Tom Moeller

<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/090326c.jpg" width="353">
Labor market stress continues. Continuing claims for unemployment insurance rose to yet another record high of 5,560,000 and remained nearly double that of last March. The series dates back to 1966. The four-week average of continuing claims also rose to another record of 5,331,250. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
At the margin, there appears to be no let-up in the bleak employment picture. Initial claims for unemployment insurance rose to 652,000 which was near the series&#39; recent high. At 652,000 the figure was close to its highest since 1982 and it roughly equaled expectations.
The Labor Department indicated that the largest increases in initial claims for the week ending March 14 were in Tennessee (+1,394), Texas (+1,028), Rhode Island (+904), North Dakota (+857), and Connecticut (+522), while the largest decreases were in California (-8,555), Michigan (-7,523), Indiana (-7,475), Pennsylvania (-3,757), and Ohio (-3,397).
Though the latest level of continuing claims was a record, the labor force has grown as well, by nearly 30% over the last twenty years. Therefore, the insured rate of unemployment is not at a record high. It rose to 4.2% which was the highest since June of 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326d.jpg" width="353">
The highest insured unemployment rates in the week ending March 7 were in Michigan (7.8 percent), Oregon (7.6), Idaho (7.2), Wisconsin (6.8), Pennsylvania (6.5), Rhode Island (6.5), Nevada (6.2), Montana (6.0), Indiana (5.9), and Vermont (5.9).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">03/21/09</th>
<th scope="col">03/14/09</th>
<th scope="col">03/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>652</td>
<td>644</td>
<td>657</td>
<td>77.7%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,560</td>
<td>5,438</td>
<td>96.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

Labor market stress continues. Continuing claims for unemployment insurance rose to yet another record high of 5,560,000 and remained nearly double that of last March. The series dates back to 1966. The four-week average of continuing [...]

U.S. Continuing Claims for Unemployment Insurance Reach Another Record High

<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>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326a.jpg" width="353">
The U.S. Bureau of Economic Analysis indicated that its revised estimate of 4Q &#39;08 was little changed. The 6.3% (AR) decline compared to the preliminary estimate of a 6.2% drop. Nevertheless, the decline was the steepest since 1982 and it approached the 7.8% quarterly decline during the &quot;credit crunch&quot; recession of 1980. Consensus expectations had been for a deepening of the 4Q decline to 6.6%.
Accompanying the GDP report was the first look at 4Q corporate profits. They fell 16.5% (-21.5% y/y) and the decline was just short of the record 17.0% drop logged during the recession of 1953. A record 59.3% drop (-66.9% y/y) in financial sector earnings led the downturn as the real estate industry imploded. Economic recession further reduced nonfinancial sector earnings by 10.7% (-8.9% y/y) before costs were brought fully under control. That decline came despite the halving of crude oil prices and was the worst quarterly drop since early 1981. Foreign sector earnings held together and rose 4.6% during 4Q but they were off 6.0% versus the year prior.
Revisions to the GDP components were fairly minor. Offsetting one another were downward revisions to inventories&#39; negative contribution to GDP growth and an upward revision to foreign trade. Nevertheless, the negative contribution from trade to U.S. growth was the first since 1Q &#39;07. Exports fell at a 23.6% rate (-1.8% y/y) as recessions abroad intensified. U.S. imports fell at a 17.5% rate (-7.5% y/y) with the developing U.S. recession.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326b.jpg" width="353">
Real U.S. final sales to domestic purchasers contracted at a 5.8% annual rate and that was the worst decline since the 1980 recession when consumers pocketed their credit cards. Personal consumption expenditures fell an unrevised 4.3% (-1.5% y/y) as spending on motor vehicles declined at a huge 38.0% annual rate. Business fixed investment fell at a 21.7% rate (-5.2% y/y) and residential investment dropped at a 22.8% rate (-19.4% y/y).
The government sector contributed marginally to GDP growth last quarter. Activity rose at a 1.3% annual rate (3.2% y/y) led by a 6.9% (8.2% y/y) rise in Federal spending.
The estimate of price inflation was unrevised. The 0.5% increase in the GDP chain price index remained greatly reduced from the 3.9% advance during 3Q. The PCE price index fell at a 4.9% annual rate as gasoline prices fell. The residential investment chain price index fell at a 9.4% annual rate while the business fixed investment price index rose 4.6%.
The U.S. National Income &amp; Product Account data is available in Haver&#39;s USECON and the USNA databases.
Sources of the Great Moderation: shocks, friction, or monetary policy? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;08 (Final)</th>
<th scope="col">4Q &#39;08 (Preliminary)</th>
<th scope="col">4Q &#39;08 (Advance)</th>
<th scope="col">3Q &#39;08</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>-6.3</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.1</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.1</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.2</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.8</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>-0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>


</html>

The U.S. Bureau of Economic Analysis indicated that its revised estimate of 4Q '08 was little changed. The 6.3% (AR) decline compared to the preliminary estimate of a 6.2% drop. Nevertheless, the decline was the steepest since 1982 [...]

