Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006a.jpg">
The pump price for regular gasoline fell last week to the lowest level since late-July. At an average $2.50 per gallon the price dropped a nickel from the prior week and may have broken out of the sideways pattern since early-June. These prices compare to the December low of $1.61. Yesterday, prices fell further. The wholesale gasoline price was down to $1.65 per gallon. Prices had reached a high in early-August of $2.03. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
During August, the consumer price index for gasoline recouped the July decline with a not seasonally adjusted 3.3% increase. Seasonally adjusted gas prices were quite firm and rose 9.1% m/m, up 40.3% YTD.
Crude oil prices have led the decline in refined product prices. Light sweet crude oil prices (WTI) fell to $68.41 per barrel, though that still was up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil fell further to $66.84 per barrel versus a daily high of $71.55 last week.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006b.jpg">
The demand for gasoline continued to improve through mid-month. The y/y rise of 1.1% was the first meaningful positive comparison since early-2007. Demand for residual fuel oil slacked off from its earlier strength and fell 5.1% y/y while distillate demand is off 13.2% y/y. Finally, oil remains plentiful as evidenced by a 16.5% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline recently have surged and are up 19.2% versus last year. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices increased again last week to an average of $3.48 per mmbtu (-54.9% y/y) but they remained down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu. Yesterday prices were up from last week&#39;s level at $3.54/mmbtu.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</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">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.50</td>
<td>2.55</td>
<td>-31.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
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The pump price for regular gasoline fell last week to the lowest level since late-July. At an average $2.50 per gallon the price dropped a nickel from the prior week and may have broken out of the sideways pattern since early-June. [...]

Weekly Gasoline Prices Fall To Lowest Level In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006a.jpg" align="left" border="0">
The pump price for regular gasoline fell
last week to the lowest level since late-July. At an average $2.50 per
gallon the price dropped a nickel from the prior week and may have
broken out of the sideways pattern since early-June. These prices
compare to the December low of $1.61. Yesterday, prices fell further.
The wholesale gasoline price was down to $1.65 per gallon. Prices had
reached a high in early-August of $2.03. The figures are reported by
the U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
During August, the consumer price index for gasoline recouped
the July decline with a not seasonally adjusted 3.3% increase.
Seasonally adjusted gas prices were quite firm and rose 9.1% m/m, up
40.3% YTD.
Crude oil prices have led the decline in
refined product prices. Light sweet crude oil prices (WTI) fell to
$68.41 per barrel, though that still was up from the December low of
$32.37. Yesterday, the spot market price for light sweet crude oil fell
further to $66.84 per barrel versus a daily high of $71.55 last week.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006b.jpg" align="right" border="0">
The demand for gasoline continued to improve through
mid-month. The y/y rise of 1.1% was the first meaningful positive
comparison since early-2007. Demand for residual fuel oil slacked off
from its earlier strength and fell 5.1% y/y while distillate demand is
off 13.2% y/y. Finally, oil remains plentiful as evidenced by a 16.5%
y/y rise in inventories of crude oil &amp; petroleum products.
Inventories of gasoline recently have surged and are up 19.2% versus
last year. The figures on crude oil production and inventories are
available in Haver's OILWKLY database.
Natural gas prices increased again last week to an average of
$3.48 per mmbtu (-54.9% y/y) but they remained down by three-quarters
from the high reached in early-July of last year of $13.19/mmbtu.
Yesterday prices were up from last week's level at $3.54/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</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">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.50</td>
<td>2.55</td>
<td>-31.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 German Orders Growth Extended 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091007a.jpg" align="left" border="0" height="265" width="353">
Order Trends: German new orders growth was
extended as foreign orders snapped back after a one-month decline.
Domestic orders fell by 1.9% after surging by 9.5% in July. Orders have
been rising steadily, strongly, over the past six months with domestic
orders up in five of those six months and foreign orders up in four of
those six months. Both series are showing continuing acceleration not
just growth. In the current quarter domestic orders are outpacing on
the back of a one month 9.5% spurt in orders in July as the new quarter
began. 
 

Foreign order sources: Orders from
countries outside the euro zone alone jumped 5.9%, in August while
foreign demand for German manufactured goods from the other 15
countries sharing the euro rose by just 2.8% in August from the month
earlier. Growth outside of the e-Zone drove German orders this past
month. 
 

