Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105f.jpg" align="left" border="0" height="265" width="353">
The chart serves as yet another reminder as to why it has been
loopy for observers to have insisted that Europe and the US had become
disconnected economically &#8211; the so-called de-coupling argument. The MFG
sectors across countries are always closely connected because they
trade goods and compete in the same markets for the same business. The
services sectors have a lower incidence of tradable services &#8211; much
lower than for goods. Still, the overall EMU and US economies have been
on such similar cycles that their two service sector indices, with very
few exceptions, have been on the same page. 
 

The EMU in country level measures are mostly on their
respective lowest readings since May of 2000. The US measure is in its
bottom 13% of its range &#8211;also very weak. Germany&#8217;s measure is &#8216;only&#8217; in
the bottom 28% of its range. 
 

The drop in the EMU index in October is its largest m/m drop
since May 2000 when the comparisons start. 
 

We can also see that consumer confidence is very low in most
of these same places. Since the service sector provides the bulk of the
jobs, this is an expected result. 
 

However we can also use this report as a double check on the
MFG report which earlier was reported to have fallen so sharply. These
two sectors are showing the same sharp onset of weakness. That tends to
imbue the signal with a greater veracity than if the result came from
just one survey. The weak signal therefore seems to be the result of a
real weakness in the economy rather than from some quirk of the
calendar or a peculiarity of one survey. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-13</td>
<td>45.76</td>
<td>48.44</td>
<td>48.46</td>
<td>47.55</td>
<td>48.45</td>
<td>50.37</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>48.31</td>
<td>50.25</td>
<td>51.39</td>
<td>49.98</td>
<td>51.49</td>
<td>51.78</td>
<td>28.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>47.54</td>
<td>50.14</td>
<td>48.04</td>
<td>48.57</td>
<td>48.96</td>
<td>53.05</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>45.68</td>
<td>49.42</td>
<td>48.47</td>
<td>47.86</td>
<td>47.63</td>
<td>48.32</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>32.22</td>
<td>36.09</td>
<td>38.98</td>
<td>35.76</td>
<td>37.39</td>
<td>41.65</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>36.05</td>
<td>40.80</td>
<td>39.82</td>
<td>38.89</td>
<td>40.65</td>
<td>45.31</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU only</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">UK (CIPs)</td>
<td>42.39</td>
<td>45.95</td>
<td>49.17</td>
<td>45.84</td>
<td>46.98</td>
<td>49.60</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">US NONFMG ISM</td>
<td>44.20</td>
<td>52.10</td>
<td>51.60</td>
<td>49.30</td>
<td>50.17</td>
<td>50.48</td>
<td>13.6%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU Index</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">EU Services</td>
<td>-10</td>
<td>-4</td>
<td>-2</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-14.92</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EMU</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-6</td>
<td>0</td>
<td>1</td>
<td>-1.67</td>
<td>2.17</td>
<td>5.79</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-24</td>
<td>-19</td>
<td>-19</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-1.11</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Consumer Confidence</td>
<td>-12</td>
<td>-9</td>
<td>-9</td>
<td>-10.00</td>
<td>-7.50</td>
<td>-3.83</td>
<td>34.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">France-Consumer Confidence</td>
<td>-32</td>
<td>-24</td>
<td>-23</td>
<td>-26.33</td>
<td>-23.83</td>
<td>-18.58</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Consumer Confidence</td>
<td>-23</td>
<td>-22</td>
<td>-24</td>
<td>-23.00</td>
<td>-22.83</td>
<td>-22.83</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain-Consumer Confidence</td>
<td>-44</td>
<td>-39</td>
<td>-37</td>
<td>-40.00</td>
<td>-38.00</td>
<td>-29.08</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK-Consumer Confidence</td>
<td>-27</td>
<td>-23</td>
<td>-24</td>
<td>-24.67</td>
<td>-22.50</td>
<td>-15.25</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="5" class="firstcol">percentile
is over range since May
2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
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The chart serves as yet another reminder as to why it has been loopy for observers to have insisted that Europe and the US had become disconnected economically – the so-called de-coupling argument. The MFG sectors across countries are [...]

Services Sectors Tank in US and in Europe

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105d.jpg" width="353">
The Composite Index for the nonmanufacturing sector from the Institute for Supply Management fell sharply in October. It declined to 44.4 from an unrevised 50.2 during September. The figure, which was weaker than Consensus expectations, was the lowest in the series&#39; relatively brief ten year history.It rivaled the low during the 2001 recession.
The nonmanufacturing business activity sub-index also fell sharply to 44.2 which was the lowest level since this past January. Each figure was the lowest since the last recession. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index for the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
The employment index fell to 41.5, a new low for the series. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105e.jpg" width="353">
The new orders sub-index fell sharply to a recession level of 44.0.
Pricing power also collapsed. The reading of 53.4 was its lowest level since 2003. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report On Business</cite>&reg;, the composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indexes for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62 industries including law firms, hospitals, government and retailers. The nonmanufacturing survey dates back to July 1997.
Interpreting the Great Moderation: changes in the volatility of economic activity at the macro and micro levels from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr334.pdf">here</a>.

