Robert Brusca

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">The flows in the table below are the detail behind the trade headlines. In February the US trade deficit shrank by a small amount to -$58.44 billion from -$58.88 billion in January. If we look at the inflation adjusted flows for the quarter to date versus Q4 2006 there is a slight deterioration implying some subtraction from GDP due to trade flows in Q1 2007.</th>
</tr>
</thead>

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
US Merchandise Real End-Use Trade Flows
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Category</td>
<td>Current</td>
<td>Previous</td>
<td colspan="3">$SA % SAAR</td>
<td>MEMO:</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb.07</td>
<td>MO %</td>
<td>MO %</td>
<td>3-MO</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Yr/Yr</td>
</tr>
<tr>
<td class="firstcol">Real Exports</td>
<td>-3.7%</td>
<td>1.7%</td>
<td>-9.7%</td>
<td>-0.7%</td>
<td>5.3%</td>
<td>10.3%</td>
</tr>
<tr>
<td class="firstcol">Food, Feed, &amp; Beverages</td>
<td>-2.5%</td>
<td>5.2%</td>
<td>24.7%</td>
<td>-12.4%</td>
<td>7.3%</td>
<td>-0.2%</td>
</tr>
<tr>
<td class="firstcol">Industrial&nbsp; Materials</td>
<td>-4.0%</td>
<td>1.8%</td>
<td>-16.4%</td>
<td>-0.7%</td>
<td>5.4%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>-5.7%</td>
<td>3.2%</td>
<td>-13.4%</td>
<td>-0.2%</td>
<td>3.1%</td>
<td>18.5%</td>
</tr>
<tr>
<td class="firstcol">Autos &amp; Parts</td>
<td>3.6%</td>
<td>-6.8%</td>
<td>8.4%</td>
<td>-5.1%</td>
<td>2.3%</td>
<td>13.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-2.8%</td>
<td>3.7%</td>
<td>7.3%</td>
<td>7.2%</td>
<td>10.6%</td>
<td>7.6%</td>
</tr>
<tr>
<td class="firstcol">Other</td>
<td>-3.6%</td>
<td>-3.5%</td>
<td>-46.5%</td>
<td>-0.4%</td>
<td>14.9%</td>
<td>15.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Real Imports</td>
<td>-1.9%</td>
<td>0.3%</td>
<td>0.5%</td>
<td>-3.8%</td>
<td>2.6%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Food, Feeds, &amp; Beverages</td>
<td>0.5%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>-0.4%</td>
<td>4.1%</td>
<td>5.8%</td>
</tr>
<tr>
<td class="firstcol">Industrial Materials</td>
<td>-7.7%</td>
<td>3.6%</td>
<td>-4.9%</td>
<td>-17.5%</td>
<td>-9.3%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>-0.9%</td>
<td>5.5%</td>
<td>6.8%</td>
<td>0.4%</td>
<td>11.4%</td>
<td>10.3%</td>
</tr>
<tr>
<td class="firstcol">Autos &amp; Parts</td>
<td>-0.4%</td>
<td>-7.2%</td>
<td>-2.9%</td>
<td>-3.9%</td>
<td>-1.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>2.8%</td>
<td>-3.4%</td>
<td>1.8%</td>
<td>10.5%</td>
<td>13.5%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">Other</td>
<td>0.2%</td>
<td>-2.6%</td>
<td>-3.8%</td>
<td>4.4%</td>
<td>5.8%</td>
<td>5.2%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<tr>
<td>The table above is a table of inflation adjusted merchandise trade for the end use commodity designations used to categorize trade flows. They show some slight deterioration in the quarter-to-date trade balance. But the real story in this report is export and import weakness. These flows are all inflation-adjusted so oil has a minimal impact even on industrial materials, the category that contains it. For the month we can see all export categories decline. The table also tells a tale of weak export trends. Export trends weaken overall and are outright negative in three of four categories in February. But broader export trends weaken too, and this is even more disturbing. Overall real export growth rates drop from 10.3% a year ago, to 5.3% Yr/Yr as of February 2007. Then they drop to -0.7% over six months and to -9.7% over the most recent three months (all expressed as annual rates of change). This pronounced slowdown in exports is disturbing. For imports the slowing is not as dramatic but still is clear: from a 4% pace a year ago to a Yr/Yr pace of 2.6% currently. Then the pace drops off to -3.8% over six months slightly rebounds to an anemic +0.5% over three months (all expressed at annual rates). <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413a.jpg" width="353"> Meanwhile, over a fairly long period, the dollar has been falling. Weak US exports cannot be blamed on poor US competitiveness; US competitiveness has been improving. US export weakness suggests instead that growth overseas is weaker than what the IMF is saying in its recent WEO (World Economic Outlook). The weakness in export trends is quite apparent and does not seem to be the result of a normal statistical variation. The slowing seems real and economic instead of false and statistical in nature. For imports the slowing is more gradual and authentically fits in with the slowdown in the US economy, it may be this slowing that has transmitted weakness abroad and come back to haunt the US in the form of slower US exports abroad.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413b.jpg" width="353">One thing about the world economy, for all its growth few regions have really developed much true domestic demand. US growth has been the lynchpin of world growth and as it has faded no other source of indigenous demand has cropped up. Japan has faltered, recent Germany&#146;s weakness is exaggerated by its VAT introduction. Still Germany does not show that much strength except from external orders and exports.There is no pick up in local demand of any significant degree. &nbsp;While everyone remains upbeat on Europe it has yet to show it can prosper without export-led growth. The strong euro may already be putting it to a test too strong for it to pass. Is that the message in weak US exports?</td>
</tr>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Key Trends In Producer Prices
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td> Mar-07</td>
<td colspan="4">PPI Trends By Type Of Good</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td> 1-Mo (M/M)</td>
<td> 3-Mo, AR</td>
<td> 6-Mo, AR</td>
<td> 1-Yr</td>
<td> Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Total PPI</td>
<td> 1.0%</td>
<td> 6.9%</td>
<td> 5.2%</td>
<td> 3.1%</td>
<td> 3.6%</td>
</tr>
<tr>
<td class="firstcol"> Finished Consumer Gds</td>
<td>1.4%</td>
<td>8.6%</td>
<td>6.1%</td>
<td>3.5%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer Foods</td>
<td>1.4%</td>
<td>18.7%</td>
<td>10.9%</td>
<td>7.9%</td>
<td> -1.2%</td>
</tr>
<tr>
<td class="firstcol">Finished Consumer Goods Excl Foods</td>
<td>1.3%</td>
<td>5.1%</td>
<td>4.3%</td>
<td>1.9%</td>
<td>6.6%</td>
</tr>
<tr>
<td class="firstcol">Nondurables less Food</td>
<td>1.9%</td>
<td>7.7%</td>
<td>5.7%</td>
<td>2.5%</td>
<td>9.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondur ex Food &amp; Energy</td>
<td>0.4%</td>
<td>5.9%</td>
<td>3.5%</td>
<td>2.3%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Durable Goods</td>
<td> -0.3%</td>
<td> -0.9%</td>
<td>1.0%</td>
<td>0.6%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">Finished Core Consumer Goods</td>
<td> 0.1%</td>
<td> 3.1%</td>
<td> 2.4%</td>
<td> 1.5%</td>
<td> 1.9%</td>
</tr>
<tr>
<td class="firstcol"> Capital Goods</td>
<td> -0.1%</td>
<td>1.9%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Industries</td>
<td>0.0%</td>
<td>2.7%</td>
<td>2.5%</td>
<td>2.8%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">Nonmanufacturing Industries</td>
<td> -0.1%</td>
<td>1.4%</td>
<td>2.2%</td>
<td>1.6%</td>
<td>1.3%</td>
</tr>
<tr>
<td class="firstcol"> Core PPI</td>
<td>0.0%</td>
<td>2.3%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">Memo: Finished Energy</td>
<td>3.6%</td>
<td>9.4%</td>
<td>8.0%</td>
<td>2.8%</td>
<td>15.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<tr>
