Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122g.jpg" align="left" border="0" height="264" width="353">
UK orders are holding in positive territory, but not by much.
Order volumes expected in 3-Mos snapped back in January. Prices are
staying very strong in the range in the top seven percent since end
2000. Export orders did tick back down in January to -4 juts below
their 12-month average at -3. On balance the UK industrial sector looks
fairly firm and somewhat inflation prone. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col"> UK Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>Nov-06</td>
<td>Oct-06</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-9</td>
<td>-5</td>
<td>-6</td>
<td>-20</td>
<td>-11</td>
<td>74%</td>
<td>2</td>
<td>-40</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-3</td>
<td>-5</td>
<td>3</td>
<td>-11</td>
<td>-6</td>
<td>89%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>17</td>
<td>11</td>
<td>2</td>
<td>20</td>
<td>12</td>
<td>63%</td>
<td>26</td>
<td>2</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3-Mo</td>
<td>12</td>
<td>11</td>
<td>5</td>
<td>9</td>
<td>11</td>
<td>80%</td>
<td>22</td>
<td>-28</td>
<td>50</td>
</tr>
<tr>
<td class="firstcol">Avg Prices for Next 3 mos</td>
<td>19</td>
<td>8</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>100%</td>
<td>19</td>
<td>-30</td>
<td>49</td>
</tr>
</tbody>
</table>
</body></html>

UK orders are holding in positive territory, but not by much. Order volumes expected in 3-Mos snapped back in January. Prices are staying very strong in the range in the top seven percent since end 2000. Export orders did tick back [...]

UK Industrial Sector Shows no Sign of Weakness, but Hints at Inflation

Tom Moeller

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<img align="left" border="0" height="264" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122a.jpg" width="353">
After an unscheduled meeting, the Federal Open Market Committee today lowered the Federal funds rate by seventy-five basis points to 3.50%. It was the largest cut in the rate since October 1984, followed thereafter by moves either in 25 or 50 basis point increments. The rate was last at 3.5% in August of 2005.
Voting against the decision was St. Louis Fed President William Poole.
The discount rate also was reduced seventy-five basis points to 4.00%.
&quot;The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.&quot; It came ahead of next week&#39;s regularly scheduled meeting of the FOMC.
Worried about even further deterioration in U.S. economic conditions, the Fed indicated that &quot;Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.&quot;
Still expressing some caution, the FOMC indicated only &quot;that it will be necessary to continue to monitor inflation developments carefully.&quot;
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm">link</a>.

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After an unscheduled meeting, the Federal Open Market Committee today lowered the Federal funds rate by seventy-five basis points to 3.50%. It was the largest cut in the rate since October 1984, followed thereafter by moves either in [...]

FOMC Takes Aggressive Action

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122a.jpg" align="left" border="0" height="265" width="353">
After an unscheduled meeting, the Federal Open Market
Committee today lowered the Federal funds rate by seventy-five basis
points to 3.50%. It was the largest cut in the rate since October 1984,
followed thereafter by moves either in 25 or 50 basis point increments.
The rate was last at 3.5% in August of 2005.
Voting against the decision was St. Louis Fed President
William Poole.
The discount rate also was reduced seventy-five basis points
to 4.00%.
"The Committee took this action in view of a weakening of the
economic outlook and increasing downside risks to growth." It came
ahead of next week's regularly scheduled meeting of the FOMC.
Worried about even further deterioration in U.S. economic
conditions, the Fed indicated that "Appreciable downside risks to
growth remain. The Committee will continue to assess the effects of
financial and other developments on economic prospects and will act in
a timely manner as needed to address those risks."
Still expressing some caution, the FOMC indicated only "that
it will be necessary to continue to monitor inflation developments
carefully."
For the complete text of the Fed's latest press release please
follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm">link</a>.

