Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040907a.jpg" width="353">
The Job Openings &amp; Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics suggests US job creation has picked up, albeit moderately. The hires rate rose to 3.3% in June versus a monthly low of 3.0% last Spring and 3.1% during all of last year. The latest hires rate is down from the March high of 3.5% but it equals the rate averaged so far this year.
This year&#39;s improvement in the hires rate has been paced by job growth in the manufacturing and construction industries.
The survey dates only to December 2000 but has since followed closely the movement in nonfarm payrolls.
The job openings rate also is up this year versus last but it has been stuck at 2.3% since December.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.3%</td>
<td>2.3%</td>
<td>2.3%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.3%</td>
<td>3.2%</td>
<td>3.1%</td>
<td>3.1%</td>
<td>3.2%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
Mass Layoffs Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 7, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040907b.jpg" width="353">
Mass layoffs in the US as reported to the Bureau of Labor Statistics jumped 52% in July from an elevated June level which rose 40% from May. The increases reversed all of improvement which had occurred through May.
These mass layoffs generated 253,929 initial claims for unemployment insurance, up 12.1% y/y.
Since the series inception in 1995 there has been a (negative) 46% correlation between the number of initial claims generated by mass layoffs and the one month change in non-farm payrolls.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments--where private sector non-farm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF10/@EF1001/@EF1001.HTM">Mass Layoffs</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Number of Events: All Industries</td>
<td>2,094</td>
<td>1,379</td>
<td>0.3%</td>
<td>18,963</td>
<td>20,277</td>
<td>21,467</td>
</tr>
</tbody>
</table>
</body>
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The Job Openings & Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics suggests US job creation has picked up, albeit moderately. The hires rate rose to 3.3% in June versus a monthly low of 3.0% last Spring and 3.1% [...]

JOLTS Indicates Improved Hiring in the US

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903c.jpg" width="353">
The Euro-Zone Purchasing Managers Index for the service industries edged down in August to 54.47 from 55.31 in July. A narrow range from 54.40 to 55.76 has prevailed for six months now, tracing a steady moderate growth path for service sector activity. These international PMI surveys are conducted by NTC-Research for Reuters, Inc.
Most individual countries have also seen minimal swings in these service industry gauges. That in Germany, a few points lower than most, has crept higher the last few months. In Italy, the opposite is true: its index was over 58 in June, but has slowed to 56.5 in August. Components for the Euro-Zone Total show that employment is picking up while new orders are showing a bit less growth. Expectations have been virtually unchanged over the summer months. Input prices, as seen in the first graph, continue to move ahead.
NTC-Research compiles purchasing manager indexes for the Euro-Zone and other countries for the manufacturing, construction and service sectors of each economy. The firm recently introduced a set of &quot;GDP Indicators&quot; which combines these three sectoral indexes into a weighted average of the three diffusion indexes. NTC analysts then use regression models to scale the index to GDP growth rates.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903d.jpg" width="353"> 
For the Euro-Zone, the index eased too in August, although it stands several percentage points above year-ago levels. For assessing year-to-year growth prospects, the NTC PMI-based indicator&#39;s translation to year-to-year growth aligns fairly well with GDP performance and has a high correlation ratio of 93%. The indicator level runs a 79% correlation with quarterly changes in Euro-Zone GDP. The recent moves in the indicator suggest a further gain in Euro-Zone GDP of 0.5 to 0.6% this quarter and year-on-year expansion of about 2-1/4%, that is, at least maintaining its recent growth rates.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers Index Percent (&gt;50 = expansion;&nbsp; &lt;50 = contraction)</th>
<th scope="col">Aug 2004</th>
<th scope="col">July 2004</th>
<th scope="col">June 2004</th>
<th scope="col">Aug 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Services:</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">Euro Zone Total</td>
<td>54.47</td>
<td>55.31</td>
<td>55.31</td>
<td>51.99</td>
<td>51.36</td>
<td>51.58</td>
<td>51.63</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>53.54</td>
<td>53.87</td>
<td>52.30</td>
<td>51.78</td>
<td>48.49</td>
<td>48.62</td>
<td>48.87</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>56.91</td>
<td>56.22</td>
<td>56.77</td>
<td>57.00</td>
<td>54.84</td>
<td>54.37</td>
<td>51.41</td>
</tr>
<tr class="odd">
<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>
</tr>
<tr>
<td class="firstcol">GDP Indicator: </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">Euro-Zone Total</td>
<td>54.5</td>
<td>55.5</td>
<td>55.0</td>
<td>50.8</td>
<td>50.6</td>
<td>51.3</td>
<td>50.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Year/Year % Change</td>
<td>2.2</td>
<td>2.2</td>
<td>2.3</td>
<td>0.4</td>
<td>0.8</td>
<td>1.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Actual GDP Growth, Year/Year</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>0.5</td>
<td>0.9</td>
<td>1.6</td>
</tr>
</tbody>
</table>
</body>
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The Euro-Zone Purchasing Managers Index for the service industries edged down in August to 54.47 from 55.31 in July. A narrow range from 54.40 to 55.76 has prevailed for six months now, tracing a steady moderate growth path for [...]