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326a.jpg" align="left" border="0" height="265" width="353">
The U.S. Bureau of Economic Analysis indicated that its
revised estimate of 4Q '08 was little changed. The 6.3% (AR) decline
compared to the preliminary estimate of a 6.2% drop. Nevertheless, the
decline was the steepest since 1982 and it approached the 7.8%
quarterly decline during the "credit crunch" recession of 1980.
Consensus expectations had been for a deepening of the 4Q decline to
6.6%.
Accompanying the GDP report was the first look at 4Q corporate
profits. They fell 16.5% (-21.5% y/y) and the decline was just short of
the record 17.0% drop logged during the recession of 1953. A record
59.3% drop (-66.9% y/y) in financial sector earnings led the downturn
as the real estate industry imploded. Economic recession further
reduced nonfinancial sector earnings by 10.7% (-8.9% y/y) before costs
were brought fully under control. That decline came despite the halving
of crude oil prices and was the worst quarterly drop since early 1981.
Foreign sector earnings held together and rose 4.6% during 4Q but they
were off 6.0% versus the year prior.
Revisions to the GDP components were fairly minor. Offsetting
one another were downward revisions to inventories' negative
contribution to GDP growth and an upward revision to foreign trade.
Nevertheless, the negative contribution from trade to U.S. growth was
the first since 1Q '07. Exports fell at a 23.6% rate (-1.8% y/y) as
recessions abroad intensified. U.S. imports fell at a 17.5% rate (-7.5%
y/y) with the developing U.S. recession.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326b.jpg" align="right" border="0" height="265" width="353">
Real U.S. final sales to domestic purchasers
contracted at a 5.8% annual rate and that was the worst decline since
the 1980 recession when consumers pocketed their credit cards. Personal
consumption expenditures fell an unrevised 4.3% (-1.5% y/y) as spending
on motor vehicles declined at a huge 38.0% annual rate. Business fixed
investment fell at a 21.7% rate (-5.2% y/y) and residential investment
dropped at a 22.8% rate (-19.4% y/y).
The government sector contributed marginally to GDP growth
last quarter. Activity rose at a 1.3% annual rate (3.2% y/y) led by a
6.9% (8.2% y/y) rise in Federal spending.
The estimate of price inflation was unrevised. The 0.5%
increase in the GDP chain price index remained
greatly reduced from the 3.9% advance during 3Q. The PCE price index
fell at a 4.9% annual rate as gasoline prices fell. The residential
investment chain price index fell at a 9.4% annual rate while the
business fixed investment price index rose 4.6%.
The U.S. National Income &amp; Product Account data is
available in Haver's USECON and the USNA
databases.
Sources of the Great Moderation: shocks, friction, or
monetary policy? from the Federal Reserve Bank of San
Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '08 (Final)</th>
<th scope="col">4Q '08 (Preliminary)</th>
<th scope="col">4Q '08 (Advance)</th>
<th scope="col">3Q '08</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>-6.3</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.1</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-0.1</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.2</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.8</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>-0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>
U.S. Continuing Claims for
Unemployment Insurance Reach Another Record High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326c.jpg" align="left" border="0">
Labor market stress continues. Continuing claims for
unemployment insurance rose to yet another record high of 5,560,000
and remained nearly double that of last March. The series
dates back to 1966. The four-week average of continuing claims also
rose to another record of 5,331,250. Continuing claims provide some
indication of workers' ability to find employment and they lag the
initial claims figures by one week.
At the margin, there appears to be no let-up in the bleak
employment picture. Initial claims for unemployment insurance rose to
652,000 which was near the series' recent high. At 652,000 the figure
was close to its highest since 1982 and it roughly equaled expectations.
The Labor Department indicated that the largest increases in
initial claims for the week ending March 14 were in Tennessee (+1,394),
Texas (+1,028), Rhode Island (+904), North Dakota (+857), and
Connecticut (+522), while the largest decreases were in California
(-8,555), Michigan (-7,523), Indiana (-7,475), Pennsylvania (-3,757),
and Ohio (-3,397).
Though the latest level of continuing claims was a record, the
labor force has grown as well, by nearly 30% over the last twenty
years. Therefore, the insured rate of unemployment is not at a record
high. It rose to 4.2% which was the highest since June of 1983. During
the last ten years there has been a 93% correlation between the level
of the insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326d.jpg" align="right" border="0">
The highest insured unemployment rates in the week ending
March 7 were in Michigan (7.8 percent), Oregon (7.6), Idaho (7.2),
Wisconsin (6.8), Pennsylvania (6.5), Rhode Island (6.5), Nevada (6.2),
Montana (6.0), Indiana (5.9), and Vermont (5.9).
The unemployment insurance claim data is available in Haver's WEEKLY
database.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">03/21/09</th>
<th scope="col">03/14/09</th>
<th scope="col">03/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>652</td>
<td>644</td>
<td>657</td>
<td>77.7%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,560</td>
<td>5,438</td>
<td>96.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
UK Retail Sales Fall But Trend
Holds Up 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090326e.jpg" align="left" border="0" height="265" width="353">
If there is an enigmatic economy right now it is the UK&#8217;s. The
central bank is very worried about deflation and economic weakness. Yet
the last retail prices report showed inflation up sharply and the core
rate stubborn. While surveys of consumer activity and measures of
confidence are weak, Yr/Yr real retail sales excluding autos are up a
very solid and strong 5.6% and two months into the quarter they are up
at a 5.9% pace. 
 

Still, in February, retail sales fell by 1% in nominal terms
and 1.9% in real terms (ex autos). 
 

Retail sales have fallen in seven of the last 12 months. They
are down in four of the last six months and have risen in only one of
the last six months- hardly a picture of strength. The 1.5% rise in
nominal sales in January is an important factor keeping the current
growth rates firm. Just to complicated things, ex auto real retail
sales are up in Three of the past six months as well as in three of the
past four months. 
 