Euro-Area policy cuts no slack - Apart
from orders, the European Commission Wednesday warned nine countries,
including Germany, that their budget deficits are too large. This is
the legacy effect of having used domestic deficit spending to bolster
the economy in the recession. That policy response was good thing, but
it now puts those countries afoul of EU Commission rules. 
 

Out of touch with reality? The warning
comes at an odd time since Euro-central bankers and policy officials in
the US have underscored that the time is not right to withdraw
stimulus. Hanging the &#8216;Sword of Damocles&#8217; over the heads of the various
ECB nations does not seem like the right policy tilt to encourage them
to keep their stimulus efforts in place. It sounds a lot like pressure
to get you house in order NOW! The EU Commission is using bad judgment
and being too strict on rules of evaluations at a time like this. Yes
it is just this sort of thinking that keeps the euro strong but it also
unduly complicates and hampers policy. This stance reminds me of the
ECB&#8217;s problems in cutting rates in timely fashion in the recession. The
target rate ceiling on the HICP hampered the ECB in the pits of the
crisis. It cut rates as a part of an &#8216;international effort&#8217;, using that
as an excuse to cut rates with headline inflation well over its ceiling
at the time. I suppose we are to understand that this warning from the
EU Commission as a formality that has come as scheduled. But in times
such as these what is the merit? Does this act brand the EU Commission
tough or as out of touch? 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>1.4%</td>
<td>3.1%</td>
<td>3.8%</td>
<td>38.7%</td>
<td>17.8%</td>
<td>-21.1%</td>
<td>-2.4%</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.6%</td>
<td>-2.4%</td>
<td>6.9%</td>
<td>42.1%</td>
<td>19.2%</td>
<td>-24.0%</td>
<td>-3.8%</td>
<td>30.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-1.9%</td>
<td>9.5%</td>
<td>0.5%</td>
<td>35.5%</td>
<td>16.4%</td>
<td>-17.6%</td>
<td>-0.9%</td>
<td>59.5%</td>
</tr>
<tr class="even">
<td class="firstcol">Real Sector Sales</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>2.7%</td>
<td>-0.5%</td>
<td>1.1%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.6%</td>
<td>1.8%</td>
<td>14.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-8.4%</td>
<td>-3.0%</td>
<td>-4.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>1.6%</td>
<td>0.5%</td>
<td>-2.6%</td>
<td>-2.3%</td>
<td>-1.1%</td>
<td>-20.6%</td>
<td>-1.8%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurable</td>
<td>0.2%</td>
<td>-0.9%</td>
<td>0.5%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-6.2%</td>
<td>-3.2%</td>
<td>-6.3%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>4.2%</td>
<td>-2.0%</td>
<td>1.4%</td>
<td>15.4%</td>
<td>7.4%</td>
<td>-20.9%</td>
<td>4.8%</td>
<td>18.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>2.5%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>23.9%</td>
<td>11.3%</td>
<td>-16.2%</td>
<td>1.0%</td>
<td>22.9%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td>2.6%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.9%</td>
<td>1.9%</td>
<td>14.3%</td>
</tr>
</tbody>
</table>
 Central Bank Of Australia Raises
Interest Rate 25 Basis Points To 3.25% 
by <a href="/comment/Curley.html">Louise
Curley</a> October 6, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006d.jpg" align="right" border="0" height="265" width="353">The Central
Bank of Australia raised its policy interest rate from 3.00% to 3.25%
today, the first of the Group of 20 to increase interest rates since
the start of the global financial crisis in late 2007.
 In
relative terms, the recession in Australia has been mild.&nbsp; The
first two charts comparing the levels in the rate of unemployment and
the changes in Gross Domestic Product with those in the United States
and the Euro Area show that there has been considerably less
unemployment in Australia and that its decline in total activity has
been milder and of shorter duration.&nbsp; GDP in Australia has
actually increased in the first two quarters of 2009.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006e.jpg" align="right" border="0" height="265" width="353">
Among the
reasons for Australia's better performance is the condition of its
financial system.&nbsp;&nbsp; Australia's financial system had
not been disrupted to the extent that those of the Americans, British
and Europeans had been by unsound practices.&nbsp; Moreover, demand
for Australian natural resources has been maintained at relatively high
levels.&nbsp; After a slow down in late 2008 Australia's most
important trading partner, China, rapidly regained its high growth
trend in 2009 and its demand for Australia's
resources.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006f.jpg" align="right" border="0" height="265" width="353">Economic
conditions in Australia in
recent months have been stronger than expected.&nbsp;&nbsp; The
Reserve Bank of Australia publishes quarterly forecasts of
GDP.&nbsp; Its last two forecasts of May 2009 and August 2009 are
shown in the third chart compared with the actual results in the first
and second quarters of 2009.&nbsp; In May, the Bank was forecasting
year over year percent declines for the four quarters of 2009 and for
the first quarter of 2010.&nbsp; The Bank raised its forecast in
August but still actual conditions were stronger than expected. The
bank's forecast for the first and second quarters of this
year--0.40%&nbsp; and 0.25% year over year increases-were below the
actual year over year increases of 0.32% and 0.53% .&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
UNEMPLOYMENT RATE (%)</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">FEB 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>5.8</td>
<td>5.8</td>
<td>5.6</td>
<td>5.7</td>
<td>5.5</td>
<td>5.7</td>
<td>5.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>9.3</td>
<td>9.2</td>
<td>9.0</td>
<td>8.8</td>
<td>8.5</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>9.7</td>
<td>9.4</td>
<td>9.5</td>
<td>9.4</td>
<td>8.9</td>
<td>8.5</td>
<td>8.1</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">GDP (Q/Q %
chg)</td>
<td>Q2 09</td>
<td>Q1 09</td>
<td>Q4 08</td>
<td>Q3 08&nbsp;</td>
<td>Q2 08&nbsp;</td>
<td>Q1 09&nbsp;</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>0.62</td>
<td>0.40</td>
<td>-0.71</td>
<td>0.32</td>
<td>0.34</td>
<td>0.74</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>-0.12</td>
<td>-2.45</td>
<td>-1.81</td>
<td>-0.35</td>
<td>-.033</td>
<td>0.79</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>-0.18</td>
<td>-1.65</td>
<td>-1.37</td>
<td>-0.68</td>
<td>0.36</td>
<td>-0.18</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
 Weekly Chain Store Sales Tick
Higher After Sharp September Decline 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006g.jpg" align="left" border="0" height="265" width="353">
Indications that consumer spending might be improving faded
during the last several weeks. During the latest week, chain store
sales slipped 0.3% leaving them 0.6% below September after that month's
0.7% decline.
During the last ten years there has been a 69% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. The weekly figures are available
in Haver's SURVEYW database.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