<td>The PPI has two headlines each month. One for the overall PPI, and one for the core. The core is the measure that excludes food and energy and that markets follow most closely. This month neither headline gives a true picture of what is going on in the PPI itself. As good as it gets&#133; Inflation is neither as strong as the 1% headline on the PPI nor as docile as the 0% rise in the core. Not surprisingly, the truth lies in between. Core inflation is the measure we prefer and the Fed prefers. But the indicators that the Fed prefers to apply the core definition to are broader than the PPI: they are the PCE deflator or the CPI index. These measures include the services sector that the PPI leaves out. That sector has been much more inflation prone than the core goods sector that we can expose for examination in the PPI. So when you look at the core PPI you are usually seeing inflation as good as it gets.About that CPI signal&#133; The table above gives us several readings on the PPI. The headline&#145;s main trend statistics are presented in the top line of the table; the PPI core is in the line that is second from the bottom. But the line that is more useful to us in the middle, entitled &quot;finished core consumer goods&quot;. This is the part of the PPI that fits directly into the core CPI number that the Fed does care about. Notice that the core for the CPI at the producer level shows a rise of 0.1%. It is stronger than the PPI&#146;s overall core because it excludes capital goods where prices fell in the month.And the CPI trends? Don&#146;t ask&#133;. Even more troubling than this minor one-tick change for the core as it applies to consumer goods is the adverse trend for this CPI Core series at the producer level. Finished core consumer goods at the producer level (FCCPPI) show steadily accelerating inflation. This is despite the small 0.1% up tick in March. &nbsp;Inflation has stepped up from 1.5% over 12-months to 2.4% over six months to 3.1% over three months (all SAAR). This progression is disturbing. Within the FCCPPI we find conflicting trends. Nondurable goods excluding energy and food are up by 0.4% in March and have their own -- much higher -- inflation progression in train (see table). But durable goods are tempered. Indeed, durable goods prices fell in March and they are showing a mixed tendency to decelerate over the course of the past year (see table). </td>
<td><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413c.jpg" width="353">The chart on the left looks at these trends using only the Yr/Yr tabulations Even so we can see that consumer durable goods inflation trends are turning lower. The upturn in nondurable core trends is also apparent as it turns higher. Capital goods trends are shown to hover at an inflation pace of about 2%. The core PPI, torn between these various trends, is in a slight downtrend itself.What&#146;s the point of a sullied point estimate? If I can make an obvious point here it is that with such disparate trends within the core PPI, it is obvious that the core is not very representative of its components. You can average (or weight-average) anything. But that does not make the resulting measure useful. We assert that the core inflation measure from the PPI is simply not useful in these circumstances. While we do need some assessment on the overall price level to tell what it is doing, (the Fed surely does) it should be clear that with important components moving in different directions final judgment depends on the weight applied to each. And since weighting is a controversial issue we would urge a great deal of caution in dealing with the trends core measures produce when components are flying every which way.&nbsp; If you peruse the chart on the left on component PPI Core trends you can see that this sort of trend convolution is not the norm. While the various core components often have differing rates of inflation, the direction is usually about the same even if the speed is not. Developments in PPI core inflation in early 2007 are odd indeed. On balance, the PPI is a report that can please no one. Inflation is still in a sort of twilight zone: too high to be comfortable but with yet enough moderation for the Fed to play along with it for a while &#150; if it so chooses. And there are plenty of convoluted &#150; or at least contrary - trends to choose from within the PPI core. What is most disturbing however is the knowledge that inflation in services tends to be stronger. That seems to imply that an uncomfortable CPI still lies ahead. The core goods portion of inflation has been the best behaved part of the CPI for some time.&nbsp; Inflation is now most troublesome in the services sector. As we move on to measures that include that sector next week with a goods sector inflation rate in hand that is itself a bit uncomfortable, disappointment seems to be the most likely result. Be prepared&#133;</td>
</tr>
</table>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413d.jpg" width="353">
The University of Michigan&#39;s consumer sentiment index has lost 11.6 points through mid-April to 85.3 from its January peak of 96.9 (Q1 1966 = 100). The reading of current conditions stands at 102.4, down from 111.3 in January, while expectations are at 74.3 from January&#39;s 87.6. These declines have come in roughly equal installments in February, March and early April.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413e.jpg" width="353">
Consumers&#39; reading of personal finances has fallen to 112 in early April from 123 in January, but is actually up from 111 in March. A few more people have rising incomes and a few less have lower incomes, both helping this component. But a growing number of respondents are saying their purchasing power is suffering from higher prices, even though their income position looks better. Survey participants see buying conditions deteriorate for &quot;large household goods&quot;; even among those who say this is a &quot;good time to buy&quot; a rising number give the reason that prices will go up, so buy now before that happens.
The fall in the expectations component results from concern over general business conditions. Fewer people look for &quot;good times&quot; and more people look for &quot;bad times&quot;. However, they remained generally positive about their own personal finances: those looking to be &quot;better off&quot; did edge down by 1 percentage point from January but those expecting to be &quot;worse off&quot; fell by 2 points.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070413f.jpg" width="353">
Inflation and unemployment expectations both contributed to the deterioration in sentiment. Median inflation expectations rose to 3.3% from 3% in January, February and March; the mean is 4.1%. Both figures are the highs since the high energy price period last summer. The unemployment outlook worsened as the smallest number of people since the 2001 recession expect &quot;less unemployment&quot; while the number expecting &quot;more unemployment&quot; returned to 40%, a kind of threshold of concern that has recently coincided with high energy price periods and was last breached in August.
The University of Michigan survey is not seasonally adjusted.This mid-month survey was based on telephone interviews with about 304 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month-end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">April (Prelim)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>85.3</td>
<td>88.4</td>
<td>91.3</td>
<td>-2.4%</td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>102.4</td>
<td>103.5</td>
<td>106.7</td>
<td>-6.2%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>74.3</td>
<td>78.7</td>
<td>81.5</td>
<td>+1.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's consumer sentiment index has lost 11.6 points through mid-April to 85.3 from its January peak of 96.9 (Q1 1966 = 100). The reading of current conditions stands at 102.4, down from 111.3 in January, while [...]