This strength in ex-auto sales is surprising. The UK economy
is suffering though severe financial problems as is the US. Sentiment
is down strongly. But the inflation figures do not want to settle down
and consumer spending simply finds ways to stay alive despite some
sputtering. It is hard to get a grip on the UK economy because of these
divergences. The inability of the government to sell as many bonds as
it tried to auction yesterday is another sign of unmoored expectations.
Inventors are having a hard time getting a grip on the economy and that
makes it hard for them to make investment decisions. I still think
weakness will enfold this economy and that the moves to stimulate are
the right ones, but for the moment, some unexpected readings of
strength are helping to support UK growth and to confuse investors. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">UK Real
and Nominal Retail Sales</th>
<th scope="col">Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr Ago</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>-1.0%</td>
<td>1.5%</td>
<td>0.0%</td>
<td>2.1%</td>
<td>-0.7%</td>
<td>0.5%</td>
<td>4.8%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>0.7%</td>
<td>0.6%</td>
<td>-0.7%</td>
<td>2.2%</td>
<td>5.3%</td>
<td>5.1%</td>
<td>5.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-3.0%</td>
<td>5.0%</td>
<td>1.0%</td>
<td>11.8%</td>
<td>-4.8%</td>
<td>-1.1%</td>
<td>3.1%</td>
<td>19.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</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">&nbsp; Retail Ex auto</td>
<td>-1.9%</td>
<td>0.8%</td>
<td>1.9%</td>
<td>3.2%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>5.6%</td>
<td>5.9%</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325c.jpg" align="left" border="0" height="265" width="353">
The IFO Index fell again in March but the IFO expectations
index rose. Expectations are still only in the 16th percentile with
this ongoing bounce. The overall business climate and the current
situation indices are at lows. 
 

The chart above shows how some of the sector indices based on
diffusion indices are doing. All three pictured indices are falling
sharply. The services and retail sectors have made a small rebound.
Manufacturing is slowing its descent. Manufacturing and the all- sector
index (not pictures) are at the bottom of their range. The wholesaling
and services sectors (wholesaling not pictured) hover around the bottom
10% of their respective ranges. The retail sector is in the bottom 20%
of its range. Construction is nearly midrange, being far less affected
overall &#8211; so far. 
 

On the month the manufacturing index ticked a bit lower.
Retailing, services and wholesaling moved a bit lower too. But
Construction showed higher diffusions reading. Contraction in there is
becoming less pronounced. And even though manufacturing deteriorated it
was by the slimmest of margins. In broad terms the IFO reading is in
agreement with the PMI sector indices from Market that show a reduction
in the rate of decline in both MFG and services. 
 

Still, the news from IFO was not good and was not a positive
as some had hoped for. The upshot is that the report weighed on the
euro. However there might be enough evidence of an abatement in the
slowdown for Europe to call for additional stimulus. Today the EU&#8217;s
Junker was saying Europe would not simply cave into the US wishes for
more European stimulus because the economy&#8217;s spiral was still so
severe. But if the severe phase of the European downturn is abating, a
dollop of stimulus might be helpful. If Europe turns more to look at
the facts of its circumstance in stead of being disagreeable with the
US, it might find that the US urging is pushing it in the right
direction. 
 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col"> IFO Survey: Germany
</th></tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5"> Percent: Yr/Yr</td>
<td colspan="4"> Index Numbers</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Mar 09</td>
<td> Feb 09</td>
<td> Jan 09</td>
<td> Dec 08</td>
<td> Nov 08</td>
<td> Current</td>
<td> Feb 09</td>
<td> Curr/Avg</td>
<td>%tile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Climate</td>
<td> -21.5%</td>
<td> -20.6%</td>
<td> -19.7%</td>
<td> -20.0%</td>
<td> -17.8%</td>
<td>82.1</td>
<td>82.6</td>
<td>85.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</td>
<td> -25.8%</td>
<td> -23.5%</td>
<td> -19.7%</td>
<td> -18.1%</td>
<td> -14.2%</td>
<td>82.7</td>
<td>84.3</td>
<td>86.2%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations</td>
<td> -16.9%</td>
<td> -17.5%</td>
<td> -19.8%</td>
<td> -22.0%</td>
<td> -21.3%</td>
<td>81.6</td>
<td>80.9</td>
<td>84.8%</td>
<td>16.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">average &amp; range since</td>
<td>Jun-91</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The IFO Index fell again in March but the IFO expectations index rose. Expectations are still only in the 16th percentile with this ongoing bounce. The overall business climate and the current situation indices are at lows. The chart [...]

IFO Index Drops But Sentiment Drops But Sentiment Makes Some Gains

<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/090325d.jpg" width="353">
February sales of new single-family homes ticked up off their lowest level in the series&#39; history. Their 4.7% month-to-month rebound to 337,000 units, nevertheless, left them down by roughly three-quarters from their peak during July 2005. February sales exceeded Consensus expectations for 300,000 units.
The February rebound in home sales was not broad based and limited to moderate increases in the South and the West. Home sales in the Midwest and in the Northeast continued lower.
Reflecting sales weakness was another decline in the median price for a new single-family home. At $200,900, the figure was off 11.6% during just the last two months and by nearly 20% since last year as homebuilders attempted to move inventory. Since their peak early in 2007, new home prices have fallen by roughly one quarter.
In fact, that effort to move homes continued successful and the inventory of unsold homes is down by 43% since the peak during 2006. In each of the country&#39;s regions, the inventory is down by one-quarter to one-third just during the last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325e.jpg" width="353">
Despite the declines in inventory levels, the month&#39;s supply of new homes for sale remains high due to low sales. It ticked down just slightly during February from the record high to 12.2 months.
By range there have no sales of new homes priced over $750,000 during the last three months. There were 1,000 registered sales of a homes priced between $500,000 &amp; $750,000 and 2,000 sales of homes priced between $400,000 and $500,000. These figures compare to sales between 3,000 and 8,000 of homes in the ranges below $400,000.
The new home sales figures are available in Haver&#39;s USECON database.
Today&#39;s House testimony by Fed Governor Elizabeth A. Duke titled Credit availability and prudent lending standards can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090325a.htm"> here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y (%)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>337</td>
<td>332</td>
<td>-41.1</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>29</td>
<td>30</td>
<td>&nbsp;-25.6</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>50</td>
<td>55</td>
<td>-35.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>193</td>
<td>176</td>
<td>-38.5</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>65</td>
<td>61</td>
<td>-54.2</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>200,900</td>
<td>206,800</td>
<td>-18.1</td>
<td>230,217</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
</html>

February sales of new single-family homes ticked up off their lowest level in the series' history. Their 4.7% month-to-month rebound to 337,000 units, nevertheless, left them down by roughly three-quarters from their peak during July [...]