Prospects for improvement in sales seem limited. The leading
indicator of sales slipped 0.3% (-0.1% y/y) during the latest week
though it had risen somewhat earlier this summer.
A Bit Better, But Very Far From Best are
yesterday's comments by New York Fed President William C. Dudley and
they are available <a href="http://www.newyorkfed.org/newsevents/speeches/2009/dud091005.html">here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">10/03/09</th>
<th scope="col">09/26/09</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">Total Weekly Chain
Store Sales</td>
<td>486.5</td>
<td>485.0</td>
<td>1.0%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>

</body></html>

Weekly Gasoline Prices Fall ToLowest Level In One Month

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005d.jpg" align="right" border="0" height="265" width="353">
There is a little good news in today's preliminary estimates
of August retail trade for the Euro Area. The value of trade managed a
small increase of 0.40% after three successive monthly declines. The
volume of trade actually declined by 0.18%. It was only a rise in
prices of 0.58% that accounted for the rise in the value of trade. The
first chart shows indexes of the value, volume and prices of Euro
Retail Trade. (We calculated the index of prices by dividing the index
of value of trade by the index of volume and multiplying the result by
100.).These are preliminary estimates for the whole area because not
all 16 countries have yet reported retail sales data. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005e.jpg" align="right" border="0" height="265" width="353">
France and Italy
are important omissions.Eurostat estimates total sales after a
significant number of countries have reported sales data. Data are
revised as more countries report.Among those countries that have
reported, Austria, Belgium, Portugal, Slovenia, and Germany show
declines in value; Finland showed no change and Slovakia and Spain
showed small gains..The Producer Price Index was also released today
and it, too, shows a small increase in August. While one month rise
does not set a trend, it may be an indication that the deflationary
impact of falling oil prices has run its course.