Euro-Zone Services Activity Maintains Steady Growth

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903b.jpg" width="353">
Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July &amp; June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August.
The fall in the unemployment rate to 5.4% from the separate household survey continued to suggest moderate labor market improvement. Employment growth eased to 21,000 (1.4% y/y) following a 629,000 rise the prior month and the labor force fell 152,000 (+0.7% y/y). The labor force participation rate slipped back to 66.0% from 66.2% in July.
Hiring in private service producing industries recovered modestly last month with an 84,000 (1.7% y/y) gain versus an upwardly revised 45,000 July rise, however, these gains are a fraction of the growth during the prior several months. Hiring in the financial sector did recover 18,000 m/m (0.8% y/y), but jobs in information services fell 10,000 (-0.3% y/y) and another 11,300 (+0.8% y/y) retailing jobs were lost. Hiring in professional &amp; business services grew 32,000 (3.4% y/y) and temporary help services jobs rose 9,800 (8.9% y/y).
Factory sector payrolls grew 22,000 (0.1% y/y) following a downwardly revised gain in July. Construction sector hiring grew 15,000 (2.8% y/y).
The breadth of increase amongst private non-farm payrolls confirmed modest job growth at 54.5% versus an upwardly revised 54.9 in July. The three month diffusion index of hiring fell to 57.9 versus a high of 74.5 in May.
The index of aggregate hours worked (employment times hours worked) grew 0.2% following an upwardly revised 0.7% July rise. The index so far in the third quarter is 2.8% (AR) above 2Q which rose a revised 2.2% (AR) versus 1Q.
Average hourly earnings rose 0.3% (2.3% y/y) following an upwardly revised 0.4% July gain.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>144,000</td>
<td>73,000</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>22,000</td>
<td>6,000</td>
<td>0.1%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July & June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August. The fall in the unemployment rate to [...]

U.S. Job Growth Recovered Some, Unemployment Rate Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903a.jpg" width="353">
The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0.
Since the series&#39; inception in 1997 there has been a 60% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
Despite the decline in the Business Index, the employment index recovered 2.5 points of the sharp 7.4 point July drop. Higher employment was reported by the same 18% of firms as in July. Since the series&#39; inception in 1997 there has been a 61% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
The new orders index slipped to 58.6 from the record high of 66.4 in July.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
The seasonally adjusted prices index fell to 70.0 versus 73.1 in July and the record high of 74.6 sin June.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<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">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>58.2</td>
<td>64.8</td>
<td>63.8</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.0</td>
<td>73.1</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>


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The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0. Since the series' [...]

