Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109e.jpg" align="left" border="0" height="265" width="353">
MFG output fell in November after a rise of 0.1% in October
and a flat September. Amid other circumstances this might seem a very
chilling set of numbers. With this weakness the Q4 path for IP two
months into the quarter is a pace of just 1.2% at an annual rate. It is
only the sharp and mind blowing gains in orders that keep the erosion
in Manufacturing output from seeming like more of a problem. Certainly,
of the two measures, output is more important. But orders are a promise
of output to come. Unfortunately there have been sizeable disconnects
between orders and output before. Since mid-2006 the growth of orders
has exceed the growth of output in Germany and by a wide margin. The
current disconnect is even larger than what it generally has been over
the past 18 months. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Total
German IP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Quarter to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>-0.9%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-3.3%</td>
<td>2.3%</td>
<td>3.5%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer goods</td>
<td>-2.3%</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-11.6%</td>
<td>-5.5%</td>
<td>0.3%</td>
<td>-3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital goods</td>
<td>-0.8%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>2.8%</td>
<td>7.0%</td>
<td>6.3%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate goods</td>
<td>-0.4%</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-4.4%</td>
<td>2.6%</td>
<td>4.6%</td>
<td>-2.1%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>0.2%</td>
<td>-7.6%</td>
<td>-3.4%</td>
<td>-7.0%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG IP</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>-2.9%</td>
<td>2.7%</td>
<td>4.5%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Orders</td>
<td>3.4%</td>
<td>4.0%</td>
<td>-1.6%</td>
<td>25.4%</td>
<td>13.7%</td>
<td>13.6%</td>
<td>27.9%</td>
</tr>
</tbody>
</table>
</body></html>

MFG output fell in November after a rise of 0.1% in October and a flat September. Amid other circumstances this might seem a very chilling set of numbers. With this weakness the Q4 path for IP two months into the quarter is a pace of [...]

German IP Slows, While Orders Grow...an Accelerate

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109d.jpg" align="left" border="0" height="265" width="353">
So much for strong German orders&#8230;. there is no carry over to
the consumer. Retail sales in Germany are a disaster. We are 10 months
away from the phase in of the VAT hike in January of 2007. That is why
the Yr/Yr decline is still so severe on the chart &#8211; the base is a pre
VAT base in Nov of 2006. It is not really not comparable to the 3-Mo
and the 6-Mo results which are both with base periods that are well
beyond the VAT hike period. Still 3-Mo and 6-Mo real retail sales
growth rates are weaker that their 12-month pace. This is not a good
sign. 
 

Two months into Q4 German real retail sales (ex autos) are
declining at an 8.2% annual rate. Nominal clothing and footwear
spending is off in the quarter at a 23% rate. November sales were a
disaster. 



<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> German Real and Nominal Retail Sales</th>
<th scope="col">New Qtr</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>SAAR</td>
</tr>
<tr>
<td class="firstcol">Retail excl Auto</td>
<td>-0.6%</td>
<td>-1.9%</td>
<td>1.1%</td>
<td>-5.7%</td>
<td>-1.5%</td>
<td>-1.7%</td>
<td>6.1%</td>
<td>-8.2%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle and Parts</td>
<td>#N/A</td>
<td>0.2%</td>
<td>-2.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>21.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-2.3%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>-3.2%</td>
<td>-2.0%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-0.8%</td>
<td>-8.3%</td>
<td>5.6%</td>
<td>-15.1%</td>
<td>1.1%</td>
<td>-1.2%</td>
<td>5.7%</td>
<td>-23.0%</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>
<td class="firstcol">Retail excl Auto</td>
<td>-1.3%</td>
<td>-2.3%</td>
<td>0.8%</td>
<td>-10.7%</td>
<td>-4.6%</td>
<td>-3.8%</td>
<td>5.6%</td>
<td>-12.6%</td>
</tr>
</tbody>
</table>
</body></html>

So much for strong German orders…. there is no carry over to the consumer. Retail sales in Germany are a disaster. We are 10 months away from the phase in of the VAT hike in January of 2007. That is why the Yr/Yr decline is still so [...]

