Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121e.jpg" width="312">
Japan&#39;s trade balance widened in October, slightly from September and more noticeably from a year ago. The October surplus was &yen;1,073 billion, up from &yen;1,051 billion in September and &yen;933 in October 2006, all calculated from the Ministry of Finance&#39;s seasonally adjusted data. Before seasonal adjustment, the surplus was &yen;1,013 billion compared with just &yen;613 billion the year earlier.Exports strengthened anew, following some moderation in September; they increased &yen;124 billion from September to &yen;7,179 billion after falling &yen;192 billion then from August. They were up 13.9% from a year ago. Chemicals, manufactured goods, non-electrical machinery and &quot;other&quot; all grew more than the total, while the largest contribution came from motor vehicles. They were up 21.3% year/year or &yen;235 billion. Imports rose &yen;103 billion in October to &yen;6,106 billion, seasonally adjusted, yielding a third consecutive yearly increase less than 10%, this one 8.6% or &yen;513 billion. More than half of this increase was &quot;mineral fuels&quot;, &yen;278 billion. Thus, ironically this month, the rise in oil imports was almost completely covered by an increase in exports of motor vehicles.The trade pattern among various countries has been interesting. The trade surplus with the US is diminishing due to smaller exports. From yearly growth averaging &yen;177 billion per month in 2006, the 12 months through October saw just a &yen;26 billion average increase with September down from a year ago by &yen;146 billion and October down &yen;23 billion.This has reduced the surplus from &yen;783 billion in October 2006 to &yen;717 billion this October. In contrast, the deficit with China is decreasing as Japanese exports there are up 19.3% from a year ago, while imports have increased only 7.2%. There was a similar move in October with the EU, although the trend there is for a growing surplus. October exports to Europe surged 24% while imports rose only 9.8%. This yielded a nice increase in the surplus to &yen;476 billion from &yen;315 billion in October 2006. 
<img height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121f.jpg" width="312"><img height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121g.jpg" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">JAPAN, Bil.&yen;</th>
<th scope="col">Oct 2007</th>
<th scope="col">Sept 2007</th>
<th scope="col">Aug 2007</th>
<th scope="col">Year Ago</th>
<th scope="col" colspan=3>Monthly Averages</th>
</tr>
<tr>
 <th colspan=5 scope="col"></th>
<th scope="col" >2006</th>
<th scope="col" >2005</th>
<th scope="col" >2004</th>
</tr>
</thead>
<tbody>

<tr>
<td class="firstcol">Trade Balance</td>
<td>1,073</td>
<td>1,051</td>
<td>1,133</td>
<td>933</td>
<td>658</td>
<td>726</td>
<td>996</td>
</tr>
<tr>
<td class="firstcol">Exports, SA*</td>
<td>7,179</td>
<td>7,054</td>
<td>7,247</td>
<td>6,448</td>
<td>6,271</td>
<td>5,471</td>
<td>5,097</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>13.9%</td>
<td>6.5%</td>
<td>14.5%</td>
<td>--</td>
<td>14.6%</td>
<td>7.3%</td>
<td>12.1%</td>
</tr>
<tr>
<td class="firstcol">Imports, SA*</td>
<td>6,106</td>
<td>6,003</td>
<td>6,114</td>
<td>5,756</td>
<td>5,612</td>
<td>4,746</td>
<td>4,101</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>8.6%</td>
<td>-3.2%</td>
<td>5.8%</td>
<td>--</td>
<td>18.3%</td>
<td>15.7%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Japan's trade balance widened in October, slightly from September and more noticeably from a year ago. The October surplus was ¥1,073 billion, up from ¥1,051 billion in September and ¥933 in October 2006, all calculated from the [...]

Japanese Trade Surplus Widens in October with Strong Exports to China and Europe

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121c.jpg" width="353">
Initial claims for unemployment insurance fell back 11,000 last week to 330,000 after a 22,000 jump during the week prior. That was a slightly greater increase than originally indicated. A claims level of 330,000 had been expected for the latest week. There were no special factors indicated as having influenced the figures.
The latest figure is for the survey week for November nonfarm payrolls and claims fell 9,000 (2.7%) from the October period.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four week moving average of initial claims dipped slightly to 329,750 (3.2% y/y).
The largest increases in initial claims for the week ending Nov. 10 were in Michigan (+6,895), California (+5,696), Puerto Rico (+3,745), New Jersey (+2,726), and New York (+2,394), while the largest decreases were in Iowa (-2,397), Ohio (-1,558), North Carolina (-870), South Carolina (-809), and Georgia (-482).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121d.jpg" width="353">
Continuing claims for unemployment insurance rose 7,000 after a 16,000 worker decline that was slightly deeper than initially reported.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment was again stable at 1.9%.
Labor Force Participation and the Prospects for U.S. Growth from the Federal Reserve Bank of Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-33.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/17/07 </th>
<th scope="col">11/10/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;330</td>
<td>341</td>
<td>2.5%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,566</td>
<td>5.7%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell back 11,000 last week to 330,000 after a 22,000 jump during the week prior. That was a slightly greater increase than originally indicated. A claims level of 330,000 had been expected for [...]

