Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203g.jpg" align="right" border="0" height="265" width="353">
Last quarter's strength in productivity growth was revised
lower with the reduced reading on GDP. Nevertheless, the revised 8.1%
jump remained the strongest since 3Q '03 and fell just short of
Consensus expectations for an 8.5% increase."&gt;
The revision reflected a downwardly revised 2.9% (-3.7% y/y)
increase in output. Hours-worked (employment times hours) was
little-revised at down 4.8% (-7.4% y/y) which followed a 7.5% 2Q
drop.Compensation costs, however, were revised up significantly to a
5.4% quarterly rate of growth and by 2.5% y/y.
The downward revision of productivity and the upward revision
to compensation lessened the previously reported decline in unit labor
costs. Nevertheless, the 2.5% decline remained the third consecutive
quarterly fall but it eased the y/y change to -1.4%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203h.jpg" align="right" border="0" height="265" width="353">

The surge in 3Q worker productivity growth in the factory
sector was revised little at a 13.4% (AR) increase. That was a record
and it lifted y/y growth to 3.0%, the highest since early-last year.
The increase came as output rose at an 8.4% rate (-10.7% y/y) and hours
worked fell at a 4.4% rate (-13.3% y/y). Compensation rose at an
upwardly revised 6.5% rate (6.1% y/y), therefore unit labor costs in
the factory sector fell at a lessened 6.1% annual rate (+3.0% y/y).
The productivity &amp; cost figures are available in
Haver's USECON database.
Fed Chairman Ben S. Bernanke's Senate
testimony today can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091203a.htm">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">
</a>(SAAR,%)</th>
<th scope="col">3Q '09 (Revised)</th>
<th scope="col">3Q '09 (Prelim.)</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>8.1</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.0</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>5.4</td>
<td>3.8</td>
<td>6.9</td>
<td>-4.7</td>
<td>2.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-2.5</td>
<td>-5.2</td>
<td>-0.0</td>
<td>-5.0</td>
<td>-1.4</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sector</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>13.4</td>
<td>13.6</td>
<td>6.8</td>
<td>-2.5</td>
<td>3.0</td>
<td>0.8</td>
<td>3.2</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>6.5</td>
<td>5.5</td>
<td>6.5</td>
<td>-0.4</td>
<td>6.1</td>
<td>3.0</td>
<td>4.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-6.1</td>
<td>-7.1</td>
<td>-0.3</td>
<td>2.2</td>
<td>3.0</td>
<td>2.2</td>
<td>1.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body></html>

Last quarter's strength in productivity growth was revised lower with the reduced reading on GDP. Nevertheless, the revised 8.1% jump remained the strongest since 3Q '03 and fell just short of Consensus expectations for an 8.5% [...]

3Q U.S. Worker Productivity Strength Revised Lower & Unit Costs Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203e.jpg" width="353">
Unexpectedly, the November Composite Index for the nonmanufacturing sector deteriorated for the second consecutive month. The figure from the Institute for Supply Management (ISM) fell below the break-even level of 50 to 48.7 and fell short of Consensus expectations for a reading of 51.2. Since the series&#39; inception in 1997 there has been a 64% correlation between the level of the composite index in the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
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. The figures are available in Haver&#39;s USECON database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203f.jpg" width="353">
Amongst the components, the business activity index for the service sector fell the hardest to 49.6 and just below the break-even level. The new orders series also fell slightly to 55.1 but remained up from November&#39;s low of 35.6. The speed of vendor deliveries increased (lower index level) to its quickest since June. Only the employment index showed slight improvement m/m but it remained well below the September level. Since the series&#39; inception in 1997 there has been an 80% 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.
Pricing power increased slightly despite the weakening in business activity. The pricing index rose m/m 57.9 and was up sharply from the December low of 36.1. Since its inception ten years ago, there has been a 73% 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 indices of 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>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM" style="color: rgb(0, 0, 0);">ISM Nonmanufacturing Survey</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>48.7</td>
<td>50.6</td>
<td>50.9</td>
<td>37.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business Activity</td>
<td>49.6</td>
<td>55.2</td>
<td>55.1</td>
<td>33.3</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>55.1</td>
<td>55.6</td>
<td>54.2</td>
<td>35.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>41.6</td>
<td>41.1</td>
<td>44.3</td>
<td>31.1</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Supplier Deliveries</td>
<td>48.5</td>
<td>50.5</td>
<td>50.0</td>
<td>49.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Index</td>
<td>57.8</td>
<td>53.0</td>
<td>48.8</td>
<td>37.0</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Unexpectedly, the November Composite Index for the nonmanufacturing sector deteriorated for the second consecutive month. The figure from the Institute for Supply Management (ISM) fell below the break-even level of 50 to 48.7 and fell [...]

