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>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203b.jpg" width="353">
In January, non-farm payrolls rose 193,000 following a December increase revised to 140,000 from the 108,000 reported last month. In addition, the November increase was revised up further 354,000 from last month&#39;s reported 305,000 gain and from 215,000 reported initially. Consensus expectations had been for a 250,000 January increase.
Benchmark revisions of the establishment survey data extended back to 2001. For 2005, the average monthly increase in payrolls was revised down to 165,000 from 179,300, but the average gain during 2004 was revised up to 175,000 from 123,000.
From the household survey the unemployment rate fell to the lowest level since July 2001. At 4.7%, the rate reflected a 295,000 (2.0% y/y) rise in employment and a 39,000 (1.5% y/y) decline in the labor force. A 4.9% unemployment rate had been the Consensus expectation for January.
Factory sector payrolls increased modestly following a downwardly revised December decline and the average gain in factory payrolls during the last three months of 2005 was revised slightly lower to 9,000. Nevertheless, the breadth of gain in factory payrolls rose to 52.4%, its best since July 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203a.jpg" width="353">
Warm weather helped lift construction employment in January by 46,000 (4.8% y/y) following an upwardly revised 5,000 increase during December.
Private service producing payrolls rose the same 136,000 (1.8% y/y) in January as during an upwardly revised December despite a 1,500 decline in retail employment (+1.0% y/y). That decline was offset by a 21,000 (1.9% y/y) gain in finance and a 24,000 (3.1% y/y) increase in professional &amp; business services. Education &amp; health services jobs posted a 39,000 (2.1% y/y) increase while jobs in leisure &amp; hospitality rose 26,000 (2.0% y/y).
Government sector employment fell 1,000 (+0.7% y/y) for the third decline in the last four months. Federal hiring fell 5,000 (-0.5% y/y) and state &amp; local jobs increased 4,000 (0.9% y/y).
Average hourly earnings again were a bit stronger than expected, rising 0.4%. Factory sector earnings rose 0.2% (2.2% y/y) and private service producing wages rose 0.4% (3.5% y/y).
2006: A Year of Transition at the Federal Reserve from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2006/el2006-1.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/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>193,000</td>
<td>140,000</td>
<td>1.6%</td>
<td>1.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>7,000</td>
<td>-1,000</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7 (Jan &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.4%</td>
<td>0.4%</td>
<td>3.3%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.9%</td>
<td>5.2% (Jan &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203e.jpg" width="353">
The Institute for Supply Management (ISM) reported that the Business Activity Index for the non-manufacturing sector fell last month to 56.8 from an upwardly revised 61.0 in December. A reading above 50 indicates expansion. The latest reading was weaker than Consensus expectations for a decline to 59.5.
Since the series&#39; inception in 1997 there has been a 53% correlation between the level of the Business Activity Index and the q/q change in real GDP for services plus construction.
The new orders component slipped sharply to its lowest level since May 2003 and the employment index, though still indicating growth at 51.1, was at its lowest since July 2004. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power was stable last month with December. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP Services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