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> EURO
AREA&nbsp; (2005=100)</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Aug 08</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y %&nbsp;</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">Value of Retail Trade</td>
<td>104.57</td>
<td>104.17</td>
<td>108.76</td>
<td>0.40</td>
<td>-3.83</td>
<td>108.7</td>
<td>106.2</td>
<td>103.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Volume of Retail Trade</td>
<td>100.22</td>
<td>100.40</td>
<td>102.64</td>
<td>-0.18</td>
<td>-236</td>
<td>103.0</td>
<td>103.7</td>
<td>102.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade Price Index</td>
<td>104.36</td>
<td>103.76</td>
<td>105.96</td>
<td>0.58</td>
<td>-1.51</td>
<td>105.6</td>
<td>102.4</td>
<td>101.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Producers Price Index</td>
<td>106.2</td>
<td>105.95</td>
<td>114.25</td>
<td>0.24</td>
<td>-7.05</td>
<td>111.8</td>
<td>106.6</td>
<td>104.2</td>
</tr>
</tbody>
</table>
</body></html>

There is a little good news in today's preliminary estimates of August retail trade for the Euro Area. The value of trade managed a small increase of 0.40% after three successive monthly declines. The volume of trade actually declined [...]

Retail Sales in The Euro Area Get a Lift From Price Increases

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005a.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity broadened last month to its highest level
since May of last year. The Composite Index for the nonmanufacturing
sector from the Institute for Supply Management (ISM) rose to 50.9, a
level that indicates there was growth in overall service sector
activity. The latest level was the highest since May of last year and
the figure outpaced Consensus expectations for an increase to 50.0. A
level of the ISM index above 50 indicates rising overall service sector
activity. Since the series' inception in 1997 there has been a 64%
correlation between the level of the composite index 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/091005b.jpg" align="right" border="0" height="265" width="353">The
improvement in the index again was broad-based amongst the
component series. The business activity index for the service sector
remained above the break-even level of 50 for the second month. The new
orders series also broached 50, up from November's low of 35.6. In
addition, the employment index rose to 44.2 and that was the highest
level since August of last year. 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.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005c.jpg" power ebbed service sector despite improvement overall activity pricing gave back more than half august gain declined to just nine percent (nsa of firms reported higher while an increased reporting lower prices since its inception ten years ago there has been a correlation between and q change in the gdp services chain price index align="right" border="0" height="265" width="353">
&gt;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>

 Housing's Great Fall: Putting Household
Balance Sheets Together Again from the Federal Reserve Bank
of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here.</a>&nbsp;
<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">September</th>
<th scope="col">August</th>
<th scope="col">September '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>50.9</td>
<td>48.4</td>
<td>50.0</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>55.1</td>
<td>51.3</td>
<td>51.5</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>54.2</td>
<td>49.9</td>
<td>50.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>44.3</td>
<td>43.5</td>
<td>44.2</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries</td>
<td>50.0</td>
<td>49.0</td>
<td>53.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>48.8</td>
<td>63.1</td>
<td>70.6</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

</body></html>

Improvement in service sector activity broadened last month to its highest level since May of last year. The Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose to 50.9, a level that [...]

U.S. ISM Nonmanufacturing Index Increases To Highest Since May '08

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005a.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity broadened last month to its highest level
since May of last year. The Composite Index for the nonmanufacturing
sector from the Institute for Supply Management (ISM) rose to 50.9, a
level that indicates there was growth in overall service sector
activity. The latest level was the highest since May of last year and
the figure outpaced Consensus expectations for an increase to 50.0. A
level of the ISM index above 50 indicates rising overall service sector
activity. Since the series' inception in 1997 there has been a 64%
correlation between the level of the composite index 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/091005b.jpg" align="right" border="0" height="265" width="353">The
improvement in the index again was broad-based amongst the
component series. The business activity index for the service sector
remained above the break-even level of 50 for the second month. The new
orders series also broached 50, up from November's low of 35.6. In
addition, the employment index rose to 44.2 and that was the highest
level since August of last year. 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.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005c.jpg" power ebbed service sector despite improvement overall activity pricing gave back more than half august gain declined to just nine percent (nsa of firms reported higher while an increased reporting lower prices since its inception ten years ago there has been a correlation between and q change in the gdp services chain price index align="right" border="0" height="265" width="353">
&gt;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>