ISM Nonmanufacturing Index Slipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903b.jpg" width="353">
Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July &amp; June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August.
The fall in the unemployment rate to 5.4% from the separate household survey continued to suggest moderate labor market improvement. Employment growth eased to 21,000 (1.4% y/y) following a 629,000 rise the prior month and the labor force fell 152,000 (+0.7% y/y). The labor force participation rate slipped back to 66.0% from 66.2% in July.
Hiring in private service producing industries recovered modestly last month with an 84,000 (1.7% y/y) gain versus an upwardly revised 45,000 July rise, however, these gains are a fraction of the growth during the prior several months. Hiring in the financial sector did recover 18,000 m/m (0.8% y/y), but jobs in information services fell 10,000 (-0.3% y/y) and another 11,300 (+0.8% y/y) retailing jobs were lost. Hiring in professional &amp; business services grew 32,000 (3.4% y/y) and temporary help services jobs rose 9,800 (8.9% y/y).
Factory sector payrolls grew 22,000 (0.1% y/y) following a downwardly revised gain in July. Construction sector hiring grew 15,000 (2.8% y/y).
The breadth of increase amongst private non-farm payrolls confirmed modest job growth at 54.5% versus an upwardly revised 54.9 in July. The three month diffusion index of hiring fell to 57.9 versus a high of 74.5 in May.
The index of aggregate hours worked (employment times hours worked) grew 0.2% following an upwardly revised 0.7% July rise. The index so far in the third quarter is 2.8% (AR) above 2Q which rose a revised 2.2% (AR) versus 1Q.
Average hourly earnings rose 0.3% (2.3% y/y) following an upwardly revised 0.4% July gain.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>144,000</td>
<td>73,000</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>22,000</td>
<td>6,000</td>
<td>0.1%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 3, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903a.jpg" width="353">
The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0.
Since the series&#39; inception in 1997 there has been a 60% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
Despite the decline in the Business Index, the employment index recovered 2.5 points of the sharp 7.4 point July drop. Higher employment was reported by the same 18% of firms as in July. Since the series&#39; inception in 1997 there has been a 61% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
The new orders index slipped to 58.6 from the record high of 66.4 in July.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
The seasonally adjusted prices index fell to 70.0 versus 73.1 in July and the record high of 74.6 sin June.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<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">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>58.2</td>
<td>64.8</td>
<td>63.8</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.0</td>
<td>73.1</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040902f.jpg" width="353">
The German Federal Statistics Office and the Bundesbank today reported continuing lackluster labor market conditions in that nation. Employment in June edged down by 1,000, while unemployment rose in August by 24,000. The August unemployment rate for Germany as a whole held at July&#39;s 10.6% as the rate in West Germany ticked up to 8.6%, a new high in the current cycle. The rate in East Germany remained at 18.5% for a fourth straight month. 
About ten days ago in this space, Louise Curley described the labor reforms presently in process in Germany. She argued that these extensive structural changes, desirable though they are for the long-run health of the German economy, had likely been a restraint on domestic demand there in the second quarter. The still lower employment figures for June seem to underscore that tendency, and the behavior of the unemployment rates so far in the third quarter suggest that things have not improved much over the summer. One might take heart in the minimal size of the employment decrease in June and see it as a sign that jobs are stabilizing. In fact, some market forecasts had looked for a larger decline. At the same time, a larger forecast survey had pointed to a much smaller increase in August unemployment than occurred. This development, along with higher energy costs, makes it difficult to be optimistic about renewed vigor in the German economy anytime soon. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Jun 04</th>
<th scope="col">May 04</th>
<th scope="col">Jun 03 &nbsp;</th>
<th scope="col">M/M &nbsp;</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment (thous, SA) &nbsp; </td>
<td>38204 &nbsp; </td>
<td>38205 </td>
<td>38293 </td>
<td>-1K &nbsp; </td>
<td>-89K &nbsp; </td>
<td>38316 &nbsp; </td>
<td>38699 &nbsp; </td>
<td>38923 &nbsp; </td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rates (%, SA)</td>
<td>Aug 04</td>
<td>Jul 04</td>
<td>Aug 03</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Germany &nbsp; </td>
<td>10.6</td>
<td>10.6</td>
<td>10.6</td>
<td>+24K*</td>
<td>+11K*</td>
<td>10.5</td>
<td>9.8</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">West Germany &nbsp; </td>
<td>8.6</td>
<td>8.5</td>
<td>8.4</td>
<td>+18K*</td>
<td>+26K*</td>
<td>8.4</td>
<td>7.7</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">East&nbsp; Germany &nbsp; </td>
<td>18.5</td>
<td>18.5</td>
<td>18.5</td>
<td>+6K*</td>
<td>-15K*</td>
<td>18.5</td>
<td>17.7</td>
<td>17.3</td>
</tr>
</tbody>
</table>
</body>
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The German Federal Statistics Office and the Bundesbank today reported continuing lackluster labor market conditions in that nation. Employment in June edged down by 1,000, while unemployment rose in August by 24,000. The August [...]