<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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>56.8</td>
<td>61.0</td>
<td>60.3</td>
<td>60.1</td>
<td>62.5</td>
<td>58.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>67.2</td>
<td>67.2</td>
<td>66.8</td>
<td>67.9</td>
<td>68.8</td>
<td>56.6</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Slipped Late in January 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203d.jpg" width="353">
The University of Michigan reported that consumer sentiment for all of January fell a slight 0.3% from December to 91.2. The decline was due to a fall late in the month and compared to an initial read of 93.4. Consensus expectations had been for 93.0 for the full month.
During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The current conditions index rose just 1.1% compared to a mid-month 2.7% increase. The reading of buying conditions for large household goods rose less than initially estimated and the reading of personal finances showed the same, slight decline (-4.1% y/y). Consumers&#39; assessment of gov&#39;t economic policy (-11.2% y/y) improved to the highest level since July.
Consumers&#39; expectations slipped 1.6% instead of increasing that amount as indicated mid-month. Expectations for personal finances fell sharply (-9.8% y/y).
The mean expected inflation rate for the next twelve months increased to 3.8% from 3.5% expected mid-month.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Jan&nbsp;</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>91.2</td>
<td>91.5</td>
<td>-4.5%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>110.3</td>
<td>109.1</td>
<td>-0.5%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>78.9</td>
<td>80.2</td>
<td>-7.9%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
U.S. Factory Inventory Accumulation Slowed 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203c.jpg" width="353">
Factory inventories grew 0.5% during December following an upwardly revised 0.3% increase during November. During the year, the rate of inventory accumulation slowed to 4.3% from 7.7% during 2004.
The rise last year in oil prices actually dampened the degree of that slowdown. During 2005, petroleum refineries&#39; inventories rose 26.0%. Less oil, factory inventories rose 3.4%, down from a 7.4% gain during 2004 and down from a 8.7% rate of accumulation early in the year.
December inventory accumulation was paced by a 0.8% (4.7% y/y) increase in primary metal which was the first monthly increase since May. Electrical equipment inventories also rose a strong 1.0% (5.7% y/y) but inventories of computers &amp; electronic products fell 0.9% (0.5% y/y) and that y/y gain was down from +7.1% last January. Machinery inventories rose just 0.1% (6.4% y/y), half the annual rate of accumulation early in the year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203f.jpg" width="353">
Factory shipments surged 2.2% but the gain was pumped by a 14.4% (83.8% y/y) rise in nondefense aircraft and a 4.2% (-0.2% y/y) gain in motor vehicles &amp; parts. Less transportation altogether as well as petroleum, shipments rose 0.9% (5.1% y/y).
Total factory orders rose 1.1% and the advance report of a 1.3% rise in durable goods orders was revised up to 1.8%.
Unfilled orders surged another 2.4% powered by a 7.6% (55.8% y/y) rise in backlogs for nondefense aircraft orders. Less the transportation sector, backlogs rose 0.5% (10.0% y/y) and the ratio of total unfilled orders to shipments fell.<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </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/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5%</td>
<td>0.3%</td>
<td>4.3%</td>
<td>4.3%</td>
<td>7.7%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.1%</td>
<td>3.3%</td>
<td>10.5%</td>
<td>8.4%</td>
<td>9.3%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>2.2%</td>
<td>0.8%</td>
<td>7.2%</td>
<td>7.4%</td>
<td>9.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>2.4%</td>
<td>3.1%</td>
<td>16.3%</td>
<td>16.3%</td>
<td>8.4%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
Large Shipments to China Help Australia Trade Balance 
by <a href="/comment/Stone.html">Carol Stone</a> February 3, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203g.jpg" width="353">
International trade for Australia looks to be very dynamic process. The trade balance widened to a significant deficit in 2003 and 2004, but moderated considerably in 2005, mirroring a pattern of decline and then rapid turnaround in exports. Exports fell 9.3% in 2003, but recovered almost exactly that amount in 2004. Then last year, they surged ahead 17.8% for the year as a whole, with 9.0% in the month of December alone over November. Exports in December, as seen in the table below, grew a whopping 28.5% from December 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203h.jpg" width="353">
At the same time, imports have not been sluggish, as they were up 10% for 2005 as a whole. As elsewhere, some of this was oil-price related, with imports of mineral fuels, lubricants and related up 34% for the year, following 28% in 2004. Chemicals also rose by more than 10%. Other manufactured goods weren&#39;t that strong, but they gained in a range of 8%-9%, so they were hardly weak.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060203i.jpg" width="353">
The two most interesting developments in Australian trade -- at least in our view -- concern metals exports and exports to China. These may be related, but available data can&#39;t confirm that. The third graph is very suggestive, however. Exports to China rose 45.5% in 2005, with a final spurt in December carrying them to A$1.8 billion, up nearly 66% from December 2004. (For comparison, shipments to the US, which were larger than those to China as recently as 2003, were relatively flat at about A$800 million/month from then until late last year.) Among kinds of goods Australia has exported, non-food crude materials also increased substantially, 29% for the year and 49% December-on-December. Over the past five years, the monthly pattern of the year-to-year changes in these raw materials has a 76% correlation with growth in exports to China. Australia is a major producer of copper and aluminum; it may well be that they are shipping considerable quantities of those metals to their large neighbor to the north. This would bode well for both countries, a fine illustration of the &quot;gains from trade&quot;, and would help minimize Australia&#39;s trade deficit with China.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ANZ/@A1/@A109/@A1098/@A1098.HTM">Australia Trade (Mil.A$)</a></th>
Month/Month
<th scope="col">Yr/Yr</th>
Monthly Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Dec 2005*</td>
<td>Nov 2005*</td>
<td>Oct 2005*</td>
<td>Dec 2004*</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">Goods &amp; Services: Balance</td>
<td>-1168</td>
<td>-2473</td>
<td>-1371</td>
<td>-2480</td>
<td>-1668</td>
<td>-2102</td>
<td>-1818</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods: Exports</td>
<td>13214</td>
<td>12129</td>
<td>11999</td>
<td>10229</td>
<td>11619</td>
<td>9848</td>
<td>9067</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>9.0</td>
<td>1.1</td>
<td>3.8</td>
<td>28.5**</td>
<td>17.8</td>
<td>9.4</td>
<td>-9.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods: Imports</td>
<td>14150</td>
<td>14227</td>
<td>13285</td>
<td>12502</td>
<td>13163</td>
<td>11875</td>
<td>10974</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-1.9</td>
<td>8.6</td>
<td>1.1</td>
<td>9.3**</td>
<td>10.1</td>
<td>8.7</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">China: Exports (NSA)</td>
<td>1827</td>
<td>1419</td>
<td>1509</td>
<td>1102</td>
<td>1336</td>
<td>918</td>
<td>757</td>
</tr>
<tr>
<td class="firstcol">USA: Exports (NSA)</td>
<td>914</td>
<td>840</td>
<td>773</td>
<td>835</td>
<td>772</td>
<td>796</td>
<td>788</td>
</tr>
</tbody>
</table>