U.S. New Home Sales Step Up From Record Low

<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/090325a.jpg" width="353">
New orders for durable goods rose a surprising 3.4% last month after a revised 7.3% January decline that was deeper than reported initially. Despite the latest increase, new orders have fallen by roughly one quarter since the middle of last year; however, downward momentum in the level of bookings may have slackened. The latest increase compared to Consensus expectations for a 2.3% drop.
The unexpected rise in orders last month was not limited to any one sector. Machinery orders were the strongest and they posted a 13.5% rise (-13.1% y/y) which recovered the sharp downdraft during January. Orders for computers &amp; related products followed with a 10.1% increase (-21.2% y/y). That erased the January drop. Orders for transportation equipment recouped their descent during January with a 2.0% increase. They remained off by nearly one-half from the year ago level. Still to the downside were February orders for new aircraft which dropped 3.6% and orders for motor vehicles &amp; parts which fell by 0.6%. Orders for communications equipment also fell sharply.
There were glimmers of stability in other industries, too. Electrical equipment bookings rose 1.6% but that made up just a piece of a January drop. They&#39;re still down by one quarter from the year ago level.Primary metals orders ticked lower by just 0.6%.
Capital equipment orders recouped nearly all of their January shortfall with an 11.0% rise. Nevertheless, they still are down by one-quarter from last February. Orders for nondefense capital goods made up their January decline but orders excluding aircraft recovered just half the January down draft. During the last ten years there has been an 80% correlation between the y/y change in nondefense capital goods orders and the change in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325b.jpg" width="353">
The rise in new orders was not accompanied by higher shipments of durable goods. They ticked 0.5% lower last month and are off 15.4% y/y. That year-to-year weakness has been accompanied by a 17.9% twelve-month decline in industrial production of durable goods. During the last ten years there has been an 83% correlation between the twelve-month change in shipments of durable goods and the change in durables industrial production.
Inventory accumulation has responded resoundingly to these production cuts. Inventories of manufactured durables fell 0.9% after a 1.1% January drop. But the last was just the second substantial monthly decline since 2003 suggesting that continued efforts to curb the inventories are waiting. Six-month growth was about flat and that compares to outright inventory decumulation at an 8.0% rate during the last recession.
The durable goods figures are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>3.4</td>
<td>-7.3</td>
<td>-23.4</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>3.9</td>
<td>-5.9</td>
<td>-16.2</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>7.4</td>
<td>-8.9</td>
<td>-29.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>6.6</td>
<td>-11.3</td>
<td>-17.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body>
</html>

New orders for durable goods rose a surprising 3.4% last month after a revised 7.3% January decline that was deeper than reported initially. Despite the latest increase, new orders have fallen by roughly one quarter since the middle [...]