U.S. Initial Claims for Jobless Insurance Fell Back

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121a.jpg" width="353">
The University of Michigan&#39;s consumer sentiment index for the full month of November held at the mid-month level of 75.0. That was down 7.3% from October and it pulled the average so far in 4Q 9.0% below the 3Q average. Consensus expectations for November were for stability with the mid-month reading of 75.0.
Both major sub-indexes were down sharply for the month. The current conditions index declined to 91.0 from October&#39;s 97.6, the weakest since March 2003. Expectations fell to 64.7 from 70.1 in October, the lowest reading since October 2005.
Current buying conditions compared to one year ago fell by half from where it was last year and the expected change in business conditions in the next 12 months also fell sharply. Current personal finances fell 9.0% and expectations for personal finances also fell. One-year expectations for business conditions fell but expectations for the next five years improved slightly from October&#39;s depressed level.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121b.jpg" width="353">
Expectations for inflation during the next twelve months jumped to 4.3% from 3.7% in October. The 2006 expectations were for 3.9% inflation this year. For the next five to ten years expectations were for a 3.4% rise in prices, equal to the expectation logged last year.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
The minutes of the latest Federal Open Market Committee Meeting can be found <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20071031.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov ( Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Nov&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>75.0</td>
<td>75.0</td>
<td>80.9</td>
<td>-18.6% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>91.0</td>
<td>91.0</td>
<td>97.6</td>
<td>-14.2%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>64.7</td>
<td>64.7</td>
<td>70.1</td>
<td>-22.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's consumer sentiment index for the full month of November held at the mid-month level of 75.0. That was down 7.3% from October and it pulled the average so far in 4Q 9.0% below the 3Q average. Consensus [...]

Michigan Consumer Sentiment Remained Depressed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121a.jpg" width="353">
The University of Michigan&#39;s consumer sentiment index for the full month of November held at the mid-month level of 75.0. That was down 7.3% from October and it pulled the average so far in 4Q 9.0% below the 3Q average. Consensus expectations for November were for stability with the mid-month reading of 75.0.
Both major sub-indexes were down sharply for the month. The current conditions index declined to 91.0 from October&#39;s 97.6, the weakest since March 2003. Expectations fell to 64.7 from 70.1 in October, the lowest reading since October 2005.
Current buying conditions compared to one year ago fell by half from where it was last year and the expected change in business conditions in the next 12 months also fell sharply. Current personal finances fell 9.0% and expectations for personal finances also fell. One-year expectations for business conditions fell but expectations for the next five years improved slightly from October&#39;s depressed level.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121b.jpg" width="353">
Expectations for inflation during the next twelve months jumped to 4.3% from 3.7% in October. The 2006 expectations were for 3.9% inflation this year. For the next five to ten years expectations were for a 3.4% rise in prices, equal to the expectation logged last year.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
The minutes of the latest Federal Open Market Committee Meeting can be found <a href="http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20071031.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov ( Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Nov&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>75.0</td>
<td>75.0</td>
<td>80.9</td>
<td>-18.6% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>91.0</td>
<td>91.0</td>
<td>97.6</td>
<td>-14.2%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>64.7</td>
<td>64.7</td>
<td>70.1</td>
<td>-22.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
Japanese Trade Surplus Widens in October with Strong Exports to China and Europe 
by <a href="/comment/Stone.html">Carol Stone</a> November 21, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121e.jpg" width="312">
Japan&#39;s trade balance widened in October, slightly from September and more noticeably from a year ago. The October surplus was &yen;1,073 billion, up from &yen;1,051 billion in September and &yen;933 in October 2006, all calculated from the Ministry of Finance&#39;s seasonally adjusted data. Before seasonal adjustment, the surplus was &yen;1,013 billion compared with just &yen;613 billion the year earlier.Exports strengthened anew, following some moderation in September; they increased &yen;124 billion from September to &yen;7,179 billion after falling &yen;192 billion then from August. They were up 13.9% from a year ago. Chemicals, manufactured goods, non-electrical machinery and &quot;other&quot; all grew more than the total, while the largest contribution came from motor vehicles. They were up 21.3% year/year or &yen;235 billion. Imports rose &yen;103 billion in October to &yen;6,106 billion, seasonally adjusted, yielding a third consecutive yearly increase less than 10%, this one 8.6% or &yen;513 billion. More than half of this increase was &quot;mineral fuels&quot;, &yen;278 billion. Thus, ironically this month, the rise in oil imports was almost completely covered by an increase in exports of motor vehicles.The trade pattern among various countries has been interesting. The trade surplus with the US is diminishing due to smaller exports. From yearly growth averaging &yen;177 billion per month in 2006, the 12 months through October saw just a &yen;26 billion average increase with September down from a year ago by &yen;146 billion and October down &yen;23 billion.This has reduced the surplus from &yen;783 billion in October 2006 to &yen;717 billion this October. In contrast, the deficit with China is decreasing as Japanese exports there are up 19.3% from a year ago, while imports have increased only 7.2%. There was a similar move in October with the EU, although the trend there is for a growing surplus. October exports to Europe surged 24% while imports rose only 9.8%. This yielded a nice increase in the surplus to &yen;476 billion from &yen;315 billion in October 2006. 
<img height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121f.jpg" width="312"><img height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121g.jpg" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">JAPAN, Bil.&yen;</th>
<th scope="col">Oct 2007</th>
<th scope="col">Sept 2007</th>
<th scope="col">Aug 2007</th>
<th scope="col">Year Ago</th>
<th scope="col" colspan=3>Monthly Averages</th>
</tr>
<tr>
 <th colspan=5 scope="col"></th>
<th scope="col" >2006</th>
<th scope="col" >2005</th>
<th scope="col" >2004</th>
</tr>
</thead>
<tbody>