</html>

In January, non-farm payrolls rose 193,000 following a December increase revised to 140,000 from the 108,000 reported last month. In addition, the November increase was revised up further 354,000 from last month's reported 305,000 [...]

U.S. Payrolls Just Below Expectations, Jobless Rate Lowest Since 2001

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202g.jpg" width="353">
Low interest rates tend to help construction, and this has been the case in Europe recently.Eurostat this morning reported construction orders through Q3 2005 for the region as a whole and for selected countries through November. Specific performance varies by country, but the renewal of this sector for the area as a whole is impressive. These orders cover contracts for nonresidential projects, including buildings and infrastructure.
Construction orders for the entire Euro-Zone 12 actually eased 1.1% in September from August, but the level over the last few months was running about 10% above 2004 amounts.Spain is a good example of the strength, with September&#39;s value almost 18% higher than a year ago. The UK, a member of the European Union (&quot;EU-25&quot;), but not the Euro-Zone, is also seeing a strong advance, with November&#39;s index 123.0 (2000=100) up 14% from November 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202h.jpg" width="353">
Germany looks to be a special case here. Its construction sector has long been in decline, basically for more than 10 years. But the last several months have seen a stabilization and some modest gains. The upturn is not steep, but for that reason, perhaps it can last a good while. Both buildings and infrastructure construction are participating, although the latter is more uneven.
Among the entire Euro-Zone, the index for buildings was 122.66 in September, up 10.1% from the year-earlier month; it averaged 122.08 in Q3, up 11.9%. Civil engineering orders were 116.49 in September, just 2.8% above September 2004, but they are more irregular than smaller project orders; the quarterly average was 117.82, up 5.0% on the year. As seen in the first graph, these orders all together have a 61% negative correlation with long-term interest rates. These latter, though, have been rising for the last few months. Will that constrain the vigor of this building activity? Possibly, but the rate increase is quite modest and the level remains near the lowest for the history of this average of European yields since 1990.

<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/EUROSTAT/@UC/@UC02/@UC02.HTM">EU-12 &amp; Select Countries,</a> 2000=100</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Aug 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone 12</td>
<td>--</td>
<td>--</td>
<td>120.27</td>
<td>121.66</td>
<td>110.26</td>
<td>105.29</td>
<td>105.42</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>76.54</td>
<td>71.86</td>
<td>76.10</td>
<td>78.99</td>
<td>74.54</td>
<td>78.46</td>
<td>88.46</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>--</td>
<td>--</td>
<td>173.89</td>
<td>173.43</td>
<td>145.16</td>
<td>130.21</td>
<td>113.29</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>123.00</td>
<td>124.50</td>
<td>110.80</td>
<td>117.90</td>
<td>104.81</td>
<td>97.80</td>
<td>102.51</td>
</tr>
</tbody>
</table>
</body>
</html>

Low interest rates tend to help construction, and this has been the case in Europe recently.Eurostat this morning reported construction orders through Q3 2005 for the region as a whole and for selected countries through November. [...]

European Construction Activity Picks Up Some Steam

<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/060202e.jpg" width="353">
Initial claims for unemployment insurance reversed the prior week&#39;s little revised gain and fell 11,000 to 273,000. Consensus expectations had been for an increase to 295,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell further to 284,250 (-13.9% y/y), its lowest level since June 2000.
Continuing unemployment insurance claims also reversed the prior week&#39;s downwardly revised increase and fell 64,000.
The insured rate of unemployment fell back to the lowest level since early 2001, at 1.9% from 2.0% the prior week.

<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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">01/28/06</th>
<th scope="col">01/21/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>273</td>
<td>284</td>
<td>-15.5%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,509</td>
<td>-7.2%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance reversed the prior week's little revised gain and fell 11,000 to 273,000. Consensus expectations had been for an increase to 295,000 claims. During the last ten years there has been a [...]

Initial Unemployment Insurance Claims Fell

<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/060202f.jpg" width="353">
Challenger, Grey &amp; Christmas reported that January job cut announcements reversed about half of the rise in December and fell 4.0% to 103,466.
Like the December report, one industry dominated the monthly total. Auto industry layoff announcements rose nearly ten fold from December on the heels of a December report when layoffs in government rose more than three times (reversed in January). Layoffs in the retail industry also surged m/m and were more than three times higher than last January.
During the last ten years there has been an 84% (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 the second consecutive sharp m/m drop in announced hiring plans and they were down 53.3% from a year ago.