<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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>44.4</td>
<td>50.2</td>
<td>53.3</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>53.4</td>
<td>70.0</td>
<td>66.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


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The Composite Index for the nonmanufacturing sector from the Institute for Supply Management fell sharply in October. It declined to 44.4 from an unrevised 50.2 during September. The figure, which was weaker than Consensus [...]

U.S. ISM Nonmanufacturing Index Fell Sharply: Recession Indicated

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105c.jpg" width="353">
According to the Challenger, Grey &amp; Christmas survey, layoffs jumped last to their highest level since January of 2004. The rise to 112,884 was a near-doubling from last October and the three-month level layoffs at 98,905 was its highest since early 2006.
The rise in layoffs last month was led by 17,949 cuts in financial industries and 15,692 cuts in the automotive industry. There also were 6,946 layoffs in the consumer goods sector, 6,301 in the electronics industries and 5,930 layoffs in the telecommunication businesses
During the last ten years there has been a 76% (inverse) correlation between the three-month moving average of announced job cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell 3.2% y/y.
The causes and consequences of economic restructuring: evidence from the early 21st century from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200841/200841abs.html">here</a>.

<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/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>112,884</td>
<td>95,094</td>
<td>78.9%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
</body>
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According to the Challenger, Grey & Christmas survey, layoffs jumped last to their highest level since January of 2004. The rise to 112,884 was a near-doubling from last October and the three-month level layoffs at 98,905 was its [...]

U.S. Challenger Layoffs Highest Since 2004

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" width="353">
The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was the largest since November 2002. During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October payroll employment this Friday. Last month, the 25,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the BLS measure of private sector payrolls.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
By the ADP measure, goods producing payrolls fell by 126,000 (-3.3% y/y). The largest decline was amongst medium sized payrolls which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" width="353"> 
Employment in the manufacturing sector fell 85,000 (-3.4% y/y) It has fallen in each month since late-2005.
Employment in the service producing industry added to the weakness in the goods producing sector and payrolls fell 31,000 (+0.9% y/y). It was their first decline since 2002. Medium sized payrolls fell 26,000 (+0.7% y/y) and large service producing payrolls dropped by 16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000 (1.4% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.<div> </div>

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>


</html>

The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was [...]

ADP Report: Payroll Employment Off 157,000

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105d.jpg" align="left" border="0" height="265" width="353">
The Composite Index for the nonmanufacturing sector from the
Institute for Supply Management fell sharply in October. It declined to
44.4 from an unrevised 50.2 during September. The figure, which was
weaker than Consensus expectations, was the lowest in the series'
relatively brief ten year history.It rivaled the low during the 2001
recession.
The nonmanufacturing business activity sub-index also fell
sharply to 44.2 which was the lowest level since this past January.
Each figure was the lowest since the last recession. Since the series'
inception in 1997 there has been a 48% correlation between the level of
the business activity index for the nonmanufacturing sector and the Q/Q
change in real GDP for the services and the construction sectors.
The employment index fell to 41.5, a new low for the series.
Since the series' inception in 1997 there has been a 56% correlation
between the level of the ISM nonmanufacturing employment index and the
m/m change in payroll employment in the service-producing plus the
construction industries.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105e.jpg" align="right" border="0" height="265" width="353">
The new orders sub-index fell sharply to a recession level of
44.0.
Pricing power also collapsed. The reading of 53.4 was its
lowest level since 2003. Since inception ten years ago, there has been
a 60% correlation between the price index and the q/q change in the GDP
services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report
On Business</cite>®, the composite index is calculated as an
indicator of the overall economic condition for the non-manufacturing
sector. It is a composite index based on the diffusion indexes for four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62
industries including law firms, hospitals, government and retailers.
The nonmanufacturing survey dates back to July 1997.
Interpreting the Great Moderation: changes in the
volatility of economic activity at the macro and micro levels from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr334.pdf">here</a>.

<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/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>44.4</td>
<td>50.2</td>
<td>53.3</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>53.4</td>
<td>70.0</td>
<td>66.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>
ADP Report: Payroll Employment Off
157,000 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" align="left" border="0" height="265" width="353">
The payroll processor ADP indicated in its latest National
Employment Report that October private nonfarm payrolls fell 157,000
after a revised 25,000 September decline. The latest was the third
decline in as many months and it was the largest since November 2002.
During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October
payroll employment this Friday. Last
month, the 25,000 worker decline in ADP's measure of private nonfarm
payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the
BLS measure of private sector payrolls.

According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.

By the ADP measure, goods producing payrolls fell by 126,000
(-3.3% y/y). The largest decline was amongst medium sized payrolls
which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in
small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" align="right" border="0" height="265" width="353">

Employment in the manufacturing sector fell 85,000 (-3.4% y/y)
It has fallen in each month since late-2005.
Employment in the service producing industry added to the
weakness in the goods producing sector and payrolls fell 31,000 (+0.9%
y/y). It was their first decline since 2002. Medium sized payrolls fell
26,000 (+0.7% y/y) and large service producing payrolls dropped by
16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000
(1.4% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's 
USECON database;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.
<div> </div>

<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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Challenger Layoffs Highest
Since 2004 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105c.jpg" align="left" border="0" height="265" width="353">
According to the Challenger, Grey &amp; Christmas survey,
layoffs jumped last to their highest level since January of 2004. The
rise to 112,884 was a near-doubling from last October and the
three-month level layoffs at 98,905 was its highest since early 2006.
The rise in layoffs last month was led by 17,949 cuts in
financial industries and 15,692 cuts in the automotive industry. There
also were 6,946 layoffs in the consumer goods sector, 6,301 in the
electronics industries and 5,930 layoffs in the telecommunication
businesses
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell 3.2%
y/y.
The causes and consequences of economic
restructuring: evidence from the early 21st century from the
Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200841/200841abs.html">here</a>.