German Retail Sales are a DISASTER in November

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109a.jpg" align="left" border="0" height="265" width="353">
German real new orders are flying high again in November after
another surprising spurt in October. After the October rise, a drop off
in November orders had been expected - quite the opposite is the
result. Orders are now growing at an annualized rate of 28% in the
fourth quarter over Q3; domestic orders are up at a 16% pace. As in
October bulk orders are responsible for the spurt in November. And a
relatively new metric tells us that German new orders from outside the
Euro Area fell last month. So, despite the spurt, it may be that the
strong euro is taking some toll after all. German foreign orders use
the definition of &#8216;foreign to Germany&#8217; not to its currency area. That
is one complication when looking at &#8216;foreign&#8217; data of any sort for Euro
Area members. Even so, the strength within the Area that German orders
imply is quite remarkable, and it is in stark contrast with other
measures that show a backtracking in confidence and in activity of
various sorts in Germany and throughout the Euro Area. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">German Orders and Sales By Sector and Origin </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>3.4%</td>
<td>4.0%</td>
<td>-1.6%</td>
<td>25.4%</td>
<td style="color: red;">12.0%</td>
<td>13.6%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>2.8%</td>
<td>5.3%</td>
<td>-0.8%</td>
<td>32.8%</td>
<td style="color: red;">15.2%</td>
<td>18.2%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>4.2%</td>
<td>2.5%</td>
<td>-2.4%</td>
<td>18.1%</td>
<td style="color: red;">8.7%</td>
<td>8.8%</td>
<td>6.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Sector Sales</td>
</tr>
<tr>
<td class="firstcol">Manufacturing/Mining</td>
<td style="color: red;">-0.6%</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>1.6%</td>
<td style="color: red;">0.8%</td>
<td style="color: red;">4.4%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td style="color: red;">-0.7%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td style="color: red;">-0.8%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">1.1%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Durables</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td style="color: red;">-21.5%</td>
<td style="color: red;">-11.4%</td>
<td style="color: red;">-1.5%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Nondurable</td>
<td style="color: red;">-0.7%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>3.8%</td>
<td>1.9%</td>
<td style="color: red;">1.5%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td style="color: red;">-2.1%</td>
<td>3.3%</td>
<td>-0.2%</td>
<td>3.4%</td>
<td style="color: red;">1.7%</td>
<td style="color: red;">5.5%</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.5%</td>
<td style="color: red;">-0.6%</td>
<td>-0.2%</td>
<td>2.3%</td>
<td style="color: red;">1.1%</td>
<td style="color: red;">5.1%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td style="color: red;">-0.7%</td>
<td>1.2%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td style="color: red;">0.7%</td>
<td style="color: red;">3.9%</td>
<td>7.5%</td>
</tr>
</tbody>
</table>
</body></html>

German real new orders are flying high again in November after another surprising spurt in October. After the October rise, a drop off in November orders had been expected - quite the opposite is the result. Orders are now growing at [...]

German Orders in Surprise Spurt

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109b.jpg" width="353">
At an annual rate, consumer credit grew 7.7% in November. That was a recovery from the depressed 1.0% gain in October.
In a sign of weaker consumer spending, year to year the 5.2% growth in credit is down slightly from its recent peak of 5.4%. The three month change however is down sharply to 3.7%, half the growth rate of this past August.
The accompanying chart indicates just how sharply the growth in consumer spending has slowed. Sales of general merchandise, appliances and furniture (major items that are financed) declined slightly in the three months ended in October.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109c.jpg" width="353">
Non-revolving credit, which accounts for nearly two thirds of the total, grew a somewhat slower 3.9% in November versus October, but the three month growth rate collapsed to 0.7% from its peak of 6.4% in August.
Revolving credit grew a faster 12.0% in November versus October, but here again the 9.0% three month growth rate is down from the 10.2% rate of growth this past July.
These figures are the major input to the Fed&#39;s Flow of Funds accounts for the household sector, released quarterly. For the third quarter, an acceleration in consumer credit growth (as evidenced by the three month peaks noted above) was accompanied by a sharp acceleration in bank loans.
Dollars and Sense is a recent speech by William Poole, President of the Federal Reserve Bank of St. Louis and it is available <a href="http://www.stlouisfed.org/news/speeches/2008/01_09_08.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Consumer Credit (m/m Chg, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</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 class="odd">
<td class="firstcol">Total</td>
<td>7.7%</td>
<td>&nbsp;1.0%</td>
<td>5.2%</td>
<td>4.5%</td>
<td>4.3%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>12.0</td>
<td>8.9</td>
<td>7.4</td>
<td>6.1</td>
<td>3.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>3.9</td>
<td>4.1</td>
<td>3.9</td>
<td>3.6</td>
<td>4.9</td>
<td>6.4</td>
</tr>
</tbody>
</table>
</body>
</html>

At an annual rate, consumer credit grew 7.7% in November. That was a recovery from the depressed 1.0% gain in October. In a sign of weaker consumer spending, year to year the 5.2% growth in credit is down slightly from its recent peak [...]

