Robert Brusca

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The component year-over-year trends do not show much evidence of a shift in the PPI trend. But in the table it is clear from the monthly data that the period of price declines is coming to an end. This is certainly true unless oil prices unravel again. 

Of the ten countries in the table, none of them have price declines in each of the last two months. Half of them have price increases (month-to-month) in March and, of those, four have price increases in both February and March. Inflation is encroaching.

For the EMU as a whole, the PPI is up month-to-month in consecutive readings for March and February. Capital goods and consumer goods prices each are net higher in March after each had posted declines in February.

Still, the past trend shows that price declines dominate the landscape. Of the ten countries in the table, over three horizons: three-month, six-month and 12-month, (a total of 30 observations) there is only one positive entry in the table. That is for Denmark over the three-month horizon as prices rose at a 2.4% annual rate. All other countries/horizons show ongoing price declines.

Only France, Portugal and Austria show price decelerations that are ongoing at an increasing rate of deceleration from 12 months to six months to three months. All other countries show that the rate of decrease in prices slowed over three months compared to six months. For the EMU as a whole, the PPI drop slowed over three months compared to six months and the three-month pace of growth was slightly stronger that its 12-month pace. Germany, Spain, Denmark, Ireland, and the Netherlands also show less price deceleration over three months than over 12 months.

The stage is set for PPI prices to begin to increase. In its deliberations, the ECB tends to look at year-over-year results and those are going to be weak and negative for some months. But over just the last two months the headline PPI is expanding at a 4.8% annual rate. The ECB will be watching these shorter term dynamics as well. 

As the ECB begins to reconsider its policy options, it will be looking at the HICP trends, not those from the PPI. But PPI prices are extra-sensitive and generally more volatile that consumer prices so the trends in the PPI are useful as guides to what may lie ahead when trends do change.

The ECB has only just launched its QE program. We could see some EMU members becoming uneasy with this program relatively soon if price developments continue in this upward direction. It is not at all that clear how the ECB will react as prices begin to rise if growth is still very weak. If inflation surpasses 2%, it is clear that the ECB would reverse course on stimulus to meet its price objective. But short of that mark, there is plenty of potential to ponder what the ECB will be doing in the months ahead.


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The component year-over-year trends do not show much evidence of a shift in the PPI trend. But in the table it is clear from the monthly data that the period of price declines is coming to an end. This is certainly true unless oil [...]

Europe's PPI Gets Ready to Shift

Tom Moeller

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New orders in the manufacturing sector jumped an expected 2.1% (-4.0% y/y)
during March following a 0.1% downtick in February, revised from 0.2%. The gain
was driven by jumps in civilian &amp; military aircraft orders.

Durable goods orders surged 4.4% (1.2% y/y), revised from 4.0% as orders for
defense aircraft doubled (16.9% y/y) and orders for commercial aircraft rose
30.6% (-3.1% y/y). Factory sector orders overall excluding the transportation
sector increased 2.1% (-4.0% y/y). Computers &amp; electronics orders jumped
7.2% (4.8% y/y) but machinery orders declined 1.4% (-11.5% y/y). Nondurable
goods orders, which equal shipments, slipped 0.3% (-8.8% y/y), pulled down by a
1.9% drop (-30.0% y/y) in petroleum shipments with lower prices. Basic chemicals
shipments declined 0.3% (-3.2% y/y) and food product shipments were off 0.3%
(-0.4% y/y), down for the third month in the last four. Countering these
declines was a 0.9% rise (13.9% y/y) in apparel shipments.

Shipments overall gained 0.5% (-2.8% y/y) as durable goods shipments rose
1.2% (3.8% y/y). Computer &amp; electronics shipments improved 1.7% (0.9% y/y)
and automobile shipments increased 14.1% (16.7% y/y). Machinery shipments
declined 1.7% (-4.3% y/y).

