significant inflation impulse in the economy. (Trade services are the margins earned by retailers; that is, the spread between the price paid by the final purchaser and the price paid by the selling vendor.)

Many observers view the PPI as a measure of prices in the early stages of the production and distribution process. This was true in the past (years ago the index was called the Wholesale Price Index), but the BLS changed the nature of the measure in 2014, and it now includes prices of many goods and services purchased by the ultimate user (hence the name of the headline measure: PPI for final demand). However, the report also includes prices of goods and services at earlier stages (intermediate demand PPI).

Prices of intermediate demand for processed goods can swing widely, and they are on an upward path now. Prices have increased more than 1.0% in six of the ten months so far this year (and more than 2.0% in four of these months). The change in October was mild by comparison (0.4%), but the year-over-year change totaled 14.6%. Prices of intermediate demand for services have been less volatile, but they rose 0.6% in October, and the upward-trending year-over-year change totaled 6.8%. Unsettling.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Energy prices dipped, but many other measures were at the high end of recent ranges.
- Intermediate prices are trending upward.

Producer Prices in October: Better Than Expected, but Still Firmer Than Desired

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