<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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>103,466</td>
<td>107,822</td>
<td>12.0%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
</body>
</html>

Challenger, Grey & Christmas reported that January job cut announcements reversed about half of the rise in December and fell 4.0% to 103,466. Like the December report, one industry dominated the monthly total. Auto industry layoff [...]

Challenger Layoffs Retreated

<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/060202b.jpg" width="353">
Non-farm labor productivity fell last quarter after a revised 4.5% increase during 3Q. It was the first decline in output per hour since 1Q &#39;01 and followed an average gain of 3.7% during the prior ten quarters. Consensus expectations had been for a 1.5% increase.
Slower output growth accounted for the drop in productivity. The marked slowdown in output to 0.9% (3.6% y/y) from 4.7% during 3Q was accompanied by an acceleration in hours worked to 1.5% (1.2% y/y) from 0.1%.
Compensation costs rose 2.8% after an upwardly revised 3Q increase. As a result, unit labor costs rose 3.5%, the quickest gain in a year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202a.jpg" width="353">
Factory sector productivity growth rose a firm 3.9% (4.1% y/y) during 4Q following a 3.7% gain during 3Q. Compensation growth slowed to 1.9% (4.1% y/y) from 3.7% and unit labor costs in the factory sector fell 1.9% (0.0% y/y) as a result.
The implicit price deflator for the nonfarm business sector rose 3.2% (3.1% y/y). Since the increase trailed the rise in costs, the ratio of prices to unit labor costs slipped from the record high of the prior quarter. During the last ten years there has been a 60% correlation between the ratio and the y/y growth in operating corporate profits.

<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/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">4Q &#39;05</th>
<th scope="col">3Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>-0.6%</td>
<td>4.5%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>2.8%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>5.2%</td>
<td>4.5%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.5%</td>
<td>-0.5%</td>
<td>1.0%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>0.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

Non-farm labor productivity fell last quarter after a revised 4.5% increase during 3Q. It was the first decline in output per hour since 1Q '01 and followed an average gain of 3.7% during the prior ten quarters. Consensus expectations [...]

U.S. Productivity Fell During 4Q '05

<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/060202d.jpg" width="353">
The Autodata Corporation reported that in January, US light vehicle sales rose 2.7% from December to 17.64M units. Consensus expectations had been for a decline to 16.3M.
The surprise stemmed from a 25.7% (23.9% y/y) rise in sales of US made cars as automakers &quot;restocked&quot; rental fleets. In contrast, imported car sales fell 18.9% (-7.0% y/y). <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202c.jpg" width="353">
Sales of domestic trucks also fell 5.9% (+0.5% y/y) though sales of imported trucks added 2.9% (9.5% y/y) to the sharp 12.5% increase during December.
Imports&#39; share of the US light vehicle market fell sharply to 18.1% from 21.0% during December.
Consumption-based macroeconomic forecasting from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_4qtr2005_part4_campbell_krane.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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>17.64</td>
<td>17.17</td>
<td>7.9%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.56</td>
<td>7.64</td>
<td>15.4%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.08</td>
<td>9.53</td>
<td>1.7%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
</body>
</html>

The Autodata Corporation reported that in January, US light vehicle sales rose 2.7% from December to 17.64M units. Consensus expectations had been for a decline to 16.3M. The surprise stemmed from a 25.7% (23.9% y/y) rise in sales of [...]