Rise in U.S. Durable Goods Orders Surprises

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325a.jpg" align="left" border="0" height="265" width="353">
New orders for durable goods rose a surprising 3.4% last month
after a revised 7.3% January decline that was deeper than reported
initially. Despite the latest increase, new orders have fallen by
roughly one quarter since the middle of last year; however, downward
momentum in the level of bookings may have slackened. The latest
increase compared to Consensus expectations for a 2.3% drop.
The unexpected rise in orders last month was not limited to
any one sector. Machinery orders were the strongest and they posted a
13.5% rise (-13.1% y/y) which recovered the sharp downdraft during
January. Orders for computers &amp; related products followed with
a 10.1% increase (-21.2% y/y). That erased the January drop. Orders for
transportation equipment recouped their descent during January with a
2.0% increase. They remained off by nearly one-half from the year ago
level. Still to the downside were February orders for new aircraft
which dropped 3.6% and orders for motor vehicles &amp; parts which
fell by 0.6%. Orders for communications equipment also fell sharply.
There were glimmers of stability in other industries, too.
Electrical equipment bookings rose 1.6% but that made up just a piece
of a January drop. They're still down by one quarter from the year ago
level.Primary metals orders ticked lower by just 0.6%.
Capital equipment orders recouped nearly all of their January
shortfall with an 11.0% rise. Nevertheless, they still are down by
one-quarter from last February. Orders for nondefense capital goods
made up their January decline but orders excluding aircraft recovered
just half the January down draft. During the last ten years there has
been an 80% correlation between the y/y change in nondefense capital
goods orders and the change in equipment &amp; software spending in
the GDP accounts. The correlation of the GDP figure with capital goods
shipments is, as one would expect, a larger 92%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325b.jpg" align="right" border="0" height="265" width="353">
The rise in new orders was not accompanied by higher shipments
of durable goods. They ticked 0.5% lower last month and are off 15.4%
y/y. That year-to-year weakness has been accompanied by a 17.9%
twelve-month decline in industrial production of durable goods. During
the last ten years there has been an 83% correlation between the
twelve-month change in shipments of durable goods and the change in
durables industrial production.
Inventory accumulation has responded resoundingly to these
production cuts. Inventories of manufactured durables fell 0.9% after a
1.1% January drop. But the last was just the second substantial monthly
decline since 2003 suggesting that continued efforts to curb the
inventories are waiting. Six-month growth was about flat and that
compares to outright inventory decumulation at an 8.0% rate during the
last recession.
The durable goods figures are available in Haver's USECON
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>3.4</td>
<td>-7.3</td>
<td>-23.4</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>3.9</td>
<td>-5.9</td>
<td>-16.2</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>7.4</td>
<td>-8.9</td>
<td>-29.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>6.6</td>
<td>-11.3</td>
<td>-17.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Step Up From
Record Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325d.jpg" align="left" border="0" height="265" width="353">
February sales of new single-family homes ticked up off their
lowest level in the series' history. Their 4.7% month-to-month rebound
to 337,000 units, nevertheless, left them down by roughly
three-quarters from their peak during July 2005. February sales
exceeded Consensus expectations for 300,000 units.
The February rebound in home sales was not broad based and
limited to moderate increases in the South and the West. Home sales in
the Midwest and in the Northeast continued lower.
Reflecting sales weakness was another decline in the median
price for a new single-family home. At $200,900, the figure was off
11.6% during just the last two months and by nearly 20% since last year
as homebuilders attempted to move inventory. Since their peak early in
2007, new home prices have fallen by roughly one quarter.
In fact, that effort to move homes continued successful and
the inventory of unsold homes is down by 43% since the peak during
2006. In each of the country's regions, the inventory is down by
one-quarter to one-third just during the last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325e.jpg" align="right" border="0" height="265" width="353">
Despite the declines in inventory levels, the month's supply
of new homes for sale remains high due to low sales. It ticked down
just slightly during February from the record high to 12.2 months.
By range there have no sales of new homes priced over $750,000
during the last three months. There were 1,000 registered sales of a
homes priced between $500,000 &amp; $750,000 and 2,000 sales of
homes priced between $400,000 and $500,000. These figures compare to
sales between 3,000 and 8,000 of homes in the ranges below $400,000.
The new home sales figures are available in Haver's USECON
database.
Today's House testimony by Fed Governor Elizabeth A. Duke
titled Credit availability and prudent lending standards
can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090325a.htm">
here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y (%)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales
(SAAR, 000s)</td>
<td>337</td>
<td>332</td>
<td>-41.1</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>29</td>
<td>30</td>
<td>&nbsp;-25.6</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>50</td>
<td>55</td>
<td>-35.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>193</td>
<td>176</td>
<td>-38.5</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>65</td>
<td>61</td>
<td>-54.2</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>200,900</td>
<td>206,800</td>
<td>-18.1</td>
<td>230,217</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
IFO Index Drops But Sentiment
Drops But Sentiment Makes Some Gains 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 25, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090325c.jpg" align="left" border="0" height="265" width="353">
The IFO Index fell again in March but the IFO expectations
index rose. Expectations are still only in the 16th percentile with
this ongoing bounce. The overall business climate and the current
situation indices are at lows. 
 

The chart above shows how some of the sector indices based on
diffusion indices are doing. All three pictured indices are falling
sharply. The services and retail sectors have made a small rebound.
Manufacturing is slowing its descent. Manufacturing and the all- sector
index (not pictures) are at the bottom of their range. The wholesaling
and services sectors (wholesaling not pictured) hover around the bottom
10% of their respective ranges. The retail sector is in the bottom 20%
of its range. Construction is nearly midrange, being far less affected
overall &#8211; so far. 
 

On the month the manufacturing index ticked a bit lower.
Retailing, services and wholesaling moved a bit lower too. But
Construction showed higher diffusions reading. Contraction in there is
becoming less pronounced. And even though manufacturing deteriorated it
was by the slimmest of margins. In broad terms the IFO reading is in
agreement with the PMI sector indices from Market that show a reduction
in the rate of decline in both MFG and services. 
 

Still, the news from IFO was not good and was not a positive
as some had hoped for. The upshot is that the report weighed on the
euro. However there might be enough evidence of an abatement in the
slowdown for Europe to call for additional stimulus. Today the EU&#8217;s
Junker was saying Europe would not simply cave into the US wishes for
more European stimulus because the economy&#8217;s spiral was still so
severe. But if the severe phase of the European downturn is abating, a
dollop of stimulus might be helpful. If Europe turns more to look at
the facts of its circumstance in stead of being disagreeable with the
US, it might find that the US urging is pushing it in the right
direction. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col"> IFO
Survey: Germany
</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5"> Percent: Yr/Yr</td>
<td colspan="4"> Index Numbers</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Mar 
09</td>
<td> Feb 
09</td>
<td> Jan 
09</td>
<td> Dec 
08</td>
<td> Nov 
08</td>
<td> Current</td>
<td> Feb 
09</td>
<td> Curr/Avg</td>
<td>%tile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Climate</td>
<td> -21.5%</td>
<td> -20.6%</td>
<td> -19.7%</td>
<td> -20.0%</td>
<td> -17.8%</td>
<td>82.1</td>
<td>82.6</td>
<td>85.5%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</td>
<td> -25.8%</td>
<td> -23.5%</td>
<td> -19.7%</td>
<td> -18.1%</td>
<td> -14.2%</td>
<td>82.7</td>
<td>84.3</td>
<td>86.2%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations</td>
<td> -16.9%</td>
<td> -17.5%</td>
<td> -19.8%</td>
<td> -22.0%</td>
<td> -21.3%</td>
<td>81.6</td>
<td>80.9</td>
<td>84.8%</td>
<td>16.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">average &amp; range since</td>
<td>Jun-91</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090324g.jpg" align="left" border="0" height="265" width="353">
The manufacturing and Services indices from Markit show that
Euro Area PMIs have risen form the bottoms in this cycle. The moves are
small and the included chart demonstrates that the move is without much
vigor. The services sector is showing the most substantial rebound. 
 