UK Industrial Sector Shows no
Signof Weakness, but Hints at Inflation 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122g.jpg" align="left" border="0" height="264" width="353">
UK orders are holding in positive territory, but not by much.
Order volumes expected in 3-Mos snapped back in January. Prices are
staying very strong in the range in the top seven percent since end
2000. Export orders did tick back down in January to -4 juts below
their 12-month average at -3. On balance the UK industrial sector looks
fairly firm and somewhat inflation prone. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col"> UK
Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-07</td>
<td>Dec-06</td>
<td>Nov-06</td>
<td>Oct-06</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-9</td>
<td>-5</td>
<td>-6</td>
<td>-20</td>
<td>-11</td>
<td>74%</td>
<td>2</td>
<td>-40</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-3</td>
<td>-5</td>
<td>3</td>
<td>-11</td>
<td>-6</td>
<td>89%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>17</td>
<td>11</td>
<td>2</td>
<td>20</td>
<td>12</td>
<td>63%</td>
<td>26</td>
<td>2</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3-Mo</td>
<td>12</td>
<td>11</td>
<td>5</td>
<td>9</td>
<td>11</td>
<td>80%</td>
<td>22</td>
<td>-28</td>
<td>50</td>
</tr>
<tr>
<td class="firstcol">Avg Prices for Next 3 mos</td>
<td>19</td>
<td>8</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>100%</td>
<td>19</td>
<td>-30</td>
<td>49</td>
</tr>
</tbody>
</table>
Turmoil in Stock Markets Around
the World Leads to a 75 Point Cut in FED'S Benchmark Interest Rate 
by <a href="/comment/Curley.html">Louise
Curley</a> January 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122f.jpg" height="265" width="312">
After a day of record declines in stock markets around the
world, the Fed announced, in an emergency move, a 75 basis points cut
in its benchmark interest rate from 4.25% to 3.50% today. This is the
largest cut since the Fed began, in 1990, to use this rate as its
principal tool of monetary policy.
Daily prices of many of the stock markets of the world can be
found in the Haver data base, INTDAILY.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122b.jpg" align="left" border="0" height="265" width="312">
We have
attached five charts showing daily stock price changes in selected
countries in five areas of the world: Western Europe, Eastern Europe,
Asia, South America and the Midlle East. The random nature of the day
to day stock price changes make for messy charts, but unusual movements
such as occurred yesterday do stand out. It should be noted, too that
in several countries, similar stock price declines occurred last
August, when the sub prime crisis was first surfacing.
The reaction of U.S. and foreign investors to the Fed's
dramatic move can be monitored using the high frequency data in the
Haver data bases, DAILY and INTDAILY. These
data bases contain daily data on interest rates, exchange rates, stock
markets and commodity prices
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122c.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080122d.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">STOCK
MARKETS&nbsp;</th>
<th scope="col">Percent Decline January 21,
2008</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">United Kingdom</td>
<td>5.27</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>7.16</td>
</tr>
<tr class="grey4">
<td class="firstcol">France</td>
<td>6.83</td>
</tr>
<tr class="grey4">
<td class="firstcol">Italy</td>
<td>5.09</td>
</tr>
<tr class="grey3">
<td class="firstcol">China</td>
<td>5.20</td>
</tr>
<tr class="grey3">
<td class="firstcol">India</td>
<td>7.81</td>
</tr>
<tr class="grey3">
<td class="firstcol">Japan</td>
<td>3.86</td>
</tr>
<tr class="grey3">
<td class="firstcol">South Korea&nbsp;</td>
<td>2.95</td>
</tr>
<tr class="grey2">
<td class="firstcol">Russia</td>
<td>7.38</td>
</tr>
<tr class="grey2">
<td class="firstcol">Poland</td>
<td>6.73</td>
</tr>
<tr class="grey2">
<td class="firstcol">Latvia</td>
<td>4.57</td>
</tr>
<tr class="grey2">
<td class="firstcol">Czech Republic</td>
<td>4.62</td>
</tr>
<tr class="grey1">
<td class="firstcol">Brazil</td>
<td>6.60</td>
</tr>
<tr class="grey1">
<td class="firstcol">Argentina</td>
<td>5.68</td>
</tr>
<tr class="grey1">
<td class="firstcol">Mexico</td>
<td>5.35</td>
</tr>
<tr class="grey1">
<td class="firstcol">Chile</td>
<td>4.30</td>
</tr>
</tbody>
</table>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121e.jpg" align="left" border="0">
The German PPI was flat in December after a 0.9% surge in
November. The ex energy PPI rose by 0.1% after rising by 0.1% in
November and by 0.2% in October. No sign of second round effects here.
While the EBC is worried about building pressures in the
monetary union this evidence of a break in inflation in Germany at the
PPI level is good news. It is not surprising that the PPI, an index
that should be more susceptible to the impact of the strong euro, is
staying in line even with the reverberations of the spiking oil prices
vibrating through it. The
news is good news but it is not decisive. The price indexes that the
ECB cares most about are the broader ones, especially the HICP. But
this news is at least hopeful on the inflation front and good news
there has been lacking lately.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Germany
PPI</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</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>12-moY-Ago</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.0%</td>
<td>0.9%</td>
<td>0.3%</td>
<td>5.1%</td>
<td>2.9%</td>
<td>2.5%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
</body></html>