U.S. Trade Trends Fit of a Friday the 13th

UK trade data came out today for February, with the goods balance, -£6.8 billion, somewhat larger than the -£6.5 billion expected in at least two forecast surveys. Exports eased very slightly to -£18.4 billion from -£18.5 billion in [...]

U.S. Export and Import Prices: No Excitement but Uneven Trends

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411h.jpg" width="353">
The U.S. federal government ran a deficit of $96.3B during March, well ahead of last March&#39;s $85.3B and also larger than consensus forecasts of $89B.
This performance brought the fiscal-year-to-date deficit to $258.4B, down from $302.9B through March last year.
Summary data for the monthly budget, reported in the Monthly Treasury Statement, are available Haver&#39;s USECON database. Details are carried in the GOVFIN database.
The excess of the monthly deficit over the forecast amount may result from the acceleration into March of April payments for veterans&#39; benefits, supplemental security income and some Medicare outlays; these are ordinarily paid on the first day of each month, but are moved forward when the First falls on a weekend. April outlays will be commensurately reduced. Additionally, individual income tax refunds reached a record for a single month, $55.5B. The previous records were $52.4B in April 2004 and $52.2B in March last year. This is possibly due to earlier filing by taxpayers, and April and May refunds could turn out to be somewhat smaller.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411g.jpg" width="353">
In total, net revenues were $166.5B in March, up just 1.2% from March 2006; for the fiscal-year-to-date, they were 8.0% above the comparable period of fiscal 2006. Individual income tax receipts were $35.4B in March, down 9.8% from March 2006, but fiscal 2007-to-date saw $479.2B, up 10.8%. Corporate income taxes were $40.2B, a record for March and up 11.8% from a year ago. Social insurance taxes were $76.5B in the month, up 6.2% from a year ago.
The U.S. Government&#39;s net outlays grew 5.2% from March 2006, reaching $262.8B, with the cumulative total for the first six fiscal months up 2.9%. Defense outlays were $52.0B in the month, up 2.4% on the year earlier. Social security outlays (benefits and administrative costs) were $48.9B, up 5.9%. Net interest turned somewhat higher, reaching $21.1B, up 8.8% on March a year ago, while smaller amounts in previous months put the total for the fiscal year so far up only 2.5%.
This report gives an inconclusive read on the state of the budget, since key tax payments are going on this month and the timing of other tax filing seems to be changing from year to year. Major outlay patterns are also erratic from month to month. Nonetheless, overall, revenues are continuing to grow faster than outlays and the budget deficit is continuing to diminish.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Budget</a>, Bil.$</th>
<th scope="col">Mar 2007</th>
<th scope="col">Feb 2007</th>
<th scope="col">Oct 2006 &nbsp;Mar 2007</th>
<th scope="col">Oct 2005 &nbsp;Mar 2006</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005</th>
<th scope="col">FY 2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-96.3</td>
<td>-120.0</td>
<td>-258.4</td>
<td>-302.9</td>
<td>-248.2</td>
<td>-318.7</td>
<td>-411.1</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>166.5</td>
<td>120.3</td>
<td>1120.9</td>
<td>1037.6</td>
<td>11.8%</td>
<td>14.6%</td>
<td>5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">8.0%</td>
<td>10.5%</td>
</tr>
<tr>
<td class="firstcol">Net Outlays</td>
<td>262.8</td>
<td>240.3</td>
<td>1379.3</td>
<td>1340.6</td>
<td>7.4%</td>
<td>7.9%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">2.9%</td>
<td>8.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. federal government ran a deficit of $96.3B during March, well ahead of last March's $85.3B and also larger than consensus forecasts of $89B. This performance brought the fiscal-year-to-date deficit to $258.4B, down from [...]