U.S. Consumer Credit Growth Up in November, Trend Down Sharply

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109b.jpg" align="left" border="0" height="265" width="353">
At an annual rate, consumer credit grew 7.7% in November. That
was a recovery from the depressed 1.0% gain in October.
In a sign of weaker consumer spending, year to year the 5.2%
growth in credit is down slightly from its recent peak of 5.4%. The three
month change however is down sharply to 3.7%, half the growth rate of
this past August.
The accompanying chart indicates just how sharply the growth
in consumer spending has slowed. Sales of general merchandise,
appliances and furniture (major items that are financed) declined
slightly in the three months ended in October.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109c.jpg" align="right" border="0" height="265" width="353">
Non-revolving credit, which accounts for nearly two thirds of
the total, grew a somewhat slower 3.9% in November versus October, but
the three month growth rate collapsed to 0.7% from its peak of 6.4% in
August.
Revolving credit grew a faster 12.0% in November versus
October, but here again the 9.0% three month growth rate is down from
the 10.2% rate of growth this past July.
These figures are the major input to the Fed's Flow of Funds
accounts for the household sector, released quarterly. For the third
quarter, an acceleration in consumer credit growth (as evidenced by the
three month peaks noted above) was accompanied by a sharp acceleration
in bank loans.
Dollars and Sense is a recent speech by
William Poole, President of the Federal Reserve Bank of St. Louis and
it is available <a href="http://www.stlouisfed.org/news/speeches/2008/01_09_08.html">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit (m/m Chg, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</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 class="odd">
<td class="firstcol">Total</td>
<td>7.7%</td>
<td>&nbsp;1.0%</td>
<td>5.2%</td>
<td>4.5%</td>
<td>4.3%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>12.0</td>
<td>8.9</td>
<td>7.4</td>
<td>6.1</td>
<td>3.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>3.9</td>
<td>4.1</td>
<td>3.9</td>
<td>3.6</td>
<td>4.9</td>
<td>6.4</td>
</tr>
</tbody>
</table>
German Orders in Surprise Spurt 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109a.jpg" align="left" border="0" height="265" width="353">
German real new orders are flying high again in November after
another surprising spurt in October. After the October rise, a drop off
in November orders had been expected - quite the opposite is the
result. Orders are now growing at an annualized rate of 28% in the
fourth quarter over Q3; domestic orders are up at a 16% pace. As in
October bulk orders are responsible for the spurt in November. And a
relatively new metric tells us that German new orders from outside the
Euro Area fell last month. So, despite the spurt, it may be that the
strong euro is taking some toll after all. German foreign orders use
the definition of &#8216;foreign to Germany&#8217; not to its currency area. That
is one complication when looking at &#8216;foreign&#8217; data of any sort for Euro
Area members. Even so, the strength within the Area that German orders
imply is quite remarkable, and it is in stark contrast with other
measures that show a backtracking in confidence and in activity of
various sorts in Germany and throughout the Euro Area. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Orders and Sales By Sector and Origin </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>3.4%</td>
<td>4.0%</td>
<td>-1.6%</td>
<td>25.4%</td>
<td style="color: red;">12.0%</td>
<td>13.6%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>2.8%</td>
<td>5.3%</td>
<td>-0.8%</td>
<td>32.8%</td>
<td style="color: red;">15.2%</td>
<td>18.2%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>4.2%</td>
<td>2.5%</td>
<td>-2.4%</td>
<td>18.1%</td>
<td style="color: red;">8.7%</td>
<td>8.8%</td>
<td>6.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Sector
Sales</td>
</tr>
<tr>
<td class="firstcol">Manufacturing/Mining</td>
<td style="color: red;">-0.6%</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>1.6%</td>
<td style="color: red;">0.8%</td>
<td style="color: red;">4.4%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td style="color: red;">-0.7%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td style="color: red;">-0.8%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">1.1%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Durables</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td style="color: red;">-21.5%</td>
<td style="color: red;">-11.4%</td>
<td style="color: red;">-1.5%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Nondurable</td>
<td style="color: red;">-0.7%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>3.8%</td>
<td>1.9%</td>
<td style="color: red;">1.5%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td style="color: red;">-2.1%</td>
<td>3.3%</td>
<td>-0.2%</td>
<td>3.4%</td>
<td style="color: red;">1.7%</td>
<td style="color: red;">5.5%</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.5%</td>
<td style="color: red;">-0.6%</td>
<td>-0.2%</td>
<td>2.3%</td>
<td style="color: red;">1.1%</td>
<td style="color: red;">5.1%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td style="color: red;">-0.7%</td>
<td>1.2%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td style="color: red;">0.7%</td>
<td style="color: red;">3.9%</td>
<td>7.5%</td>
</tr>
</tbody>
</table>
German Retail Sales are a DISASTER
in November 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109d.jpg" align="left" border="0" height="265" width="353">
So much for strong German orders&#8230;. there is no carry over to
the consumer. Retail sales in Germany are a disaster. We are 10 months
away from the phase in of the VAT hike in January of 2007. That is why
the Yr/Yr decline is still so severe on the chart &#8211; the base is a pre
VAT base in Nov of 2006. It is not really not comparable to the 3-Mo
and the 6-Mo results which are both with base periods that are well
beyond the VAT hike period. Still 3-Mo and 6-Mo real retail sales
growth rates are weaker that their 12-month pace. This is not a good
sign. 
 