U.S. ISM Nonmanufacturing Index Slips Again

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203d.jpg" align="left" border="0" height="265" width="353">
In November the Services PMI rose to 53.04 from 52.58. The
services PMI stands in the 63rd percentile of its range. As such it is
stronger than the EMU commission index for the sector that is only in
the 47th percentile of its range. 
 
Among EMU nations France&#8217;s index is the relative strongest standing in
the 81st percentile of its range. Ireland is the relative weakest with
the services index standing in the 40th percentile of its range. 
 
Interestingly the service sector has continued to improve with little
or no improvement in consumer confidence (see bottom panel of table
above). 
 
The service sector is important since it is where most of the jobs are.
Despite ongoing sector improvement consumers have simply not had their
spirits lifted. In Germany the banks continue to be obstreperous about
lending. In the UK the service sector is backing off. France is doing
well but at the cost of its fiscal progress. To be sure the various
counties of the e-Zone and of EU remain challenged. E-Zone lending has
been slow to revive. But getting the service sector back on track is a
key objective of mending the Euro-economy. That revival should fix a
lot of what is wrong. 
The improved economy pushed initial claims for unemployment insurance
down to a 15-month low. The Labor Department indicated that during the
latest week, which included the Thanksgiving holiday, claims fell to
457,000 from a downwardly revised 462,000 during the prior period. The
figures are down from the recession peak of 674,000 claims reached in
March. The four-week moving average of claims fell to 481,250 and the
latest weekly figure was lower than Consensus expectations for and
increase to 488,000 claims.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th class="scope" colspan="8">Markit
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area</td>
<td>53.04</td>
<td>52.58</td>
<td>50.86</td>
<td>52.16</td>
<td>49.46</td>
<td>45.81</td>
<td>63.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>51.38</td>
<td>50.73</td>
<td>52.06</td>
<td>51.39</td>
<td>50.21</td>
<td>47.13</td>
<td>51.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>60.87</td>
<td>57.71</td>
<td>53.16</td>
<td>57.25</td>
<td>52.29</td>
<td>47.96</td>
<td>81.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>49.84</td>
<td>52.20</td>
<td>48.53</td>
<td>50.19</td>
<td>47.31</td>
<td>43.94</td>
<td>48.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain</td>
<td>46.13</td>
<td>47.74</td>
<td>46.39</td>
<td>46.75</td>
<td>44.60</td>
<td>39.90</td>
<td>54.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ireland</td>
<td>46.80</td>
<td>47.37</td>
<td>45.46</td>
<td>46.54</td>
<td>45.16</td>
<td>39.85</td>
<td>40.8%</td>
</tr>
<tr class="grey2">
<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="grey3">
<td class="firstcol">UK (CIPs)</td>
<td>56.63</td>
<td>56.90</td>
<td>55.30</td>
<td>56.28</td>
<td>54.63</td>
<td>49.96</td>
<td>80.8%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">EU Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol">EU Index</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">EU Services</td>
<td>-9</td>
<td>-11</td>
<td>-11</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-26.00</td>
<td>47.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">EMU</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-4</td>
<td>-7</td>
<td>-9</td>
<td>-6.67</td>
<td>-11.50</td>
<td>-18.96</td>
<td>36.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Cons Confidence</td>
<td>-17</td>
<td>-18</td>
<td>-19</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-21.31</td>
<td>47.2%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany-Ccon</td>
<td>-19</td>
<td>-16</td>
<td>-19</td>
<td>-18.00</td>
<td>-22.00</td>
<td>-25.92</td>
<td>32.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France-Ccon</td>
<td>-18</td>
<td>-21</td>
<td>-24</td>
<td>-21.00</td>
<td>-25.33</td>
<td>-29.92</td>
<td>47.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ital-Ccon</td>
<td>-17</td>
<td>-18</td>
<td>-16</td>
<td>-17.00</td>
<td>-17.17</td>
<td>-22.33</td>
<td>42.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK-Ccon</td>
<td>-8</td>
<td>-8</td>
<td>-10</td>
<td>-8.67</td>
<td>-12.67</td>
<td>-20.00</td>
<td>71.1%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">percentile is over range
since May 2000</td>
</tr>
</tbody>
</table>
</body></html>

In November the Services PMI rose to 53.04 from 52.58. The services PMI stands in the 63rd percentile of its range. As such it is stronger than the EMU commission index for the sector that is only in the 47th percentile of its range. [...]