German Labor Market Remains in the Doldrums

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040902d.jpg" width="353">
Initial claims for unemployment insurance jumped 19,000 to 362,000 last week on the heels of a 10,000 rise the week prior. Roughly half of both week&#39;s increases were due to the impact of Hurricane Charley on claims in Florida, according to the Labor Department. The Consensus forecast had beenfor 335,000 claims.
The 4-week moving average of initial claims rose to 343,000 (-14.4% y/y).
Continuing claims for unemployment insurance fell 5,000 following a downwardly revised 5,000 decline the week prior.
The insured rate of unemployment remained at 2.3%, where it has hovered since the end of April.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">08/28/04</th>
<th scope="col">08/21/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>362</td>
<td>343</td>
<td>-12.6%</td>
<td>399</td>
<td>403</td>
<td>403</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,882</td>
<td>-19.4%</td>
<td>3,516</td>
<td>3,564</td>
<td>2974</td>
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Initial claims for unemployment insurance jumped 19,000 to 362,000 last week on the heels of a 10,000 rise the week prior. Roughly half of both week's increases were due to the impact of Hurricane Charley on claims in Florida, [...]

Initial Jobless Insurance Claims Again Raised Hurricane Charley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040902c.jpg" width="353">
Inventory accumulation in the factory sector is in high gear. Total inventories jumped 0.8% in July and the prior month&#39;s strong 0.7% gain was revised to 1.0%. Year to year growth of 3.9% is the strongest since early 2001.
Inventory accumulation has been widespread but notable amongst machinery (5.6% y/y) manufacturers as well as primary (5.9% y/y) &amp; fabricated metals (7.6% y/y) producers.
Unfilled orders again were strong rising 1.2% but the ratio of unfilled orders to shipments ticked up only slightly and remained well below the highs of 2001.
Factory orders surged 1.3% following an upwardly revised 1.2% gain in June. Durable goods orders jumped 1.6% versus the advance report of a 1.7% rise.Non-durable goods orders (which equal shipments) rose 1.0% (11.8% y/y).
Factory shipments surged 0.6% following an upwardly revised 1.1% jump in June. Excluding the transportation sector shipments added 1.3% (12.2% y/y) to the 1.2% June spike.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.9%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.3%</td>
<td>1.2%</td>
<td>11.8%</td>
<td>3.7%</td>
<td>-1.9%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.6%</td>
<td>1.1%</td>
<td>10.0%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.2%</td>
<td>0.6%</td>
<td>9.8%</td>
<td>4.2%</td>
<td>-6.1%</td>
<td>-5.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Inventory accumulation in the factory sector is in high gear. Total inventories jumped 0.8% in July and the prior month's strong 0.7% gain was revised to 1.0%. Year to year growth of 3.9% is the strongest since early 2001. Inventory [...]

Factory Inventories Up

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

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

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Michael J. Moran

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The Conference Board’s index of Consumer Confidence fell 10.3% in January, marking the sharpest decline during the soft patch that began in late 2024. The measure moved to a new low for the current cycle, dipping even below the trough seen during the pandemic. However, confidence was not at a desperate level relative to long-run standards. The index was far lower during the recession associated with the financial crisis, and it also was noticeably lower during the previous four recessions or their aftermaths.

Both the present situation and the expectations components contributed to the decline in January, with expectations posting a sharper change (-12.7% versus -8.0%). Like the headline index, the present situation component moved to a new low for the current cycle. The expectations component saw a softer result in one other recent month -- April 2025, no doubt a response to President Trump’s announcement of hefty tariffs on April 2.

The softening labor market seems to be playing a role in the erosion of confidence in the past year or so. The Conference Board’s survey of consumers asks whether jobs are plentiful or hard to get. The differential in responses (the share saying plentiful less the share saying hard to get) provides clear insight into perceptions of the labor market. After registering a record reading in March 2022 (47.1%), this measure has trended sharply lower, moving to 3.1% in January. While the erosion has been notable, the level of the index is not troubling relative to historical standards. It has been well into negative territory when conditions are weak (-46.1% around the time of the financial crisis and a record low of -58.7% in December 1982).