Two months into Q4 German real retail sales (ex autos) are
declining at an 8.2% annual rate. Nominal clothing and footwear
spending is off in the quarter at a 23% rate. November sales were a
disaster. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> German
Real and Nominal Retail Sales</th>
<th scope="col">New Qtr</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>SAAR</td>
</tr>
<tr>
<td class="firstcol">Retail excl Auto</td>
<td>-0.6%</td>
<td>-1.9%</td>
<td>1.1%</td>
<td>-5.7%</td>
<td>-1.5%</td>
<td>-1.7%</td>
<td>6.1%</td>
<td>-8.2%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle and Parts</td>
<td>#N/A</td>
<td>0.2%</td>
<td>-2.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>21.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-2.3%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>-3.2%</td>
<td>-2.0%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-0.8%</td>
<td>-8.3%</td>
<td>5.6%</td>
<td>-15.1%</td>
<td>1.1%</td>
<td>-1.2%</td>
<td>5.7%</td>
<td>-23.0%</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>
<td class="firstcol">Retail excl Auto</td>
<td>-1.3%</td>
<td>-2.3%</td>
<td>0.8%</td>
<td>-10.7%</td>
<td>-4.6%</td>
<td>-3.8%</td>
<td>5.6%</td>
<td>-12.6%</td>
</tr>
</tbody>
</table>
German IP Slows, While Orders
Grow...an Accelerate 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 9, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080109e.jpg" align="left" border="0" height="265" width="353">
MFG output fell in November after a rise of 0.1% in October
and a flat September. Amid other circumstances this might seem a very
chilling set of numbers. With this weakness the Q4 path for IP two
months into the quarter is a pace of just 1.2% at an annual rate. It is
only the sharp and mind blowing gains in orders that keep the erosion
in Manufacturing output from seeming like more of a problem. Certainly,
of the two measures, output is more important. But orders are a promise
of output to come. Unfortunately there have been sizeable disconnects
between orders and output before. Since mid-2006 the growth of orders
has exceed the growth of output in Germany and by a wide margin. The
current disconnect is even larger than what it generally has been over
the past 18 months. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Total
German IP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Quarter to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>-0.9%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-3.3%</td>
<td>2.3%</td>
<td>3.5%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer goods</td>
<td>-2.3%</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-11.6%</td>
<td>-5.5%</td>
<td>0.3%</td>
<td>-3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital goods</td>
<td>-0.8%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>2.8%</td>
<td>7.0%</td>
<td>6.3%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate goods</td>
<td>-0.4%</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-4.4%</td>
<td>2.6%</td>
<td>4.6%</td>
<td>-2.1%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>0.2%</td>
<td>-7.6%</td>
<td>-3.4%</td>
<td>-7.0%</td>
<td>-5.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG IP</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>-2.9%</td>
<td>2.7%</td>
<td>4.5%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Orders</td>
<td>3.4%</td>
<td>4.0%</td>
<td>-1.6%</td>
<td>25.4%</td>
<td>13.7%</td>
<td>13.6%</td>
<td>27.9%</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108f.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108g.jpg" height="265" width="312">