March/April Calendar Quirk, Big Refunds Raise March Budget Deficit. Year-to-Date Down $45 Billion

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411e.jpg" width="353">
France&#146;s trade deficit widened in February as imports outpaced exports. Import growth continues to look more vibrant than export growth as the trends are accelerating more uniformly across trade categories. 
Over the recent three months imports are growing at a pace of 7.5% nearly the same as the Yr/Yr pace. For exports the overall pace for three month is barely positive and well under the Yr/Yr growth rate of 5%. For the rest of imports growth rates are quite solid. For capital goods the pace of acceleration is quite clear with blow-off type growth over the last three months. That pace is sure to cool from the near 40% it currently posts. Motor vehicle imports are strong, running at a super strong 28% pace and 14% Yr/Yr. Other consumer goods however show weakness: imports at -6.4% for three months and they are steadily decelerating.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411f.jpg" width="353"> 
This is the mixed picture for France. Export growth is cooling. Imports are strong and seem to point to strong domestic demand. But consumer goods imports (non-auto) are very weak and do not signal that same type of domestic demand strength form the consumer. For the moment France is a bit enigmatic. 
After seeing export and import trends wither steadily throughout 2006 and early 2007 both exports and imports have sprung to life in February of 2007.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French Trade Trends for Goods
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M%</td>
<td colspan="3">% SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-07</td>
<td>Jan-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>-&#128;&#128; 2,702.00</td>
<td>-&#128;&#128; 2,612.00</td>
<td>-&#128;&#128; 2,565.67</td>
<td>-&#128;&#128; 2,185.83</td>
<td>-&#128;&#128; 2,245.17</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>2.8%</td>
<td>-1.4%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>1.3%</td>
<td>1.3%</td>
<td>-1.1%</td>
<td>18.9%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>4.8%</td>
<td>0.7%</td>
<td>2.8%</td>
<td>-1.8%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>0.5%</td>
<td>-4.3%</td>
<td>-6.2%</td>
<td>2.6%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>3.2%</td>
<td>-1.2%</td>
<td>7.5%</td>
<td>2.6%</td>
<td>7.6%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>6.4%</td>
<td>2.6%</td>
<td>39.1%</td>
<td>10.8%</td>
<td>9.0%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>3.0%</td>
<td>0.8%</td>
<td>28.2%</td>
<td>16.8%</td>
<td>14.0%</td>
</tr>
<tr>
<td class="firstcol">Consumer goods</td>
<td>2.0%</td>
<td>-1.9%</td>
<td>-6.4%</td>
<td>0.5%</td>
<td>6.2%</td>
</tr>
<tr>
<td colspan="6">*Bil. Euros; mo or period average</td>
</tr>
</tbody>
</table>
</body>
</html>

Frances trade deficit widened in February as imports outpaced exports. Import growth continues to look more vibrant than export growth as the trends are accelerating more uniformly across trade categories. Over the recent three [...]

French Trade Deficit Widens

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">The JOLTS report (Job Openings and Labor Turnover Survey) is not a front-line jobs report but it is a report economists like that reveals a lot about what is going on behind the scenes in the labor market. This month&#146;s report is mixed as it shows&nbsp;a slowing in hires and in openings but fewer separations and a steady quit rate with lower layoff tendencies. At the bottom of the table below I try to bring theses reading to life by placing them in their respective ranges and defining each as being in a set percent of its range. There I also present the current readings expressed as percentages of their own respective means and medians. In that way the relative merit of each category comes through a bit clearer.&nbsp; The table shows that layoffs and separations are quite low. Layoffs are at a series low, in fact. Quits are high. To an economist this a good sign since people do not quit jobs unless prospects are good. A high quit rate is a good sign of labor market strength. Job openings are high and higher in their range than is hiring (hiring is at the two-thirds mark in its range). This configuration makes me wonder about skill mixes and labor shortages.</th>
</tr>
</thead>

