Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201f.jpg" align="left" border="0" height="265" width="353">
The Institute of Supply Management (ISM) reported that its
Composite Index of Manufacturing Sector Activity recovered last month.
The m/m gain to 50.7 from a revised 48.4 in December (figures were
revised back to 2005) contrasted with Consensus expectations for a slip
to 47.5. Data points above 50 indicate growth in factory sector
activity.
Last month's composite reading was the highest since August of
last year.
During the last twenty years there has been a 64% correlation
between the level of the Composite Index and the three month growth in
factory sector industrial production.
It is appropriate to correlate the ISM index level
with factory sector growth because the ISM index
is a diffusion index. It measures growth by being constructed using all
of the absolute positive changes in activity added to one half of the
no change in activity measures.
Strong gains in the production and in the inventory components
accounted for most of the rise in the composite index. The orders and
the vendor deliveries components also rose but to much lesser degrees.
The index of new export orders recovered all of the m/m
decline during December. The latest was the highest level since last
May.
The employment index declined sharply m/m to its lowest level
since 2003. During the last twenty years there has been a 67%
correlation between the level of the ISM employment Index and the three
month growth in factory sector employment.
The prices paid index jumped sharply m/m to its highest level
since July 2006. During the last twenty years there has been a 77%
correlation between the price index and the three month change in the
PPI for intermediate goods. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201h.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January '07</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">Composite Index</td>
<td>50.7</td>
<td>48.4</td>
<td>49.3</td>
<td>51.1</td>
<td>53.1</td>
<td>54.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>49.5</td>
<td>46.9</td>
<td>52.4</td>
<td>54.3</td>
<td>53.4</td>
<td>57.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>76.0</td>
<td>68.0</td>
<td>53.0</td>
<td>64.6</td>
<td>65.0</td>
<td>66.4</td>
</tr>
</tbody>
</table>
</body></html>

The Institute of Supply Management (ISM) reported that its Composite Index of Manufacturing Sector Activity recovered last month. The m/m gain to 50.7 from a revised 48.4 in December (figures were revised back to 2005) contrasted with [...]

ISM Index Improved

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201a.jpg" width="353">
The Bureau of Labor Statistics reported that nonfarm payrolls fell in January by 17,000 versus expectations for a rise of 70,000. In December, the rise payrolls was revised to a stronger gain of 82,000, but November&#39;s increase was halved to 60,000. Moreover, the gain for all of last year was revised down slightly to 1.1% from the 1.3% reported earlier.
The decline in jobs during January was the first since August 2003. Five years ago, job declines continued through 2002 &amp; 2003 though economic recession ended in November 2001.
Fewer jobs in government accounted for the outright decline in overall January employment. An 18,000 worker decline (+0.8% y/y) in gov&#39;t jobs overall owed to a 24,000 worker decline (+0.1% y/y) in state gov&#39;t jobs. That left employment in private industries last month to rise a negligible 1,000 (0.7% y/y) but a similar preliminary reading for December was revised up to a gain of 54,000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201b.jpg" width="353">
In the private service sector employment rose by a weak 52,000 (1.4% y/y) although December&#39;s increase was about doubled to 115,000. Professional &amp; business services jobs fell by 11,000 (+1.6% y/y), the first material m/m decline since 2004. Temporary help services jobs fell 9,000 (-3.3% y/y). Retail employment rose 11,200 (0.4% y/y) but jobs in finance fell 2,000 (-1.1% y/y), the eleventh decline in the last thirteen months (Here is where the earlier job numbers were revised down sharply.)
Jobs in education continued firm and rose 15,700 (3.1% y/y) while job gains in the health care sector also were strong and rose 30,900 (3.1% y/y). Jobs in the leisure &amp; hospitality sector have been strong as well and rose 19,000 (2.7% y/y) in January.
Factory sector payrolls fell another 28,000. Construction employment fell as well, by 27,000, which was the seventh consecutive monthly drop.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201c.jpg" width="353">
Continuing to portend weakness in job creation was one month diffusion index of 46.2%. This measure of the breadth of job creation amongst industries was at its lowest level since 2003.
The unemployment rate slipped to 4.9% last month after the jump to 5.0% in December. Household employment rose 37,000 (0.2% y/y) while the labor force fell 42,000 (+0.6% y/y). Unemployment fell 79,000 (+7.6% y/y) but the labor force participation rate rose to 66.1%, its highest since last June.
Average hourly earnings rose 0.2%. Factory sector earnings jumped 0.5% (2.9% y/y) and private service-providing earnings rose 0.2% (4.0% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</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">Payroll Employment</td>
<td>-17</td>
<td>82</td>
<td>60</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>18</td>
<td>115</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-28</td>
<td>-20</td>
<td>-3</td>
<td>-1.9%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-27</td>
<td>-45</td>
<td>-57</td>
<td>-3.6%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.8</td>
<td>33.8</td>
<td>33.9 (Jan. &#39;07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.7%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.9%</td>
<td>5.0%</td>
<td>4.7%</td>
<td>4.6% (Jan &#39;07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Bureau of Labor Statistics reported that nonfarm payrolls fell in January by 17,000 versus expectations for a rise of 70,000. In December, the rise payrolls was revised to a stronger gain of 82,000, but November's increase was [...]