The German PPI was flat in December after a 0.9% surge in November. The ex energy PPI rose by 0.1% after rising by 0.1% in November and by 0.2% in October. No sign of second round effects here. While the EBC is worried about building [...]

German PPI: Oh, BEHAVE! …and it does

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121d.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121a.jpg" height="265" width="312">

The Building Societies Association (BSA), which covers all 60
Building Societies in the UK, approved mortgages amounting to 3,144
million pounds in December, down 26% from November of last year and 21%
from December 2006. The broader, Council of Mortgage Lenders (CML),
which includes, in addition to the Building Societies, banks and other
institutions engaged in mortgage lending, declined 25% in December from
November and 21% from December 2006.
The first chart shows the absolute value of the approvals made
by the BSA and total lending made by the CML. Over the past five years,
approvals by the BSA have been between 11% and 22% of total mortgage
lending. The second chart shows the year to year changes in the two
series. The variation in the BSA data appears to be somewhat greater
than that in the CML data.
The Rightmove Price index declined by almost 1% in January and
is now 4.6% below the peak reached in October of last year. The
Rightmove Price Index is a measure of the asking price of houses coming
to market through Rightmove's 11,500 estate agency branches. The sample
includes up to 200,000 houses each month, representing about 80% of the
market. It is the largest and most up to date sample of any house price
indicator in the U.K.
Rightmove also publishes the actual prices of various types of
houses: detached, semi detached, terraced and flats. These are shown in
the fourth chart. The prices of the more expensive accommodations--the
detached and semi detached houses--fell, respectively, 3% and almost 1%
in January. At the same time, the prices of the less expensive
accommodations--terraced houses and flats rose, respectively, 1.7% and
1.8%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121b.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121c.jpg" height="265" width="312">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;MORTGAGE
AND PRICE DATA&nbsp;</th>
<th scope="col">Dec 07</th>
<th scope="col">Nov 07&nbsp;</th>
<th scope="col">Dec 06&nbsp;</th>
<th scope="col">M/M %Chg&nbsp;</th>
<th scope="col">Y/Y %Chg&nbsp;</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">Approvals by BSA
(Million Pounds)</td>
<td>3144</td>
<td>4238</td>
<td>3962</td>
<td>-25.81</td>
<td>-20.65</td>
<td>51739</td>
<td>56465</td>
<td>45628</td>
</tr>
<tr>
<td class="firstcol">Lending by CML
(Million Pounds)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>22600</td>
<td>29990</td>
<td>28617</td>
<td>-24.64</td>
<td>-21.03</td>
<td>362314</td>
<td>345217</td>
<td>288400</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan 08</td>
<td>Dec 07&nbsp;</td>
<td>Jan 07&nbsp;</td>
<td>M/M %Chg&nbsp;</td>
<td>Y/Y %Chg&nbsp;</td>
<td>2007</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol"> Rightmove House Price
Index (2000=100)&nbsp;&nbsp;</td>
<td>187.5</td>
<td>189.1</td>
<td>181.3</td>
<td>-0.85</td>
<td>3.42</td>
<td>191.2</td>
<td>172.0</td>
<td>159.4</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td class="firstcol" colspan="9"> Rightmove
Prices of
Houses (Pounds)</td>
</tr>
<tr class="odd">
<td class="firstcol">Detached&nbsp;</td>
<td>324114</td>
<td>334039</td>
<td>316739</td>
<td>-2.97</td>
<td>2.33</td>
<td>336294</td>
<td>306255</td>
<td>284840</td>
</tr>
<tr>
<td class="firstcol">Semi Detached&nbsp;</td>
<td>203951</td>
<td>205759</td>
<td>195564</td>
<td>-0.88</td>
<td>4.29</td>
<td>205645</td>
<td>189.353</td>
<td>178630</td>
</tr>
<tr class="odd">
<td class="firstcol"> Terraced&nbsp;</td>
<td>183324</td>
<td>180224</td>
<td>175339</td>
<td>1.72</td>
<td>4.55</td>
<td>183681</td>
<td>164884</td>
<td>153475</td>
</tr>
<tr>
<td class="firstcol">
Flats/Apartments&nbsp;</td>
<td>197384</td>
<td>193973</td>
<td>189265</td>
<td>1.76</td>
<td>4.29</td>
<td>196167</td>
<td>171504</td>
<td>156489</td>
</tr>
</tbody>
</table>
</body></html>