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
JOLTS Summary Statistics for the Nation
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="5">National Statistics Since January of 2000</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Openings</td>
<td>Hires</td>
<td>Separation</td>
<td>Quit</td>
<td>Layoffs &amp; D</td>
<td>Other Separations</td>
</tr>
<tr>
<td class="firstcol">Feb-07</td>
<td>3.0</td>
<td>3.9</td>
<td>3.6</td>
<td>2.2</td>
<td>1.1</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Jan-07</td>
<td>3.1</td>
<td>4.0</td>
<td>3.7</td>
<td>2.2</td>
<td>1.5</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">average</td>
<td>2.6</td>
<td>3.8</td>
<td>3.7</td>
<td>2.0</td>
<td>1.4</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Median</td>
<td>2.6</td>
<td>3.8</td>
<td>3.7</td>
<td>2.0</td>
<td>1.4</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">Percentile</td>
<td>75.0%</td>
<td>66.7%</td>
<td>37.5%</td>
<td>83.3%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Range</td>
<td>1.2</td>
<td>0.9</td>
<td>0.8</td>
<td>0.6</td>
<td>0.7</td>
<td>0.1</td>
</tr>
<tr>
<td class="firstcol">Max</td>
<td>3.3</td>
<td>4.2</td>
<td>4.1</td>
<td>2.3</td>
<td>1.8</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">Min</td>
<td>2.1</td>
<td>3.3</td>
<td>3.3</td>
<td>1.7</td>
<td>1.1</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td colspan="7">Percent of</td>
</tr>
<tr>
<td class="firstcol">Median</td>
<td>117.6%</td>
<td>102.6%</td>
<td>97.3%</td>
<td>110.0%</td>
<td>78.6%</td>
<td>100.0%</td>
</tr>
<tr>
<td class="firstcol">Average</td>
<td>115.9%</td>
<td>103.4%</td>
<td>98.0%</td>
<td>108.1%</td>
<td>78.2%</td>
<td>86.8%</td>
</tr>
<tr class="odd">
<td colspan="7">Recovery period only</td>
</tr>
<tr>
<td class="firstcol">Percentile</td>
<td>75.0%</td>
<td>66.7%</td>
<td>37.5%</td>
<td>83.3%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Median</td>
<td>115.4%</td>
<td>100.0%</td>
<td>97.3%</td>
<td>104.8%</td>
<td>78.6%</td>
<td>100.0%</td>
</tr>
<tr>
<td class="firstcol">Average</td>
<td>113.5%</td>
<td>102.2%</td>
<td>97.9%</td>
<td>107.7%</td>
<td>78.6%</td>
<td>86.4%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Regional variances Regionally conditions can be and are quite different. Hiring has been strong in the Midwest, West and South, but it has lagged in the Northeast. Job openings are the highest in the South then the West followed by the Midwest with the Northeast decidedly trailing.But all regions see low layoffs. For three of them layoffs are at a cycle low. For the Midwest they are moderate in the lower one-third of its range. We know that a lot of auto company programs are trying to ease out high cost labor and that these firms concentrate in the Midwest.&nbsp; Still, the Midwest reading is quite moderate. The relatively high quit rates show strong local labor markets from the South across the Midwest to the West. But the Northeast has a low quit rate, a sign of a poor labor market since workers with jobs are reluctant to leave them.</th>
</tr>
</thead>

</table>
<table border="0" cellspacing="0" width="100%">
<tr>
<td><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411a.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411b.jpg" width="353"> <img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411c.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411d.jpg" width="353"> </td>
</tr>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">JOLTS by Industry We can weight and array JOLTS data by industry. On this basis some odd things emerge as well as some very understandable ones. The construction sector is clearly under some pressure. Yet, the JOLTS figures show that job openings in the sector are at a recovery period high.&nbsp; At the same time, separations, quits and hires in the sector are at or nearly at recovery period lows. This raises some questions about what the job openings are - for what kinds of jobs and what pay. Hires are the relative strongest for Government, followed by other services. Manufacturing sector hires are above the midpoint, in their 60th percentile. Quits are moderate for government and fairly robust for manufacturing and services. On balance the JOLTS data show a still vibrant labor market. The high quit rates are quite indicative of strength and they transcend most regions (except the NE) and industries (except construction). The service sector is a very solid sector. Even manufacturing is far short of being called soft; it looks pretty well-off despite all the industry restructuring.&nbsp; &nbsp;In short the JOLTS report looks behind the scenes of the jobs data and finds that the underpinnings look pretty good.</th>
</tr>
</thead>