U.S. Payrolls Fell Unexpectedly, Revisions & Jobless Rate Down Slightly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics reported that nonfarm payrolls
fell in January by 17,000 versus expectations for a rise of 70,000. In
December, the rise payrolls was revised to a stronger gain of 82,000,
but November's increase was halved to 60,000. Moreover, the gain for
all of last year was revised down slightly to 1.1% from the 1.3%
reported earlier.
The decline in jobs during January was the first since August
2003. Five years ago, job declines continued through 2002 &amp;
2003 though economic recession ended in November 2001.
Fewer jobs in government accounted for the outright decline in
overall January employment. An 18,000 worker decline (+0.8% y/y) in
gov't jobs overall owed to a 24,000 worker decline (+0.1% y/y) in state
gov't jobs. That left employment in private industries last month to
rise a negligible 1,000 (0.7% y/y) but a similar preliminary reading
for December was revised up to a gain of 54,000.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201b.jpg" align="right" border="0" height="265" width="353">
In the private service sector employment rose by a weak 52,000
(1.4% y/y) although December's increase was about doubled to 115,000.
Professional &amp; business services jobs fell by 11,000 (+1.6%
y/y), the first material m/m decline since 2004. Temporary help
services jobs fell 9,000 (-3.3% y/y). Retail employment rose 11,200
(0.4% y/y) but jobs in finance fell 2,000 (-1.1% y/y), the eleventh
decline in the last thirteen months (Here is where the earlier job
numbers were revised down sharply.)
Jobs in education continued firm and rose 15,700 (3.1% y/y)
while job gains in the health care sector also were strong and rose
30,900 (3.1% y/y). Jobs in the leisure &amp; hospitality sector
have been strong as well and rose 19,000 (2.7% y/y) in January.
Factory sector payrolls fell another 28,000. Construction
employment fell as well, by 27,000, which was the seventh consecutive
monthly drop.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201c.jpg" align="left" border="0" height="265" width="353">
Continuing to portend weakness in job creation was one month
diffusion index of 46.2%. This measure of the breadth of job creation
amongst industries was at its lowest level since 2003.
The unemployment rate slipped to 4.9%
last month after the jump to 5.0% in December. Household employment
rose 37,000 (0.2% y/y) while the labor force fell 42,000 (+0.6% y/y).
Unemployment fell 79,000 (+7.6% y/y) but the labor force participation
rate rose to 66.1%, its highest since last June.
Average hourly earnings rose 0.2%. Factory
sector earnings jumped 0.5% (2.9% y/y) and private service-providing
earnings rose 0.2% (4.0% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment:
000s</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</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">Payroll Employment</td>
<td>-17</td>
<td>82</td>
<td>60</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>18</td>
<td>115</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-28</td>
<td>-20</td>
<td>-3</td>
<td>-1.9%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-27</td>
<td>-45</td>
<td>-57</td>
<td>-3.6%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.8</td>
<td>33.8</td>
<td>33.9 
&nbsp;(Jan. '07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.7%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.9%</td>
<td>5.0%</td>
<td>4.7%</td>
<td>4.6% 
&nbsp;(Jan '07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment's
Earlier Gains Diminished 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 1, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201e.jpg" align="left" border="0" height="265" width="353">
The University of Michigan's consumer sentiment index for all
of last month did improve by 3.8% m/m to a reading of 78.4. But that
gain was reduced by nearly one half from the rise reported at
mid-month. A level for the month of 79 had been expected.
The current conditions index rose by 3.7% m/m, half the rise
reported initially. The gain in current conditions for buying large
household goods was reduced to 6.6% (-12% y/y). The gain in the view of
current personal finances disintegrated to zero (-20.3% y/y) following
two months of decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201d.jpg" align="right" border="0" height="265" width="353">
Improvement in expected business conditions during the next
year was lowered slightly to 3.8% m/m (-22.3% y/y). Expectations for
business conditions during the next five years disappeared (-42.4% y/y)
but expectations for personal finances were slightly improved and rose
3.6% (-8.7% y/y).
Expectations for inflation during the next twelve months
slipped to 4.0%. For the next five to ten years expectations similarly
slipped to a 3.4% rise in prices, equal to the expected gain during all
of last year.
Opinions about government policy rose, but by a reduced 5.4%
m/m (-18.8% y/y).
The University of Michigan survey is not seasonally
adjusted.The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews. The summary indexes are in Haver's USECON database,
with details in the proprietary UMSCA database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">Jan (Final)</th>
<th scope="col">Jan (Prelim)</th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Jan&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>78.4</td>
<td>80.5</td>
<td>75.5</td>
<td>76.1</td>
<td>-19.1% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current
Conditions</td>
<td>94.4</td>
<td>98.1</td>
<td>91.0</td>
<td>91.5</td>
<td>-15.2%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Expectations</td>
<td>68.1</td>
<td>69.1</td>
<td>65.6</td>
<td>66.2</td>
<td>-22.3%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
ISM Index Improved 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 1, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201f.jpg" align="left" border="0" height="265" width="353">
The Institute of Supply Management (ISM) reported that its
Composite Index of Manufacturing Sector Activity recovered last month.
The m/m gain to 50.7 from a revised 48.4 in December (figures were
revised back to 2005) contrasted with Consensus expectations for a slip
to 47.5. Data points above 50 indicate growth in factory sector
activity.
Last month's composite reading was the highest since August of
last year.
During the last twenty years there has been a 64% correlation
between the level of the Composite Index and the three month growth in
factory sector industrial production.
It is appropriate to correlate the ISM index level
with factory sector growth because the ISM index
is a diffusion index. It measures growth by being constructed using all
of the absolute positive changes in activity added to one half of the
no change in activity measures.
Strong gains in the production and in the inventory components
accounted for most of the rise in the composite index. The orders and
the vendor deliveries components also rose but to much lesser degrees.
The index of new export orders recovered all of the m/m
decline during December. The latest was the highest level since last
May.
The employment index declined sharply m/m to its lowest level
since 2003. During the last twenty years there has been a 67%
correlation between the level of the ISM employment Index and the three
month growth in factory sector employment.
The prices paid index jumped sharply m/m to its highest level
since July 2006. During the last twenty years there has been a 77%
correlation between the price index and the three month change in the
PPI for intermediate goods. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201h.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January '07</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">Composite Index</td>
<td>50.7</td>
<td>48.4</td>
<td>49.3</td>
<td>51.1</td>
<td>53.1</td>
<td>54.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>49.5</td>
<td>46.9</td>
<td>52.4</td>
<td>54.3</td>
<td>53.4</td>
<td>57.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>76.0</td>
<td>68.0</td>
<td>53.0</td>
<td>64.6</td>
<td>65.0</td>
<td>66.4</td>
</tr>
</tbody>
</table>
NTC Shows a Rebound in Europe by <a href="/comment/Brusca.html">By&nbsp;Robert
Brusca</a> February 1, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080201c.jpg" align="left" border="0" height="265" width="353">
The NTC MFG PMIs show that EMU MFG took a hit to growth late
in 2007 but has been on a steady mend since then. The EU Commission
readings do not share such a benign view as that report&#8217;s industrial
sector as its readings are still losing ground. The NTC framework is
much more upbeat in that respect. However, the NTC data, while more
upbeat in a time-series sense (momentum), has its readings relatively
weaker in early 2008 compared to their past history than the EU
Commission data. For example the over the same time period the EU data
put industrial strength in the 76th percentile of its range stronger
than NTC&#8217;s 66th percentile. 
 