 Housing's Great Fall: Putting Household
Balance Sheets Together Again from the Federal Reserve Bank
of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here.</a>&nbsp;
<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">September</th>
<th scope="col">August</th>
<th scope="col">September '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>50.9</td>
<td>48.4</td>
<td>50.0</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>55.1</td>
<td>51.3</td>
<td>51.5</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>54.2</td>
<td>49.9</td>
<td>50.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>44.3</td>
<td>43.5</td>
<td>44.2</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries</td>
<td>50.0</td>
<td>49.0</td>
<td>53.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>48.8</td>
<td>63.1</td>
<td>70.6</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

 Retail Sales in The Euro Area Get
a Lift From Price Increases 
by <a href="/comment/Curley.html">
Louise Curley</a> October 5, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005d.jpg" align="right" border="0" height="265" width="353">There is a little good news
in today's preliminary estimates
of August retail trade for the Euro Area. The value of trade managed a
small increase of 0.40% after three successive monthly declines. The
volume of trade actually declined by 0.18%. It was only a rise in
prices of 0.58% that accounted for the rise in the value of trade. The
first chart shows indexes of the value, volume and prices of Euro
Retail Trade. (We calculated the index of prices by dividing the index
of value of trade by the index of volume and multiplying the result by
100.).These are preliminary estimates for the whole area because not
all 16 countries have yet reported retail sales data. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005e.jpg" align="right" border="0" height="265" width="353">France and
Italy
are important omissions.Eurostat estimates total sales after a
significant number of countries have reported sales data. Data are
revised as more countries report.Among those countries that have
reported, Austria, Belgium, Portugal, Slovenia, and Germany show
declines in value; Finland showed no change and Slovakia and Spain
showed small gains..The Producer Price Index was also released today
and it, too, shows a small increase in August. While one month rise
does not set a trend, it may be an indication that the deflationary
impact of falling oil prices has run its course.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> EURO
AREA&nbsp; (2005=100)</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Aug 08</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y %&nbsp;</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">Value of Retail Trade</td>
<td>104.57</td>
<td>104.17</td>
<td>108.76</td>
<td>0.40</td>
<td>-3.83</td>
<td>108.7</td>
<td>106.2</td>
<td>103.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Volume of Retail Trade</td>
<td>100.22</td>
<td>100.40</td>
<td>102.64</td>
<td>-0.18</td>
<td>-236</td>
<td>103.0</td>
<td>103.7</td>
<td>102.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade Price Index</td>
<td>104.36</td>
<td>103.76</td>
<td>105.96</td>
<td>0.58</td>
<td>-1.51</td>
<td>105.6</td>
<td>102.4</td>
<td>101.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Producers Price Index</td>
<td>106.2</td>
<td>105.95</td>
<td>114.25</td>
<td>0.24</td>
<td>-7.05</td>
<td>111.8</td>
<td>106.6</td>
<td>104.2</td>
</tr>
</tbody>
</table>
</body></html>

U.S. ISM Nonmanufacturing IndexIncreases To Highest Since May '08

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002h.jpg" align="left" border="0" height="265" width="353">
August&#8217;s EMU PPI excluding construction rose by 0.7% following
a drop of 0.9% in July. Still the three-month growth rate (annualized)
is now positive at 0.7% the six month growth rate is at -3.9% and the
12-month growth rate is at -7.6%. Inflation is gaining a toe hold again
in EMU at the producer price level. The ECB ahs a ceiling arrangement
for the HICP only (harmonized index of consumer inflation). 
 

Even so, inflation does not appear to be cooking in any sense
of the word. For consumer goods, prices were still flat in August and,
at -0.3%, the three month growth rate for consumer goods is still close
to its six month annualized pace at -0.6%. There is no pressure there.
Capital goods prices continued to fall in August dropping by 0.1%. Over
three months, capital goods prices are falling by 0.8%; that is a
slight but only a slight improvement from dropping by 1.4% at an annual
rate over six months. There is not much inflation pressure from capital
goods prices either. 
 

Virtually all the inflation pressure in the PPI is coming from
industrial supplies or intermediate goods. Intermediate goods prices
rose by 0.4% in August. They are also up at a 1.1% annual rate over
three months and down at an annual rate of 3.6% over six months. 
 