The seasonally adjusted Halifax Bank of Scotland's Index of
house prices showed a slight rise in the price of houses in the United
Kingdom in December after declines in the three previous months. The
Index rose 1.3% from 629.5 (1983=100) November to 637.7 in December.
The Bank also publishes data on the pound price of a house. In December
the price rose to 197,039 pounds from 194.500 in November. The average
price of all houses in the U.K. in index and pound terms is shown in
the first chart.
Seasonal adjustment has only been applied to the price of all
houses. Prices paid for new and existing house and prices paid by first
time buyers and former owner occupiers are available only on an
unadjusted bases. In order to reduce some of the noise in the data we
have aggregated the data from monthly to quarterly. In spite of the
rise in house prices in December, the fourth quarter showed a decline
of 2.4% in the unadjusted data of total sales. The prices of existing
houses, however, declined 3.3% and the price of new houses rose by
5.7%, as shown in the second chart.
The average price paid for a new house in the last quarter of
2007 was 199 thousand pounds or almost 6% above the third quarter,
while the price of an existing house was 195 thousand pounds or 3.3%
below the third quarter. Prices paid for new and existing houses are
shown in the third chart. Both the first time buyer and the former
owner occupier paid 2% less on average for a house in the fourth
quarter than in the third quarter. However the first time payer paid an
average of 147 thousand pounds while a former owner occupier paid an
average of 219 thousand pounds as shown in the fourth chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108h.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108i.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">U. K.
HOUSE PRICES:HALIFAX BANK OF SCOTLAND</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 % 
&nbsp;Chg&nbsp;</th>
<th scope="col">Y/Y % 
&nbsp;Chg&nbsp;</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">Index 1983=100</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;All Houses
SA&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>637.7</td>
<td>629.5</td>
<td>599.7</td>
<td>1.30</td>
<td>6.34</td>
<td>634.3</td>
<td>580.1</td>
<td>535.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;All Houses
NSA</td>
<td>632.2</td>
<td>628.7</td>
<td>594.4</td>
<td>0.56</td>
<td>6.36</td>
<td>634.3</td>
<td>580.1</td>
<td>535.0</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;&nbsp;
Existing Houses NSA</td>
<td>641.0</td>
<td>635.6</td>
<td>612.5</td>
<td>0.85</td>
<td>4.65</td>
<td>648.4</td>
<td>595.6</td>
<td>548.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Newly Built NSA</td>
<td>547.5</td>
<td>582.2</td>
<td>497.5</td>
<td>-5.96</td>
<td>10.05</td>
<td>550.8</td>
<td>496.4</td>
<td>462.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Standard Average Price
(Pounds) SA</td>
<td>197039</td>
<td>194500</td>
<td>185280</td>
<td>1.31</td>
<td>6.35</td>
<td>195973</td>
<td>179233</td>
<td>165310</td>
</tr>
<tr>
<td class="firstcol">&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>Q4 07</td>
<td>Q3 07&nbsp;</td>
<td>Q4 06&nbsp;</td>
<td>Q/Q %Chg&nbsp;</td>
<td>Y/Y %Chg&nbsp;</td>
<td>2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;All Houses
SA&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>634.7</td>
<td>643.9</td>
<td>602.8</td>
<td>-1.39</td>
<td>5.33</td>
<td>634.3</td>
<td>580.1</td>
<td>535.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;All Houses
NSA</td>
<td>633.7</td>
<td>649.3</td>
<td>601.2</td>
<td>-2.40</td>
<td>5.40</td>
<td>634.3</td>
<td>580.1</td>
<td>535.0</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp;&nbsp;
Existing Houses NSA</td>
<td>643.0</td>
<td>664.9</td>
<td>619.0</td>
<td>-3.30</td>
<td>3.87</td>
<td>648.4</td>
<td>595.6</td>
<td>548.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Newly Built NSA</td>
<td>572.0</td>
<td>541.2</td>
<td>498.6</td>
<td>5.70</td>
<td>14.72</td>
<td>550.8</td>
<td>496.4</td>
<td>462.7</td>
</tr>
</tbody>
</table>
</body></html>

The seasonally adjusted Halifax Bank of Scotland's Index of house prices showed a slight rise in the price of houses in the United Kingdom in December after declines in the three previous months. The Index rose 1.3% from 629.5 [...]