The Building Societies Association (BSA), which covers all 60 Building Societies in the UK, approved mortgages amounting to 3,144 million pounds in December, down 26% from November of last year and 21% from December 2006. The broader, [...]

More Evidence of Weakness in U.K. Housing Market

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121d.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121a.jpg" height="265" width="312">

The Building Societies Association (BSA), which covers all 60
Building Societies in the UK, approved mortgages amounting to 3,144
million pounds in December, down 26% from November of last year and 21%
from December 2006. The broader, Council of Mortgage Lenders (CML),
which includes, in addition to the Building Societies, banks and other
institutions engaged in mortgage lending, declined 25% in December from
November and 21% from December 2006.
The first chart shows the absolute value of the approvals made
by the BSA and total lending made by the CML. Over the past five years,
approvals by the BSA have been between 11% and 22% of total mortgage
lending. The second chart shows the year to year changes in the two
series. The variation in the BSA data appears to be somewhat greater
than that in the CML data.
The Rightmove Price index declined by almost 1% in January and
is now 4.6% below the peak reached in October of last year. The
Rightmove Price Index is a measure of the asking price of houses coming
to market through Rightmove's 11,500 estate agency branches. The sample
includes up to 200,000 houses each month, representing about 80% of the
market. It is the largest and most up to date sample of any house price
indicator in the U.K.
Rightmove also publishes the actual prices of various types of
houses: detached, semi detached, terraced and flats. These are shown in
the fourth chart. The prices of the more expensive accommodations--the
detached and semi detached houses--fell, respectively, 3% and almost 1%
in January. At the same time, the prices of the less expensive
accommodations--terraced houses and flats rose, respectively, 1.7% and
1.8%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121b.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121c.jpg" height="265" width="312">