Unfilled orders gained 0.1% (8.1% y/y) due to a 0.9% increase (7.5% y/y) in
computers and a 0.5% rise (10.7% y/y) in electrical equipment &amp; appliances.
Transportation backlogs rose 0.3% 10.5% y/y) and furniture backlogs gained 0.3%
(12.9% y/y)

Manufacturers inventories fell 0.2% (+0.9% y/y). Computers inventories rose
0.8% (4.7% y/y) and machinery inventories gained 0.3% (2.8% y/y). Primary metals
products inventories declined 2.1% (+4.9% y/y).

The factory sector figures are available in Haver's USECON database.
The expectations figure from the Action Economics Forecast Survey is available
in AS1REPNA.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >New Orders</td>
 <td >2.1</td>
 <td >-0.1</td>
 <td >-0.7</td>
 <td >-4.0</td>
 <td >2.8</td>
 <td >2.7</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Shipments</td>
 <td >0.5</td>
 <td >0.4</td>
 <td >-2.3</td>
 <td >-2.8</td>
 <td >2.3</td>
 <td >2.0</td>
 <td >4.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >-0.2</td>
 <td >0.0</td>
 <td >-0.4</td>
 <td >0.9</td>
 <td >2.5</td>
 <td >2.3</td>
 <td >2.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Unfilled Orders</td>
 <td >0.1</td>
 <td >-0.5</td>
 <td >-0.3</td>
 <td >8.1</td>
 <td >9.9</td>
 <td >7.0</td>
 <td >3.7</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

New orders in the manufacturing sector jumped an expected 2.1% (-4.0% y/y) during March following a 0.1% downtick in February, revised from 0.2%. The gain was driven by jumps in civilian & military aircraft orders. Durable goods [...]

U.S. Factory Sector Orders Surge With Aircraft

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The story of the EMU PMIs this month is a bit convoluted. Germany and the EMU had upward revisions to their weak flash estimates, but the two gauges each still declined in April. At a diffusion reading of 52, the EMU gauge is actually stronger than it seems. It is lower only 59% of the time.

Among these EMU reporters, five are weaker month-to-month and three are stronger. Italy, Austria and the Netherlands are stronger on balance. 

But Austria and France are still extremely weak, posting queue standings in the lower 30th to 40th percentile range. Even German sits only in the 56th percentile of its historic queue of values.

The leading economies based on the queue standings of their manufacturing sectors are Spain (92nd percentile) and Ireland (84th percentile). Italy and Greece (Greece, of all countries!) have percentile standings in the 60th percentile range. These standings are relative to each country's own history. So while Greece's raw diffusion score is 46, the lowest of this group of nations, it has a corresponding relatively high score compared to its own history (even despite the sharp drop this month).

In terms of momentum, both France and Greece have three-month and six-month averages slipping compared to their respective earlier periods. Only Ireland has a six-month average above its 12-month average and a three-month average above its six-month average, demonstrating gathering momentum. But Germany, Italy, Austria and Ireland show improvement over three months compared to six months. 

Outside the EMU, the U.K. and Sweden each show three-month average improvement. Denmark is like Ireland showing sequential strength. 

The chart shows that in the big picture despite some minor setbacks to diffusion levels this month the Big four EMU economics are either holding their ground (France and Spain) or making further gains (Germany and Italy). Germany is still in an uptrend with its give-back this month. France and Spain each have sideways momentum; Spain at a high level and France at a low level.

This month China's manufacturing PMI showed a setback to 48.9 from 49.2. The Sentix index of European investor confidence slid. While there are hopes for success for the ECB's stimulus efforts, the impact on manufacturing is still too muted to see. Even the dive in the euro exchanger has not been enough to boost manufacturing in this weak global environment - at least not yet.


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The story of the EMU PMIs this month is a bit convoluted. Germany and the EMU had upward revisions to their weak flash estimates, but the two gauges each still declined in April. At a diffusion reading of 52, the EMU gauge is actually [...]

Europe's Manufacturing PMIs Show or Hold Trend Progress

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Sales of light vehicles declined 4.0% (+2.5% y/y) during April to 16.45 million units (AR) 
versus 17.15 million in March. The latest level remained in the range staked out
since the middle of last year.