The media has recently characterized the economy as being “K-shaped”: upper-income individuals advancing while lower-income individual are losing ground. One could argue that the confidence survey supports such a view, as the confidence among the two lowest income groups is lower than those for the two upper income groups. However, the differential is not unique to the current cycle. The confidence index among lower-income individuals is nearly always lighter than those for upper income groups, and the current differential is on the lighter side of historical norms.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Both expectations and assessments of the present situation contributed to the decline
- The index moved to a new low for the current cycle.
- A softening labor market played a role.

Consumer Confidence Tumbled in January

Winnie Tapasanun

260127J25.jpg

260127K25.jpg

U.S. house prices rose 0.6% m/m in November, the third m/m rise in four months, following a 0.4% increase in October (unrevised) and no change in September (-0.1% previously), according to the Federal Housing Finance Agency (FHFA) House Price Index. The HPI reached a record high of 439.28 in November, up 14.1% from its August 2022 low of 384.85. The year-on-year growth rate picked up to 1.9% in November after easing to 1.7% in October (the slowest pace since March 2012), while remaining down from 4.8% in November 2024 and well below a high of 18.5% in February 2022.

House prices increased m/m in November (vs. October) across eight of the nine census divisions. Gains were led by East South Central (+1.1% vs. -0.6%), followed by West South Central (+1.0% vs. +1.3%), South Atlantic (+0.8% vs. +0.3%), New England (+0.6% vs. +0.7%), Pacific (+0.5% vs. -0.03%), East North Central (+0.5% vs. +0.4%), West North Central (+0.3% vs. +0.5%), and Mountain (+0.3% vs. +0.4%). Meanwhile, house prices were virtually unchanged m/m in Middle Atlantic in November after three consecutive m/m increases.

Year-on-year house prices continued to rise in November across most regions, except Pacific and Mountain. The y/y pace accelerated in November (vs. October) in four of the nine census divisions: East North Central (+5.1% vs. +4.8%), New England (+3.7% vs. +3.6%), East South Central (+3.0% vs. +1.2%), and West South Central (+1.0% vs. -0.3%). Meanwhile, house price growth decelerated y/y in November (vs. October) in Middle Atlantic (+4.3% vs. +5.0%) and West North Central (+3.4% vs. +3.8%). House prices in South Atlantic were unchanged y/y in November and October. To the downside, Pacific (-0.4% vs. -0.1%) and Mountain (-0.1% vs. +0.2%) were the only regions posting y/y declines in November (vs. October).

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

260127L25.jpg

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- FHFA HPI +0.6% (+1.9% y/y) in Nov., third m/m gain in four months.
- House prices up m/m in eight of nine census divisions, led by East South Central (+1.1%); prices flat m/m in Middle Atlantic.
- House prices up y/y in six of nine regions, led by East North Central (+5.1%), but down in Pacific (-0.4%) and Mountain (-0.1%); prices flat y/y in South Atlantic.

U.S. FHFA House Prices Advance in November

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New orders for durable goods gained a more-than-expected 5.3% m/m in November after a 2.1% decline in October (-2.2% initially), according to today’s advance report by the U.S. Census Bureau. November marked the third m/m rise in four months following m/m declines in July and June. The Action Economics Forecast Survey had expected a 2.8% m/m November increase. The year-on-year rate accelerated to 12.3% in November, the fastest pace since May, up from 4.8% in October and -3.4% in November 2024. Durable goods orders excluding the transportation sector rose 0.5% (4.4% y/y) in November, the seventh straight m/m rise, after a 0.1% uptick in October. Durable goods orders excluding defense rebounded 6.6% (12.6% y/y), the third m/m increase in four months, following a 1.3% October drop.

The m/m gain in November durable goods orders was led by a 97.6% m/m surge in orders for nondefense aircraft & parts following decreases of 17.8% in October and 6.8% in September. Orders for defense aircraft & parts dropped 1.2% (+19.9% y/y) in November following a 32.8% plunge in October and four consecutive m/m gains. Orders excluding aircraft fell 0.4% (+4.3% y/y), the first m/m fall since June, after no change in October.