Fleet Purchases Raised U.S. Vehicle Sales in January

<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/060202d.jpg" width="353">
The Autodata Corporation reported that in January, US light vehicle sales rose 2.7% from December to 17.64M units. Consensus expectations had been for a decline to 16.3M.
The surprise stemmed from a 25.7% (23.9% y/y) rise in sales of US made cars as automakers &quot;restocked&quot; rental fleets. In contrast, imported car sales fell 18.9% (-7.0% y/y). <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202c.jpg" width="353">
Sales of domestic trucks also fell 5.9% (+0.5% y/y) though sales of imported trucks added 2.9% (9.5% y/y) to the sharp 12.5% increase during December.
Imports&#39; share of the US light vehicle market fell sharply to 18.1% from 21.0% during December.
Consumption-based macroeconomic forecasting from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_4qtr2005_part4_campbell_krane.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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>17.64</td>
<td>17.17</td>
<td>7.9%</td>
<td>16.92</td>
<td>16.87</td>
<td>16.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.56</td>
<td>7.64</td>
<td>15.4%</td>
<td>7.65</td>
<td>7.49</td>
<td>7.62</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.08</td>
<td>9.53</td>
<td>1.7%</td>
<td>9.27</td>
<td>9.37</td>
<td>9.01</td>
</tr>
</tbody>
</table>
U.S. Productivity Fell During 4Q '05 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202b.jpg" width="353">
Non-farm labor productivity fell last quarter after a revised 4.5% increase during 3Q. It was the first decline in output per hour since 1Q &#39;01 and followed an average gain of 3.7% during the prior ten quarters. Consensus expectations had been for a 1.5% increase.
Slower output growth accounted for the drop in productivity. The marked slowdown in output to 0.9% (3.6% y/y) from 4.7% during 3Q was accompanied by an acceleration in hours worked to 1.5% (1.2% y/y) from 0.1%.
Compensation costs rose 2.8% after an upwardly revised 3Q increase. As a result, unit labor costs rose 3.5%, the quickest gain in a year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202a.jpg" width="353">
Factory sector productivity growth rose a firm 3.9% (4.1% y/y) during 4Q following a 3.7% gain during 3Q. Compensation growth slowed to 1.9% (4.1% y/y) from 3.7% and unit labor costs in the factory sector fell 1.9% (0.0% y/y) as a result.
The implicit price deflator for the nonfarm business sector rose 3.2% (3.1% y/y). Since the increase trailed the rise in costs, the ratio of prices to unit labor costs slipped from the record high of the prior quarter. During the last ten years there has been a 60% correlation between the ratio and the y/y growth in operating corporate profits.

<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/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">4Q &#39;05</th>
<th scope="col">3Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>-0.6%</td>
<td>4.5%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>3.4%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>2.8%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>5.2%</td>
<td>4.5%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.5%</td>
<td>-0.5%</td>
<td>1.0%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>0.2%</td>
</tr>
</tbody>
</table>
Challenger Layoffs Retreated 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202f.jpg" width="353">
Challenger, Grey &amp; Christmas reported that January job cut announcements reversed about half of the rise in December and fell 4.0% to 103,466.
Like the December report, one industry dominated the monthly total. Auto industry layoff announcements rose nearly ten fold from December on the heels of a December report when layoffs in government rose more than three times (reversed in January). Layoffs in the retail industry also surged m/m and were more than three times higher than last January.
During the last ten years there has been an 84% (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 the second consecutive sharp m/m drop in announced hiring plans and they were down 53.3% from a year ago.

<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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>103,466</td>
<td>107,822</td>
<td>12.0%</td>
<td>1,072,054</td>
<td>1,039,935</td>
<td>1,236,426</td>
</tr>
</tbody>
</table>
Initial Unemployment Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202e.jpg" width="353">
Initial claims for unemployment insurance reversed the prior week&#39;s little revised gain and fell 11,000 to 273,000. Consensus expectations had been for an increase to 295,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell further to 284,250 (-13.9% y/y), its lowest level since June 2000.
Continuing unemployment insurance claims also reversed the prior week&#39;s downwardly revised increase and fell 64,000.
The insured rate of unemployment fell back to the lowest level since early 2001, at 1.9% from 2.0% the prior week.

<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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">01/28/06</th>
<th scope="col">01/21/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>273</td>
<td>284</td>
<td>-15.5%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,509</td>
<td>-7.2%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
European Construction Activity Picks Up Some Steam 
by <a href="/comment/Stone.html">Carol Stone</a> February 2, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202g.jpg" width="353">
Low interest rates tend to help construction, and this has been the case in Europe recently.Eurostat this morning reported construction orders through Q3 2005 for the region as a whole and for selected countries through November. Specific performance varies by country, but the renewal of this sector for the area as a whole is impressive. These orders cover contracts for nonresidential projects, including buildings and infrastructure.
Construction orders for the entire Euro-Zone 12 actually eased 1.1% in September from August, but the level over the last few months was running about 10% above 2004 amounts. Spain is a good example of the strength, with September&#39;s value almost 18% higher than a year ago. The UK, a member of the European Union (&quot;EU-25&quot;), but not the Euro-Zone, is also seeing a strong advance, with November&#39;s index 123.0 (2000=100) up 14% from November 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060202h.jpg" width="353">
Germany looks to be a special case here. Its construction sector has long been in decline, basically for more than 10 years. But the last several months have seen a stabilization and some modest gains. The upturn is not steep, but for that reason, perhaps it can last a good while. Both buildings and infrastructure construction are participating, although the latter is more uneven.
Among the entire Euro-Zone, the index for buildings was 122.66 in September, up 10.1% from the year-earlier month; it averaged 122.08 in Q3, up 11.9%. Civil engineering orders were 116.49 in September, just 2.8% above September 2004, but they are more irregular than smaller project orders; the quarterly average was 117.82, up 5.0% on the year. As seen in the first graph, these orders all together have a 61% negative correlation with long-term interest rates. These latter, though, have been rising for the last few months. Will that constrain the vigor of this building activity? Possibly, but the rate increase is quite modest and the level remains near the lowest for the history of this average of European yields since 1990.