<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/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>112,884</td>
<td>95,094</td>
<td>78.9%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
Services Sectors Tank in US and in
Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105f.jpg" align="left" border="0" height="265" width="353">
The chart serves as yet another reminder as to why it has been
loopy for observers to have insisted that Europe and the US had become
disconnected economically &#8211; the so-called de-coupling argument. The MFG
sectors across countries are always closely connected because they
trade goods and compete in the same markets for the same business. The
services sectors have a lower incidence of tradable services &#8211; much
lower than for goods. Still, the overall EMU and US economies have been
on such similar cycles that their two service sector indices, with very
few exceptions, have been on the same page. 
 

The EMU in country level measures are mostly on their
respective lowest readings since May of 2000. The US measure is in its
bottom 13% of its range &#8211;also very weak. Germany&#8217;s measure is &#8216;only&#8217; in
the bottom 28% of its range. 
 

The drop in the EMU index in October is its largest m/m drop
since May 2000 when the comparisons start. 
 

We can also see that consumer confidence is very low in most
of these same places. Since the service sector provides the bulk of the
jobs, this is an expected result. 
 

However we can also use this report as a double check on the
MFG report which earlier was reported to have fallen so sharply. These
two sectors are showing the same sharp onset of weakness. That tends to
imbue the signal with a greater veracity than if the result came from
just one survey. The weak signal therefore seems to be the result of a
real weakness in the economy rather than from some quirk of the
calendar or a peculiarity of one survey. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-13</td>
<td>45.76</td>
<td>48.44</td>
<td>48.46</td>
<td>47.55</td>
<td>48.45</td>
<td>50.37</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>48.31</td>
<td>50.25</td>
<td>51.39</td>
<td>49.98</td>
<td>51.49</td>
<td>51.78</td>
<td>28.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>47.54</td>
<td>50.14</td>
<td>48.04</td>
<td>48.57</td>
<td>48.96</td>
<td>53.05</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>45.68</td>
<td>49.42</td>
<td>48.47</td>
<td>47.86</td>
<td>47.63</td>
<td>48.32</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>32.22</td>
<td>36.09</td>
<td>38.98</td>
<td>35.76</td>
<td>37.39</td>
<td>41.65</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>36.05</td>
<td>40.80</td>
<td>39.82</td>
<td>38.89</td>
<td>40.65</td>
<td>45.31</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU only</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">UK (CIPs)</td>
<td>42.39</td>
<td>45.95</td>
<td>49.17</td>
<td>45.84</td>
<td>46.98</td>
<td>49.60</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">US NONFMG ISM</td>
<td>44.20</td>
<td>52.10</td>
<td>51.60</td>
<td>49.30</td>
<td>50.17</td>
<td>50.48</td>
<td>13.6%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU Index</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">EU Services</td>
<td>-10</td>
<td>-4</td>
<td>-2</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-14.92</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EMU</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-6</td>
<td>0</td>
<td>1</td>
<td>-1.67</td>
<td>2.17</td>
<td>5.79</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-24</td>
<td>-19</td>
<td>-19</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-1.11</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Consumer Confidence</td>
<td>-12</td>
<td>-9</td>
<td>-9</td>
<td>-10.00</td>
<td>-7.50</td>
<td>-3.83</td>
<td>34.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">France-Consumer Confidence</td>
<td>-32</td>
<td>-24</td>
<td>-23</td>
<td>-26.33</td>
<td>-23.83</td>
<td>-18.58</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Consumer Confidence</td>
<td>-23</td>
<td>-22</td>
<td>-24</td>
<td>-23.00</td>
<td>-22.83</td>
<td>-22.83</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain-Consumer Confidence</td>
<td>-44</td>
<td>-39</td>
<td>-37</td>
<td>-40.00</td>
<td>-38.00</td>
<td>-29.08</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK-Consumer Confidence</td>
<td>-27</td>
<td>-23</td>
<td>-24</td>
<td>-24.67</td>
<td>-22.50</td>
<td>-15.25</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="5" class="firstcol">percentile
is over range since May
2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" width="353">
The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the cost of $2.40 was the lowest since February of 2007. Prices have now fallen roughly $1.75 per gallon, or by forty percent, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell another sixteen cents from last week&#39;s average to $1.41. In futures trading the November contract closed down further at $1.36 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.
The slowing of U.S. economic growth and the relatively high price for gas has reduced demand for gasoline by 4.0% y/y, according to the U.S. Department of Energy. This was the largest y/y drop since late 1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 7.8% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" width="353">
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $65.68 per barrel, down by more than one-half from the high in July of $145.66. In futures trading yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near their lowest level since October of last year. The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.