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;MORTGAGE
AND PRICE DATA&nbsp;</th>
<th scope="col">Dec 07</th>
<th scope="col">Nov 07&nbsp;</th>
<th scope="col">Dec 06&nbsp;</th>
<th scope="col">M/M %Chg&nbsp;</th>
<th scope="col">Y/Y %Chg&nbsp;</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">Approvals by BSA
(Million Pounds)</td>
<td>3144</td>
<td>4238</td>
<td>3962</td>
<td>-25.81</td>
<td>-20.65</td>
<td>51739</td>
<td>56465</td>
<td>45628</td>
</tr>
<tr>
<td class="firstcol">Lending by CML
(Million Pounds)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>22600</td>
<td>29990</td>
<td>28617</td>
<td>-24.64</td>
<td>-21.03</td>
<td>362314</td>
<td>345217</td>
<td>288400</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan 08</td>
<td>Dec 07&nbsp;</td>
<td>Jan 07&nbsp;</td>
<td>M/M %Chg&nbsp;</td>
<td>Y/Y %Chg&nbsp;</td>
<td>2007</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol"> Rightmove House Price
Index (2000=100)&nbsp;&nbsp;</td>
<td>187.5</td>
<td>189.1</td>
<td>181.3</td>
<td>-0.85</td>
<td>3.42</td>
<td>191.2</td>
<td>172.0</td>
<td>159.4</td>
</tr>
<tr style="font-weight: bold;" class="grey3">
<td class="firstcol" colspan="9"> Rightmove
Prices of
Houses (Pounds)</td>
</tr>
<tr class="odd">
<td class="firstcol">Detached&nbsp;</td>
<td>324114</td>
<td>334039</td>
<td>316739</td>
<td>-2.97</td>
<td>2.33</td>
<td>336294</td>
<td>306255</td>
<td>284840</td>
</tr>
<tr>
<td class="firstcol">Semi Detached&nbsp;</td>
<td>203951</td>
<td>205759</td>
<td>195564</td>
<td>-0.88</td>
<td>4.29</td>
<td>205645</td>
<td>189.353</td>
<td>178630</td>
</tr>
<tr class="odd">
<td class="firstcol"> Terraced&nbsp;</td>
<td>183324</td>
<td>180224</td>
<td>175339</td>
<td>1.72</td>
<td>4.55</td>
<td>183681</td>
<td>164884</td>
<td>153475</td>
</tr>
<tr>
<td class="firstcol">
Flats/Apartments&nbsp;</td>
<td>197384</td>
<td>193973</td>
<td>189265</td>
<td>1.76</td>
<td>4.29</td>
<td>196167</td>
<td>171504</td>
<td>156489</td>
</tr>
</tbody>
</table>
German PPI: Oh, BEHAVE! &#8230;and it
does 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121e.jpg" align="left" border="0">
The German PPI was flat in December after a 0.9% surge in
November. The ex energy PPI rose by 0.1% after rising by 0.1% in
November and by 0.2% in October. No sign of second round effects here.
While the EBC is worried about building pressures in the
monetary union this evidence of a break in inflation in Germany at the
PPI level is good news. It is not surprising that the PPI, an index
that should be more susceptible to the impact of the strong euro, is
staying in line even with the reverberations of the spiking oil prices
vibrating through it. The
news is good news but it is not decisive. The price indexes that the
ECB cares most about are the broader ones, especially the HICP. But
this news is at least hopeful on the inflation front and good news
there has been lacking lately.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Germany
PPI</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</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>12-moY-Ago</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.0%</td>
<td>0.9%</td>
<td>0.3%</td>
<td>5.1%</td>
<td>2.9%</td>
<td>2.5%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
</body></html>