The NTC data showed eight of nine members (see table) losing
momentum still in December, but in January it reports only four of nine
still slipping, only the UK among them one of the larger EMU economies.
In January NTC shows only two of these countries with MFG contracting
(readings below 50), Italy does that for the second month running. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC MFG
Indices</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>52.77</td>
<td style="color: red;">52.56</td>
<td>52.80</td>
<td>52.71</td>
<td>52.87</td>
<td>54.09</td>
<td>66.7%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>54.43</td>
<td style="color: red;">53.59</td>
<td>53.74</td>
<td>53.92</td>
<td>54.04</td>
<td>55.46</td>
<td>71.0%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>53.92</td>
<td>53.85</td>
<td>52.55</td>
<td>53.44</td>
<td>52.32</td>
<td>53.03</td>
<td>66.9%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>50.80</td>
<td style="color: red;">50.74</td>
<td>51.34</td>
<td>50.96</td>
<td>51.71</td>
<td>52.88</td>
<td>52.7%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>49.77</td>
<td style="color: red;">49.51</td>
<td>50.73</td>
<td>50.00</td>
<td>50.43</td>
<td>52.65</td>
<td style="color: red;">46.1%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>54.10</td>
<td style="color: red;">53.21</td>
<td>55.00</td>
<td>54.10</td>
<td>54.16</td>
<td>54.38</td>
<td>69.4%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">51.44</td>
<td style="color: red;">52.67</td>
<td style="color: red;">54.28</td>
<td>52.80</td>
<td>53.51</td>
<td>53.64</td>
<td>50.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">46.37</td>
<td style="color: red;">49.54</td>
<td>52.34</td>
<td>49.42</td>
<td>51.54</td>
<td>52.22</td>
<td style="color: red;">6.6%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">53.10</td>
<td style="color: red;">54.40</td>
<td style="color: red;">54.47</td>
<td>53.99</td>
<td>55.11</td>
<td>56.39</td>
<td>61.1%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">50.63</td>
<td style="color: red;">52.42</td>
<td>53.94</td>
<td>52.33</td>
<td>53.35</td>
<td>54.10</td>
<td style="color: red;">47.6%</td>
</tr>
</tbody>
</table>
</body></html>

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131i.jpg" width="353">
The Conference Board indicated that its index of help-wanted advertising did rise slightly last month but only to 22 from 21 in November. The figures are at the record lows for the series which dates back to the 1950s.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131j.jpg" width="353">
The proportion of labor markets with rising want-ads improved to 59% from a low of 12% in August.</div>
The regions of the country where the index of help-wanted advertising improved m/m were the West South Central, the West North Central, the East North Central, and the Middle Atlantic. States in each of the other regions of the country showed flat or declining ad volume.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.<div align="left"> </div>

<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/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">December 2006</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>22</td>
<td>21</td>
<td>33</td>
<td>26</td>
<td>33</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
</html>

The Conference Board indicated that its index of help-wanted advertising did rise slightly last month but only to 22 from 21 in November. The figures are at the record lows for the series which dates back to the 1950s. The Conference [...]