<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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
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The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the [...]

U.S. Gasoline Prices Lowest Since March '07 As Demand Falls

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" width="353">
Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward&#39;s Automotive News (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m decline in October sales pulled them more than one-third below the same month&#39;s level of last year. Sales for the year so far have averaged a 13.76M annual selling rate, down 15.0% from the first ten months of last year. The level of October vehicle sales was quite a bit weaker than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on top of their 8.3% drop during September and year-to-date, sales were down 17.0% from the first ten months of last year. Domestically made light truck sales suffered further from higher gasoline prices and they fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than during the first ten months of 2007. Sales of U.S. made cars declined a less severe 15.2% from September. As drivers continued to shift purchases to relatively fuel efficient vehicles, car sales were down 8.2% versus the first ten months of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" width="353">
Sales of imported light vehicles were not immune to the developing recession in the U.S. Last month they fell 6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during September. The latest was the lowest level since October of 2002.Sales of imported autos actually rose m/m. The 0.3% rise to 1.95M units left them off just 3.7% from the first ten months of last year, but the latest was their lowest sales rate since January 2006. Year-to-date, sales were down 4.0% from the first ten months of 2007.Sales of imported light truck sales were not, however, immune to the effect from higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were down 17.5% from the first ten months of last year.
Import&#39;s share of the U.S. light vehicle market recovered their loss of the prior two months and rose to 27.5%. (Imported vehicles are those produced outside the U.S. and do not include vehicles with the nameplate of a foreign manufacturer produced within the U.S.)
Who really made your car? from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<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/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>


</html>

Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward's Automotive News [...]

Vacant Auto Showrooms; U.S. Light Vehicle Sales Lowest Since 1983

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" align="left" border="0" height="265" width="353">
Auto showrooms were notably quiet last month as U.S. sales of
light vehicles fell to 10.56 million units (AR). The figure was the
lowest level since February, 1983 according to the Autodata Corporation
and Ward's Automotive News (Seasonal adjustment of the figures is
provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m
decline in October sales pulled them more than one-third below the same
month's level of last year. Sales for the year so far have averaged a
13.76M annual selling rate, down 15.0% from the first ten months of
last year. The level of October vehicle sales was quite a bit weaker
than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles
fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on
top of their 8.3% drop during September and year-to-date, sales were
down 17.0% from the first ten months of last year. Domestically made
light truck sales suffered further from higher gasoline prices and they
fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than
during the first ten months of 2007. Sales of U.S. made cars declined a
less severe 15.2% from September. As drivers continued to shift
purchases to relatively fuel efficient vehicles, car sales were down
8.2% versus the first ten months of last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" align="right" border="0" height="265" width="353">
Sales of imported light vehicles were not
immune to the developing recession in the U.S. Last month they fell
6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during
September. The latest was the lowest level since October of 2002.Sales
of imported autos actually rose m/m. The 0.3% rise to 1.95M units left
them off just 3.7% from the first ten months of last year, but the
latest was their lowest sales rate since January 2006. Year-to-date,
sales were down 4.0% from the first ten months of 2007.Sales of
imported light truck sales were not, however, immune to the effect from
higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were
down 17.5% from the first ten months of last year.
Import's share of the U.S. light vehicle
market recovered their loss of the prior two months and rose to 27.5%.
(Imported vehicles are those produced outside the U.S. and do not
include vehicles with the nameplate of a foreign manufacturer produced
within the U.S.)
Who really made your car? from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<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/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Lowest Since
March '07 As Demand Falls 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline fell
by another twenty five cents last week. According to the U.S.
Department of Energy survey, the price decline came on top of a twenty
five cent drop during the prior week and the cost of $2.40 was the
lowest since February of 2007. Prices have now fallen roughly $1.75 per
gallon, or by forty percent, since their peak early this past July. The
latest decline was accompanied by a drop in the average price for all
grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline fell another sixteen cents from last week's average to $1.41.
In futures trading the November contract closed down further at $1.36
per gallon.
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.
The slowing of U.S. economic growth and the relatively high
price for gas has reduced demand for gasoline by
4.0% y/y, according to the U.S. Department of Energy. This was the
largest y/y drop since late 1995 (the latest four weeks versus the same
four weeks last year). The demand for all petroleum products also has
softened, falling 7.8% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" align="right" border="0" height="265" width="353">
These DOE figures are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude oil
fell further last week to an average $65.68 per barrel, down by more
than one-half from the high in July of $145.66. In futures trading
yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near
their lowest level since October of last year. The average price this
month was nearly one-half below the high for natural gas prices in
early-July of $13.19/mmbtu.