More Evidence of Weakness in U.K.Housing Market

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080121f.jpg">
Japan&#146;s tertiary (services) sector index is a fresh release and it signals a modest rebound in activity in November as the sector index edges up to 100.6 form 100.5. Its growth rate (y/y) rises to 1.1% for a 0.9% in November, but is still slower than it has been much of the year previously. It is also above its three-month average. The mining and MFG sector is growing faster that the service sector over the past year with a growth rate of 1.6% compared to the 1.1% for services. Still, MFG sector growth by this index peaked at 4.5% in Februaru and at 4.4% in August. Since August the MFG slowdown has been pronounced. The slip in MFG growth to 1.6% November is from 3.6% on October.
The chart on the left shows that one signal of a slowdown in Japan is when the MFG and Mining sector index grows slower than the service sector index. There are three examples of that happening since 1997 and two of them were in recessions. So far Japanese officials are still upbeat about the economy. The slowing in the MFG sector and crawling growth rate in services are reminders of how close Japan remains to the edge that separates slow growth from contractions.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Up to date Japan Industry Surveys
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Nov-2007</td>
<td>Oct-2007</td>
<td>Sep-2007</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">Mining and MFG</td>
<td>110.4</td>
<td>112.2</td>
<td>110.3</td>
<td>111.0</td>
<td>110.2</td>
<td>109.0</td>
<td>112.2</td>
<td>87.7</td>
<td>92.7%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>110.6</td>
<td>110.5</td>
<td>109.2</td>
<td>110.1</td>
<td>110.3</td>
<td>110.0</td>
<td>111.2</td>
<td>91.0</td>
<td>97.0%</td>
</tr>
<tr>
<td colspan="10">Ranges, Max, Min since 1993</td>
</tr>
</tbody>
</table>
</body>
</html>

Japans tertiary (services) sector index is a fresh release and it signals a modest rebound in activity in November as the sector index edges up to 100.6 form 100.5. Its growth rate (y/y) rises to 1.1% for a 0.9% in November, but is [...]

Japan MFG and Service Sectors still growing…but slower

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080118g.jpg" align="left" border="0" height="265" width="353">
The hit to UK retail sales was severe enough to reverberate in
the exchange markets where sterling suffered a set back in trading
after the retail figures were made public. The chart tells the story
without the benefits of numbers. The pattern clearly shows a loss in
headline momentum and a loss in momentum on all major horizons. Real
excl auto sales echos that pattern. 
 

In numbers retail sales drop by 0.4% (ex autos) in real terms
in December, and that drop is never a good sign. For the full quarter,
however, real retail sales ex autos continue to grow at a pace of 1.9%.
But the slip in the three month growth rate is a negative indicator for
momentum and the period ahead. Food sales were up in December with
nonfood spending weak. UK indicators have been touch and go in recent
months, This one pushes the BOE closer to being truly concerned about
growth and may be enough to get a rate cut from it. But since inflation
data are not cooperative and the EMU region is slowing but holding
policy pat, it is not yet clear if the UK will follow the US lead to
lower rates or to be stoic and stay with continental Europe. The UK
economy seems to be on the cusp. 
 
 


<table border="0" cellspacing="0" width="100%">
</table>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">UK Real and Nominal Retail Sales </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>
</tr>
<tr>
<td class="firstcol">Total Retail</td>
<td>-0.6%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>-0.9%</td>
<td>0.5%</td>
<td>1.7%</td>
<td>4.8%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>0.4%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>4.2%</td>
<td>5.4%</td>
<td>3.2%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-0.9%</td>
<td>-6.2%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>8.1%</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></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>
</tr>
<tr>
<td class="firstcol">Retail excl auto</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>4.9%</td>
</tr>
</tbody>
</table>
</body></html>

The hit to UK retail sales was severe enough to reverberate in the exchange markets where sterling suffered a set back in trading after the retail figures were made public. The chart tells the story without the benefits of numbers. [...]