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
JOLTS Rankings by Main Sectors
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="5">Major Job Sectors</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb-07</td>
<td>Services</td>
<td>Manufacturing</td>
<td>Constructions</td>
<td>Government</td>
</tr>
<tr>
<td class="firstcol">Job Openings</td>
<td>67.8%</td>
<td>85.7%</td>
<td>100.0%</td>
<td>87.5%</td>
</tr>
<tr>
<td class="firstcol">Hires</td>
<td>79.7%</td>
<td>60.0%</td>
<td>0.0%</td>
<td>100.0%</td>
</tr>
<tr>
<td class="firstcol">Separations</td>
<td>57.4%</td>
<td>70.0%</td>
<td>4.0%</td>
<td>50.0%</td>
</tr>
<tr>
<td class="firstcol">Quits</td>
<td>89.0%</td>
<td>83.3%</td>
<td>0.0%</td>
<td>50.0%</td>
</tr>
</tbody>
</table>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411e.jpg" width="353">
France&#146;s trade deficit widened in February as imports outpaced exports. Import growth continues to look more vibrant than export growth as the trends are accelerating more uniformly across trade categories. 
Over the recent three months imports are growing at a pace of 7.5% nearly the same as the Yr/Yr pace. For exports the overall pace for three month is barely positive and well under the Yr/Yr growth rate of 5%. For the rest of imports growth rates are quite solid. For capital goods the pace of acceleration is quite clear with blow-off type growth over the last three months. That pace is sure to cool from the near 40% it currently posts. Motor vehicle imports are strong, running at a super strong 28% pace and 14% Yr/Yr. Other consumer goods however show weakness: imports at -6.4% for three months and they are steadily decelerating.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411f.jpg" width="353"> 
This is the mixed picture for France. Export growth is cooling. Imports are strong and seem to point to strong domestic demand. But consumer goods imports (non-auto) are very weak and do not signal that same type of domestic demand strength form the consumer. For the moment France is a bit enigmatic. 
After seeing export and import trends wither steadily throughout 2006 and early 2007 both exports and imports have sprung to life in February of 2007.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French Trade Trends for Goods
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M%</td>
<td colspan="3">% SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-07</td>
<td>Jan-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>-&#128;&#128; 2,702.00</td>
<td>-&#128;&#128; 2,612.00</td>
<td>-&#128;&#128; 2,565.67</td>
<td>-&#128;&#128; 2,185.83</td>
<td>-&#128;&#128; 2,245.17</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>2.8%</td>
<td>-1.4%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>1.3%</td>
<td>1.3%</td>
<td>-1.1%</td>
<td>18.9%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>4.8%</td>
<td>0.7%</td>
<td>2.8%</td>
<td>-1.8%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>0.5%</td>
<td>-4.3%</td>
<td>-6.2%</td>
<td>2.6%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>3.2%</td>
<td>-1.2%</td>
<td>7.5%</td>
<td>2.6%</td>
<td>7.6%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>6.4%</td>
<td>2.6%</td>
<td>39.1%</td>
<td>10.8%</td>
<td>9.0%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>3.0%</td>
<td>0.8%</td>
<td>28.2%</td>
<td>16.8%</td>
<td>14.0%</td>
</tr>
<tr>
<td class="firstcol">Consumer goods</td>
<td>2.0%</td>
<td>-1.9%</td>
<td>-6.4%</td>
<td>0.5%</td>
<td>6.2%</td>
</tr>
<tr>
<td colspan="6">*Bil. Euros; mo or period average</td>
</tr>
</tbody>
</table>
French Trade Deficit Widens 
by <a href="/comment/Brusca.html">Robert Brusca</a> April 11, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411g.jpg" width="353">
The U.S. federal government ran a deficit of $96.3B during March, well ahead of last March&#39;s $85.3B and also larger than consensus forecasts of $89B.
This performance brought the fiscal-year-to-date deficit to $258.4B, down from $302.9B through March last year.
Summary data for the monthly budget, reported in the Monthly Treasury Statement, are available Haver&#39;s USECON database. Details are carried in the GOVFIN database.
The excess of the monthly deficit over the forecast amount may result from the acceleration into March of April payments for veterans&#39; benefits, supplemental security income and some Medicare outlays; these are ordinarily paid on the first day of each month, but are moved forward when the First falls on a weekend. April outlays will be commensurately reduced. Additionally, individual income tax refunds reached a record for a single month, $55.5B. The previous records were $52.4B in April 2004 and $52.2B in March last year. This is possibly due to earlier filing by taxpayers, and April and May refunds could turn out to be somewhat smaller.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070411h.jpg" width="353">
In total, net revenues were $166.5B in March, up just 1.2% from March 2006; for the fiscal-year-to-date, they were 8.0% above the comparable period of fiscal 2006. Individual income tax receipts were $35.4B in March, down 9.8% from March 2006, but fiscal 2007-to-date saw $479.2B, up 10.8%. Corporate income taxes were $40.2B, a record for March and up 11.8% from a year ago. Social insurance taxes were $76.5B in the month, up 6.2% from a year ago.
The U.S. Government&#39;s net outlays grew 5.2% from March 2006, reaching $262.8B, with the cumulative total for the first six fiscal months up 2.9%. Defense outlays were $52.0B in the month, up 2.4% on the year earlier. Social security outlays (benefits and administrative costs) were $48.9B, up 5.9%. Net interest turned somewhat higher, reaching $21.1B, up 8.8% on March a year ago, while smaller amounts in previous months put the total for the fiscal year so far up only 2.5%.
This report gives an inconclusive read on the state of the budget, since key tax payments are going on this month and the timing of other tax filing seems to be changing from year to year. Major outlay patterns are also erratic from month to month. Nonetheless, overall, revenues are continuing to grow faster than outlays and the budget deficit is continuing to diminish.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Budget</a>, Bil.$</th>
<th scope="col">Mar 2007</th>
<th scope="col">Feb 2007</th>
<th scope="col">Oct 2006 &nbsp; Mar 2007</th>
<th scope="col">Oct 2005 &nbsp; Mar 2006</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005</th>
<th scope="col">FY 2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-96.3</td>
<td>-120.0</td>
<td>-258.4</td>
<td>-302.9</td>
<td>-248.2</td>
<td>-318.7</td>
<td>-411.1</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>166.5</td>
<td>120.3</td>
<td>1120.9</td>
<td>1037.6</td>
<td>11.8%</td>
<td>14.6%</td>
<td>5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">8.0%</td>
<td>10.5%</td>
</tr>
<tr>
<td class="firstcol">Net Outlays</td>
<td>262.8</td>
<td>240.3</td>
<td>1379.3</td>
<td>1340.6</td>
<td>7.4%</td>
<td>7.9%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">2.9%</td>
<td>8.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