<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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
Global PMI's Forecasting RecordLow
in Manufacturing Production 
by <a href="/comment/Curley.html">Louise
Curley</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104g.jpg" align="right" border="0" height="265" width="353">
After two sharp declines in September and October the global
PMI (Purchasing Managers Index) for manufacturing reached a record low
of 40.98 (50+ = expansion)in October, as can be seen in the first chart.
The PMI is a good predictor of manufacturing production. As an
example, the second chart shows the relationship between the PMI for
the Euro Area and the year-over- year changes in its manufacturing
production. The correlation, R, between the two series is .84, the R2
is .706 indicating that the PMI explains about 70% of the variation in
manufacturing production.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104e.jpg" align="right" border="0" height="265" width="353">
The Global PMI is based on the responses of 26 countries that
account for 83% of world manufacturing production. The latest figures
suggest that no country appears to be immune to the global slowdown in
manufacturing production. In the October data there is only one country
still in the expansion phase, that is, India, with an index of 52.19.
but it has been declining from a somewhat higher base than some of the
other countries. The third chart compares India with three other
emerging markets--China, Russia and Brazil.
The countries showing the lowest PMIs, and hence, the greatest
contraction, are Ireland, 39.69, Italy, 39.67 and Spain, 34.60, These
last are shown in the fourth chart. 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104h.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104f.jpg" border="0" height="265" width="312">

<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">PURCHASING
MANAGERS' INDEXES&nbsp;</th>
<th scope="col">Brazil</th>
<th scope="col">China</th>
<th scope="col">India&nbsp;</th>
<th scope="col">Italy</th>
<th scope="col">Ireland</th>
<th scope="col">Spain</th>
<th scope="col">Russia</th>
<th scope="col">Singapore&nbsp;</th>
<th scope="col">Japan</th>
<th scope="col">UK</th>
<th scope="col">Euro Area</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">October 2008</td>
<td>45.68</td>
<td>45.23</td>
<td>52.19</td>
<td>39.67</td>
<td>39.69</td>
<td>34.60</td>
<td>46.45</td>
<td>45.80</td>
<td>42.22</td>
<td>41.49</td>
<td>41.10</td>
</tr>
<tr>
<td colspan="12">&nbsp;</td>
</tr>
</tbody>
</table>
EMU PPI Falls Again but Year/YearPace is Still Horrific 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104i.jpg" align="left" border="0" height="265" width="353">
The EMU PPI fell by 0.2% in September after dropping by 0.5%
in August. WITH those two drops the three-month growth in the total
ex-construction PPI is STILL +2.5% saar. The year/year PPI is at 7.9%.
In between these the 6-month PPI has been blunted to 7.5% but its
growth rate too is still horrific. Core PPI inflation is dropping and
is &#8216;down&#8217; to 3.2%. But this report is uniformly being interpreted as
paving the way for an ECB rate cut. But of the four major EU nations we
show the core PPI trends for in the table below, only Italy is below
the ceiling for inflation that the ECB imposes on the HICP headline.
And this ECB is a SINGLE MANDATE central bank. It has an inflation
tolerance, period; it has no commitment to growth. But even with the
inflation picture this bad, the ECB is widely believed to be on the
brink of a second rate cut.
This shows us how far the ECB has come. Some European Finance
ministers continue to marginalize the risk. In Germany there is a
certain pretending in play that its banks and its economy are not hurt
by as much. But Europe&#8217;s connection to central and Eastern Europe
reinforce their sense of involvement with the stuff that is going
wrong. In addition there is the leverage and all the fancy financial
assets banks piled on their balance sheets. All of them did it.
In Europe the economic numbers are still diving. Today it is
auto registrations that look so weak. The EU Commission has cuts its
growth numbers to two marginally negative numbers over the next two
quarters. Time will tell if that forecast is overly optimistic. The
fact that the ECB is cutting rates with the inflation picture still as
poor as it is, tells a much clearer story of what Europe really fears
and how much.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Euro
Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area-15</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total ex Construction</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>2.5%</td>
<td>7.5%</td>
<td>7.9%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.1%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.3%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.0%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>4.9%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>-0.9%</td>
<td>-2.4%</td>
<td>-0.3%</td>
<td>19.1%</td>
<td>20.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>-1.8%</td>
<td>4.5%</td>
<td>5.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>6.8%</td>
<td>9.6%</td>
<td>8.3%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Gy Ex Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>2.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>5.9%</td>
<td>7.3%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">It Ex Energy</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK</td>
<td>-0.2%</td>
<td>-2.4%</td>
<td>-8.3%</td>
<td>16.2%</td>
<td>19.4%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">UK Ex Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>3.2%</td>
<td>9.1%</td>
<td>8.2%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Euro Area 15
Harmonized PPI
excluding Construction.</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The EA 15
countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body></html>

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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The U.S. trade deficit in goods and services (BOP basis) in March grew to $140.5 billion after narrowing slightly to $123.2 billion in February, revised from $122.7 billion, after widening to $130.7 billion in January according to the U.S. Census Bureau. A $136.7 billion deficit was expected by the Action Economics Forecast Survey. Exports rose 0.2% (6.7% y/y) in March after increasing 2.8% in February. This was accompanied by a 4.4% rise (27.1% y/y) rise in imports which came after m/m stability in February. In Q1’25, the deficit grew to an average $131.4 billion, after rising to an average $83.3 billion in Q4’24.