U.S. Help-Wanted Advertising Remained Low

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131h.jpg" align="left" border="0" height="265" width="353">
At 103.2, the EU confidence index fell by two points following
a nearly one point drop in December. The sentiment index now resides at
the border of the 70th percentile of its range since 1990. In absolute
terms services and the industrial sector give the most lift to the
region. But once alternatively ranked within their own ranges (since
1990) the sectors are repositioned. The industrial sector becomes the
strongest residing in the 85th percentile of its range with
construction, a battered sector, still doing &#8216;relatively&#8217; well in the
84th percentile of its range. While the service sector has a high raw
score, that is simply the nature of trend-dominated services. When
placed within its range, its relative contribution is much diminished.
At a percentile reading of 44.7% services in EU is the relative weakest
sector, followed by consumer confidence (58th percentile) and retailing
(66th percentile). So far only services are performing at a level that
is short of their usual mid-point. And the service sector is losing
momentum fast. 

On a country level sentiment is near its range mid-point in
Italy (54.4 percentile) and Spain (46.5 percentile). Germany (58.4
percentile) and France are doing better than that but still are fading.
France, especially, is staying in its range&#8217;s 75th percentile. The UK,
an EU member, is also still strong in the 70th percentile of its range
for economic sentiment. 

But make no mistake about it, the trends are poor. The
weakness extends back to about June. EMU sentiment has dropped (m/m) in
each of the past eight months. French and UK sentiment has dropped in
five of eight of those months. Spain&#8217;s sentiment fell in six of eight
months; Italy and Germany in seven of eight. 

Over this period the EMU index has shed 9.9 points, Italy has
lost 10.4 points and the UK has dropped 9.4 points. German sentiment
dropped 8.5 points, Spain&#8217;s sentiment fell by 7.4 points and France&#8217;s
eroded by just 4.9 points. 

From their cycle peaks, however, not just the past eight
months, Italy (-12.9) and Spain (-12.6) have made the largest drops
followed by the UK (-11.0). Germany (-8.5) and France have declined the
least with France&#8217;s cycle peak to current skid of 5.7 points being the
smallest among the largest EMU economies. Still, its momentum points
lower. 

In various ways we can construct measures of country and
sector weakness. It is clear that weakness is widespread across
countries and regions in the e-Zone. It is not yet clear how far this
trend to weakness will play out. But one very disturbing fact is the
lack of participation in the recovery and outright weakness of the
consumer and in retailing. Expansion cannot last without bringing the
consumer along.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">EU</td>
<td>Jan 
08</td>
<td>Dec 
07</td>
<td>Nov 
07</td>
<td>Oct 
07</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>R-SQ 
w/ 
Overall</td>
</tr>
<tr class="grey2">
<td class="firstcol">Overall</td>
<td>103.2</td>
<td>105.8</td>
<td>106.6</td>
<td>108.8</td>
<td>69.9</td>
<td>81</td>
<td>116</td>
<td>73</td>
<td>43</td>
<td>100</td>
<td>1.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>2</td>
<td>85.3</td>
<td>28</td>
<td>7</td>
<td>-27</td>
<td>34</td>
<td>-7</td>
<td>0.88</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-10</td>
<td>-7</td>
<td>-7</td>
<td>-5</td>
<td>58.6</td>
<td>97</td>
<td>2</td>
<td>-27</td>
<td>29</td>
<td>-10</td>
<td>0.83</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>-3</td>
<td>2</td>
<td>4</td>
<td>2</td>
<td>66.7</td>
<td>49</td>
<td>6</td>
<td>-21</td>
<td>27</td>
<td>-6</td>
<td>0.46</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-4</td>
<td>-3</td>
<td>-1</td>
<td>0</td>
<td>84.4</td>
<td>27</td>
<td>3</td>
<td>-42</td>
<td>45</td>
<td>-17</td>
<td>0.43</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>11</td>
<td>15</td>
<td>14</td>
<td>19</td>
<td>44.7</td>
<td>91</td>
<td>32</td>
<td>-6</td>
<td>38</td>
<td>17</td>
<td>0.81</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Based on&nbsp;Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-0.7%</td>
<td style="color: red;">-1.2%</td>
<td style="color: red;">-0.8%</td>
<td>65.1</td>
<td>91</td>
<td>117</td>
<td>73</td>
<td>44</td>
<td>100</td>
<td>0.94</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td style="color: red;">-1.9%</td>
<td style="color: red;">-0.3%</td>
<td style="color: red;">0.2%</td>
<td style="color: red;">-0.7%</td>
<td>58.4</td>
<td>83</td>
<td>121</td>
<td>79</td>
<td>42</td>
<td>99</td>
<td>0.65</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td style="color: red;">-0.8%</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-0.5%</td>
<td>0.5%</td>
<td>75.4</td>
<td>54</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>0.79</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td style="color: red;">-1.3%</td>
<td>2.3%</td>
<td style="color: red;">-4.2%</td>
<td style="color: red;">-0.2%</td>
<td>54.4</td>
<td>112</td>
<td>121</td>
<td>71</td>
<td>50</td>
<td>100</td>
<td>0.78</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-1.4%</td>
<td style="color: red;">-0.1%</td>
<td style="color: red;">-2.7%</td>
<td>46.5</td>
<td>182</td>
<td>118</td>
<td>67</td>
<td>51</td>
<td>100</td>
<td>0.65</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td style="color: red;">-2.2%</td>
<td style="color: red;">-1.0%</td>
<td style="color: red;">-4.5%</td>
<td style="color: red;">-2.0%</td>
<td>70.5</td>
<td>91</td>
<td>118</td>
<td>69</td>
<td>50</td>
<td>100</td>
<td>0.42</td>
</tr>
<tr class="odd">
<td colspan="5" class="firstcol">Since 1990
except Services (Oct
1996)
208</td>
<td colspan="2">-Count</td>
<td colspan="2">Services:</td>
<td>126</td>
<td colspan="2">-Count</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is an index, sector
readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
</body></html>