Durable goods orders for transportation jumped 14.7% (29.0% y/y) in November, the third m/m gain in four months and the biggest since May, following a 6.3% drop in October. Orders for motor vehicles & parts fell 0.5% (+4.5% y/y) after a 0.1% October dip and five consecutive m/m rises. Across other sectors, orders for electrical equipment, appliances & components recovered 1.7% (6.3% y/y) following a 0.5% October drop, and orders for computers & electronic products rose 0.2% (5.3% y/y) after a 0.2% October increase; both recorded their seventh m/m rise in eight months. Orders for fabricated metal products climbed 1.0% (5.3% y/y), the fifth successive m/m gain, after a 0.8% October increase. Machinery orders rose 0.5% (7.7% y/y), the seventh straight m/m rise, on top of a 0.6% October gain. Orders for all other durable goods increased 0.3% (0.2% y/y), up for the second time in three months, after holding steady in October. Meanwhile, orders for primary metals were unchanged (4.2% y/y) following a 1.1% October decline.

Capital goods orders advanced 14.5% (27.7% y/y) in November, the third m/m gain in four months and the largest since May, reversing a 5.6% drop in October. Nondefense capital goods orders jumped 20.0% (31.6% y/y), the first m/m increase since August, following a 4.0% October decline. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) rose 0.7% (5.5% y/y), the fifth straight m/m rise, after a 0.3% October increase. Defense capital goods orders fell 14.3% (+4.9% y/y) following a 13.2% October fall and two successive m/m increases. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 0.4% (5.1% y/y) in November after a 0.8% increase in October, registering the third consecutive m/m rise and the sixth in seven months.

Shipments of all manufactured goods dipped 0.1% (+2.2% y/y) in November following a 0.1% uptick in October and two successive m/m declines. Durable goods shipments slid 0.2% (+5.7% y/y), the first m/m slide since August, after a 0.5% October increase. Nondurable goods shipments were virtually unchanged (-1.3% y/y) following a 0.3% October decline.

Unfilled orders of durable goods advanced 1.3% (9.3% y/y) in November, the fourth straight m/m gain, after a 0.2% increase in October. Excluding transportation, unfilled orders rose 0.3% (1.3% y/y), also up for the fourth consecutive month, following a 0.3% October rise.

Manufacturing inventories edged up 0.1% (1.1% y/y) in November after holding steady in October. Durable goods inventories rose 0.2% (1.5% y/y) following a 0.2% October rise and two successive 0.1% declines. Nondurable goods inventories ticked up 0.1% (0.4% y/y) after a 0.2% October decrease.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- Headline orders +5.3% (+12.3% y/y) in Nov., third m/m rise in four months.
- Nondefense aircraft orders surge 97.6% m/m vs. a 17.8% Oct. drop.
- Transportation orders rebound 14.7% m/m; orders ex transportation rise 0.5%.
- Core capital goods shipments +0.4%, sixth m/m gain in seven months, adding to Q4’25 momentum.
- Durable goods shipments -0.2%; unfilled orders +1.3%; inventories +0.2%.

U.S. Durable Goods Orders Rebound in November, Exceeding Expectations

Robert Brusca

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Germany’s IFO readings in January show a bit more strength in the climate reading, nearly unchanged current conditions, and nearly unchanged expectations. These readings that tend toward small changes or unchanged readings are - and have been - characteristic of the IFO survey for most of 2025 where the various sector readings basically made some improvement through about the first quarter of the year and then pretty much flatlined for the rest of the year. Growth Dynamics in Germany have become fairly stagnant. The question is when something will occur that will light a fire under growth or, more unfortunately, send the economy back into a tailspin.

The climate readings on long-dated rankings are all weak with only one reading for construction above its 50th percentile and data back to 1993. However, on a shorter timeline looking at conditions just since February 2022 that marks the invasion of Ukraine, we have the climate reading at a 63.8 percentile standing, construction at an 89.4 percentile standing and wholesaling at a 72.3 percentile standing. Manufacturing also manages a positive standing at its 55.3 percentile.