The trade deficit in goods (BOP basis) widened to a record $163.2 billion in March from $147.9	 billion in February, revised from $147.0 billion. Goods exports (customs value) rose 1.4% (7.0% y/y) in March, after increasing 3.6% in February. The latest increase reflected an 8.2% (8.4% y/y) surge in auto exports which came after a 12.7% strengthening. A 3.5% (4.0% y/y) gain occurred in industrial supplies & materials exports which followed a 5.1% rise. Foods, feeds & beverage exports rose 6.6% (1.4% y/y) after declining in four of the prior five month. Working lower, capital goods exports fell 2.5% (+13.9% y/y) in March after a 4.	8% increase and nonauto consumer goods exports were off 1.1% (+3.4% y/y) in March after a 2.4% gain.

Imports of goods increased 5.5% (31.4% y/y) in March after a 0.2% February easing. Imports of nonauto consumer goods imports surged 27.9% (56.0% y/y) following a 3.1% February gain. Auto imports rose 6.6% (8.7% y/y) after a 1.2% rise. Capital goods imports rose 4.2% (22.5% y/y) following a 1.1% rise. Foods, feeds & beverage imports eased 0.4% (+11.1% y/y) following a 2.0% weakening. Industrial supplies & materials imports declined 12.4% (+39.5% y/y) after weakening 4.6% in February. Petroleum imports by end-use fell 4.1% (-10.2% y/y) after a 2.9% decline. Nonpetroleum imports increased 6.0% (34.8% y/y) after holding steady in February.

The inflation-adjusted goods trade deficit (customs value) deepened to $150.9 billion in March from $136.9 billion in February. Real exports rose 1.6% (5.3% y/y) after a 3.0% February increase, while real imports rose 5.8% (29.8% y/y) in March following a 0.5% February slip.

The services trade surplus narrowed to $23.0 billion in March after decreasing to $23.8 billion in February. It reached a peak of $25.7 billion in November of last year. Service exports fell 0.9% (+5.7% y/y) after a 0.8% decline in February. Construction services exports rose 1.0% (37.7% y/y) after increasing 2.6% in February. Travel services exports fell 7.1% (-3.7% y/y) and financial exports increased 0.9% (7.3% y/y). Transport exports rose 3.1% (2.4% y/y). Service imports eased 0.1% (+10.8% y/y) in March following a 0.8% gain. Maintenance & repair services declined 1.5% (+32.1% y/y) while imported transport services increased 1.2% (1.7% y/y). Imported travel services fell 2.2% (5.3% y/y) while charges for use of intellectual property rose 1.0% (13.6 y/y).

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $24.8 billion in March from $26.6 billion in February. Exports to China declined 8.2% (-10.5% y/y) while imports weakened 7.2% (-2.7% y/y). The deficit with the European Union deepened to a record $48.3 billion in March from $30.9 billion in February. Exports rose 10.9% (14.5% y/y) while imports soared 34.0% (65.4% y/y). The deficit with Japan deepened to $5.8 billion from $5.2 billion in February. Exports rose 1.8% (8.8% y/y) and imports rose 6.4% (9.9% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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250506M8.jpg

- Goods deficit grows as imports surge ahead of tariff imposition.
- Exports edge higher, led by autos.
- Petroleum product imports fall as crude oil prices decline.

U.S. Trade Deficit Deepens to Record in March

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Retail gasoline prices for all grades improved to an average $3.27 per gallon (-13.1% y/y) in the week ended May 5 and reversed the prior week’s easing to $3.26. Prices were $3.37 per gallon to begin the month but remained above their low of $3.13 in the week of December 9. An earlier high was $3.79 in the week ending April 22, 2024. The all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel eaed to $3.50 per gallon (-10.2% y/y) in the week of May 5 from $3.51 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $59.64 per barrel (-26.4% y/y) in the week ended May 2, after rising to $63.09 per barrel in the prior week. Prices remained below a high of $91.45 in the week of September 29, 2023. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $57.13 per barrel. The price of European Brent crude oil declined to $63.50 per barrel (-25.9% y/y) in the week of May 2 from $67.92 in the previous week. Prices remained well below a recent high of $95.61 in the week of September 29, 2023 and compared to a peak of $127.40 in the week of June 10, 2022.

Natural gas prices improved to an average $3.09 per mmbtu (+88.4% y/y) in the week ended May 2, after falling to $3.00/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday’s price was $3.26/mmbtu.

Gasoline demand rose 3.2% y/y in the four weeks ending April 25 following a 0.4% y/y decline in the prior four weeks. Demand for all petroleum products improved 0.3% y/y in the four weeks ending April 25 after a 0.4% y/y rise in the previous four-week period. Crude oil input to refineries eased 0.1% y/y in the four weeks ending April 25 after a 1.3% y/y decline in the prior four weeks.

Gasoline inventories slipped 0.7% y/y in the week ending April 25 after a 1.2% y/y rise in the week ending April 18. Residual fuel oil inventories fell 18.7% y/y in the week of April 25, after a 19.0% y/y fall in the prior week. Crude oil inventories rose 1.4% y/y in the week of April 25 after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell w/w to 25.5 days in the week of April 25 from 26.4 days in the prior. The recent low was 22.9 days in the week of November 8. The supply of crude oil eased w/w to 27.9 days in the week of April 25 after three weeks at 28.3 days, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices edge higher.
- Crude oil prices decline.
- Natural gas costs rise.