At 103.2, the EU confidence index fell by two points following a nearly one point drop in December. The sentiment index now resides at the border of the 70th percentile of its range since 1990. In absolute terms services and the [...]

EU and Country Level Confidence is Still Sinking

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131e.jpg" align="left" border="0" height="265" width="353">
German retail sales in December did nothing to make large
piles of presents appear under the old tanenbaum. Retail sales ex
autos, German clothing sales and vehicle sales (that lag for now) each
shows a dwindling trend. In the fourth quarter, nominal ex auto sales
are lower at a 7.4% annual rate; in real terms that becomes a -11.4%
annual rate.

The German unemployment rate continues to drop but German
unemployment still hovers above 8%. Despite ongoing e-Zone improvements
the consumer remains a lagging sector and now creeping evidence shows a
slowing across the e-Zone itself. Consumer confidence and retailing
continue to be the lagging sectors that optimists look to become
sources of growth as the Germany economy shifts into its next gear. The
problem is that various consumer measures suggest that no such pick-up
lies ahead for the consumer sentiment or for consumer spending.
Strength in the euro, while a source of contentment to the ECB - and
many Germans as well - is also a source of angst for what it means to
German export prospects.

With the release of the EU Commission indexes today the German
economy showed a drop to -1 in sentiment for the consumer sector in
January. Retailing, too, saw sentiment fall back from a -18 rating in
December to -22 in January. Germany&#8217;s industrial sector, the back bone
of the economy, stepped back to post a +1 reading from +2 in December.
The services and construction sectors (the latter still very weak) each
posted month-to-month improvements. But by and large German sectors
took a step back in January with Germany&#8217;s overall sentiment reading
falling by two full points. The consumer sector does not seem about to
get out of its rough patch at all.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> German
Real and Nominal Retail Sales&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>SAAR (QTR)</td>
</tr>
<tr class="grey1">
<td class="firstcol">Retail Ex Auto</td>
<td>-0.4%</td>
<td>-1.1%</td>
<td>-1.4%</td>
<td>-11.0%</td>
<td>-4.0%</td>
<td>-4.9%</td>
<td>9.8%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle and Parts</td>
<td>--</td>
<td>-1.2%</td>
<td>0.4%</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>38.2%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-1.4%</td>
<td>-2.3%</td>
<td>0.1%</td>
<td>-13.5%</td>
<td>-5.3%</td>
<td>-3.3%</td>
<td>5.7%</td>
<td>-4.5%</td>
</tr>
<tr>
<td class="firstcol">Clothing Footwear</td>
<td>2.3%</td>
<td>-1.5%</td>
<td>-8.5%</td>
<td>-27.8%</td>
<td>-3.7%</td>
<td>-2.1%</td>
<td>10.9%</td>
<td>-18.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">Retail Ex Auto</td>
<td>-0.1%</td>
<td>-1.9%</td>
<td>-1.8%</td>
<td>-14.3%</td>
<td>-6.9%</td>
<td>-6.8%</td>
<td>9.4%</td>
<td>-11.4%</td>
</tr>
</tbody>
</table>
</body></html>

German retail sales in December did nothing to make large piles of presents appear under the old tanenbaum. Retail sales ex autos, German clothing sales and vehicle sales (that lag for now) each shows a dwindling trend. In the fourth [...]