<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="www.haverselect.com/dlx/EUROSTAT/@UC/@UC02/@UC02.HTM">EU-12 &amp; Select Countries,</a> 2000=100</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Aug 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone 12</td>
<td>--</td>
<td>--</td>
<td>120.27</td>
<td>121.66</td>
<td>110.26</td>
<td>105.29</td>
<td>105.42</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>76.54</td>
<td>71.86</td>
<td>76.10</td>
<td>78.99</td>
<td>74.54</td>
<td>78.46</td>
<td>88.46</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>--</td>
<td>--</td>
<td>173.89</td>
<td>173.43</td>
<td>145.16</td>
<td>130.21</td>
<td>113.29</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>123.00</td>
<td>124.50</td>
<td>110.80</td>
<td>117.90</td>
<td>104.81</td>
<td>97.80</td>
<td>102.51</td>
</tr>
</tbody>
</table>
</body>
</html>

<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/060201e.jpg" width="353">
The State Committee of the Russian Federation reported GDP data today for the year 2005. Total GDP expanded 6.4% for the year as a whole. Assuming there are no meaningful revisions to the first three quarters of the year, the year-to-year growth for Q4 would be 7.0%, the same as for Q3, not seasonally adjusted. [The implied Q4 information is calculated by us, using DLX capabilities in Excel.]
For the year as a whole, growth slowed from 2004 in all major expenditure categories. For most, this downshift was quite modest. Indeed, private consumption remained on a firm growth path after picking up in 2004. In contrast, both exports and imports saw a sizable adjustment. Imports of goods and services had expanded 22.5% in 2004 and moderated to 16.2% in 2005. Exports had been up 11.9% in &#39;04 and then grew only 5.6% last year. A cursory examination of the price deflator for exports suggests that accelerating prices, perhaps for oil, lifted nominal export growth, while export volume gains were much smaller, their weakest since 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060201f.jpg" width="353">
Prices in general seem still to be an issue in Russia. Inflation, again perhaps energy related, accelerated sharply in 2004, to nearly 20% from 13.2% in 2003. Last year saw a bit of moderation at a still-high rate. The acceleration is reflected in a price deflator for Russian exports, seen in the second graph. Deflators for consumption and capital formation don&#39;t show this significant increase, although they still run at 10-12% rates. Compared with its neighbors, this range of inflation is fairly high. The Ukraine and Kazakhstan experience occasional bouts of double-digit price increases, but most other surrounding industrial countries have much lower rates: Poland, Hungary, the Czech Republic, and so on. Russia continues then to grapple with structural difficulties that, despite its apparently healthy real growth, keep its overall economic performance in a rather precarious state.

<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/EMERGECW/@EB/@EB2/@EB2.HTM">Russia</a> (Bil.2003 Rubles)</th>
<th scope="col">2005 Annual Level</th>
<th scope="col">% of Total</th>
<th scope="col">Q4 Y/Y Implied Growth</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total GDP</td>
<td>15,101</td>
<td>100.0</td>
<td>7.0</td>
<td>6.4</td>
<td>7.2</td>
<td>8.2</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">Private Consumption</td>
<td>8,109</td>
<td>53.7</td>
<td>--</td>
<td>11.1</td>
<td>11.6</td>
<td>6.0</td>
<td>8.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Gov&#39;t Consumption</td>
<td>2,423</td>
<td>16.0</td>
<td>--</td>
<td>1.8</td>
<td>2.1</td>
<td>0.6</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Capital Formation</td>
<td>2,991</td>
<td>19.8</td>
<td>--</td>
<td>10.5</td>
<td>11.3</td>
<td>11.5</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>4,488</td>
<td>29.7</td>
<td>--</td>
<td>16.2</td>
<td>22.5</td>
<td>18.6</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>5,501</td>
<td>36.4</td>
<td>--</td>
<td>5.6</td>
<td>11.9</td>
<td>12.4</td>
<td>10.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Deflator (2003=100)</td>
<td>143.47</td>
<td>--</td>
<td>25.7</td>
<td>19.7</td>
<td>19.9</td>
<td>13.2</td>
<td>15.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The State Committee of the Russian Federation reported GDP data today for the year 2005. Total GDP expanded 6.4% for the year as a whole. Assuming there are no meaningful revisions to the first three quarters of the year, the year-to- [...]

Russian Growth Moderates in 2005; Inflation Still Up in Double-Digits

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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

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

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Andrew Cates

**The US labour market**
The latest data highlight a growing sense of fragility in the US labour market. The unemployment rate, while still relatively low by historical standards, has been edging higher through the course of this year. More telling, however, is the signal from this week’s consumer confidence survey from Conference Board and specifically the labour market differential — the gap between the share of consumers saying jobs are plentiful versus those saying jobs are hard to get. That balance has narrowed sharply, moving back toward levels historically associated with softer labour demand and rising unemployment.