U.K. House Prices: Halifax Bank of Scotland (HBOS) Indexes and Averages of House Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108e.jpg" align="left" border="0" height="265" width="353">
EMU retail sales volumes fell by 0.5% In November and are off
at a 4.2% annualized rate in Q4. The figures show the Euro Area as a
region that is still unsupported by consumer activity. While German
manufacturing seems to be still healthy (see today&#8217;s orders report) the
consumer in Europe is floundering. Sales volumes are lower by 1% Yr/Yr
and are falling at a 0.2% pace over six months. Over three months the
annual rate of decline is 4.3%. 
 

Nonfood sales are lagging the most down by 0.6% in the month
compared to a -0.4% drop for food. Yr/Yr declines for the two
categories of retail sales growth are similar, around -1%. Although the
Manufacturing data for the Euro Area have softened they show more
resilience. Still with the very strong euro and a very weak consumer it
is difficult to be too upbeat on the Euro Area&#8217;s prospects. 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Ezone (13) Retail Sales Volume</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone-13 Total</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-4.3%</td>
<td>-0.2%</td>
<td>-1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>0.2%</td>
<td>-2.6%</td>
<td>-1.0%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Non Food</td>
<td>-0.6%</td>
<td>-0.8%</td>
<td>0.0%</td>
<td>-5.3%</td>
<td>0.2%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>-2.9%</td>
<td>2.1%</td>
<td>-5.0%</td>
<td>-2.0%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">HH Goods</td>
<td>#N/A</td>
<td>-0.4%</td>
<td>-1.3%</td>
<td>-4.8%</td>
<td>0.1%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Books news, etc</td>
<td>#N/A</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-2.8%</td>
<td>1.1%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Pharmaceuticals</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.6%</td>
<td>4.5%</td>
<td>4.6%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Non Spec</td>
<td>#N/A</td>
<td>#N/A</td>
<td>0.6%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="odd">
<td class="firstcol">Mail Order</td>
<td>#N/A</td>
<td>#N/A</td>
<td>-0.1%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Non-food Country Detail:
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>#N/A</td>
<td>-3.2%</td>
<td>-0.1%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>2.6%</td>
<td>5.5%</td>
<td>5.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy (Total: Value)</td>
<td>#N/A</td>
<td>0.6%</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>-0.9%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU)</td>
<td>0.4%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>6.3%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Shaded areas calculated on a
one-month lag due to lagging data</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

EMU retail sales volumes fell by 0.5% In November and are off at a 4.2% annualized rate in Q4. The figures show the Euro Area as a region that is still unsupported by consumer activity. While German manufacturing seems to be still [...]

EMU Retail Sales Volumes Still Sinking in Q4

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080108d.jpg" width="353">
The retail price of gasoline rose a nickel last weeks to $3.11 per gallon following a seven cent rise during the prior week. 
The increase returned prices to the highest level in nearly two months. 
During that opening week of 2008, crude oil prices jumped sharply to $98.17 for a barrel WTI crude. The increase reversed yesterday, however, with forecasts that unseasonably warm temperatures in the Northeast U.S. would continue. Crude prices fell to $95.10 per barrel. 
Natural gas prices also fell yesterday, but sharp gains in December raised the wholesale price to an average $7.67 per mmbtu. Prices were up by roughly one quarter from the very warm December of 2006. 
What&#39;s Driving Gasoline Prices from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/eclett/2007/el0710.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">Energy Prices</a></th>
<th scope="col">01/07/08</th>
<th scope="col">12/31/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($/Gallon)</td>
<td>3.11</td>
<td>3.06</td>
<td>34.8%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
</tbody>
</table>


</html>

The retail price of gasoline rose a nickel last weeks to $3.11 per gallon following a seven cent rise during the prior week.