EMU PMI Rises Strongly In November

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203a.jpg" align="right" border="0" height="265" width="353">
The improved
economy pushed initial claims for unemployment insurance down to a
15-month low. The Labor Department indicated that during the latest
week, which included the Thanksgiving holiday, claims fell to 457,000
from a downwardly revised 462,000 during the prior period. The figures
are down from the recession peak of 674,000 claims reached in March.
The four-week moving average of claims fell to 481,250 and the latest
weekly figure was lower than Consensus expectations for and increase to
488,000 claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203b.jpg" align="right" border="0" height="265" width="353">Continuing claims for unemployment insurance
during
the latest week inched up by 28,000 after a 176,000 decline during the
week prior which was much greater than reported initially. Continuing
claims were at the lowest level since late-February. The decline is a
function of the improved job market but also reflects the exhaustion of
unemployment benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell to 5,541,500. This series dates back to
1966.
Extended benefits for unemployment insurance
rose w/w to a cycle high of 597,688 during the second week of November.
The latest was&nbsp; versus 550,343 during all of October.
The
insured rate of unemployment remained stable at 4.1% and matched its
lowest since late-March. The rate reached a high of 5.2% during
late-June. During the last ten years, there has been a 93% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203c.jpg" align="right" border="0" height="265" width="353">The
highest insured unemployment rates in the week ending November 14
were in Puerto Rico (6.1%), Oregon (5.9), Alaska (5.5), Nevada
(5.2),&nbsp; California (5.2), Michigan (5.1), Wisconsin (5.0),
Pennsylvania (5.0), and South Carolina (4.5). The lowest insured
unemployment rates were in North Dakota (1.2%), Virginia (2.0), Texas
(2.5), Maine (2.9), Wyoming (2.9), Maryland (3.1), Ohio (3.5), New York
(3.5), Mississippi (3.5) and Florida (3.7). Most of these rates are
slightly higher than their recent low. However, the data are not
seasonally adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.
The Fed's latest Beige Book covering regional economic
conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20091202/default.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">11/28/09</th>
<th scope="col">11/21/09</th>
<th scope="col">11/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>457</td>
<td>462</td>
<td>501</td>
<td>-11.6%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,465</td>
<td>5,437</td>
<td>33.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.1</td>
<td>4.1</td>
<td>3.1 (11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

</body></html>

The improved economy pushed initial claims for unemployment insurance down to a 15-month low. The Labor Department indicated that during the latest week, which included the Thanksgiving holiday, claims fell to 457,000 from a [...]

U.S. Weekly Initial Claims For Jobless Insurance Fall Further

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}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203a.jpg" align="right" border="0" height="265" width="353">
The improved
economy pushed initial claims for unemployment insurance down to a
15-month low. The Labor Department indicated that during the latest
week, which included the Thanksgiving holiday, claims fell to 457,000
from a downwardly revised 462,000 during the prior period. The figures
are down from the recession peak of 674,000 claims reached in March.
The four-week moving average of claims fell to 481,250 and the latest
weekly figure was lower than Consensus expectations for and increase to
488,000 claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203b.jpg" align="right" border="0" height="265" width="353">Continuing
claims for unemployment insurance
during
the latest week inched up by 28,000 after a 176,000 decline during the
week prior which was much greater than reported initially. Continuing
claims were at the lowest level since late-February. The decline is a
function of the improved job market but also reflects the exhaustion of
unemployment benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell to 5,541,500. This series dates back to
1966.
Extended benefits for unemployment insurance
rose w/w to a cycle high of 597,688 during the second week of November.
The latest was&nbsp; versus 550,343 during all of October.
The
insured rate of unemployment remained stable at 4.1% and matched its
lowest since late-March. The rate reached a high of 5.2% during
late-June. During the last ten years, there has been a 93% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203c.jpg" align="right" border="0" height="265" width="353">The
highest insured unemployment rates in the week ending November 14
were in Puerto Rico (6.1%), Oregon (5.9), Alaska (5.5), Nevada
(5.2),&nbsp; California (5.2), Michigan (5.1), Wisconsin (5.0),
Pennsylvania (5.0), and South Carolina (4.5). The lowest insured
unemployment rates were in North Dakota (1.2%), Virginia (2.0), Texas
(2.5), Maine (2.9), Wyoming (2.9), Maryland (3.1), Ohio (3.5), New York
(3.5), Mississippi (3.5) and Florida (3.7). Most of these rates are
slightly higher than their recent low. However, the data are not
seasonally adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.
The Fed's latest Beige Book covering regional economic
conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20091202/default.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">11/28/09</th>
<th scope="col">11/21/09</th>
<th scope="col">11/14/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>457</td>
<td>462</td>
<td>501</td>
<td>-11.6%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,465</td>
<td>5,437</td>
<td>33.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.1</td>
<td>4.1</td>
<td>3.1 (11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