250828Z1.jpg

**Goods and services inflation** 
Haver’s breakdown of goods and services CPI inflation in the advanced economies highlights where fresh risks are emerging. Goods inflation, which had been receding sharply after the pandemic supply shocks, has recently shown signs of firming again. Some of this probably reflects the impact of US tariff policies, which are raising import costs and putting renewed upward pressure on traded goods prices. While services inflation remains the more stubborn component in most advanced economies, the risk is that tariffs could reintroduce stickiness into goods prices, slowing the overall disinflation process.

250828Z2.jpg

**China, Europe and US trade policy**
A consequence of US tariff policies has been a sharp contraction in Chinese exports to the US market, with much of the surplus redirected elsewhere. Europe in particular has recorded near double-digit import growth in recent months, raising concerns that Beijing is deflecting its industrial overcapacity problem rather than resolving it, effectively transferring the pressure onto trading partners. China’s authorities, however, have begun to push back, introducing measures to curb excess supply and rein in so-called “involution,” including clampdowns on price wars across several industries.

250828Z3.jpg

**China’s excess capacity and Europe**
A closer look at Europe–China trade shows that electric vehicles remain a key flashpoint. Import volumes from China have continued to rise even as per-unit prices fall sharply from a year ago —evidence suggesting that industrial overcapacity persists, with low-cost Chinese EVs increasingly challenging European automakers. The surge has carried on despite EU tariffs of up to 45% on battery EVs, as Chinese producers have adapted by pushing plug-in hybrids and expanding onshore production in Europe to bypass duties and defend market share.

250828Z4.jpg

**Wage growth in the US and Europe** 
Turning back to inflation dynamics, the UK stands out for its persistent wage pressures. While posted wage growth has cooled across the US and euro area, the UK measure has remained elevated at around 6% year-on-year, well above pre-pandemic norms. This stickiness reflects a still-tight labour market in key service sectors, even as broader activity has slowed and unemployment has edged higher. For the Bank of England, it underscores the dilemma: headline inflation is easing, but underlying pay growth risks keeping services inflation uncomfortably high, complicating the timing and scale of policy easing.

250828Z5.jpg

**The UK economy**
The UK’s net international investment position has deteriorated noticeably in recent years, with both direct investment and portfolio flows showing persistent weakness. The latest data underline how net FDI has turned increasingly negative, while the portfolio investment balance has also eroded, leaving the UK more reliant on volatile short-term funding sources. This deterioration comes against a backdrop of heightened investor unease about the riskiness of UK debt markets, where elevated gilt yields and rising debt-servicing costs have amplified concerns over fiscal sustainability. Taken together, these trends underscore the vulnerability of the UK’s external position at a time when global capital is arguably proving more selective and risk sensitive.

250828Z6.jpg

Global markets have continued to rally into late summer, buoyed by AI optimism, dovish signals from central bankers at Jackson Hole, and expectations of easier policy ahead. Yet beneath the surface, risks to the world economy are accumulating. In the US, labour market indicators point to softening conditions (chart 1), while tariff-driven pressures are beginning to push goods prices higher (chart 2). Global trade flows are being reshaped by US policy, with China’s excess capacity increasingly diverted toward Europe, most visibly through surging exports of electric vehicles (EVs) (charts 3 and 4). At the same time, wage growth remains stubbornly elevated in the UK, complicating disinflation (chart 5), while concerns are mounting over the country’s external vulnerabilities as net FDI and portfolio positions weaken against the backdrop of jittery debt markets (chart 6). Together, these dynamics highlight the tension between buoyant market performance and a global economy still grappling with structural fragilities.

Charts of the Week: Riskbusters

250828N8.jpg

250828C8.jpg

Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

250828O8.jpg

250828P8.jpg

Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% rise.

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**.

250828Q8.jpg

250828S8.jpg

- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

U.S. GDP Q2’25 Growth Revised Up; Profits Improve

Sandy Batten

250828J2.jpg

250828K2.jpg

The Kansas City Fed manufacturing composite index was unchanged at 1 in August from July. This was the second consecutive month that the index has been positive, indicating the manufacturing in the KC Fed district continue to inch up in August. Prior to the positive reading in July, the index had been negative for 22 consecutive months. The index’s most recent high was 31 reached in both April 2021 and October 2021. The durable manufacturing sector was mostly flat in August, while nondurable manufacturing activity declined slightly driven by printing activities and paper and chemical manufacturing. 

The August survey was open for a six-day period from August 20-25, 2025 and included 103 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The ISM-adjusted index calculated by Haver Analytics rose to 51.1 (NSA) in August from 50.2 in July. This was the fifth reading above the critical 50 level that separates expansion from contraction in the past six months, a further indication of expanding manufacturing activity.