German Retail Sales Continue to Slow

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131f.jpg" width="353">
Rising 0.8% last quarter, the employment cost index for private industry workers remained steady with the 3Q increase. The gain matched Consensus expectations. Moreover, the gain in total compensation in 4Q was roughly steady at 3.0% with the gains since 2005.
During the last twenty years there has been a 54% correlation between the growth in employee compensation and the rise in the PCE price index. That level of correlation goes neither up or down, when either series is led or lagged the other. This suggests a self reinforcing effect between the two series.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131g.jpg" width="353">
Wage and salary growth held at the 0.8% rate of 3Q. Wages account for roughly 70% of the compensation index. Wages in the services industries rose 0.8% (3.3% y/y). Wages in the leisure &amp; hospitality sector have been relatively strong with a 4.2% rise and professional &amp; business services wages also have been strong with a 4.0% y/y gain. Wages in the goods producing industries rose 0.9% (2.5% y/y) have lagged.
The gain in benefit costs also held about steady with a 0.9% 4Q rise. For all of last year, the 2.4% growth rate was the lowest since 1997. The slowdown has been pronounced in most service industries, but perhaps most pronounced in the goods producing sector where a 1.4% y/y growth rate last year is down from 8.7% growth in 2004.
The slowdown in benefit cost inflation for the year is due in part to a more moderate rise in the cost of health benefits:up 4.8% last year versus 10%+ rates of gain in 2002 and 2003. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">4Q &#39;07</th>
<th scope="col">3Q &#39;07</th>
<th scope="col">2Q &#39;07</th>
<th scope="col">4Q 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">Compensation</td>
<td>0.8%</td>
<td>0.8%</td>
<td>0.9%</td>
<td>3.0%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.8%</td>
<td>0.8%</td>
<td>0.8%</td>
<td>3.4%</td>
<td>3.4%</td>
<td>2.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.9%</td>
<td>0.8%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.9%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body>
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Rising 0.8% last quarter, the employment cost index for private industry workers remained steady with the 3Q increase. The gain matched Consensus expectations. Moreover, the gain in total compensation in 4Q was roughly steady at 3.0% [...]

U.S. Employment Cost Index Steady At 0.8% Quarterly Increase

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131c.jpg" width="353">
Last week, initial claims for jobless insurance surged to a level which now exceeds the late 2007 highs. A 69,000 w/w jump to 375,000 followed declines during the prior several weeks. The latest level is the highest since October of 2005. The difficulties of seasonal adjusting the data during the holiday season clearly played a role in the earlier declines. A more modest rise in claims to 317,000 had been generally expected.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080131d.jpg" width="353">
The four-week moving average of initial claims, a measure which smoothes out most of the series&#39; w/w volatility, rose to 325,750 (+5.0% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 47,000 after a little revised 78,000 decline during the week prior. The figure provides some indication of workers&#39; ability to find employment but here again difficulties of seasonal adjustment this time of year are great.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment held steady w/w at 2.0%.
Credit Derivatives, Macro Risks, and Systemic Risks from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq407_weithers.pdf"> here</a>.

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<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">01/26/08</th>
<th scope="col">01/19/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;375&nbsp;</td>
<td>306</td>
<td>18.3%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,716</td>
<td>8.1%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
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Last week, initial claims for jobless insurance surged to a level which now exceeds the late 2007 highs. A 69,000 w/w jump to 375,000 followed declines during the prior several weeks. The latest level is the highest since October of [...]

U.S. Initial Claims for Unemployment Insurance Surged

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

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

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Retail gasoline prices for all grades rose to an average $3.19 per gallon (0.3% y/y) in the week ended November 10 after easing to $3.15 in the previous week. 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. Haver Analytics seasonally adjusts the retail price of regular grade gasoline. That price rose to $3.10 last week from $3.05 in the previous week. Diesel fuel prices rose to $3.84 per gallon last week (9.0% y/y) after increasing to $3.75 per gallon in the prior week.

The price of West Texas Intermediate crude oil fell to an average $60.08 per barrel (-16.1% y/y) in the week ended November 7 after improving to $60.70 per barrel in the prior week. Prices remained below a recent high of $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $61.04 per barrel. The price of European Brent crude declined to $64.30 per barrel (-15.0% y/y) in the week of November 7 after rising to $65.02 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. Yesterday, the price was $63.86 per barrel.

Natural gas prices strengthened to an average $3.54/mmbtu (137.6% y/y) in the week ended November 7 after rising to $3.43/mmbtu in the prior week. The rise left prices at the highest level since the second week of April and well above the low of $1.40/mmbtu in the week of March 15, 2024. Yesterday, the price was $3.80 per mmbtu.

Gasoline demand declined 2.1% y/y in the four weeks ending October 31, following a 4.2% y/y decline in the prior four weeks. Demand for all petroleum products weakened 1.2% y/y in the four weeks ending October 31, after falling 0.9% y/y in the previous four-week period. Crude oil input to refineries declined 4.5% y/y in the four weeks ending October 31, after falling 1.7% y/y in the prior four weeks.

Gasoline inventories fell 2.5% y/y in the week ending October 31 following a 0.1% y/y slip in the prior week. Residual fuel oil inventories fell 7.1% y/y in the October 31 week after falling 10.0% y/y in the prior week. Working higher, crude oil inventories rose 1.9% y/y in the week of October 31 after increasing 1.7% y/y in the previous week.