Still the services index remains in the lower 3.5% of its
range and the MFG index is in the bottom of 1.6% of its range both
since August 1998. 
 

These reports are the first for March and they are the first
signs that the pace of decline in the European economy may be slowing.
They are still very weak signals since each resides well below the
neutral level for this survey which is at a value of 50. Neither survey
has developed any sort of upward momentum. So far all we have is a sign
of a lesser pace of decline, not of any actual improvement. But this is
how the end of the severe phase of recession looks. And it will be good
to get that behind us. Once this phase ends remedial actions have more
potential to help the economy. . 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col">FLASH
Readings</th>
</tr>
<tr>
<th colspan="3" scope="col">Markit
PMIs for the Euro
Area</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr>
<td class="firstcol">Mar-09</td>
<td>33.97</td>
<td>40.06</td>
</tr>
<tr>
<td class="firstcol">Feb-09</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr>
<td class="firstcol">Jan-09</td>
<td>34.42</td>
<td>42.16</td>
</tr>
<tr>
<td class="firstcol">Dec-08</td>
<td>33.87</td>
<td>42.06</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">Averages</td>
</tr>
<tr>
<td class="firstcol">3-Mo</td>
<td>33.95</td>
<td>40.49</td>
</tr>
<tr>
<td class="firstcol">6-Mo</td>
<td>37.25</td>
<td>41.96</td>
</tr>
<tr>
<td class="firstcol">12-Mo</td>
<td>43.41</td>
<td>45.72</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">127-Mo Range</td>
</tr>
<tr>
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr>
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr>
<td class="firstcol">% Range</td>
<td>1.6%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
</body></html>

The manufacturing and Services indices from Markit show that Euro Area PMIs have risen form the bottoms in this cycle. The moves are small and the included chart demonstrates that the move is without much vigor. The services sector is [...]

Flash PMIs Bottom Out

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

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

Andrew Cates

**US trade with Europe** 
Geopolitical tensions surrounding Greenland have abruptly sharpened investor sensitivity to US trade and foreign-policy risk. What might once have been dismissed as rhetorical brinkmanship has taken on greater macro-financial relevance as Donald Trump has coupled renewed interest in Greenland’s strategic importance with explicit threats of higher tariffs on European imports. The first chart below highlights that the US is materially more exposed to EU goods than the EU is to US trade, making any escalation asymmetrically more costly for the US economy. Beyond the direct inflationary impact of higher tariffs, the more immediate risk lies in confidence effects and capital flows: early signs of capital reallocation away from US assets over the past 24 hours suggest that markets could be beginning to price a broader erosion of policy predictability. In this environment, tariffs risk functioning less as a targeted trade tool and more as a systemic confidence shock—tightening financial conditions, unsettling the dollar’s safe-haven status and increasing downside risks to US growth via weaker investment and higher risk premia.

260122Z1.jpg

**Japan’s JGB yields**
That said, recent capital outflows from US assets may owe as much to developments in Japan as to geopolitical and trade-related shocks. While tariff threats and policy unpredictability have clearly unsettled sentiment, an underappreciated driver of the sell-off in US Treasuries has been the sharp repricing in the Japanese government bond market. Renewed domestic political uncertainty and intensifying concerns over Japan’s debt dynamics have triggered a rapid rise in JGB yields, prompting portfolio rebalancing by Japanese investors and reducing the relative appeal of US duration. Given Japan’s role as one of the largest foreign holders of US Treasuries, yield gyrations at home can translate quickly into capital repatriation, hedging adjustments and reduced demand for US bonds. In this sense, recent moves in US yields may reflect less a direct reaction to geopolitical risk and more a globally transmitted capital-flow shock—originating in Japan but felt most acutely in US financial markets.

260122Z2.jpg

**Inflation expectations and oil prices**
Capital-flow dynamics may have also begun to spill over into how markets are pricing US inflation risk and monetary credibility. Historically, medium-term US inflation expectations have remained closely anchored to global energy prices, as illustrated by the strong co-movement between the 5-year forward inflation rate and Brent crude prices. More recently, however, that relationship has begun to fray: inflation expectations have proven notably resilient even as oil prices have softened, suggesting that markets are increasingly pricing political and policy risk rather than cost-push fundamentals alone. Renewed tariff threats under President Trump, combined with heightened geopolitical tensions involving Greenland and transatlantic relations, risk reinforcing concerns that future inflation outcomes could be shaped as much by political intervention as by macroeconomic conditions. Any perception that the Federal Reserve may face constraints on its operational independence would compound this shift—loosening inflation anchors, raising term premia and increasing the sensitivity of capital flows to US policy credibility.

260122Z3.jpg

**UK inflation** 
UK inflation data released this week show a small upside surprise in headline CPI at year-end. Headline CPI inflation specifically rose from 3.2% y/y in November to 3.4% in December, a little more than expected. The chart below shows that the pickup was driven by persistent underlying pressures—most notably in services. While a negative drag from energy prices has largely faded, services inflation continues to account for a disproportionate share of overall price growth, probably reflecting ongoing wage pressures and limited slack in parts of the domestic economy.

260122Z4.jpg

**Wage growth in the US and Europe** 
Labour-market data from the Indeed Hiring Lab reinforce the picture of persistent services-side pressure in the UK inflation mix. As the chart shows, UK posted wage growth remains elevated relative to both the euro area and the US, even though momentum has eased from its 2023 peak. At around the mid-5% range on a three-month moving average basis, UK wage growth is still running at a pace that is difficult to reconcile with a rapid return of services inflation to target. By contrast, posted wage growth in the euro area has slowed more decisively, while the US has seen a sharper deceleration from earlier extremes.