U.S. Weekly Initial Claims For
Jobless Insurance Fall Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203d.jpg" align="left" border="0" height="265" width="353">
In November the Services PMI rose to 53.04 from 52.58. The
services PMI stands in the 63rd percentile of its range. As such it is
stronger than the EMU commission index for the sector that is only in
the 47th percentile of its range. 
 
Among EMU nations France&#8217;s index is the relative strongest standing in
the 81st percentile of its range. Ireland is the relative weakest with
the services index standing in the 40th percentile of its range. 
 
Interestingly the service sector has continued to improve with little
or no improvement in consumer confidence (see bottom panel of table
above). 
 
The service sector is important since it is where most of the jobs are.
Despite ongoing sector improvement consumers have simply not had their
spirits lifted. In Germany the banks continue to be obstreperous about
lending. In the UK the service sector is backing off. France is doing
well but at the cost of its fiscal progress. To be sure the various
counties of the e-Zone and of EU remain challenged. E-Zone lending has
been slow to revive. But getting the service sector back on track is a
key objective of mending the Euro-economy. That revival should fix a
lot of what is wrong. 
The improved economy pushed initial claims for unemployment insurance
down to a 15-month low. The Labor Department indicated that during the
latest week, which included the Thanksgiving holiday, claims fell to
457,000 from a downwardly revised 462,000 during the prior period. The
figures are down from the recession peak of 674,000 claims reached in
March. The four-week moving average of claims fell to 481,250 and the
latest weekly figure was lower than Consensus expectations for and
increase to 488,000 claims.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th class="scope" colspan="8">Markit
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area</td>
<td>53.04</td>
<td>52.58</td>
<td>50.86</td>
<td>52.16</td>
<td>49.46</td>
<td>45.81</td>
<td>63.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>51.38</td>
<td>50.73</td>
<td>52.06</td>
<td>51.39</td>
<td>50.21</td>
<td>47.13</td>
<td>51.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>60.87</td>
<td>57.71</td>
<td>53.16</td>
<td>57.25</td>
<td>52.29</td>
<td>47.96</td>
<td>81.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>49.84</td>
<td>52.20</td>
<td>48.53</td>
<td>50.19</td>
<td>47.31</td>
<td>43.94</td>
<td>48.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain</td>
<td>46.13</td>
<td>47.74</td>
<td>46.39</td>
<td>46.75</td>
<td>44.60</td>
<td>39.90</td>
<td>54.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ireland</td>
<td>46.80</td>
<td>47.37</td>
<td>45.46</td>
<td>46.54</td>
<td>45.16</td>
<td>39.85</td>
<td>40.8%</td>
</tr>
<tr class="grey2">
<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="grey3">
<td class="firstcol">UK (CIPs)</td>
<td>56.63</td>
<td>56.90</td>
<td>55.30</td>
<td>56.28</td>
<td>54.63</td>
<td>49.96</td>
<td>80.8%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol">EU Index</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">EU Services</td>
<td>-9</td>
<td>-11</td>
<td>-11</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-26.00</td>
<td>47.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">EMU</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-4</td>
<td>-7</td>
<td>-9</td>
<td>-6.67</td>
<td>-11.50</td>
<td>-18.96</td>
<td>36.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Cons Confidence</td>
<td>-17</td>
<td>-18</td>
<td>-19</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-21.31</td>
<td>47.2%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany-Ccon</td>
<td>-19</td>
<td>-16</td>
<td>-19</td>
<td>-18.00</td>
<td>-22.00</td>
<td>-25.92</td>
<td>32.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France-Ccon</td>
<td>-18</td>
<td>-21</td>
<td>-24</td>
<td>-21.00</td>
<td>-25.33</td>
<td>-29.92</td>
<td>47.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ital-Ccon</td>
<td>-17</td>
<td>-18</td>
<td>-16</td>
<td>-17.00</td>
<td>-17.17</td>
<td>-22.33</td>
<td>42.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK-Ccon</td>
<td>-8</td>
<td>-8</td>
<td>-10</td>
<td>-8.67</td>
<td>-12.67</td>
<td>-20.00</td>
<td>71.1%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">percentile
is over range
since May 2000</td>
</tr>
</tbody>
</table>
EMU PMI Rises Strongly In
November&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> December 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203g.jpg" align="left" border="0" height="265" width="353">
Last quarter's strength in productivity growth was revised
lower with the reduced reading on GDP. Nevertheless, the revised 8.1%
jump remained the strongest since 3Q '03 and fell just short of