Gasoline Prices Up Further

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.

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**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.

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**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

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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

251113E.jpg

Industrial output in the European Monetary Union in September advanced by 0.2% after falling by 1.1% in August and rising by 0.7% in July. Output of consumer goods fell in the month with overall consumer goods output falling by 2.5% and a 0.5% reduction in consumer durables output and a 2.6% reduction in the output of consumer nondurable goods. However, intermediate goods output grew by 0.3% and capital goods output rose by 0.3% in September. Output fell broadly across each of these sectors and subsectors in August but then it rose in all of them in July. Output metrics have been through a bit of turbulence over the last three months.

**Sequential Growth Performance**
Sequential calculations showing annual rates of growth over 12 months, six months and three months reveal some weakening in output and then some diminishing of that trend. Overall output rises by 1.4% over 12 months. Then output falls at a 4.9% annual rate over six months and that reduction in its cut to -0.8% over three months. Manufacturing follows that same pattern. Consumer goods output also follows that pattern, but durables and nondurables output of consumer goods are on the same wavelength with the only difference that consumer durables output also falls over 12 months. Intermediate goods output rises by 0.3% over 12 months, falls at a 3.3% rate over six months, and then rises at a 2.3% annual rate over three months. Capital goods output is up by 1.5% over 12 months, falls at a 2.9% annual rate for six months, and then is flat over three months. The sector results show a good deal of chaos in terms of trying to pin down a trend.

**Quarter-to-Date**
Quarter-to-date that now show results for the full third quarter on this preliminary note, reveal output eroding by 0.1% at an annual rate; manufacturing output falling at a 0.4% annual rate, with an increase in consumer goods at a 1% annual rate, created totally by an increase of 1.5% consumer nondurable goods output. Intermediate goods and capital goods both show output declines in the just-ended quarter.

**Rankings/Standings**
The percentile standings show that consumer durable goods output is below its median at a 39.9 percentile standing. Intermediate and capital goods output also are both below their medians (below 50%) but a 45-percentile standing for intermediate goods and a 46.8 percentile standing for capital goods prevail. However, these are not tremendously weak values; they're just slightly below their median rates of increase since the median rate of increase occurs at a ranking of 50%.

**Country Performance for Manufacturing**
We're revisiting the country data much of which has already been released. Out of 13 monetary union members in the table only 5 show output declines in September and none of the four largest economies log a decline in output in September. However, seven countries had logged declines in August, and six had logged declines in July.

**Countries Sequentially**
Turning to sequential data annual growth rates over 12 months, six months, and three months, there are declines in six countries over three months, in seven countries over six months but in only four countries over 12 months. The country's logging output declines over 12 months include Germany, Finland, Luxembourg, and Malta.

**Quarter-to-Date**
On a quarter-to-date to date basis, there are five countries that log output declines in the third quarter. They are Germany, Finland, Portugal, Luxembourg, and Malta.

**Country Standings**
The queue percentile standings show five countries with output increasing at a pace below its median pace since 2007. The average of the median standings across countries is a reading of 63.8% and that's the same as the standing for output in the whole euro area. While the performance of output is still somewhat irregular, conditions appear to be solidifying and risks to the downside appear to be diminishing. Conditions remain somewhat touch and go. The European Central Bank is in a waiting mode; it has not turned off its easing cycle. In the United States, it's unclear whether the Fed is going to continue the easing cycle or not. The government shutdown in the U.S. makes U.S. policy options more complicated although the outlook for growth in the United States in 2026 with new fiscal provisions in force and a rebound out of the government shutdown appear to be quite good. However, globally inflation is still largely excessive and central banks are definitely running out of room to become more stimulative.

251113.jpg

Europe

EMU Industrial Output Advances 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.

Economy in Brief: 2008

Jump to:

German IP Slows, While Orders Grow...an Accelerate

German Retail Sales are a DISASTER in November

German Orders in Surprise Spurt

U.S. Consumer Credit Growth Up in November, Trend Down Sharply

U.S. Consumer Credit Growth Up in November, Trend Down Sharply

U.K. House Prices: Halifax Bank of Scotland (HBOS) Indexes and Averages of House Prices

EMU Retail Sales Volumes Still Sinking in Q4

Gasoline Prices Up Further