Month-to-month in January, there are small changes afoot across the five sectors and all of them show some modest improvement except for services that backtrack slightly moving from a reading of -2.1 in December to -2.6 in January.

Current conditions show almost no change at all with a -4.8 reading in January compared to a -4.9 reading in December. Across sectors in January, there's about a two-point improvement in manufacturing, a small improvement in construction and more sizable improvement in wholesaling, a small improvement in retailing, and a step back for services.

For current conditions, the percentile standings on the long-view to 1993, again, show only construction with a reading above its 50th-percentile - that is, above its historic median - at 61.6%. The all-sector reading has only a 11.9 percentile standing which is quite weak and generally weaker than the individual sectors. That fact simply underpins the notion of how this coincident-weakness across all the sectors is unusual because the all-sector index has a weaker ranking than any of the individual industries or sectors on the long timeline. On the shorter timeline, construction, again, is at a 59.6 percentile reading, above its 50th percentile, wholesaling comes close at a 48.9 percentile, reading retailing is exceptionally weak at a 4.3 percentile reading, and services are at a 10.6 percentile rating also quite weak. The current index is dominated by weakness.

Expectations in January show a step back for the overall reading and that's based on weakness in services. There are nearly 3-points of improvement in manufacturing, unchanged readings in construction, a slight improvement in wholesaling, a sizeable 6-point improvement in retailing, and a weaker reading from services, which back off by half a point on the month. The percentile standings when data are ranked over the long period to 1993 show everything below the 50th percentile; all rankings are below their historic medians on that timeline. However, when compared to February 2022, marking the invasion of Ukraine, all of the readings are above their 50th percentile, generally in about the 80th or 90th percentiles, except for services that only manage a ranking in the 55th percentile.

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**Summing up**
Across these three different concepts of climate, current conditions, and expectations, we see the most consistent firmness from the construction sector. We also see improvement in manufacturing, and generally from wholesaling, and more substantial improvement from retailing. The weakness stems from the services sector which shows a step back on all three of the concepts. Services are particularly weak when we rank them on the long-time horizon although current conditions are also quite weak for services in January alone and on the short-time horizon (relative to other sectors). What's encouraging in this survey is the improvement in sectors outside of services, but the services sector is the job creating sector and so having it as the lagging reading across all these dimensions is a problem. It is something that should hold back an optimistic view of the future.

Germany

IFO Readings for Germany Mostly Waffle; Services Lag

Tian Yong Woon

This week, we take stock of key developments across Asia. The IMF’s latest outlook delivered several positive growth revisions, with India once again seen at the forefront of regional expansion, while China is still seen unlikely to reach a 5% growth target this year should it be adopted (chart 1). Between China and the US, a clear divergence in trade strategies persists. China has continued to pivot toward Asia to sustain relatively robust export growth, while the US has turned inward—effectively narrowing its trade deficit in line with President Trump’s objectives (chart 2). Within Asia, trade ties with China have become increasingly two-way, as China’s share as an export destination has risen steadily over the past decades to rival that of the US for many economies (chart 3).

In the AI space, notable developments emerged following reports that Chinese authorities may soon formally allow domestic tech firms to import Nvidia’s H200 chips. The news could provide a boost to US tech equities, although broader geopolitical risks remain a possible resurgent drag on sentiment (chart 4). Turning to Japan, last week’s Bank of Japan (BoJ) meeting left policy rates unchanged, as expected. However, the BoJ’s latest outlook report delivered upgrades to both growth and inflation forecasts—developments that could pave the way for further monetary tightening (chart 5), albeit likely only after near-term uncertainties, most notably upcoming snap elections, have passed. Ahead of the polls, the yen and Japanese government bonds have come under sustained pressure (chart 6), though short sellers may become more cautious given the risk of official intervention.

**The IMF’s World Economic Outlook**
The International Monetary Fund (IMF) unveiled its updated forecasts last week in its World Economic Outlook (WEO) publication. On growth, World GDP growth for 2026 was revised up by 0.2 ppts to 3.3%, driven by a surge in technology investment, including AI. China and India each saw a 0.3 ppt upgrade to their growth forecasts, while Japan and South Korea received more modest 0.1 ppt upgrades. Within Asia, India continues to be seen as the region’s growth leader (chart 1). By contrast, despite the IMF upgrade, China is still not expected to reach 5% growth this year should it re-adopt such a target, though there has been some discussion of a lower target range of 4.5–5%. On the downside, only a handful of economies saw downgrades; in Asia, the Philippines stands out with a 0.1 ppt downward revision to 5.6% for the year.