Measured in days’ supply, gasoline inventories fell to 23.7 days in the week of October 31 from 24.3 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil rose to 27.5 days in the week of October 31 from 26.7 days in the prior week. The supply remained below a recent 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** and **USENERGY** databases.

- Gasoline prices rise to four-week high.
- Crude oil prices decline.
- Natural gas prices move to highest level since April.
- Demand for gasoline & all petroleum products falls.

U.S. Energy Prices Remain Mixed in Latest Week

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The number of weekly mortgage loan edged 0.6% higher (73.7% y/y) during the week ended November 7 after falling 1.9% during the prior week and rising 7.1% one week earlier.

The effective interest rate on a 30-year fixed-rate mortgage rose to 6.52% after rough stability at 6.48% during the prior week. These rates stand below their January average of 7.20%. Rates on a 15-year fixed rate loan were 5.86% while interest rates on a 30-year JUMBO loan averaged 6.57%. Rates on a 5-year ARM eased to 5.82%.

Purchase loan applications last week increased 5.8% (29.6% y/y) after falling 0.6% in the prior week and rising 4.5% one week earlier. Applications to refinance an existing loan declined 3.4% (+146.5% y/y) following a 2.8% decline in the prior week and rising 9.3% one week earlier.

Loans to refinance an existing mortgage fell to 55.6% of total applications from 57.0% in the prior week. The percentage of total loans that were ARMs declined to 7.8% from 8.7% one week earlier.

The average loan size declined to $396,500 last week from $414,900. The size of conventional purchase loans declined to $431,400 from $435,100 while the size of refinanced loans declined to $368,700 from $399,700 one week earlier.

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.

- Mortgage interest rates rise to three-week high.
- Purchase loans surge but refinancing declines.

U.S. Weekly Mortgage Applications & Interest Rates Edge Higher

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Global money supply growth boomed during COVID. Then growth ‘busted,’ decelerating sharply with the United States, the United Kingdom, and the European Monetary Union all showing monetary contraction to some degree throughout 2023. The only country to buck this trend was Japan which had a more modest boost in money supply during COVID and then more modest growth rates that decelerated and continued to gravitate toward near zero growth, until recently, when Japanese money supply started to accelerate very slightly.

**Euro Area**
Recent trends show nominal money growth in the euro area decelerating slightly from a 2.5% growth rate over 12 months to growth rates around 2% or a bit lower over three months and six months. Monetary union private credit has also decelerated from a growth rate of 2.4% over 12 months to 1.7% over six months and to a 1.3% annual rate over three-months.

**United States, United Kingdom, and Japan**
Nominal money supply growth in the U.S. remains fairly steady, growing 4.5% over 12 months and an annual rate of 5 to 5.4% over three months and six months. The U.K. nominal money supply growth is 3.5% over 12 months, 2.8% at an annual rate over six months and 3.6% at an annual rate over three months. Japan's M2 plus CDs has been stepping up its growth from 1.6% over 12 months to a 2% pace over six months to 4% at an annual rate over three months. Nominal money supply growth is mostly fluctuating between steady and stronger across these monetary center countries.

**Real balances in EMU**
Real money balances, however, are looking significantly weaker. In the European monetary Union, real M2 grows 0.3% over 12 months and then its growth rate slips to -0.6% at an annual rate over both three months and six months. Private credit in the euro area rises by 0.1% over 12 months, declines by 0.5% at an annual rate over six months, and declines at a 1.3% annual rate over three months. Real credit is weakening.

**More real balances**
In the U.S., real money supply growth is fluctuating, growing at 1.4% over 12 months, stepping up to 2.3% over six months and back to a 1.4% annual rate over three months. U.K. real money balances are simply shrinking at a -0.6% annual rate over 12 months and a -0.7% annual rate over three months. In Japan, real money balances are actually accelerating; real money growth is -1.3% over 12 months, which rises to plus 0.4% over six months with an annual rate of 2.9% at an annual rate over three months.


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**Global monetary growth conditions**
Global monetary conditions simply don't show a great deal of change over the last year. The perception is that nominal money growth has been relatively stable; however, we can see that real money growth and real credit growth are declining in the euro area and in the U.K. Real balances are growing at a relatively modest rate but also accelerating in Japan. On the whole, money supply doesn't seem to be playing a significant role in charting a new path for monetary policy- except perhaps in Japan.

Global Money Supplies Deliver Growth-Rate Plateau

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The NFIB Small Business Optimism Index eased 0.6% (+4.8%) to 98.2 in October after falling 2.0% to a 98.8 in September and rising 0.5% to 100.8 in August, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. Four of the ten index components increased last month while five fell and one was unchanged. The NFIB Small Business Uncertainty Index fell 12.0% (-20.0% y/y) last month to 88 after rising 7.5% in September.