U.S. Energy Prices Remain Mixed in Latest Week

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Not many respondents are showing absolute slowing. Only five this month. Only six over the last three months on average. The median total PMI score fell to 49.7 showing contraction in April from 51.1 in March. The average fared slightly better. The 12-months to 6-months to 3-months show a moderate but consistent slowing. The breadth of slowing is wide with 60.9% of survey respondents slowing over three months compared to six months.

The percentile standings show the most strength for the BRIC group with reading above 50% (that marks the median). All other groupings have standings below the 50% mark indicating that they are below their respective medians of the last four-plus years.

Over every horizon from 12-months to 6-months to 3-months, more than 50% of the respondents show a weakening (slowing) in their PMI responses.

Among the largest economies, only Italy has a composite PMI standing above its median (above 50%).

Only 9 of 24 respondents have PMI ranked percentile standings above the 50% mark. That underlines the weakness in composite conditions and the breadth of the weakness.
 
Services sectors no longer are providing the lift to offset ongoing weakness in manufacturing. The differences among countries are narrowing.

Economic conditions across countries may be narrowing for several reasons, one being that the COVID period and then the shock reaction to Russia's invasion from Ukraine put all countries on the same timeline as central banks have been leaning against the shockwaves from those 2 events. As a result of those events, inflation flared but has more recently been falling. Still, inflation continues to be over the top of targets with the European Monetary Union right now making the most progress and Japan facing more late cycle weakness with excessive inflation than other countries in the mix. More recently aggressive tariff policy the United States has put all countries on their back foot and puts everyone on notice that the future has become a lot more uncertain. Central banks that were progressing toward rate cuts now are worried about the possibility of more inflation from tariffs or from the possibility of recession from tariffs - tariffs up the ante on uncertainty as well as on risk. What we see in this month's PMI statistics is a gradual continued erosion as the perceived risk here is that things get steadily but slowly worse as firms, investors, and consumers began to pull in their horns and prepare for something bad to happen not knowing what that might be.

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Global Composite PMIs Erode

Tian Yong Woon

This week, we focus on trade developments between the US and major Asian economies. Early indications coming out of US-India trade talks seem encouraging, with terms such as “forward most-favoured-nation” for the US and “zero-for-zero” tariffs appearing in news reports — terms which, if enacted, would represent a significant win for the US. India stands to benefit greatly as well if key exports to the US, such as pharmaceuticals (chart 1), receive substantial tariff relief. The benefits could be strongly mutual if a deal also grants the US greater access to India’s large auto consumer market, particularly for major US electric vehicle (EV) producers, given that EV adoption in India remains at a very early stage (chart 2).

Turning to South Korea, discussions also appear to be progressing at a healthy pace, although details remain limited and ongoing domestic political challenges continue to hinder substantive breakthroughs. Nonetheless, the South Korean won has shown signs of stabilisation, while local equity markets have remained buoyant (chart 3). Recent trade data for April has also provided some investor relief, as weak exports to the US were more than offset by a strong performance in semiconductor shipments (chart 4).

In Japan, the race to secure a trade deal with the US is well underway, with automotive exports expected to be a key focal point given their significance to Japan’s economy and the US being a major export destination (chart 5). China, however, remains a notable outlier, with formal trade talks with the US not yet underway. Still, the US-China trade relationship continues to be the most closely watched, given its scale and potential impact on global growth and trade dynamics. While markets await China’s official April trade data, early indicators such as port activity already suggest a decline in bilateral trade flows (chart 6).

**US-India trade talks**
US-India trade discussions have reportedly been progressing rapidly, with both sides having already finalized in April the terms of reference for talks, setting the stage for formal negotiations. One early sign of favourable momentum is India’s possible offering of a “forward most-favoured-nation” clause to the US. This would ensure the US always receives the most favourable tariff terms, ahead of any other trade partner. If enacted, this would be a significant win for the US and a major leap forward in the US-India trade relationship. Another reported breakthrough involves India’s reported proposal of “zero-for-zero” tariffs on steel, auto components, and pharmaceuticals—offered on a reciprocal basis up to a certain quantity. If agreed, this would be mutually beneficial, especially as pharmaceuticals remain one of the US economy’s key imports from India, as shown in chart 1. On a separate note, and more recently, India’s phone exports to the US have reportedly gained prominence. With steep US tariffs on China, firms like Apple are increasingly incentivised to accelerate production shifts to India.

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Additionally, India’s proposed “zero-for-zero” tariff plan for auto parts may galvanise US access to India’s large domestic auto market, which has remained comparatively insulated due to high import tariffs. Another area to watch in the trade talks is electric vehicle (EV) imports, especially given US EV giant Tesla’s continued interest in expanding into the Indian market. That said, EV adoption in India remains in its early stages by many measures. While India has an immense middle class with future sales potential, EVs accounted for only about 2% of new cars sold in 2023, as shown in chart 2. This is well below levels seen in other Asian economies like China, or leaders in this space like Norway, where nearly all new cars sold are EVs. Challenges remain in unlocking the domestic Indian market—particularly around affordability and the underdeveloped state of EV infrastructure.