Consensus expectations for an 8.5% increase.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203h.jpg" align="right" border="0" height="265" width="353">
The revision reflected a downwardly revised 2.9% (-3.7% y/y)
increase in output. Hours-worked (employment times hours) was
little-revised at down 4.8% (-7.4% y/y) which followed a 7.5% 2Q
drop.Compensation costs, however, were revised up significantly to a
5.4% quarterly rate of growth and by 2.5% y/y.
The downward revision of productivity and the upward revision
to compensation lessened the previously reported decline in unit labor
costs. Nevertheless, the 2.5% decline remained the third consecutive
quarterly fall but it eased the y/y change to -1.4%.
The surge in 3Q worker productivity growth in the factory
sector was revised little at a 13.4% (AR) increase. That was a record
and it lifted y/y growth to 3.0%, the highest since early-last year.
The increase came as output rose at an 8.4% rate (-10.7% y/y) and hours
worked fell at a 4.4% rate (-13.3% y/y). Compensation rose at an
upwardly revised 6.5% rate (6.1% y/y), therefore unit labor costs in
the factory sector fell at a lessened 6.1% annual rate (+3.0% y/y).
The productivity &amp; cost figures are available in
Haver's USECON database.
Fed Chairman Ben S. Bernanke's Senate
testimony today can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091203a.htm">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">
</a>(SAAR, %)</th>
<th scope="col">3Q '09 (Revised)</th>
<th scope="col">3Q '09 (Prelim.)</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>8.1</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.0</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>5.4</td>
<td>3.8</td>
<td>6.9</td>
<td>-4.7</td>
<td>2.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-2.5</td>
<td>-5.2</td>
<td>-0.0</td>
<td>-5.0</td>
<td>-1.4</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sector</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>13.4</td>
<td>13.6</td>
<td>6.8</td>
<td>-2.5</td>
<td>3.0</td>
<td>0.8</td>
<td>3.2</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>6.5</td>
<td>5.5</td>
<td>6.5</td>
<td>-0.4</td>
<td>6.1</td>
<td>3.0</td>
<td>4.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-6.1</td>
<td>-7.1</td>
<td>-0.3</td>
<td>2.2</td>
<td>3.0</td>
<td>2.2</td>
<td>1.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
3Q U.S. Worker Productivity
Strength Revised Lower&nbsp;&amp; Unit Costs Up 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203e.jpg" align="left" border="0" height="265" width="353">
Unexpectedly, the November Composite Index for the
nonmanufacturing sector deteriorated for the second consecutive month.
The figure from the Institute for Supply Management (ISM) fell below
the break-even level of 50 to 48.7 and fell short of Consensus
expectations for a reading of 51.2. Since the series' inception in 1997
there has been a 64% correlation between the level of the composite
index in the nonmanufacturing sector and the Q/Q change in real GDP for
the services and the construction sectors.
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. The figures are
available in Haver's USECON database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203f.jpg" align="right" border="0" height="265" width="353">
Amongst the components, the business activity index for the
service sector fell the hardest to 49.6 and just below the break-even
level. The new orders series also fell slightly to 55.1 but remained up
from November's low of 35.6. The speed of vendor deliveries increased
(lower index level) to its quickest since June. Only the employment
index showed slight improvement m/m but it remained well below the
September level. Since the series' inception in 1997 there has been an
80% 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.
Pricing power increased slightly despite the weakening in
business activity. The pricing index rose m/m 57.9 and was up sharply
from the December low of 36.1. Since its inception ten years ago, there
has been a 73% 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 indices of 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>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM" style="color: rgb(0, 0, 0);">ISM Nonmanufacturing Survey</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>48.7</td>
<td>50.6</td>
<td>50.9</td>
<td>37.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>49.6</td>
<td>55.2</td>
<td>55.1</td>
<td>33.3</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>55.1</td>
<td>55.6</td>
<td>54.2</td>
<td>35.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>41.6</td>
<td>41.1</td>
<td>44.3</td>
<td>31.1</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries</td>
<td>48.5</td>
<td>50.5</td>
<td>50.0</td>
<td>49.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Index</td>
<td>57.8</td>
<td>53.0</td>
<td>48.8</td>
<td>37.0</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