The outlook for business conditions was mixed in the latest survey. The net balance of respondents planning to add to inventories declined to a six-month low of -2% from +1% in September. The net percent expecting the economy to improve fell to 20% last month after weakening to 23% in September. A lessened 6% expected higher real sales in six months, compared to 8% in September. A lessened 15% of respondents indicated that now was a good time to increase employment compared to 16% in September. Earnings trends deteriorated sharply.

Offsetting these declines, plans to make capital outlays rose to a ten-month high of 23% of firms after steadying at 21%. The index of expected credit conditions jumped to -3% from -7%. It remained up from a low of -11 in November 2023. A modestly increased 13% of respondents felt that now was a good time to expand. Inventories were assessed as being too low by a lessened 4% of respondents after 7% in September.

On the labor front, 49% of businesses reported few or no qualified workers to fill job openings in October, down slightly from 50% in September. That remained up, however, from a low of 43% in August. These readings remained below a high of 56% in August of 2024.

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The net percent raising their average selling prices fell to 21% last month compared to 24% in September. It had grown to 32% in February. The percentage planning to raise prices eased to 30% in October, down from a 32% high in June. Worker compensation deteriorated as a net 26% of respondents lifted compensation during the last three months versus 31% in the last survey. Compensation gains peaked at 50% of firms in January 2022. A steady net 19% of firms are making plans to raise worker compensation in the next three months, below the November 2024 high of 28%.

The quality of labor was reported by 27% of member firms as the single most important issue facing small businesses. That was increased from 18% in September, and the highest in five years. Moving lower, the cost of labor was ranked by 8% of respondents as the largest problem, compared to 11% in September, while financial & interest rates worries dropped to 2%, the lowest in two years. A lessened 12% cited inflation as the most important problem. Other major concerns were taxes (16%) and poor sales (10%). 

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.

- Inventory, economy & employment concerns weigh on optimism.
- Percentage of respondents raising prices moves down; price expectations ease.
- Concerns about quality of labor surge but labor cost worries recede.

U.S. NFIB Small Business Optimism Index Slips in October

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Macroeconomic expectations in the ZEW survey backtracked slightly in Germany while improving slightly in the United States in November. The economic situation improved slightly in the euro area and Germany while backtracking in the United States. That's the assessments of the current economic situation and expectations for Germany or the EMU that are moving in different directions in the U.S. and in Germany or in the U.S. vs. the European Monetary Union in November.

Inflation expectations backed off across the board easing slightly in the euro area, Germany, and also in the United States. While that happened, expectations for short-term interest rates became less focused on rate cuts in the euro area and slightly less tilted toward the expectation for rate cuts in the U.S. as well. Long-term rate expectations receded somewhat in both Germany and in the U.S. in November by small amounts. Stock market expectations picked up in the euro area, Germany, and the U.S., and in most cases, somewhat significantly.

**The queue standings**
The queue standings are ranked standings of these various metrics, and they tell a clear story of how the ZEW experts see current conditions and policy tradeoffs. The euro area has an economic situation where the queue standing is at its 51st percentile, slightly above its historic median (on data since the early 1990s). However, Germany and the U.S. have very weak percentile standings with Germany in its 14.5 percentile and the U.S. in its 35th percentile. Macroeconomic expectations, however, find Germany at a solid 63.6 percentile while the U.S. is at a 23.3 percentile. ZEW experts are far more upbeat on prospects for German recovery right now than in the United States – and that seems odd to me with a lot of fiscal stimulus in train in the U.S. and tons of ‘AI’ investment.

Inflation expectations are high in the U.S. at an 85.5 percentile standing, well above the historic median, and clearly showing threatening conditions. This compares to a 30% queue standing for the euro area and Germany.

Short-term rate expectations are significantly below the median for both the euro area and the U.S. with the euro area at a 26.8 percentile and the U.S. at a 9.3 percentile standing. Long-term rate expectations have Germany at a 43-percentile and the U.S. at a more similar 35-percentile. Stock market expectations are fairly similar across the lot with the euro area at a 38-percentile standing, Germany at a 35-percentile standing and the U.S. at a 38-percentile standing.

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**Summing up**
These metrics remind us that ZEW experts see different inflation circumstances in the U.S. compared to Europe as well as very different current economic situations, especially between the U.S. and the euro area and very different macroeconomic expectations between the U.S. and Germany. The U.S. is seen more as a place that's percolating inflation despite the fact that the Federal Reserve continues to say inflation is under control and inflation expectations are well anchored. Apparently, they are not well-anchored among the ZEW financial experts. We might add, nor are they well-anchored among participants in the University of Michigan survey, or for respondents to the NFIB survey that was just released. Maybe it's the Fed that is not very well anchored to reality when it comes to inflation expectations assessments?

Economy in Brief: 2008

Jump to:

ISM Index Improved

U.S. Payrolls Fell Unexpectedly, Revisions & Jobless Rate Down Slightly

U.S. Payrolls Fell Unexpectedly, Revisions & Jobless Rate Down Slightly

U.S. Help-Wanted Advertising Remained Low

EU and Country Level Confidence is Still Sinking

German Retail Sales Continue to Slow

U.S. Employment Cost Index Steady At 0.8% Quarterly Increase

U.S. Initial Claims for Unemployment Insurance Surged