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**China, the US, and trade**
Turning to China, and to recap, the economy managed to eke out exactly 5% growth in 2025, supported by exports amid a challenging domestic backdrop. Whether this pace can be sustained this year, however, remains uncertain. Externally, China has nonetheless maintained relatively robust export growth despite tariffs, largely by redirecting exports toward other trading partners, particularly within Asia. On the other side, the US—through its pursuit of “America First” policies such as tariffs—has seen its trade deficit significantly reduced over the past year (chart 2), effectively achieving one of President Trump’s stated objectives. That said, both approaches carry risks: China may face heightened scrutiny over excess capacity, while the US risks further alienating long-standing trade partners.

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More on China: the relationship with Asia has become increasingly two-way. China has not only pivoted its exports toward regional partners but has also become a growing export destination for Asian economies. For many major economies in the region, China now accounts for at least 10% of exports, reaching as high as 25% in cases such as Indonesia. In contrast, the US share of exports has declined across several Asian economies. Japan and the Philippines, for example, each had around 30% of exports heading to the US in the early 2000s; today, that share has fallen to roughly 15–20%. As a result, China now rivals the US as an export destination for many economies as inward-looking “America First” policies take hold (chart 3). Importantly, China’s rise as a key export destination has been gradual, unfolding over decades from shares that were previously largely below 5%.

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**China and chips**
There have also been notable developments in the chips space after reports that China may soon allow its tech firms to purchase Nvidia’s H200 AI chips. The news could boost sentiment in US tech equities, although geopolitical risks remain elevated and details are still scarce (chart 4). Still, authorities appear keen to support the domestic chip industry: companies are reportedly being encouraged to buy a set number of domestic chips as a condition for approval to import H200s. The H200 is an older generation of Nvidia chips that the US previously approved for export, albeit with a 25% tariff on units destined for China. Importantly, the latest reports run counter to earlier concerns that H200 shipments had been effectively banned, after Chinese customs reportedly stopped some shipments.

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**The Bank of Japan**
Moving to Japan, the Bank of Japan (BoJ) released its first interest rate decision of the year last week and, as expected, kept its policy rate unchanged at 0.75% (chart 5). The meeting nonetheless offered notable takeaways. The BoJ’s latest outlook report included modest upgrades to real GDP forecasts for fiscal years 2025 and 2026. It also revised up core CPI forecasts, likely reflecting expectations of both already passed and maybe even anticipated additional fiscal support under new Prime Minister Takaichi. The twin upgrades suggest the path to further monetary tightening may be clearer over the coming quarters, once interim uncertainties ease. That said, Japan still faces several near-term risks, including upcoming elections, which we discuss in the next section.

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**Japan’s snap elections**
Previous rumours that Prime Minister Takaichi might call snap elections in early February materialised last Friday, when the Lower House was dissolved to make way for polls on February 8. While the move may capitalise on her strong approval ratings, it remains a political gamble and introduces an interim period of political flux and policy uncertainty. In the lead-up to and following the announcement, the yen weakened significantly and Japanese yields surged, prompting authorities to publicly warn against excessive volatility. Yen short sellers have also become more cautious, given the risk that further sharp moves could trigger market intervention. External factors have since helped the yen recover somewhat: renewed US government shutdown fears have weighed on the US dollar, supporting the yen in recent days (chart 6).

Economy in Brief: September 2004

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JOLTS Indicates Improved Hiring in the US

Euro-Zone Services Activity Maintains Steady Growth

U.S. Job Growth Recovered Some, Unemployment Rate Fell

ISM Nonmanufacturing Index Slipped

U.S. Job Growth Recovered Some, Unemployment Rate Fell

German Labor Market Remains in the Doldrums

Initial Jobless Insurance Claims Again Raised Hurricane Charley

Factory Inventories Up