JOLTS Report Shows U.S. Economy’s Complexities

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410c.jpg" width="353">
China&#39;s merchandise trade balance fell sharply in March to $84.7 billion from $108.0 billion in February. Exports fell by $23.4 billion and imports rose by $0.3 billion. As the data are not seasonally adjusted, the monthly ups and downs in the first quarter of the year are frequently affected by the variations in the dates of the Chinese New Year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410d.jpg" width="353"> In spite of the decline in the March trade balance, the balance for the whole quarter was a record at $63.7 billion, $7.5 billion above the previous quarter and $30.7 above the first quarter of 2006. The first chart shows China&#39;s merchandise exports, imports and balances of trade in goods over the past five years on a quarterly basis.
The surplus with the US was $42 billion in the first quarter of this year, $2.6 billion above the previous quarter and $7.8 billion above the first quarter of 2006. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410f.jpg" width="353">The growing surplus with the U.S. has been causing friction between China and the US over the last several years and has reached the point where the US has recently increased duties on Chinese coated paper and, just yesterday, filed two cases with the WTO (World Trade Organization) to reduce barriers to US goods and to criminalize piracy. The second chart shows the widening gap between China&#39;s exports to the US and its imports from the US.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410e.jpg" width="353">
In contrast to the US, China has run a deficit with Japan as shown in the third chart. Until 2005, China also ran a deficit in goods with Germany. Since then, however, China has been recording a growing surplus with Germany as shown in the fourth chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@P1/@P17/@P17.HTM">CHINA TRADE IN GOODS</a> &nbsp;(Bil US$)</th>
<th scope="col">Mar 07</th>
<th scope="col">Feb 07</th>
<th scope="col">Mar 06</th>
<th scope="col">M/M Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">Q1 07</th>
<th scope="col">Q4 06&nbsp;</th>
<th scope="col">Q1 06&nbsp;</th>
<th scope="col">Q/Q Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Export Total</td>
<td>84.7</td>
<td>108.0</td>
<td>76.5</td>
<td>-23.4</td>
<td>8.2</td>
<td>282.9</td>
<td>263.6</td>
<td>219.0</td>
<td>19.3</td>
<td>63.9</td>
<td>969.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;To US</td>
<td>16.8</td>
<td>21.4</td>
<td>16.9</td>
<td>-4.6</td>
<td>-0.1</td>
<td>58.2</td>
<td>54.7</td>
<td>47.9</td>
<td>3.5</td>
<td>10.3</td>
<td>203.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;To Germany</td>
<td>3.0</td>
<td>4.3</td>
<td>3.3</td>
<td>-1.3</td>
<td>-0.3</td>
<td>11.1</td>
<td>10.6</td>
<td>9.5</td>
<td>0.5</td>
<td>1.6</td>
<td>40.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;To Japan</td>
<td>7.1</td>
<td>9.3</td>
<td>7.5</td>
<td>-2.1</td>
<td>-0.4</td>
<td>25.1</td>
<td>23.8</td>
<td>22.3</td>
<td>1.3</td>
<td>2.8</td>
<td>91.8</td>
</tr>
<tr class="odd">
<td class="firstcol"> Imports Total </td>
<td>74.2</td>
<td>73.9</td>
<td>63.3</td>
<td>0.3</td>
<td>10.9</td>
<td>219.3</td>
<td>207.4</td>
<td>168.1</td>
<td>11.9</td>
<td>51.2</td>
<td>791.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;From US</td>
<td>6.1</td>
<td>4.9</td>
<td>4.8</td>
<td>1.3</td>
<td>1.6</td>
<td>16.3</td>
<td>15.4</td>
<td>13.8</td>
<td>0.9</td>
<td>2.5</td>
<td>59.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;From Germany</td>
<td>3.4</td>
<td>3.6</td>
<td>2.8</td>
<td>-0.2</td>
<td>0.6</td>
<td>10.2</td>
<td>10.3</td>
<td>8.7</td>
<td>-0.1</td>
<td>1.5</td>
<td>37.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;From Japan</td>
<td>10.9</td>
<td>10.8</td>
<td>9.2</td>
<td>0.1</td>
<td>1.7</td>
<td>32.3</td>
<td>30.4</td>
<td>27.2</td>
<td>1.9</td>
<td>5.1</td>
<td>115.8</td>
</tr>
<tr class="odd">
<td class="firstcol"> Balance Total </td>
<td>10.4</td>
<td>34.1</td>
<td>13.1</td>
<td>-23.6</td>
<td>-2.7</td>
<td>63.7</td>
<td>56.1</td>
<td>32.9</td>
<td>7.5</td>
<td>30.7</td>
<td>177.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;US</td>
<td>10.7</td>
<td>16.5</td>
<td>12.1</td>
<td>-5.8</td>
<td>-1.4</td>
<td>42.0</td>
<td>39.3</td>
<td>34.1</td>
<td>2.6</td>
<td>7.8</td>
<td>144.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Germany</td>
<td>-0.4</td>
<td>0.7</td>
<td>0.5</td>
<td>-1.1</td>
<td>-0.9</td>
<td>0.9</td>
<td>0.3</td>
<td>0.8</td>
<td>0.6</td>
<td>0.1</td>
<td>2.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Japan</td>
<td>-3.8</td>
<td>-1.5</td>
<td>-1.7</td>
<td>-2.3</td>
<td>-2.1</td>
<td>-7.2</td>
<td>-6.6</td>
<td>-4.9</td>
<td>-0.5</td>
<td>-2.3</td>
<td>-24.0</td>
</tr>
</tbody>
</table>
</body>
</html>

China's merchandise trade balance fell sharply in March to $84.7 billion from $108.0 billion in February. Exports fell by $23.4 billion and imports rose by $0.3 billion. As the data are not seasonally adjusted, the monthly ups and [...]