UK Retail Sales Take a Hit

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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

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Andrew Cates

**Upbeat investors**
Despite a year marked by major headwinds — from renewed US tariffs and persistent geopolitical strains to shifting interest-rate expectations — incoming global economic data have consistently outperformed forecasters’ expectations. The Citigroup Economic Surprise Index has remained in positive territory for most of 2025, indicating that growth, labour, and spending indicators have been “less bad” or outright stronger than consensus predicted. That resilience has helped to underpin market sentiment: while bouts of concern have occasionally lifted the Cboe Volatility Index (VIX), volatility has stayed relatively subdued, and equity markets have remained buoyant. In effect, 2025 has been a year in which the real economy has quietly outpaced the gloom, keeping risk appetite supported even as the macro narrative remained fraught with shocks and uncertainty.

251113Z1.jpg

**Less restriction from monetary policy**
Another key source of support for investors through 2025 has been the steady easing in both inflation and monetary policy across the major advanced economies. Core CPI has continued to trend lower from its 2022–23 highs, reflecting softer goods prices, moderating wage growth, and the lagged effects of tighter policy. With inflation now back within sight of central bank targets, policy rates have been edging down for the first time in several years. That shift has eased financial conditions, lowered real borrowing costs, and helped sustain asset valuations even as growth expectations have moderated. In effect, 2025 has marked the transition from a phase of inflation anxiety and policy restraint to one of gentle disinflation and tentative monetary normalisation—an environment that has kept liquidity abundant and risk assets well supported.

251113Z2.jpg

**A thrust from fiscal policy**
A further policy tailwind in 2025 has come from the fiscal side, where governments in the major advanced economies have largely resisted meaningful consolidation despite earlier pledges to rebuild buffers. Across the US, Europe, and Japan, the cyclically adjusted primary balance remains firmly expansionary, helping to sustain demand at a time when private investment and trade have softened. In the United States, spending linked to industrial policy, energy transition, and defence has continued to underpin activity; in Europe, fiscal policy has remained loose as governments balance social pressures and investment needs; and in Japan, the new prime minister has signalled further stimulus to support household income and productivity growth. Yet this persistent fiscal support has also had a side effect: it has kept longer-term real yields unusually elevated, reflecting both heavy sovereign issuance and investor recognition that governments are still running structural deficits even in a low-growth environment. In other words, fiscal policy has been a crucial prop for near-term growth—but also one reason why the “new normal” for real yields now looks higher than in the pre-pandemic decade.

251113Z3.jpg

**The AI Boom**
One of the defining features of 2025 has been the AI investment boom, centred on the extraordinary surge in spending on US data centres and digital infrastructure. Real private investment in this sector has soared to record highs as firms race to expand computing capacity, driven by optimism about artificial intelligence and its potential to transform productivity. The pickup in utilisation-adjusted total factor productivity suggests that some efficiency gains may already be materialising, though it remains too early to tell whether these effects will endure. Investors have largely welcomed this capital deepening as a sign of renewed US dynamism, but it also carries familiar late-cycle risks — from valuation bubbles in AI-related equities to mounting energy demands and strain on power grids. The key question for 2026 and beyond is whether this unprecedented capex wave will deliver the sustained productivity lift needed to justify its scale, or whether it proves another costly technological exuberance.

251113Z4.jpg

**Global trade fragmentation** 
Global trade came under renewed strain in 2025 as President Trump moved quickly in his second term to escalate tariff actions against China and several key trading partners. The US effective tariff rate has surged from below 8% at the end of 2024 to around 21% by mid-2025, marking the most aggressive trade tightening since the late 2010s. The back-and-forth imposition of tariff and non-tariff barriers between Washington and Beijing has led to a sharp pullback in bilateral trade flows, with US imports from China falling markedly and Chinese imports from the US also sliding. The broader ripple effects have been significant: global supply chains are once again being re-routed, firms are diversifying production toward third-country hubs, and world trade growth has slowed. This latest round of protectionism has reinforced the trend toward strategic fragmentation — a more regional, politically filtered form of globalisation — that continues to reshape the post-pandemic trading landscape.