Auto sales decreased 4.4% last month to 7.36 million and were
down 2.7% y/y. Imported car sales declined 8.8% to 2.06 million (-10.0% y/y) and
were at the low end of the range in place since 2012. Domestic auto sales fell 
a lesser 2.6% to 5.31 million (+0.5% y/y), remaining near the low end of the range of the last year.

Light truck sales declined 3.8% (+7.1% y/y) to 9.09 million units. Domestic light truck sales
decreased 4.6% to 7.86 million (+5.2% y/y). Imported truck sales, however, increased 2.1% to 1.23 million (+21.2% y/y),
reaching the highest level since August 2009 when the &quot;cash-for-clunkers&quot; program fueled sales.

Imports share of the market for light vehicles slipped m/m to 20.0%, down 
versus a high of 30.7% in February 2009. Imports share of the passenger car market fell to 27.9% after
jumping to 29.3% during March. Imports share of the light truck market rose
sharply to 13.5%, the highest level since November 2013.

U.S. vehicle sales figures are published by Autodata and can be found in Haver's USECON database.

Expectations of a Pickup Remain Despite a Slow Start to 2015 from the Federal Reserve Bank of Dallas 
is available <a href="http://www.dallasfed.org/assets/documents/research/update/us/2015/1503.pdf">here</a>.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Light Vehicle Sales (SAAR,
 Mil. Units)</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >16.45</td>
 <td >17.15</td>
 <td >16.23</td>
 <td >2.5</td>
 <td >16.49</td>
 <td >15.58</td>
 <td >14.48</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Autos</td>
 <td >7.36</td>
 <td >7.70</td>
 <td >7.23</td>
 <td >-2.7</td>
 <td >7.91</td>
 <td >7.78</td>
 <td >7.42</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
 <td >5.31</td>
 <td >5.45</td>
 <td >5.21</td>
 <td >0.5</td>
 <td >5.68</td>
 <td >5.48</td>
 <td >5.10</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Imported</td>
 <td >2.06</td>
 <td >2.26</td>
 <td >2.02</td>
 <td >-10.0</td>
 <td >2.23</td>
 <td >2.30</td>
 <td >2.32</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Light Trucks</td>
 <td >9.09</td>
 <td >9.44</td>
 <td >9.01</td>
 <td >7.1</td>
 <td >8.58</td>
 <td >7.81</td>
 <td >7.06</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Domestic</td>
 <td >7.86</td>
 <td >8.24</td>
 <td >7.92</td>
 <td >5.2</td>
 <td >7.50</td>
 <td >6.73</td>
 <td >6.09</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Imported</td>
 <td >1.23</td>
 <td >1.20</td>
 <td >1.09</td>
 <td >21.2</td>
 <td >1.08</td>
 <td >1.08</td>
 <td >0.97</td>
 </tr>
 </tbody>
 </table>
 
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Sales of light vehicles declined 4.0% (+2.5% y/y) during April to 16.45 million units (AR) versus 17.15 million in March. The latest level remained in the range staked out since the middle of last year. Auto sales decreased 4.4% last [...]

U.S. Light Vehicle Sales Ease

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Momentum in the building sector has weakened significantly. The value of construction put-in-place
slipped 0.6% during March following no change in February, revised from -0.1%.
Year-to-year growth of 2.0% follows gains of roughly 6.0% during 2013 and 2014.
A 0.5% March rise had been expected in the
Action Economics Forecast Survey.

The growth slowdown in private construction activity has been pronounced.
Building eased 0.3% in March following a 0.3% rise. The y/y gain of 2.9% is down
from 8.0% last year. Residential building activity declined 1.6% following
little change in February. Negative y/y growth of 2.6% compares to a 5.1% rise
last year and a 20.4% 2013 increase. Single-family building activity fell 1.8%
(+7.8% y/y) after a 1.1% decline. Annual growth had been 10-30%. Multi-family
building dropped 2.1% (+23.4% y/y), the first fall since July. The y/y gain of
23.4%, though still firm, is down from a one-third increase in 2014. Spending on
improvements declined 1.0% and was down by one-quarter versus last year.

Nonresidential building activity improved 1.0% but y/y growth of 9.0% showed
slightly less momentum than last year's 11.2% gain. Office
construction jumped 2.9% (26.3% y/y) but commercial building fell 2.7% (+12.1%
y/y). An area showing continued strength was amusements &amp; recreation. Though
activity fell 3.4% in March, the y/y increase of 29.5% was up from 6.3% last
year and 16.2% in 2013.

Public sector building activity fell 1.5% (-0.3% y/y), the third month of
decline, and it's off 7.5% since an October high.
Nonresidential building fell 1.5% (-0.6% y/y) but commercial construction
increased 12.4% (35.8% y/y) after a 6.6% rise. Power construction slipped 0.3%
(-14.0% y/y) while highways and streets construction moved 2.4% lower (-5.6%
y/y). Construction here amounts to 32% of public sector building activity.
The construction spending figures are in Haver's USECON database and
the expectations figure is contained in the AS1REPNA database.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Construction Put in Place (%)</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >Mar Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >-0.6</td>
 <td >0.0</td>
 <td >-1.2</td>
 <td >2.0</td>
 <td >6.1</td>
 <td >5.7</td>
 <td >9.2</td>
 </tr>
 </tbody>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Private</td>
 <td >-0.3</td>
 <td >0.3</td>
 <td >-0.3</td>
 <td >2.9</td>
 <td >8.0</td>
 <td >10.1</td>
 <td >16.0</td>
 </tr>
 </tbody>
 <tbody>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential</td>
 <td >-1.6</td>
 <td >0.2</td>
 <td >1.3</td>
 <td >-2.6</td>
 <td >5.1</td>
 <td >20.4</td>
 <td >14.4</td>
 </tr>
 </tbody>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential</td>
 <td >1.0</td>
 <td >0.5</td>
 <td >-1.8</td>
 <td >9.0</td>
 <td >11.2</td>
 <td >0.6</td>
 <td >17.5</td>
 </tr>
 </tbody>
 <tbody>
 <tr>
 <td class="firstcol" >&nbsp; Public</td>
 <td >-1.5</td>
 <td >-0.8</td>
 <td >-3.5</td>
 <td >-0.3</td>
 <td >1.5</td>
 <td >-3.5</td>
 <td >-2.8</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Momentum in the building sector has weakened significantly. The value of construction put-in-place slipped 0.6% during March following no change in February, revised from -0.1%. Year-to-year growth of 2.0% follows gains of roughly [...]

U.S. Construction Spending Growth Slackens

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Factory sector activity garnered no momentum last month following sharp
deterioration during the winter. The April Composite Index from the 
Institute for Supply Management (ISM) held steady at 51.5 with
the March reading unrevised. The latest figures remained down from the August 2014
high of 58.1, reaching the lowest level since May 2013. Improvement to 52.0 had
been expected in the Action Economics Forecast Survey. During
the last ten years, there has been a 74% correlation between the level of the
index and the q/q change in real GDP.

Showing improvement last month was the production series to 56.0. It 
remained, however, below its August high of 63.1. Therefore, only modest growth
was indicated. New orders rose to 53.5, but here again the index remained well
below its August high of 63.9.

The employment reading fell below break-even to 48.3, suggesting negative job 
growth. It moved to the lowest point since September 2009. During the last ten years, 
there has been a 65% correlation between the jobs number and the m/m change in factory 
sector employment. Also declining was the supplier delivery index. The slip to 50.1 
followed a plummet during March and indicated the quickest product delivery speeds since 
May 2013. The decline in the inventories index to 49.5 suggested decumulation for the 
first time since December.

The prices paid index recovered for the second straight month. At 40.5, it
was the highest level since November. The latest level was down, however, 
from 60.5 in January of last year. Seven percent (NSA) of respondents indicated 
paying higher prices while 26% paid less.

Export orders improved to 51.5, the highest level since December but still
was below the 59.5 level reached in November 2013. The import orders series
recovered its March decline with a rise to 54.0 but remained below last year's
high of 58.0. Order backlogs held steady at 49.5, down from 57.5 in March of
last year.

The figures from the Institute For Supply Management (ISM) are diffusion
indexes. A reading above 50 represents growth in factory sector activity. They 
can be found in Haver's USECON database. The expectations number is in 
the AS1REPNA database.

Job Switching and Wage Growth from the Federal Reserve Bank of Chicago is available 
<a href="https://www.chicagofed.org/publications/chicago-fed-letter/index">here</a>.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >ISM Mfg</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Apr '14</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Composite Index</td>
 <td >51.5</td>
 <td >51.5</td>
 <td >52.9</td>
 <td >55.3</td>
 <td >55.7</td>
 <td >53.8</td>
 <td >51.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;New Orders</td>
 <td >53.5</td>
 <td >51.8</td>
 <td >52.5</td>
 <td >56.2</td>
 <td >59.0</td>
 <td >56.9</td>
 <td >52.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Production</td>
 <td >56.0</td>
 <td >53.8</td>
 <td >53.7</td>
 <td >57.1</td>
 <td >59.2</td>
 <td >57.5</td>
 <td >53.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Employment</td>
 <td >48.3</td>
 <td >50.0</td>
 <td >51.4</td>
 <td >54.7</td>
 <td >54.5</td>
 <td >53.2</td>
 <td >53.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Supplier Deliveries</td>
 <td >50.1</td>
 <td >50.5</td>
 <td >54.3</td>
 <td >55.4</td>
 <td >55.0</td>
 <td >51.9</td>
 <td >50.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Inventories</td>
 <td >49.5</td>
 <td >51.5</td>
 <td >52.5</td>
 <td >53.0</td>
 <td >50.8</td>
 <td >49.4</td>
 <td >48.2</td>
 </tr>
 <tr>
 <td class="firstcol" >Prices Paid Index (NSA)</td>
 <td >40.5</td>
 <td >39.0</td>
 <td >35.0</td>
 <td >56.5</td>
 <td >55.6</td>
 <td >53.8</td>
 <td >53.2</td>
 </tr>
 </tbody>
 </table>
 
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Factory sector activity garnered no momentum last month following sharp deterioration during the winter. The April Composite Index from the Institute for Supply Management (ISM) held steady at 51.5 with the March reading unrevised. [...]

U.S. ISM Manufacturing Index Remains Weak

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Only the U.K. manufacturing index is available for April. That indicator fell sharply to 51.9 in April from 54.02 in March. This is the manufacturing sector's sharpest one-month drop since February 2013 when it fell by more than three points in one month.

The manufacturing drop was unexpected; the large drop obviously was unexpected. The construction and services sectors have been embroiled in a slide for some months. However, services, like manufacturing, was showing some sign of revival. The services sector made a local peak at 60.5 in August of last year and then fell to 55.8 in December; since then, the services sector has been gaining. That pattern of recovery was accompanied by a similar rebound in manufacturing. Those patterns made it look like revival was in train. Wrong! That revival, at least in manufacturing, has just turned sour. This manufacturing report takes the notion of ongoing recovery off the table and leaves us in quandary about how the U.K. economy is going to behave.

The percentile standing statistics bear out how weak the recovery has been. The manufacturing PMI sits only in the 35th percentile of its historic queue of values in April, a very weak reading. Construction- through March- sits in the 87th percentile of its queue, a relatively strong position. The service sectors which is rising and posted a strong increase in March still only sits in the 65th percentile of its queue, a very modest position.

On balance, the U.K. economy is still struggling. The PMI gauges show little evidence of strength except for construction which is the smallest sector. Manufacturing is hurt in part because of the U.K. proximity to Europe and the euro area where the euro has been very weak along with growth.


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Only the U.K. manufacturing index is available for April. That indicator fell sharply to 51.9 in April from 54.02 in March. This is the manufacturing sector's sharpest one-month drop since February 2013 when it fell by more than three [...]

U.K. Manufacturing PMI Drops Sharply

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Chicago purchasing managers reported that their April Business Barometer
Index increased to 52.3, a three-month high, following an unrevised rise to 46.3
in March. The reading exceeded expectations for 49.0 in the Action
Economics Forecast Survey. Haver Analytics constructs an ISM-Adjusted
Index using the Chicago numbers, comparable to the overall ISM index to be released tomorrow. 
Our figure strengthened as well to 53.6, its highest level since January. During the last
ten years, there has been a 61% correlation between the adjusted Chicago
Purchasing Managers index and real GDP growth.

Most of the component series improved this month. The new orders series
surged and recouped most of the prior two months' decline. Improvement in the
production and order backlog series also was significant. Employment increased
as well. During the last ten years, there has been an 82% correlation between the
employment figure and the m/m change factory sector employment. The inventories
&amp; vendor delivery speed series moved lower.

The index of prices paid declined to the lowest point since the end of the recession in 2009.
Eleven percent (NSA) of respondents reported paying higher prices while 22 percent reporting
paying less.

The MNI Chicago Report is produced by MNI/Deutsche Borse Group in partnership
with ISM-Chicago. The survey covers a sample of over 200 purchasing
professionals in the Chicago area with a monthly response rate of about 50%. The
ISM-Adjusted headline index is calculated by Haver Analytics using these data to
construct a figure with the ISM methodology. The figures can be found in
Haver's SURVEYS database. The Consensus expectations figure is available
in AS1REPNA.

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 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" >Chicago Purchasing Managers Index (%,
 SA)</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Apr'14</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >ISM-Adjusted General Business Barometer</td>
 <td >53.6</td>
 <td >50.9</td>
 <td >48.3</td>
 <td >58.9</td>
 <td >59.4</td>
 <td >54.3</td>
 <td >54.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >General Business Barometer</td>
 <td >52.3</td>
 <td >46.3</td>
 <td >45.8</td>
 <td >62.5</td>
 <td >60.7</td>
 <td >56.1</td>
 <td >54.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Production</td>
 <td >52.7</td>
 <td >49.3</td>
 <td >44.8</td>
 <td >68.1</td>
 <td >64.5</td>
 <td >58.3</td>
 <td >57.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;New Orders</td>
 <td >55.1</td>
 <td >42.3</td>
 <td >42.0</td>
 <td >67.4</td>
 <td >63.8</td>
 <td >59.2</td>
 <td >55.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Order Backlogs</td>
 <td >48.5</td>
 <td >41.9</td>
 <td >41.1</td>
 <td >55.0</td>
 <td >54.2</td>
 <td >48.9</td>
 <td >48.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Inventories</td>
 <td >54.2</td>
 <td >58.0</td>
 <td >46.7</td>
 <td >50.3</td>
 <td >56.0</td>
 <td >45.7</td>
 <td >51.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Employment</td>
 <td >54.0</td>
 <td >50.3</td>
 <td >49.8</td>
 <td >56.1</td>
 <td >56.0</td>
 <td >55.6</td>
 <td >55.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Supplier Deliveries</td>
 <td >51.9</td>
 <td >54.8</td>
 <td >58.3</td>
 <td >52.5</td>
 <td >56.5</td>
 <td >52.5</td>
 <td >54.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Prices Paid</td>
 <td >43.1</td>
 <td >45.7</td>
 <td >47.8</td>
 <td >60.1</td>
 <td >61.0</td>
 <td >59.9</td>
 <td >62.2</td>
 </tr>
 </tbody>
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Chicago purchasing managers reported that their April Business Barometer Index increased to 52.3, a three-month high, following an unrevised rise to 46.3 in March. The reading exceeded expectations for 49.0 in the Action Economics [...]

Chicago Purchasing Managers Index Posts Surprising Strength

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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