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**US-South Korea trade talks**
Discussions on the US-South Korea trade front also appear to be progressing at a steady pace, with technical talks reportedly having concluded in Washington last week. However, details remain limited, and full-scale negotiations have not yet begun. Complicating matters is South Korea’s domestic political landscape. With the country heading into a snap presidential election on June 3, Vice Industry Minister Park has said there is no chance of a comprehensive deal being reached before then. Still, both sides have committed to working toward an agreement before the expiration of Trump’s 90-day reciprocal tariff pause on July 8. In financial markets, the won continues to swing but remains above its year-to-date lows (chart 3). Meanwhile, South Korean equities have been lifted by a softening in trade rhetoric from both the US and China, as well as optimism around the US-South Korea talks.

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Turning to the hard trade data, South Korea’s more complete April numbers offered some initial relief to investors. The economy still managed to post moderate export growth, surprising many, despite a nearly 7% y/y decline in exports to the US, as shown in chart 4. One of the key drivers was semiconductors, which recorded double-digit y/y growth for the second consecutive month. However, these figures likely do not yet reflect the full initial impact of the steep mutual tariffs between the US and China. Firmer indications may emerge in the coming months. By then, though, attention will likely have shifted toward the outcome of US trade talks with key partners, as the end of its 90-day reciprocal tariff pause draws near.

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**US-Japan trade talks**
Turning to Japan, there is a sense of cautious optimism, with Japan’s chief trade negotiator Akazawa expressing hope for a US-Japan trade deal by June, following the second and most recent round of talks held in Washington last week. A key point of interest is whether Japan can negotiate an exemption from the current 25% automotive tariffs imposed by the US. This is especially significant given the importance of the US as a destination for Japanese auto exports, as shown in chart 5, and the central role the sector plays in Japan’s broader manufacturing economy. Also worth noting is a recent clarification by Japan’s Finance Minister Kato, who walked back earlier remarks and stated that Japan will not use the sale of US Treasuries as a bargaining tool. The clarification may help defuse a potential point of friction between the two sides as trade discussions continue.

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**US-China trade developments**
Turning to US-China trade developments — while progress here has lagged, this relationship remains the most closely watched, given its potentially large impact if meaningful movement occurs. Recent messaging from both sides has softened, stepping back from the fiery exchanges and tariff escalations seen earlier in April, offering some interim relief for investors. China has reportedly exempted certain US imports from tariffs, including specific pharmaceutical and industrial chemical products. However, on US-China trade talks, they remain at a very early stage, with China merely “evaluating” the prospect of negotiations with the US. This suggests we are still far from anything resembling a formal deal. Investors are now closely watching for first-round effects of US tariffs, which are expected to appear in China’s April trade numbers due later this week. Early signs point to a slowdown. For example, vessel traffic at the Los Angeles–Long Beach port remains at range lows, hinting at reduced shipments from China.

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Asia

Economic Letter from Asia: Art of the Deal

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The U.S. ISM Services PMI rose to 51.6 during April, after falling sharply to 50.8 in March from 53.5 in February, according to today’s report by the Institute for Supply Management. The reading indicated service sector expansion for the tenth consecutive month, although the rate of expansion has slowed significantly. The index hit a recent high of 55.8 in October of last year and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected 50.2 for April.

Haver Analytics constructs a composite index combining the services index and the manufacturing index released on Thursday. This index rose to 51.2 in Apri from 50.6 in March. The latest figure remains above its June low of 49.1.

Amongst the services component series, the employment index led last month’s improvement in the overall index. It rose to 49.0 after falling sharply to 46.2 in March. Higher employment was reported by a slightly improved 14.6% (NSA) of respondents while a lessened 16.4% reported a decline. The new orders index rose to 52.3 after falling to 50.4 in March. A higher 22.4% (NSA) of respondents reported a rise in orders while a lessened 15.3% reported a decline. Reporting slower delivery speeds, the supplier delivery series edged up to 51.3 in April after falling to 50.6 in March. Working lower, the business activity series declined to 53.7 after rising to 55.9 in March. A higher 26.2% (NSA) of respondents reported improved activity while a lessened 14.0% reported deterioration.

On the inflation front, the prices index surged to 68.9 in April after easing to 62.8 in March. A greatly increased 39.6% (NSA) of respondents reported higher prices while a lessened 1.9% reported lower prices. The index was increased from its December 2022 low 53.1 and stood at its highest level since October 2022.

Additionally, the new export orders index increased to 48.6 (NSA) in April following a decline to 45.8 in March from 52.1 in February. Just 14.8% of survey respondents reported higher exports while an increased 17.7% reported a decline. The imports index plummeted to 44.3 last month from 52.6 in March. A greatly lessened 4.7% of respondents reported higher imports while a doubled 16.2% reported a decline. The inventory change index jumped to 53.4, a six-month high. The order backlog index edged up to 48.0 in April after falling sharply to 47.4 in March. A lessened 12.2% of respondents reported higher backlogs while a fewer 16.2% reported a decline. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests	 contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Total index remains near nine-month low.
- Employment, new orders & supplier deliveries edge up. Business activity weakens. 
- Prices Index strengthens to roughly two-year high.

Economy in Brief: November 2008

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