260122Z5.jpg

**China’s property market**
Finally, the Q4 GDP figures released in China this week sit uneasily alongside continued weakness in its domestic property sector, which remains a key drag on both investment and consumption. While Q4 growth of 4.5% y/y brought full-year GDP broadly in line with the authorities’ 5% target, the chart highlights how property-market adjustment is still running deep beneath the surface. Prices of existing homes across China’s 70 cities remain in year-on-year decline, while real estate investment continues to contract sharply, underscoring the scale and persistence of the sector’s retrenchment. This helps explain why fixed asset investment has softened further and why household demand remains subdued, despite more resilient industrial output.

260122Z6.jpg

This week’s data and market moves have been framed by an abrupt escalation in geopolitical tensions surrounding Greenland, which has served as a catalyst for broader financial unease rather than a standalone shock. The episode has sharpened investor focus on US policy predictability, amplifying concerns already evident in the charts on EU–US trade exposure, where tariff threats risk feeding directly into confidence effects and capital flows. At the same time, recent turbulence in Japanese government bonds appears to have been an underappreciated driver of the sell-off in US Treasuries, highlighting how global capital reallocation—rather than geopolitics alone—has contributed to higher US yields. These forces intersect with growing questions around the durability of US monetary credibility, as inflation expectations have shown signs of decoupling from traditional oil-price anchors, raising the sensitivity of markets to any perceived constraints on the Federal Reserve. Beyond the US, UK data delivered a modest upside surprise in headline inflation, with persistent services and wage pressures reinforcing a cautious policy backdrop for the Bank of England. In China, meanwhile, Q4 GDP growth of 4.5% y/y kept full-year expansion aligned with the government’s target, but continued weakness in the property sector remains a significant drag on investment and household confidence. Taken together, the week’s developments point to a global outlook increasingly shaped by geopolitical risk, capital-flow dynamics and domestic  structural constraints, rather than by straightforward cyclical momentum alone.

Charts of the Week: Seeing Green

Sandy Batten

260122N8.jpg

260122C8.jpg

Real GDP increased 4.4% q/q saar in the third quarter of 2025 in the final estimate, up marginally from 4.3% in the first release. The Action Economics Forecast Survey expected no revision. Growth from a year ago was unrevised at 2.3% y/y. Growth of corporate profits was revised up to 4.5% q/q not annualized from 4.2% in the previous report.

The revision to GDP mostly reflected slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventory investment. Nonresidential fixed investment increased a revised 3.2% q/q saar versus a 2.8% gain in the previous release. This reflected a smaller decline in structures, a smaller increase in equipment and a larger increase in intellectual property products than previously estimated. Residential investment was revised weaker with a 7.1% quarterly decline versus -5.1% in the previous estimate.

Upon revision, exports rose 9.6% q/q in Q3 versus 8.8% in the first estimate. Consequently, the trade deficit narrowed a little more than in the first estimate, resulting in net exports adding 1.62%-points to overall growth, 0.03%-point more previously estimated. The decline in inventory investment in Q3 was smaller than previously estimated, reducing the drag from inventories by 0.1%-point versus the previous estimate. The decline in inventories subtracted 0.12%-point in Q3 on top of a 3.44%-point subtraction in Q2.

Domestic demand growth remained solid in Q3 but was revised down 0.1%-point. Final sales to domestic purchasers grew a revised 2.8% q/q saar in Q3 versus 2.9% in the first estimate. Final sales to private domestic purchasers increased 2.9% q/q, down slightly from 3.0% previously.

260122O8.jpg

260122P8.jpg

The primary driver of overall growth continued to be personal consumption expenditures. They increased an unrevised 3.5% q/q saar in Q3, adding 2.34%-points to total GDP growth. This reflected a 3.0% increase in spending on goods versus 3.1% previously and a 3.6% gain in spending on services versus 3.7% previously. The rise in government spending was unrevised at 2.2% q/q. However, spending by the federal government was revised slightly slower to 2.7% from 2.9% while spending by state and local governments was revised up slightly to 2.0% from 1.8%.

Key measures of inflation were unrevised. Inflation as measured by the GDP price index remained at 3.8% q/q saar in Q3, but this was up markedly from 2.1% in Q2. Similarly, PCE inflation in Q3 was unrevised at 2.8% versus 2.1% in Q2. Core PCE inflation was also unrevised at 2.9% in Q3.

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

260122Q8.jpg

260122S8.jpg

- Real GDP grew 4.4% q/q saar in Q3 2025, up slightly from 4.3% previously reported.
- The modest upward revision was due mostly to slightly stronger nonresidential fixed investment, a larger increase in exports and a smaller decrease in inventories.
- Growth of domestic demand remained solid in Q3 but was revised down 0.1%-point.
- GDP and PCE inflation were unrevised at 3.8% and 2.8%, respectively. Both are meaningful accelerations from Q2.

U.S. Q3 GDP Growth Revised Slightly Faster

Kathleen Stephansen, CBE

260122A2.jpg

260122B2.jpg

Initial claims for unemployment insurance edged up 1,000 to 200,000 in the week ending January 17, from 199,000 in the week ending January 10, revised from 198,000. The four-week moving average of initial claims was 201,500 in the January 17 week, down 3,750 from 205,250 in the January 10 week, revised from 205,000, and reaching the lowest level for this average since January 13, 2024, when it was 200,000.

Federal government employees initially filed 1010 (NSA) jobless insurance claims in the week ended January 10, after filing 646 (NSA) claims in the week ended January 3.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 26,000 to 1.849 million in the week ended January 10 from 1.875 million in the week ending January 3, revised from 1.884 million. The four-week moving average was 1.871 million in the latest week, down from 1.887 million in the January 3 week, revised from 1.889 million. The insured unemployment rate remained at 1.2% in the week of January 10, unchanged from previous 6 weeks.