China's Trade Surplus Tumbles in March, but First Quarter Surplus Is Still A Record

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410b.jpg" width="353">
French industrial output was up especially strong rising by 1.1% and led by a 1.2% increase in the output of consumer goods. EU IP trends have been soft recently. Even Germany where conditions have been rather solid has showed some weakness in consumer goods output; of course Germany may still be fighting its way though some VAT effects early in the year. With this strong gain in February, France at least shows that one large EU country has some solid output growth in consumer goods. This has been led by autos where output is up by a strong 4.7% spurt in February alone. 
For France the chart now shows some building momentum trends in place as the 3-mo growth rate is rising sharply and the six month pace is firming along with the Yr/Yr pace.
In February France demonstrates good growth across sectors. Auto output is especially strong. Consumer goods output is surprisingly robust as that sector had lagged. Capital goods output trends are simply steady and above the pace of 4%. Intermediate goods output has picked up in February.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French IP Excluding construction
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">SAAR except m/m </td>
<td>Feb-07</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>3-mo</td>
<td>&nbsp;6-mo </td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>1.1%</td>
<td>-0.2%</td>
<td>1.0%</td>
<td>7.7%</td>
<td>1.6%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>1.2%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>6.4%</td>
<td>2.9%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>4.8%</td>
<td>4.4%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediary</td>
<td>1.3%</td>
<td>-1.2%</td>
<td>1.4%</td>
<td>6.3%</td>
<td>1.2%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Auto</td>
<td>4.7%</td>
<td>0.4%</td>
<td>1.5%</td>
<td>29.9%</td>
<td>3.9%</td>
<td>4.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

French industrial output was up especially strong rising by 1.1% and led by a 1.2% increase in the output of consumer goods. EU IP trends have been soft recently. Even Germany where conditions have been rather solid has showed some [...]

French Industrial Output Up Sharply in February

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070410a.jpg" width="353">
Japan&#146;s economy watcher&#146;s survey shows the ongoing downshift in Japan&#146;s economy from a local peak reached back in March of 2006. Since then, the economy has showed less strength but in the recent three months or so the economy watcher&#146;s index has showed some lift in its overall position as well as in its outlook. During this period job market conditions have remained positive and have stabilized. This index is one of the reasons that the Bank of Japan (BoJ) may remain confident that the economy is still doing alright despite some uneven reports early this year. 
The indicators in the table below give a somewhat broader picture of the performance of the Japanese economy. The first panel of the chart shows the raw readings on several measures; the second panel re-expresses them as a percentile of the indicator&#146;s own range of values over the past five years. For example the current economy watchers index shows the future component is in the 70th percentile (top 30%) of this five-year range of values. The other economy watcher indicators are near or above the 60th percentile, significantly above even the midpoint of their respective ranges (the 50th percentile mark is the mid-point). But the NTC MFG reading is relatively weaker at a 52.5 raw reading it shows some expansion. As a percentile of its five-year range it is weak, residing in only its 43rd percentile. The Teikoku indexes are relatively stronger. They are based on a more comprehensive weighting of questions put to survey participants. The MFG reading is in the 86th percentile of its range, much stronger than the NTC reading in its range. Also the services and construction readings are in the top 10 percentile of their respective ranges. Retailing is at a weaker but still firm 75th percentile.
The BoJ decision to keep rates on hold seems reasonable. The economy has had some uneven numbers but there has also been some new flirtation with deflation. The BoJ board seems to be trying to make sure that recovery is in gear before moving rates up as deputy governor Muto had previously promised. For the moment BOJ policy seem to be right where it needs to be.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Key Japanese surveys
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Year range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Mar-07</td>
<td>Feb-07</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>Mar-07</td>
<td>Feb-07</td>
<td>Jan-07</td>
</tr>
<tr>
<td class="firstcol">Diffusion</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Economy Watchers</td>
<td>50.8</td>
<td>49.2</td>
<td>47.2</td>
<td>48.9</td>
<td>65.6%</td>
<td>57.4%</td>
<td>53.7%</td>
</tr>
<tr>
<td class="firstcol">Employment</td>
<td>56.3</td>
<td>55.9</td>
<td>56.3</td>
<td>54.5</td>
<td>59.7%</td>
<td>57.9%</td>
<td>64.9%</td>
</tr>
<tr>
<td class="firstcol">Future</td>
<td>51.3</td>
<td>52.1</td>
<td>50.9</td>
<td>48.9</td>
<td>70.6%</td>
<td>75.0%</td>
<td>68.3%</td>
</tr>
<tr>
<td class="firstcol">NTC MFG</td>
<td>52.5</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>43.5%</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Econ Trends (Teikoku&#39;/50 neutral/weighted diffusion))</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>47.2</td>
<td>46.7</td>
<td>46.7</td>
<td>47.6</td>
<td>86.2%</td>
<td>84.5%</td>
<td>85.2%</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>41.1</td>
<td>39.9</td>
<td>39.8</td>
<td>39.4</td>
<td>74.3%</td>
<td>69.9%</td>
<td>69.3%</td>
</tr>
<tr>
<td class="firstcol">Wholesale</td>
<td>44.6</td>
<td>43.8</td>
<td>44.1</td>
<td>44.8</td>
<td>85.8%</td>
<td>82.1%</td>
<td>84.8%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>49.9</td>
<td>49.4</td>
<td>48.9</td>
<td>49.3</td>
<td>92.2%</td>
<td>90.2%</td>
<td>88.5%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>38.7</td>
<td>38.7</td>
<td>38.2</td>
<td>39.0</td>
<td>91.2%</td>
<td>91.0%</td>
<td>88.6%</td>
</tr>
<tr>
<td colspan="8">100 is high; Zero is low</td>
</tr>
</tbody>
</table>
</body>
</html>

Japans economy watchers survey shows the ongoing downshift in Japans economy from a local peak reached back in March of 2006. Since then, the economy has showed less strength but in the recent three months or so the economy [...]

Bank of Japan Holds Policy Steady on Unanimous Vote…

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

260205C15.jpg

260205D15.jpg

- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

260205A2.jpg

260205B2.jpg

Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

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

260205C2.jpg

260205D2.jpg

- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief: 2007

Jump to: