Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306c.jpg" width="353">
Factory inventories surged 1.3% in January and posted the strongest m/m increase since early 2005. It followed an upwardly revised 0.9% December increase. Together the gains lifted the three month annualized rate of increase to 12.0%, up sharply from last year&#39;s lows which were at or below 1.0% through the Summer.
Excluding the volatile transportation sector where the aircraft industry can have an outsized effect on the total figures, the story of accelerated inventory accumulation isn&#39;t much different. Inventories rose the same 1.3% in January, the December rise was revised up, and the three month rate of accumulation was 9.6%, up from slight decumulation early last year. Inventories in the civilian aircraft industry rose 3.7% during January and the three month rate of gain was 51.3%.
Total factory orders fell 2.5% during January, pulled lower by a 30.4% m/m decline in orders for civilian aircraft (+86.7% y/y). Less that decline and less the transportation sector altogether, orders fell a slight 0.4% after a 0.6% December gain. The three month rate of increase at 6.9% was down from the double digit rates of increase seen last year. January orders for durable goods fell 5.1%, about the same as the advance report of a 5.3% decline.
Factory shipments surged 1.1%, again influenced by a strong aircraft industry where shipments rose 11.7% (19.1% y/y). Excluding the transportation sector shipments rose 0.8% and the three month rate of growth of 9.2% was down by half from last year&#39;s peak rates of gain.
Overall unfilled orders rose 0.7% in January and the three month rate of increase was a hefty 18.6%. Shipments of civilian aircraft &amp; parts still can&#39;t keep pace with orders, therefore backlogs rose 1.4% after a 4.0% surge in December (45.0% y/y). Excluding the transportation sector altogether unfilled orders rose a lesser 0.4% during January and the three month average growth rate was a still firm 9.2% (AR).
Macroeconomic Interdependence and the International Role of the Dollar from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr316.pdf"> here</a> .

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>1.3</td>
<td>0.9</td>
<td>5.0</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>1.3</td>
<td>0.5</td>
<td>4.0</td>
<td>2.5</td>
<td>7.1</td>
<td>8.0</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>-2.5</td>
<td>2.0</td>
<td>7.7</td>
<td>1.4</td>
<td>5.1</td>
<td>11.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.4</td>
<td>0.6</td>
<td>8.0</td>
<td>1.2</td>
<td>5.4</td>
<td>11.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.1</td>
<td>-0.4</td>
<td>7.1</td>
<td>1.1</td>
<td>4.3</td>
<td>10.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.8</td>
<td>-0.2</td>
<td>8.1</td>
<td>1.3</td>
<td>5.0</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.7</td>
<td>2.5</td>
<td>18.3</td>
<td>18.1</td>
<td>20.0</td>
<td>15.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>0.4</td>
<td>1.3</td>
<td>8.6</td>
<td>9.1</td>
<td>14.1</td>
<td>8.4</td>
</tr>
</tbody>
</table>
</body>
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Factory inventories surged 1.3% in January and posted the strongest m/m increase since early 2005. It followed an upwardly revised 0.9% December increase. Together the gains lifted the three month annualized rate of increase to 12.0%, [...]

U.S. Factory Inventory Gain Strong, Orders Reverse December Rise

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306d.jpg" width="353">
The National Association of Realtors reported that the January level of pending sales of existing homes was unchanged from December. The reading contrasted slightly with Consensus expectations for a modest decline. The latest level also was unchanged from last year&#39;s low reached in August.
These figures are analogous to the new home sales data from the Commerce Dept. They measure existing home sales when the sales contract is signed, not at the time the sale is closed.
In contrast to the stability in overall sales, pending home sales in the Northeast continued to fall. The 4.1% m/m January decline was the sixth in the last seven months and sales were down 40.1% from the monthly peak early in 2005. Sales in the South also were quite weak in January and fell 6.1% m/m, the fourth down month in a row. Sales were off 35.5% from the 2005 peak.
Sales in the Midwest recently have shown some stability. They rose 0.6% in January and were up 7.4% from the low last August. Nevertheless, sales were one third lower than the 2004 peak. Out West sales recovered in January. The 13.0% rise was first m/m gain on record but sales were still 44.6% below the late 2005 peak.
The Realtors also indicated in an earlier report that the number of homes on the market and available for sale rose 5.5% (18.4% y/y) in January.
The pending home sales data are available in Haver&#39;s PREALTOR database and the number of homes on the market are in the REALTOR database.

<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">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>85.9</td>
<td>&nbsp;85.9</td>
<td>&nbsp;&nbsp; -19.6%</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
<td>124.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>69.6</td>
<td>72.6</td>
<td>-28.0</td>
<td>85.6</td>
<td>98.5</td>
<td>108.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>85.2</td>
<td>84.7</td>
<td>-13.3</td>
<td>89.6</td>
<td>102.0</td>
<td>116.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>89.5</td>
<td>95.3</td>
<td>-23.8</td>
<td>107.3</td>
<td>127.3</td>
<td>134.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93.8</td>
<td>83.0</td>
<td>-12.7</td>
<td>92.3</td>
<td>109.5</td>
<td>128.6</td>
</tr>
</tbody>
</table>
</body>
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The National Association of Realtors reported that the January level of pending sales of existing homes was unchanged from December. The reading contrasted slightly with Consensus expectations for a modest decline. The latest level [...]

U.S. Pending Home Sales Unchanged in January

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306a.jpg" width="353">
Initial claims for unemployment insurance fell 24,900 to 351,000 last week. The decline reversed all of the 21,000 increase during the prior week which was revised to show a slightly stronger rise. During February claims averaged 359,000 (+6.3% y/y) per week, up 9.8% from the January average.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance continued their recent rise. A 29,000 increase during the latest week followed a 16,000 gain during the prior period which was revised down slightly. Insured unemployment stood at its highest level since Summer 2005. The figure provides some indication of workers&#39; ability to find employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306b.jpg" width="353">
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 2.1% for the fifth consecutive week.
The latest Beige Book from the Federal Reserve covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2008/20080305/fullreport20080305.pdf">here</a>.
An Expanded Look at Employment from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080301/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">03/01/08</th>
<th scope="col">02/23/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;351</td>
<td>375</td>
<td>7.3%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,831</td>
<td>12.3%</td>
<td>2,551</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance fell 24,900 to 351,000 last week. The decline reversed all of the 21,000 increase during the prior week which was revised to show a slightly stronger rise. During February claims averaged [...]

U.S. Weekly Jobless Insurance Claims Fell

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306c.jpg" align="left" border="0" height="265" width="353">
Factory inventories surged 1.3% in January and posted the
strongest m/m increase since early 2005. It followed an upwardly
revised 0.9% December increase. Together the gains lifted the three
month annualized rate of increase to 12.0%, up sharply from last year's
lows which were at or below 1.0% through the Summer.
Excluding the volatile transportation sector where the
aircraft industry can have an outsized effect on the total figures, the
story of accelerated inventory accumulation isn't much different.
Inventories rose the same 1.3% in January, the December rise was
revised up, and the three month rate of accumulation was 9.6%, up from
slight decumulation early last year. Inventories in the civilian
aircraft industry rose 3.7% during January and the three month rate of
gain was 51.3%.
Total factory orders fell 2.5% during January, pulled lower by
a 30.4% m/m decline in orders for civilian aircraft (+86.7% y/y). Less
that decline and less the transportation sector altogether, orders fell
a slight 0.4% after a 0.6% December gain. The three month rate of
increase at 6.9% was down from the double digit rates of increase seen
last year. January orders for durable goods fell 5.1%, about the same
as the advance report of a 5.3% decline.
Factory shipments surged 1.1%, again influenced by a strong
aircraft industry where shipments rose 11.7% (19.1% y/y). Excluding the
transportation sector shipments rose 0.8% and the three month rate of
growth of 9.2% was down by half from last year's peak rates of gain.
Overall unfilled orders rose 0.7% in January and the three
month rate of increase was a hefty 18.6%. Shipments of civilian
aircraft &amp; parts still can't keep pace with orders, therefore
backlogs rose 1.4% after a 4.0% surge in December (45.0% y/y).
Excluding the transportation sector altogether unfilled orders rose a
lesser 0.4% during January and the three month average growth rate was
a still firm 9.2% (AR).
Macroeconomic Interdependence and the International
Role of the Dollar from the Federal Reserve Bank of New York
is available <a href="http://www.newyorkfed.org/research/staff_reports/sr316.pdf">
here</a> .

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory
Survey</a> (NAICS, %)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>1.3</td>
<td>0.9</td>
<td>5.0</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.3</td>
<td>0.5</td>
<td>4.0</td>
<td>2.5</td>
<td>7.1</td>
<td>8.0</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>-2.5</td>
<td>2.0</td>
<td>7.7</td>
<td>1.4</td>
<td>5.1</td>
<td>11.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>-0.4</td>
<td>0.6</td>
<td>8.0</td>
<td>1.2</td>
<td>5.4</td>
<td>11.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.1</td>
<td>-0.4</td>
<td>7.1</td>
<td>1.1</td>
<td>4.3</td>
<td>10.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.8</td>
<td>-0.2</td>
<td>8.1</td>
<td>1.3</td>
<td>5.0</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.7</td>
<td>2.5</td>
<td>18.3</td>
<td>18.1</td>
<td>20.0</td>
<td>15.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>0.4</td>
<td>1.3</td>
<td>8.6</td>
<td>9.1</td>
<td>14.1</td>
<td>8.4</td>
</tr>
</tbody>
</table>
U.S. Pending Home Sales Unchanged
in January 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306d.jpg" align="left" border="0" height="265" width="353">
The National Association of Realtors reported that the January
level of pending sales of existing homes was unchanged from December.
The reading contrasted slightly with Consensus expectations for a
modest decline. The latest level also was unchanged from last year's
low reached in August.
These figures are analogous to the new home sales data from
the Commerce Dept. They measure existing home sales when the sales
contract is signed, not at the time the sale is closed.
In contrast to the stability in overall sales, pending home
sales in the Northeast continued to fall. The 4.1% m/m January decline
was the sixth in the last seven months and sales were down 40.1% from
the monthly peak early in 2005. Sales in the South also were quite weak
in January and fell 6.1% m/m, the fourth down month in a row. Sales
were off 35.5% from the 2005 peak.
Sales in the Midwest recently have shown some stability. They
rose 0.6% in January and were up 7.4% from the low last August.
Nevertheless, sales were one third lower than the 2004 peak. Out West
sales recovered in January. The 13.0% rise was first m/m gain on record
but sales were still 44.6% below the late 2005 peak.
The Realtors also indicated in an earlier report that the
number of homes on the market and available for sale rose 5.5% (18.4%
y/y) in January.
The pending home sales data are available in Haver's PREALTOR
database and the number of homes on the market are in the REALTOR
database.

<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">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>85.9</td>
<td>&nbsp;85.9</td>
<td>&nbsp;&nbsp; -19.6%</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
<td>124.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>69.6</td>
<td>72.6</td>
<td>-28.0</td>
<td>85.6</td>
<td>98.5</td>
<td>108.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>85.2</td>
<td>84.7</td>
<td>-13.3</td>
<td>89.6</td>
<td>102.0</td>
<td>116.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>89.5</td>
<td>95.3</td>
<td>-23.8</td>
<td>107.3</td>
<td>127.3</td>
<td>134.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93.8</td>
<td>83.0</td>
<td>-12.7</td>
<td>92.3</td>
<td>109.5</td>
<td>128.6</td>
</tr>
</tbody>
</table>
U.S. Weekly Jobless Insurance
Claims Fell 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306a.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance fell 24,900 to
351,000 last week. The decline reversed all of the 21,000 increase
during the prior week which was revised to show a slightly stronger
rise. During February claims averaged 359,000 (+6.3% y/y) per week, up
9.8% from the January average.
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last ten years there has
been a (negative) 76% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance continued their
recent rise. A 29,000 increase during the latest week followed a 16,000
gain during the prior period which was revised down slightly. Insured
unemployment stood at its highest level since Summer 2005. The figure
provides some indication of workers' ability to find employment.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306b.jpg" align="right" border="0" height="265" width="353">
The continuing claims numbers lag the initial claims figures
by one week.
The insured rate of unemployment remained at 2.1% for the
fifth consecutive week.
The latest Beige Book from the Federal
Reserve covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2008/20080305/fullreport20080305.pdf">here</a>.
An Expanded Look at Employment from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080301/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">03/01/08</th>
<th scope="col">02/23/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;351</td>
<td>375</td>
<td>7.3%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,831</td>
<td>12.3%</td>
<td>2,551</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
German Orders Take Another
SwingLower 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306e.jpg" align="left" border="0">
Manufacturing orders were a little weaker at the start of the
year than in the fourth quarter said the German ministry in a classic
understatement of the facts. It noted, however, mitigating factors,
such as a change in the tax depreciation system at the start of 2008
that caused many domestic companies to pull their orders backward into
2007. Even with that pull back December orders fell. And the 2008
growth rate as of January 2008 compared to the Q4 base sees a 7.6%
annual rate of decline in Q1 2008. Domestic orders are shrinking at a
2.4% pace. But foreign orders, an area unaffected by the depreciation
rule in Germany, sees Q1 orders are off at a 12.3% annual pace.
German orders are being compressed. German domestic orders
peaked in September 2006 and have been declining irregularly ever
since. There was an order rebound in November and December of 2007 but
the down shift is again in train.
In Germany sales trends show declines for consumer durables
and nondurables. Sales of intermediate goods have seen resurgence while
capital goods sales continue to be quite firm and have recently
re-accelerated. This is a
continuation of the same story that sees the consumer sector weak and
capital goods remaining strong. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>-1.5%</td>
<td>-1.1%</td>
<td>3.0%</td>
<td>1.2%</td>
<td style="color: red;">0.6%</td>
<td>9.6%</td>
<td>6.9%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-1.3%</td>
<td>-2.5%</td>
<td>2.3%</td>
<td style="color: red;">-5.9%</td>
<td style="color: red;">-3.0%</td>
<td>13.3%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-1.9%</td>
<td>0.4%</td>
<td>3.7%</td>
<td>9.1%</td>
<td style="color: red;">4.5%</td>
<td style="color: red;">5.8%</td>
<td>8.1%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">Sector
Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>1.4%</td>
<td>1.1%</td>
<td>-0.7%</td>
<td>7.3%</td>
<td style="color: red;">3.6%</td>
<td style="color: red;">5.9%</td>
<td>9.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td style="color: red;">-0.5%</td>
<td>0.5%</td>
<td>-0.6%</td>
<td style="color: red;">-2.3%</td>
<td style="color: red;">-1.1%</td>
<td style="color: red;">1.1%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Cons Durables</td>
<td style="color: red;">-2.6%</td>
<td>2.8%</td>
<td>-0.2%</td>
<td style="color: red;">-0.4%</td>
<td>-0.2%</td>
<td style="color: red;">-1.5%</td>
<td>7.0%</td>
</tr>
<tr>
<td class="firstcol">Cons Nondurable</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td style="color: red;">-2.6%</td>
<td style="color: red;">-1.3%</td>
<td style="color: red;">1.5%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>2.7%</td>
<td>0.9%</td>
<td>-2.1%</td>
<td>6.0%</td>
<td style="color: red;">3.0%</td>
<td style="color: red;">7.9%</td>
<td>11.3%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td style="color: red;">0.6%</td>
<td>1.9%</td>
<td>0.8%</td>
<td>14.1%</td>
<td>6.8%</td>
<td style="color: red;">6.2%</td>
<td>9.2%</td>
</tr>
<tr>
<td class="firstcol">All MFG Sales</td>
<td>1.3%</td>
<td>1.2%</td>
<td>-0.9%</td>
<td>6.7%</td>
<td style="color: red;">3.3%</td>
<td style="color: red;">5.6%</td>
<td>8.8%</td>
</tr>
</tbody>
</table>
Japan Economy Shows Weakening
Sectors and a Weakening Outlook 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080306f.jpg" align="left" border="0" height="265" width="353">
The Teikoku indices show a weakening Japan economy. Just today
Japan policymakers, commenting on the state of the economy, were saying
that it is weak and did not know if the word &#8216;recession&#8217; should be used
in connection with it. The
Teikoku index hit a five year low in January and has recovered slightly
in February. The NTC MFG index is also weak but not quite as weak as
the Teikoku MFG reading; it is not in the bottom 5 percent of its range
but in the bottom 30% of it.
The Teikoku outlook indices show that progressively greater
weakness is expected looking ahead. While each of these indexes, the
current, the 6-mo ahead and 12-mo ahead index, has fallen, each has
also made a small rebound in February. Up until now, Japan has taken a
mostly upbeat view of the economy. It took Japanese officials a long
time to downgrade the economy and its prospects. But the slide in the
economy is now undeniable. Still, like the US, we do not yet know how
far the economy will skid.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Key
Japanese Surveys</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Yr range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>Dec-07</td>
</tr>
<tr>
<td class="firstcol">NTC MFG</td>
<td>50.8</td>
<td>52.4</td>
<td>52.3</td>
<td>50.8</td>
<td>30.5%</td>
<td>47.4%</td>
<td>47.3%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Econ
Trends (Teikoku'/50
neutral/weighted diffusion)</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>38.5</td>
<td>37.9</td>
<td>40.8</td>
<td>41.7</td>
<td>4.4%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>32.6</td>
<td>31.3</td>
<td>34.2</td>
<td>34.4</td>
<td>9.4%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Wholesale</td>
<td>35.3</td>
<td>34.5</td>
<td>37.0</td>
<td>38.3</td>
<td>6.3%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>41.0</td>
<td>40.4</td>
<td>43.5</td>
<td>45.0</td>
<td>5.4%</td>
<td>0.0%</td>
<td>20.1%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>29.7</td>
<td>28.9</td>
<td>32.0</td>
<td>32.6</td>
<td>7.5%</td>
<td>0.0%</td>
<td>16.4%</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080305h.jpg" align="left" border="0" height="265" width="353">
Services in the Euro Area bounced back in February but the
index still resides in the lower portion of the range it has occupied
since May of 2000. The overall index stands in its 39th
percentile, about 10 percentage points below range mid-point. Germany
and France have two of the &#8216;stronger&#8217; service sector readings with
indexes that are near or above their range midpoints at 50% and 56%
respectively. Italy finds its service sector with the worst reading
since this survey was taken. Similarly Spain and Ireland are weak in
their range in the bottom 15 percentile or worse. The UK, an EU member
country, finds its service sector in the 54th
percentile. Its reading rose in February as well.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> NTC
Services Indexes for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-08</td>
<td>Jan-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>52.25</td>
<td>50.56</td>
<td>51.98</td>
<td>53.35</td>
<td>55.54</td>
<td>39.9%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>52.17</td>
<td>49.17</td>
<td>50.86</td>
<td>52.31</td>
<td>55.32</td>
<td>50.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>58.15</td>
<td>56.60</td>
<td>57.88</td>
<td>58.01</td>
<td>58.35</td>
<td>56.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>47.15</td>
<td>47.86</td>
<td>48.24</td>
<td>50.77</td>
<td>53.47</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>46.13</td>
<td>44.24</td>
<td>47.12</td>
<td>49.48</td>
<td>52.42</td>
<td>11.7%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>48.27</td>
<td>51.90</td>
<td>51.23</td>
<td>52.96</td>
<td>55.19</td>
<td>14.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">EU
only</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>54.05</td>
<td>52.46</td>
<td>52.96</td>
<td>53.43</td>
<td>55.41</td>
<td>54.4%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">percentile
is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

Services in the Euro Area bounced back in February but the index still resides in the lower portion of the range it has occupied since May of 2000. The overall index stands in its 39th percentile, about 10 percentage points below [...]

EMU Services PMI Makes a Small Rebound in February

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080305g.jpg" align="left" border="0" height="265" width="353">
January Euro Area retail sales fell 1% in volume terms. Over
three months growth has slowed marginally and is clinging in real terms
to a 1% rate of growth. The volume of spending on food has picked up in
the recent three months after negative growth rates of six and 12
months despite climbing prices. The volume of spending on nonfood items
has steadily deteriorated: 12-month to 6-month to 3-month. This is matter of concern. Three of
four EU countries depicted in the table details show sales decelerating
in the recent three-month period. I say three since I include Italy
that only offers nominal figures. Once inflation is subtracted surely
Italy with nominal sales already so weak will add to the story of
retail weakness in EMU. France shows some resilience. The UK, while
showing some slowing, also shows some growth consumer is not about to
hold growth aloft in the Euro Area. The purchase plans plotted in the
chart underscore that fact of life.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Euro
Area 15 Retail Sales Volume</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>-1.1%</td>
<td>-1.4%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>0.6%</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>-2.8%</td>
<td>-1.4%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">Nonfood</td>
<td>0.4%</td>
<td>0.0%</td>
<td>-0.4%</td>
<td>0.0%</td>
<td>-1.6%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-13.0%</td>
<td>-2.0%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">HH Goods</td>
<td>#N/A</td>
<td>0.6%</td>
<td>-0.8%</td>
<td>-2.7%</td>
<td>-2.6%</td>
<td>-2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Books news, etc</td>
<td>#N/A</td>
<td>-0.6%</td>
<td>0.1%</td>
<td>-1.2%</td>
<td>-1.7%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">Pharma</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Nonspecialized stores</td>
<td>#N/A</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-3.0%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr>
<td class="firstcol">Mail Order</td>
<td>#N/A</td>
<td>2.8%</td>
<td>-1.3%</td>
<td>4.1%</td>
<td>1.0%</td>
<td>-1.2%</td>
</tr>
<tr class="grey4">
<td colspan="7" class="firstcol">Nonfood Country detail
(volume)</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.9%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>-4.0%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>1.7%</td>
<td>2.0%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">Italy (Total; Value)</td>
<td>#N/A</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU)</td>
<td>1.2%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>6.8%</td>
<td>5.6%</td>
<td>7.6%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Shaded areas
calculated on a
one-month lag due to lagging data.</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">The EA 15
countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body></html>

January Euro Area retail sales fell 1% in volume terms. Over three months growth has slowed marginally and is clinging in real terms to a 1% rate of growth. The volume of spending on food has picked up in the recent three months after [...]

Retail Sales and Spending Plans in EMU: Deceleration

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080305f.jpg" width="353">
Challenger, Grey &amp; Christmas reported that job cut announcements in February fell to 72,091 after 74,986 cuts during January. The average of announcements so far in 2008 is slightly below the 2007 average.
Job cut announcements rose m/m in the aerospace industry but fell in the auto industry. Layoffs in construction and computers also rose but they fell in electronics, financial and in the retail industry.
During the last ten years there has been a 76% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans were up slightly m/m but they were down sharply y/y.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>72,091</td>
<td>74,986</td>
<td>-14.2%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
</body>
</html>

Challenger, Grey & Christmas reported that job cut announcements in February fell to 72,091 after 74,986 cuts during January. The average of announcements so far in 2008 is slightly below the 2007 average. Job cut announcements rose [...]

Challenger Layoffs Down Last Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080305d.jpg" width="353">
The Business Activity Index for the non-manufacturing sector, from the Institute for Supply Management, last month improved somewhat to a reading of 50.8 from 41.9 in January. Consensus expectations had been for less of an improvement to 47.7.
Despite the rise in February, the index remained near its lowest since 2003. A level of 50 is the break even point between rising and falling activity in the service sector.
Since the series&#39; inception in 1997 there has been a 44% correlation between the level of the Business Activity Index in the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors. The correlation of the factory sector ISM index with the change in real GDP less just services is a higher 57%, though over the last ten years it only has been 34%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080305e.jpg" width="353">
The new orders sub index rose m/m to a reading of 49.6 and made up a little more than half of its ten point decline during January.
Conversely, the employment sub index also rose but its 3.0 point rise to 46.9 made up less than half the January decline. That was to its lowest level since 2002. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power again eased slightly m/m for the third month, however, the level of 67.9 remained well above that of the last two years. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
The Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the ISM manufacturing sector composite index is a weighted average of five components.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>50.8</td>
<td>41.9</td>
<td>54.9</td>
<td>56.0</td>
<td>58.0</td>
<td>60.2</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>67.9</td>
<td>70.7</td>
<td>53.9</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


</html>

The Business Activity Index for the non-manufacturing sector, from the Institute for Supply Management, last month improved somewhat to a reading of 50.8 from 41.9 in January. Consensus expectations had been for less of an improvement [...]

U.S. ISM Non-Manufacturing Index Somewhat Improved

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

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Mortgage applications increased 10.9% (11.9% y/y) in the week ending August 8, after rising 3.1% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loan refinancing surged 23.0% (7.5% y/y) last week, following a 5.2% gain in the prior week. Applications for loans to purchase a home rose 1.4% (16.3% y/y) last week, following a 1.5% rise in the week of August 1.

The effective interest rate on a 30-year fixed-rate loan eased to 6.86% in the week ending August 8 after falling to 6.94%	 in the prior week. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages declined to 6.09% in the latest week from 6.19% in the week of August 1. Conversely, the rate on 30-year Jumbo loans increased to 6.86% last week from 6.82% one week earlier. The rate on a 5-year ARM dropped to 6.05% in the week of August 8 after falling to 6.25% in the prior week. It was the lowest rate since the second week of March.

The share of applications for refinancing an existing loan jumped to 46.5% of total applications in the week ending August 8, from 41.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity rose to 9.60% in the latest week from 8.50% in the week of August 1.

The average size of a mortgage loan jumped 4.5% (-1.1% y/y) to $398,700 in the week of August 8, following a 1.9% rise in the prior week. The average size of a purchase loan fell 1.2%, little changed y/y, to $426,900 in the latest week after gaining 0.7% in the week ending August 1. The average size of a loan to refinance a mortgage surged 18.3% (-3.0% y/y) to $366,400 last week, after rising 5.2% in the prior week. It was increased from $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Loan refinancing continues to strengthen as purchase applications rise slightly.
- Effective fixed-interest rate on 30-year loans falls to four-month low.
- Average loan size continues to increase.

U.S. Mortgage Applications Surge Last Week as Interest Rates Slip

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In what is becoming a more common global story, confidence in Norway is rebounding after an earlier significant setback as countries recalibrate their circumstances under the revised Trump's tariff format. Norwegian consumer confidence had slipped in the second quarter to -19.1 from -5.4 in the first quarter, but now in the third quarter, confidence is snapping back to a -3.2 reading, the strongest reading since the first quarter of 2022.

Of course, there's a lot in the mix for this important northern European economy. Norway is an oil economy, and it also is one of the economies that is more vulnerable to relations with Russia. It has a relatively short but direct common border with Russia in the far north; otherwise, the borders are with Sweden and Finland. Still, with conditions in Russia touch and go and with Russian aircraft occasionally testing the air defenses the Baltic region, this is a geopolitically sensitive location.

On the economic front, inflation has been creeping up but the headline and core inflation rates are above the 2% mark and largely occupying space between 2.5% and 3%. Economic performance has been a bit uneven with the unemployment rate beginning to move up, as that rate has been notching steadily higher as 2025 has progressed. The last move by the central bank was to cut its key interest rate on site deposits. With the unemployment rate rising, there was little reaction in the bond market to this, especially in the environment where the manufacturing sector continues to be under pressure as it is for the most part globally with output in Norway contracting over the past two months (Y/Y).

Consumers’ rating of the environment for spending improved in the third quarter after deteriorating sharply in Q2. Its improvement brings it to a level above where it was in the first quarter as well; however, on ranked data back to the early 1990s the environment for making a major purchase still only has an 11.4 percentile standing, a relatively weak performance.

The assessment of the overall economy for the next year improved sharply once again after falling sharply in the second quarter. This metric had a value of 5.1 in the first quarter that slipped back to -21.2 in the second quarter; since then, the third quarter has gained some of that back at a survey reading of -3.3. It's still not back to its first quarter level, and it still is a reading that represents relatively weak performance as it has a 28.8 percentile standing which leaves it clearly in the bottom third of its queue of values since the early 1990s.

However, the personal finance readings do pick up for conditions expected for next year as the index evolves from a reading of 21.5 in the first quarter to 11.2 in the second quarter and back up to 21.8 in the third quarter of 2025. This reading brings the personal finance assessment to a 47-percentile standing, just slightly below its median for the period; at a level of 21.8, it's above its mean value of 20.1 for the period. This news on the personal finance front is better than anywhere else in the survey.

Consumer confidence is also rated according to age. And while there are some differences among the age-cohorts, for the most part they move and evaluated in unison. The queue rankings range from 16.7% (with the youngest growth at the low end) to 25.8% with the oldest group at the high end. Over 4 quarters, the changes in the age-cohort evaluations range from +11.1 to +18.7.

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On balance, Norway’s economy is experiencing some significant strains and it's unclear exactly where it stands trying to draw conclusions from quarterly data after these sharp gyrations as the economy tries to accustom itself to a new global tariff environment, the economic cycle, and deal with the geopolitical realities of the day. There's certainly a lot for Norwegians to sort out, for now confidence has made some recovery, and the economy is experiencing a bit of a soft spot. Consumers are managing to make the best of it, but they're still dealing with consumer confidence readings that have been weaker than this, only about 20% of the time so it's still a difficult slog for consumers.

Norway

Norway’s Confidence Steps Back Up in Q3 After Q2 Stumble

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The Consumer Price Index increased 0.2% in July after rising 0.3% in June and 0.1% in May. The July increase matched the forecast in the Action Economics Forecast Survey. The 2.7% y/y increase in the headline CPI in July held steady with June, but was increased from 2.3% in April. It remained below the 9.1% peak in June 2022. The CPI excluding food & energy increased an expected 0.3% last month after a 0.2% June rise and a 0.1% uptick in May. The 3.1% y/y July rise compared to 2.8% from March through May, still well below the 6.6% peak in September 2022.

Energy prices declined 1.1% (-1.6% y/y) last month after rising 0.9% in June. Gasoline prices weakened 2.2% (-9.5% y/y) after rising 1.0% in June. Fuel oil prices improved 1.8% (-2.9% y/y) after rising 1.3% in May. Natural gas prices fell 0.9% (+13.8% y/y) following a 0.5% gain, and electricity prices eased 0.1% (5.5% y/y) after rising 1.0% in June.

Food prices held steady in July (+2.9% y/y) following two straight 0.3% increases. Egg prices fell 3.9% (+16.4% y/y), off for the fourth straight month. Meat, poultry & fish prices rose 0.7% (4.6% y/y) after increasing 0.8%, while dairy product prices gained 0.7% (1.5% y/y), after easing in four of the last five months. Cereal & bakery product costs eased 0.2% (+1.0% y/y) for the second straight month while fruit & vegetable prices held steady (0.2% y/y), following a 0.9% gain. Nonalcoholic beverage prices declined 0.5% (+3.6% y/y) in July after rising 1.4% in June.

Goods prices less food and energy rose 0.2% in July for the second straight month. The 1.2% y/y price gain is up from slight y/y declines in the first three months of this year. Prices of used cars and trucks rose 0.5% (+4.8% y/y) last month, after falling 0.7% in June, while new vehicle costs held steady (+0.4% y/y) after falling 0.3% for two consecutive months. Apparel prices edged 0.1% higher (-0.2% y/y) in July after rising 0.4%. Appliance prices fell 0.9% (-0.3% y/y), after strengthening 1.9%. Home furnishings prices increased 0.7% (2.4% y/y) after rising 1.0%. Recreation product costs rose 0.4% (-0.1% y/y) in July, after a 0.8% increase. Education & communication product costs declined 1.3% (-4.3% y/y) after holding steady in June. Medical care goods prices rose 0.1% (NSA, 0.1% y/y) for the second straight month.

Services prices less energy strengthened 0.4% (3.6% y/y) after rising 0.3% in June. Shelter prices rose 0.2% (3.7% y/y), the same as in June, as owners’ equivalent rent of primary residences increased 0.3% (4.1% y/y) for the third straight month. The cost of lodging away from home declined 1.0% (-3.5% y/y), the fifth straight month of decline. Rents of primary residences gained 0.3% (3.5% y/y), after two consecutive 0.2% increases. Transportation service prices jumped 0.8% (3.5% y/y) after gaining 0.2% and the cost of motor vehicle insurance edged up 0.1% (5.3% y/y) in July, the same as in June. Public transportation costs increased 3.0% (0.7% y/y) after rising 0.4% during June. The cost of medical services increased 0.8% (4.3% y/y) after a 0.6% rise, and the cost of recreation services rose 0.4% (3.9% y/y) after rising 0.2% in June. Education & communication services prices rose 0.2% (1.1% y/y) after edging 0.1% higher in June.

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

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- Decline in energy & stable food prices reduce overall strength.
- Core inflation picks up with tariff effects.
- Core goods prices strengthen but core services inflation steadies.

U.S. Consumer Price Inflation Eases in July

Winnie Tapasanun

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The NFIB Small Business Optimism Index increased to 100.3 in July, the highest level since February, from 98.6 in June and 98.8 in May, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. This was the third consecutive month that the index was above the 52-year average of 98. The index was down from its recent peak of 105.1 in December but up from 93.7 in July 2024 and a low of 88.5 in March 2024. Six of the 10 index components rose, two fell, and two were unchanged. Amid high uncertainty (with tariffs, inflation, and international conflicts), the NFIB Small Business Uncertainty Index rose to 97 in July, the highest reading in five months, after a five-point decline to 89 in June. The index, while down from its record high of 110 in October, was above its recent low of 86 in December and a low of 65 in November 2023.

The outlook for business conditions in the next six months remained positive for the ninth straight month in the latest survey. The net balance of respondents expecting the economy to improve rose to 36% in July, the highest level since February, following a three-point decline to 22% in June; thus, having remained significantly above a record low of -61% in June 2022. Expected real sales slipped to a net 6% in July after a three-point decrease to 7% in June, posting the lowest of three successive positive readings. The latest figure was above its recent low of -18% in August 2024. A net -9% of respondents reported higher nominal sales in the past three months, down from -5% in June. The latest result was below the most recent positive reading of 1% in May 2022 and a peak of 9% in June 2021.

Plans to expand the business rose to 16% in July, the highest reading since January, from 11% in June; the latest figure, while down from its most recent high of 20% in December, was up from a low of 2% in March 2023. Plans to make capital outlays rebounded to 22% in July following a one-point dip to 21% in June; these numbers were down from their recent high of 28% in November and a high of 31% in October 2021. Meanwhile, expected credit conditions registered at -4% for the third consecutive month in July; this steady reading was slightly below its recent high of -2% in December but above a low of -11% in November 2023.

On the labor front, forty-eight percent of respondents reported that qualified workers to fill job openings were hard to find in July, down from 50% in June. These numbers were below their recent high of 56% in August 2024, a high of 57% in September 2023, and a peak of 62% in September 2021. A net 14% planned to increase employment in July, slightly up from 13% in June and posting the highest reading since February; it was above its recent low of 11% in March 2024 but below a high of 26% in May 2022 and a peak of 32% in August 2021. Notably, 33% reported positions not able to be filled in July, down from 36% in June and registering the lowest reading since January 2021; these figures remained below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The figure held at -22% in July and June, a poor reading, following a five-point drop to -26% in May. These readings, while up from a low of -37% in August 2024, remained below a high of -18% in March 2023 and a high of -5% in June 2021.

On the pricing front, actual and expected selling prices, while trending down, remained at an inflationary level; thus, suggesting continued inflationary pressures. The net percent of firms raising their average selling prices fell to 24% in July, the lowest reading since January, after a four-point rise to 29% in June. These numbers were up from 22% in July 2024 but well below a high of 66% in March 2022. The percentage planning to raise prices fell to a three-month-low 28% in July following a one-point increase to 32% in June; these figures were above 24% in July 2024 but below a high of 33% in March 2024 and a high of 52% in March 2022.

Wage inflation, while relatively high, eased in the July survey. A net 27% of respondents raised compensation during the last three months, down from 33% reported in the June survey. It was down from a high of 46% in February 2023 and a peak of 50% in January 2022. A net 17% of firms planned to raise worker compensation in the next three months, down from 19% reported in June and posting the lowest reading in three months; these numbers were below a high of 28% in November, a high of 30% in November 2023, and a high of 32% in October 2022.

The quality of labor was reported as the single most important problem facing small businesses, as reported by 21% of NFIB members in July, up five points from 16% in June; it registered the highest reading since August 2024 and the biggest m/m increase since August 2022. Taxes were reported as the next most important problem, with 17% reported in July vs. 19% in June. Inflation continued to be a problem facing small businesses, as reported by 11% in July and June, the lowest reading since September 2021; the figure was well below a peak of 37% in July 2022. Other concerns (in July vs. June) included poor sales (11% vs. 10%), the cost of labor (9% vs. 10%), government requirements (8% vs. 9%), insurance cost/availability (8% vs. 8%), and competition from large businesses (6% vs. 7%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- July NFIB Small Business Optimism Index up 1.7 pts. to 100.3.
- Uncertainty Index up 8 pts. to a 5-month-high 97.
- Expectations for economy up 14 pts. to 36%, the highest since Feb.
- Plans to expand business up 5 pts. to 16%, the highest since Jan.
- Expected real sales down 1 pt. to 6%, still positive for the third straight month.
- Percent of firms raising avg. selling prices down 5 pts. to a 6-month-low 24%.
- Quality of labor (21%), taxes (17%), and inflation (11%) are the top three business concerns.

U.S. NFIB Small Business Optimism Rises in July; Highest Level Since February

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Retail gasoline prices for all grades, on average, dipped to $3.24 per gallon (-8.1% y/y) last week after rising to $3.27 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.75 per gallon (+1.3% y/y) in the week of August 11 after easing to $3.80 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $64.71 per barrel (-14.6% y/y) in the week ended August 8 from $68.50 in the prior week. The drop left prices at the lowest level since the first week of June. Prices, nonetheless, remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $68.17 per barrel (-13.5% y/y) in the week of August 8, after rising to $70.09 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $67.36 per gallon yesterday.

Natural gas prices slipped to an average $2.99/mmbtu (+59.0% y/y) in the week ended August 8, after falling to an average $3.03/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $3.05 per mmbtu.

Gasoline demand declined 2.2% y/y in the four weeks ending August 1, following a 3.0% y/y decline in the prior four weeks. Demand for all petroleum products rose 1.6% y/y in the four weeks ending August 1, after a 1.5% y/y increase in the previous four-week period. Crude oil input to refineries rose 2.9% y/y in the four weeks ending August 1, after a 1.7% y/y gain in the prior four weeks.

Gasoline inventories rose 0.9% y/y in the week ending August 1 after a 2.1% y/y in the prior week. Residual fuel oil inventories fell 25.8% y/y in the week of August 1, after a 22.5% y/y fall in the prior week. Crude oil inventories rose 2.7% y/y in the week of August, after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories held at 25.5 days in the week of August 1. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil eased to 25.0 days in the week of August 1 from 25.2 days in the prior week and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices weaken.
- Crude oil prices decline sharply.
- Natural gas prices ease.


Economy in Brief: March 2008

Jump to:

U.S. Factory Inventory Gain Strong, Orders Reverse December Rise

U.S. Pending Home Sales Unchanged in January

U.S. Weekly Jobless Insurance Claims Fell

U.S. Factory Inventory Gain Strong, Orders Reverse December Rise

EMU Services PMI Makes a Small Rebound in February

Retail Sales and Spending Plans in EMU: Deceleration

Challenger Layoffs Down Last Month

U.S. ISM Non-Manufacturing Index Somewhat Improved