251113Z5.jpg

**Lingering uncertainties**
If there has been one constant through 2025, it has been uncertainty itself. Both global economic policy uncertainty and geopolitical risk indices have remained at historically high levels, underscoring an environment shaped by unpredictable policy shifts, heightened conflict risks, and volatile leadership transitions. Trade tensions between the US and China, renewed instability in the Middle East, and political fragmentation across Europe have all contributed to a pervasive sense of unease. For businesses and investors, this has meant navigating a world where the policy outlook can change overnight — from tariffs and fiscal surprises to shifting regulatory regimes. Yet despite this turbulence, financial markets have shown remarkable resilience, helped by disinflation, easier monetary policy, and continued technological investment. In short, 2025 has been a year in which uncertainty has become the new normal — less an episodic shock, more a defining structural feature of the global economic landscape.


251113Z6.jpg

The global economic story of 2025 has been one of resilience amid disruption. Despite a succession of shocks — from a renewed U.S.–China trade confrontation and elevated geopolitical risks, to a sharp rise in fiscal activism and the energy-intensive AI investment boom — the world economy has held up better than many feared. Activity data have consistently surprised on the upside, supporting buoyant equity markets and keeping volatility contained. Meanwhile, inflation has continued to ease and central banks have cautiously shifted toward easier policy, even as large government deficits have kept longer-term real yields elevated. At the same time, US tariff policies have re-emerged as a defining force in global trade, with steep new duties on Chinese, Canadian, and Mexican goods disrupting supply chains and prompting renewed fragmentation in world commerce. These measures have cooled bilateral trade flows and added another layer of uncertainty to an already unsettled policy environment. Yet uncertainty itself remains the dominant feature of 2025 — geopolitical tension, technological exuberance, and diverging fiscal and monetary paths have left investors navigating a world where optimism and fragility coexist.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/2maIAQuAmTWSmhhZOnQDq3?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: The Year in Review

251113F5.jpg

251113G5.jpg

The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) increased 3.9% (-0.3% y/y) during September to 104.5 after rising 2.8% in August and 2.9% in July. The index roughly equaled the recent high of 104.8 in September of 2024. The level of home affordability was 16.2% higher than its low of 89.9 in October 2023, but remained 41.6% below the high of 179.0 in April 2020.

The rise in September affordability occurred as the median price of an existing single-family home fell 1.6% (+2.3% y/y) to $420,700. The price compared to the record $438,600 in June 2025. Mortgage rates fell to 6.43% after declining to 6.67% in August. The fall in mortgage rates left them above their low of 6.26% in September of last year, though below a 7.70% high in October of 2023. They remained well above a December 2020 low of 2.73%.

In September, the principal plus interest payment fell 4.0% (+4.1% y/y) to $2,112 per month, down 8.6% from June’s record high of $2,311, but still well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 23.9% of income during September, down from 24.9% in August, but increased from a low of 14.0% of income in April 2020.

The decline in housing costs in September was accompanied by a 0.3% decline (+3.8% y/y) in median family income to $105,946 after rising 0.3% in both August and July. Qualifying income declined 4.0% (+4.1% y/y) to $101,376, the third straight month of sharp decline.

Housing affordability improved m/m across the country in September. The index rose in the Midwest, the country’s most affordable region, by 5.1% (-2.8% y/y) to 131.9. In the South, the index increased 2.2% (0.6% y/y) to 109.9, while the affordability index in the Northeast jumped 9.4% (-2.8% y/y) to 92.7. In the West, where homes are the least affordable, the index improved 2.3% (1.1% y/y) to 75.0 in September.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990. It reached an all-time high of 213.3 in January 2013.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

251113H5.jpg

251113I5.jpg

- Home prices & mortgage rates continue to decline.
- Median income edges lower.
- Affordability increases across country.

U.S. Housing Affordability Increases in September

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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.

Economy in Brief: 2008

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UK Industrial Sector Shows no Sign of Weakness, but Hints at Inflation

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