</body></html>

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.even{
background-color:#dde5ef;
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background-color:#f0f0f0;
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091202h.jpg" align="left" border="0" height="265" width="353">
The EMU PPI has turned up in October pushing the three month
headline PPI series to an annual rate gain of 4.1%. Main categories
(independently seasonally adjusted) all show declines in October while
the headline (ex construction) series is up.
Inflation in Germany, France, Italy and the UK rose this
month. Only German core PPI inflation fell
Only Germany has persistently declining Inflation as its 3-mo,
6-mo and 12-mo inflation rates all are falling. Even so, German core
inflation is showing a steady menu of higher increase across its
sequential growth rates and its headline pace, despite dropping, is
dropping by less and less as we shorten the horizon for inflation
calculation. That means that despite its persistent declines even
German headline inflation is seeing upward pressures embedded those
ongoing but diminishing declines. French headline and core rates are
accelerating as are the headline rates for Italy and the UK. The recent
UK inflation result is eye-popping.
On balance the Euro Area has some inflation cooking. It is on
simmer but Europe is not Japan and has no deflation problem. For the
most part the inflation that is appearing seems to be healthy after a
period of extended price declines and in an economy that needs to begin
to post some growth in the aftermath of asset price drops. Italy and UK
inflation rates are uncomfortably high. But headline inflation is being
buffeted by energy prices and may not be indicative of true inflation
pressures at all. PPI inflation is notoriously volatile. The ECB
looking more closely at the HICP, yet this report will not go unnoticed.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th class="scope" colspan="7">Euro Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">TotalxConstruct</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>4.1%</td>
<td>0.4%</td>
<td>-6.6%</td>
<td>6.1%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-0.7%</td>
<td>2.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>-0.8%</td>
<td>-2.8%</td>
<td>2.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>3.3%</td>
<td>0.5%</td>
<td>-6.5%</td>
<td>4.1%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>0.0%</td>
<td>5.2%</td>
<td>2.4%</td>
<td>-5.2%</td>
<td>3.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-5.2%</td>
<td>-6.1%</td>
<td>-7.5%</td>
<td>7.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Gy ExEnergy</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>-1.0%</td>
<td>-3.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France:Tot</td>
<td>1.0%</td>
<td>-0.2%</td>
<td>6.5%</td>
<td>2.7%</td>
<td>-6.6%</td>
<td>4.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Fr ExF&amp;Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>-0.4%</td>
<td>-3.4%</td>
<td>3.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.3%</td>
<td>0.3%</td>
<td>5.9%</td>
<td>1.2%</td>
<td>-6.1%</td>
<td>4.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>1.4%</td>
<td>0.4%</td>
<td>19.0%</td>
<td>8.6%</td>
<td>-2.7%</td>
<td>14.6%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Euro Area Harmonized PPI ex
construction</td>
</tr>
</tbody>
</table>
</body></html>

The EMU PPI has turned up in October pushing the three month headline PPI series to an annual rate gain of 4.1%. Main categories (independently seasonally adjusted) all show declines in October while the headline (ex construction) [...]