Federal government employees’ continuing benefits claims were 12,977 (NSA) in the week ending January 3, from 12,803 (NSA) in the week of December 27.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 3, the highest unemployment rates were in Rhode Island (3.27%), New Jersey (3.17%), Washington (2.85%), Minnesota (2.75%), Massachusetts (2.74%), Oregon (2.37%), Connecticut (2.31%), Montana (2.26%), California (2.21%), and Alaska (2.06%). The lowest rates were in Florida (0.29%), North Carolina (0.40%), and Louisiana (0.43%). Rates in other notable states include New York (2.28%), Pennsylvania (2.23%), Illinois (2.21%), and Texas (1.14%). 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.

260122C2.jpg

260122D2.jpg

U.S. Initial Claims for Unemployment Insurance Edged Up in Latest Week

Winnie Tapasanun

260121F.jpg

260121G.jpg

The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, fell 9.3% m/m to 71.8 in December following unrevised increases of 3.3% in November and 2.4% in October, according to the National Association of Realtors (NAR). December marked the first m/m fall since July and the steepest since April 2020. The year-on-year rate was -3.0% in December, the first negative y/y reading since September, compared to +2.6% in November and -5.0% in December 2024. The index had fallen 42.6% since its October 2021 high of 125.1. In 2025, the PHSI declined 0.9% after drops of 3.0% in 2024 and 16.1% in 2023.

The m/m fall in December pending home sales occurred alongside a decline in the average 30-year mortgage rate to 6.20% in December, the lowest since September 2024, down from 6.24% in November and 6.25% in October. These rates, while below a peak of 7.62% in October 2023, had remained higher than a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales decreased m/m in December across all four major regions. The Midwest recorded the sharpest drop, with sales plunging 14.9% (-9.8% y/y) in December—the first m/m decline since September and the deepest since April 2020—after a 1.3% increase in November. Sales in the West slumped 13.3% (-5.1% y/y), the third m/m decrease in four months, following a 9.2% November rebound. Sales in the Northeast slid 11.0% (-3.6% y/y), the first m/m slide since August, after a 1.8% November rise. Sales in the South fell 4.0% (+2.0% y/y), the first m/m fall since June, after a 2.5% November gain.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- PHSI -9.3% m/m (-3.0% y/y) to 71.8 in Dec., lowest index level since July.
- Home sales m/m down in all four major regions, w/ the Midwest seeing the steepest drop (-14.9%).
- Home sales y/y down in the Northeast, Midwest, and West, but up in the South (+2.0%).

U.S. Pending Home Sales Drop in December Following Four Consecutive M/M Gains

260121N4.jpg

260121O4.jpg

Total construction spending fell 0.6% m/m (-1.5% y/y) in September to $2,164.3 billion following a 0.4% monthly gain in August. However, it rebounded in October, rising 0.5% m/m (-1.0% y/y) to $2,175.2 billion (saar). This is the ninth consecutive month that construction spending has been lower than a year ago. A 0.1% m/m decline in September and an unchanged reading in October had been expected in the Action Economics Forecast Survey. Over the first ten months of this year, construction spending amounted to $1,825.3 billion, 1.4% below the $1,851.4 billion for the same period in 2024.

Spending on private construction was at a seasonally adjusted annual rate of $1,651.3 billion in October, 0.6% above the September estimate of $1,640.8 billion (-3.0% y/y), which fell 0.9% m/m from August. Private residential construction was at a seasonally adjusted annual rate of $913.9 billion in October, up 1.3% m/m from September, which declined 1.4% from August. Private nonresidential construction was at a seasonally adjusted annual rate of $737.4 billion in October, down 0.2% m/m from September, which also had declined 0.2% in September from August.

The October increase in private residential investment was due entirely to a 4.5% m/m increase in spending on improvements, its largest monthly gain since April 2024, following a 2.2% monthly decline in September. Single family construction fell 1.3% m/m in October, its eight consecutive monthly decline, while multi-family construction slipped 0.2% m/m, its first monthly decline in five months. The decline in private nonresidential construction was more than accounted for by a 0.9% m/m drop in manufacturing construction, its ninth consecutive monthly decline.

The value of public construction spending edged up 0.1% m/m in October to $524.0 billion after having risen 0.4% m/m in September. Of particular importance, educational construction was at a seasonally adjusted annual rate of $114.8 billion, up 0.7% m/m in October on top of a 1.1% m/m increase in September. Highway construction was at a seasonally adjusted annual rate of $141.6 billion, 0.1% m/m above the September estimate after a 0.4% monthly decline in September from August. Spending on highways and educational facilities are by far the two largest components of public construction spending. Spending on water supply construction at $35.2 billion was also important in October, up 1.2% m/m on top of a 1.5% monthly gain in September.

The construction figures can be found in Haver’s **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

260121P4.jpg

260121Q4.jpg

- Total construction spending fell 0.6% m/m in September but rebounded 0.5% m/m in October.
- Private construction spending slumped 0.9% m/m in September but rose 0.6% m/m in October.
- Private nonresidential construction fell for the fourth consecutive month while private residential construction posted a 1.3% m/m gain.

Economy in Brief: 2009

Jump to:

U.S. Continuing Claims for Unemployment Insurance Reach Another Record High

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

U.S. 4Q GDP Decline Remains Sharpest Since Early 1980s As Profits Crater

IFO Index Drops But Sentiment Drops But Sentiment Makes Some Gains

U.S. New Home Sales Step Up From Record Low

Rise in U.S. Durable Goods Orders Surprises

Rise in U.S. Durable Goods Orders Surprises

Flash PMIs Bottom Out