Across EMU countries the headline PPI rose in all of the
largest of them. Ex food and energy prices rose in Germany and in
France as well. For all these price measures, the August rise is
balanced by a drop in July. 
 

Still the bottom line is that prices are on the move again.
While it does not look like the pressures are very widespread across
commodity classifications or very intense, the pressure seems quite
real and widespread cross the larger EMU nations. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="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>Aug-09</td>
<td>Jul-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">Total excl Constructions</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>0.7%</td>
<td>-3.9%</td>
<td>-7.6%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-2.6%</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Cap Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-3.6%</td>
<td>-7.4%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>4.1%</td>
<td>-0.7%</td>
<td>-7.1%</td>
<td>6.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.6%</td>
<td>-6.8%</td>
<td>-9.4%</td>
<td>-7.6%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany excl Energy</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-3.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France&nbsp;</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>-2.9%</td>
<td>-8.4%</td>
<td>7.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France excl Food &amp;
Energy</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-2.6%</td>
<td>-3.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>-2.8%</td>
<td>-7.8%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>-1.7%</td>
<td>6.2%</td>
<td>1.0%</td>
<td>-6.5%</td>
<td>21.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Euro Area Harmonized PPI ex
construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

August’s EMU PPI excluding construction rose by 0.7% following a drop of 0.9% in July. Still the three-month growth rate (annualized) is now positive at 0.7% the six month growth rate is at -3.9% and the 12-month growth rate is at [...]

PPI Points Way Higher for Euro Area Inflation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002g.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year.
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.
In addition to fewer layoffs, hiring plans have picked up and were more than double last year&#39;s level. There have been strong increase in services, electronics and entertainment/leisure industries.
The Challenger figures are available in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
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<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">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>
<td class="firstcol">Announced Job Cuts</td>
<td>66,404</td>
<td>76,456</td>
<td>-30.2%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>25,047</td>
<td>13,100</td>
<td>162.6</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>
</body>
</html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year. During the last [...]

Challenger Layoffs Fall Further To Cycle Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002a.jpg" width="353">
Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the &quot;Cash-for-Clunkers&quot; sales program. Sales last month fell 34.6% m/m to 9.22M units according to the Autodata Corporation. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). September sales were weaker than the expected 9.6M sales rate and were at their lowest since February.
Sales of domestically made vehicles fell by more than one-third from August to 6.62M units and they were down 29.7% y/y. Sales of fuel efficient cars fell nearly 40% m/m while light truck sales posted a 29% m/m decline that left them down one-third versus last September. Year-to-date, sales of domestic vehicles overall were down 13.1% following last year&#39;s 35.8% drop from December-to-December.
Imported light vehicles similarly fell with the end of the government&#39;s sales program. A 36.5% m/m decline to 2.60 units more than reversed the August increase. Sales of imported autos fell a hard 36.3% while sales of imported light trucks also fell by more than one-third m/m. Year-to-date, sales of imported vehicles were slightly below last year&#39;s average.
Overall, import&#39;s share of the U.S. light vehicle market slipped to 28.2% last month from 29.0% in August. It reached 26.5% during all of last year. (Imported vehicles are those produced outside the United States.) Imports&#39; share of the U.S. car market totaled 35.3%, versus 34.3% last year while the share of the light truck market was 19.7%, up slightly from 18.3% last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002b.jpg" width="353">
The U.S. vehicle sales figures can be found in Haver&#39;s USECON database.
Regulatory reform is yesterday&#39;s House testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091001a.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/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Sept. 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>9.22</td>
<td>14.09</td>
<td>11.24</td>
<td>-26.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.02</td>
<td>8.05</td>
<td>6.20</td>
<td>-20.3</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.25</td>
<td>5.26</td>
<td>4.11</td>
<td>-23.8</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.77</td>
<td>2.78</td>
<td>2.09</td>
<td>-12.9</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.20</td>
<td>6.05</td>
<td>5.04</td>
<td>-33.0</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.37</td>
<td>4.75</td>
<td>4.06</td>
<td>-34.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.83</td>
<td>1.31</td>
<td>0.98</td>
<td>-26.1</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>


</html>

Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the "Cash-for-Clunkers" sales program. Sales last month fell [...]

U.S. Vehicle Sales Payback August Strength

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.

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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

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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: October 2009

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