PPI Heats Up in the Euro Area

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091202a.jpg" align="right" border="0" height="265" width="353">It's the same story as in
prior months, only
more-so. October construction spending was unchanged after revisions
lowered earlier months' activity. September outlays now are reported
down 1.6%, double last months' estimate. Consensus estimates had been
for a slight uptick in October activity.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091202b.jpg" align="right" border="0" height="265" width="353">Residential
building activity
did increase 4.4%, but a September gain was revised to a 2.0% decline.
Single-family construction rose 1.9% (-30.7% y/y) for the fifth
consecutive, firm monthly increase. Spending on improvements also
firmed by 8.7% (-7.3% y/y) but September's initially reported 7.2%
increase was revised to a 5.7% decline. Multi-family building continued
down by 2.1% (-43.6% y/y) and was off 55.6% from the January 2007
peak.· Nonresidential building activity fell another 2.5% during
October after a 3.6% September decline that was double the initial
estimate. Since the 2008 peak activity has fallen by 20.6%. Spending in
the food &amp; beverage industry declined 32.5% y/y while
expenditures in the lodging were off by nearly one-half. Commercial
building overall fell 40.0% y/y while office building dropped by more
than one-third. Relatively moderate was the y/y decline in the
education, religious and health care sectors.&nbsp;· Public
construction overall fell a modest 0.4% during October and y/y
expenditures actually rose though tax revenues fell. Building activity
on highways &amp; streets fell just 0.3% m/m (+4.7% y/y) as the
nation's infrastructure received more attention. Public spending on
health care facilities reversed much of the prior month's gain with a
3.2% decline (+12.6% y/y) and building in the education sector rose
1.1% (-0.1% y/y).
 The construction put-in-place figures are available
in Haver's USECON database. Talking
about Tomorrow&#8217;s Monetary Policy Today from the Federal
Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-35.html">
here </a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
(%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.0</td>
<td>-1.6</td>
<td>-0.9</td>
<td>-14.4</td>
<td>-6.9</td>
<td>-1.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.3</td>
<td>-3.0</td>
<td>-0.5</td>
<td>-21.9</td>
<td>-11.1</td>
<td>-5.7</td>
<td>5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>4.2</td>
<td>-2.0</td>
<td>3.1</td>
<td>-23.6</td>
<td>-29.1</td>
<td>-19.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-2.5</td>
<td>-3.6</td>
<td>-2.9</td>
<td>-20.6</td>
<td>13.2</td>
<td>23.1</td>
<td>16.2</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-0.4</td>
<td>0.9</td>
<td>-1.7</td>
<td>3.8</td>
<td>5.6</td>
<td>13.1</td>
<td>9.3</td>
</tr>
</tbody>
</table>

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It's the same story as in prior months, only more-so. October construction spending was unchanged after revisions lowered earlier months' activity. September outlays now are reported down 1.6%, double last months' estimate. Consensus [...]

U.S. Construction Flat In October With Downward Revisions To Prior Months

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091202i.jpg" align="right" border="0" height="265" width="353">
The
outplacement firm of Challenger, Grey &amp; Christmas indicated
that job cut announcements fell last month to 50,349, compared to a
high of 241,748 in January of this year. The latest reading was the
least number of layoffs since December 2007. Layoffs have moderated
sharply in the apparel, consumer goods, financial, retail, services and
transportation industries. They rose sharply in the health care
industry and moderately in the insurance industry.During
the last ten years there has been a 67% (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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091202j.jpg" align="right" border="0" height="265" width="353">
These figures are gross layoffs
and do not reflect new hires as do the monthly figures on payroll
employment. At their 2007 low, the latest Challenger figures were then
accompanied by monthly gains in nonfarm payrolls of roughly 160,000.
Challenger also provides data on firms' hiring plans. During November
plans fell back to the recession lows after having increased over the
last two months. The net of hires less layoffs nevertheless was near
its least 2007.The Challenger figures are available in Haver's SURVEYS
database. The Recession in Perspective from the
Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/">here</a>.
<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/SURVEYS/@S3/@S301/@S301.HTM" style="color: rgb(0, 0, 0);">Challenger, Gray
&amp; Christmas</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>50,349</td>
<td>55,679</td>
<td>66,404</td>
<td>-72.3%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>10,076</td>
<td>57,520</td>
<td>25,047</td>
<td>-9.7</td>
<td>118,600</td>
<td>365,583</td>
<td>273,887</td>
</tr>
</tbody>
</table>
</body></html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements fell last month to 50,349, compared to a high of 241,748 in January of this year. The latest reading was the least number of layoffs since [...]

Challenger Layoffs Move To Lowest Since Late-2007

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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Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

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The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

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

250502X5.jpg

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- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

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Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

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**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

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**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

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**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

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**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

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**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

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Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: 2009

Jump to:

3Q U.S. Worker Productivity Strength Revised Lower & Unit Costs Up

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