For the major component indexes, the production index was 0 in August, but this was up from -3 in July. The new orders index rose to 5 in August, its highest reading since May 2022, from 2 in July. The shipments index increased to 6 in August from 3 in July. The employment index was 0 in August, but this was up from -11 in July. Also, the average workweek index rebounded to 3 in August after having been in negative territory for the previous four months. Supplier delivery times were unchanged at 7 in August. The elevation of this index since April may indicate some incipient supply-chain disruptions from higher tariffs. In contrast, raw materials inventories fell to -7 in August from 8 in July.

On the inflation front, the prices paid for raw materials index remained elevated but fell to 43 in August from 47 in July and a local high of 51 in June. Forty-four percent of respondents reported an increase in raw materials prices in August, down from 48% in July and 53% in June, while only 4% reported a decrease, down from 5% in July and 6% in June. The prices received for finished products index increased to 21 in August from 18 in July. This index has fluctuated in a range between 17 and 21 for the past four months.

Expectations for future activity remained positive, with the composite index rising to 11 from 8, as firms anticipate an improvement in production and new orders. While expectations have been trending up over the past several months, they remain depressed relative to the recent high reading of 17 last December. Capital expenditures expectations remained in negative territory in August for the second consecutive month but edged up to -3 from -4 in July.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

250828L2.jpg

250828M2.jpg

- Index remained (though barely) in positive territory for the second consecutive month, indicating that manufacturing activity was inching up.
- Prior to last month, the index had been negative for 22 consecutive months.
- Positive readings across most key components.

FRB Kansas City Manufacturing Index Unchanged in August

250828F0.jpg

250828G0.jpg

The Pending Home Sales Index weakened 0.4% in July (+0.7% y/y) to 71.7 after falling an unrevised 0.8% in June and rising an unrevised 1.8% in May, according to the National Association of Realtors (NAR). The Index remained 42.7% below its most recent peak of 125.1 in October 2021. The index is a forward-looking measure of home sales based on contract signings.

The fall in pending home sales occurred as the average rate on a 30-year mortgage rose to 6.72% in July after holding steady m/m at 6.82% in June. These rates remained well above a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales were mixed last month in the four major regions of the country. Sales in the Midwest declined 4.0% (+1.3% y/y) in July after easing 0.8% in June. Sales in the Northeast fell 0.6% both m/m and y/y, after holding steady in June. In the South, sales eased 0.1% (+1.8% y/y) following a 0.6% June decline, but sales in the West increased 3.7% (-1.9% y/y), reversing a 3.9% June drop.

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.

- Decline adds to June weakness.
- Regional changes are mixed.


U.S. Pending Home Sales Decline in July

Kathleen Stephansen, CBE

250828A5.jpg

250828B5.jpg

Initial claims for unemployment insurance declined to 229,000 during the week of August 23, after rising to 234,000 in the week of August 16, revised from 235,000. The Action Economics Forecast Survey expected 230,000 initial claims for last week. The four-week moving average of initial claims increased to 228,500 from 226,000, revised from 226,250. It was the highest level since the second week of July.

In the week ended August 16, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – decreased by 7,000 to 1.954 million from 1.961 million in the prior week, revised down by 11,000 from 1.972 million. The four-week moving average rose to 1.956 million in the week ending August 16, the highest level in six weeks, and up from 1.952 million in the prior week, revised from 1.955 million.

In the week ending August 16, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was 1.3% for the twelfth consecutive week.

The insured unemployment rate varied greatly across individual states and territories. In the week ended August 9, the highest unemployment rates were in New Jersey (2.75%), Rhode Island (2.58%), Massachusetts (2.18%), Minnesota (2.17%), California (2.11%), Washington (2.08%), District of Columbia (2.04%), and Puerto Rico (2.02%). The lowest were in South Dakota (0.28%), Florida (0.42%), and Alabama and North Carolina (both 0.47%). Rates in other notable states include Pennsylvania (1.92%), New York (1.73%), Illinois (1.72%), and Texas (1.24%). 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. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250828C5.jpg

250828D5.jpg

- Initial claims declined in latest week after a surge in the prior week.
- Continuing claims declined.
- Insured unemployment rate holds steady.

Economy in Brief: February 2006

Jump to:

U.S. Payrolls Just Below Expectations, Jobless Rate Lowest Since 2001

European Construction Activity Picks Up Some Steam

Initial Unemployment Insurance Claims Fell

Challenger Layoffs Retreated

U.S. Productivity Fell During 4Q '05

Fleet Purchases Raised U.S. Vehicle Sales in January

Fleet Purchases Raised U.S. Vehicle Sales in January

Russian Growth Moderates in 2005; Inflation Still Up in Double-Digits