<tr>
<td class="firstcol">Trade Balance</td>
<td>1,073</td>
<td>1,051</td>
<td>1,133</td>
<td>933</td>
<td>658</td>
<td>726</td>
<td>996</td>
</tr>
<tr>
<td class="firstcol">Exports, SA*</td>
<td>7,179</td>
<td>7,054</td>
<td>7,247</td>
<td>6,448</td>
<td>6,271</td>
<td>5,471</td>
<td>5,097</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>13.9%</td>
<td>6.5%</td>
<td>14.5%</td>
<td>--</td>
<td>14.6%</td>
<td>7.3%</td>
<td>12.1%</td>
</tr>
<tr>
<td class="firstcol">Imports, SA*</td>
<td>6,106</td>
<td>6,003</td>
<td>6,114</td>
<td>5,756</td>
<td>5,612</td>
<td>4,746</td>
<td>4,101</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr %Chg</td>
<td>8.6%</td>
<td>-3.2%</td>
<td>5.8%</td>
<td>--</td>
<td>18.3%</td>
<td>15.7%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for Jobless
Insurance Fell Back 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 21, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121c.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance fell back 11,000
last week to 330,000 after a 22,000 jump during the week prior. That
was a slightly greater increase than originally indicated. A claims
level of 330,000 had been expected for the latest week. There were no
special factors indicated as having influenced the figures.
The latest figure is for the survey week for November nonfarm
payrolls and claims fell 9,000 (2.7%) from the October period.
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last six years there has
been a (negative) 78% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment.
The four week moving average of initial claims dipped slightly
to 329,750 (3.2% y/y).
The largest increases in initial claims for the week ending
Nov. 10 were in Michigan (+6,895), California (+5,696), Puerto Rico
(+3,745), New Jersey (+2,726), and New York (+2,394), while the largest
decreases were in Iowa (-2,397), Ohio (-1,558), North Carolina (-870),
South Carolina (-809), and Georgia (-482).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071121d.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance rose 7,000 after
a 16,000 worker decline that was slightly deeper than initially
reported.
The continuing claims numbers lag the initial claims figures
by one week.
The insured rate of unemployment was again stable at 1.9%.
Labor Force
Participation and the Prospects for U.S. Growth from
the Federal Reserve Bank of Bank of San Francisco is available <a 
 href="http://www.frbsf.org/publications/economics/letter/2007/el2007-33.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
 <colgroup><col><col><col><col><col><col></colgroup>
 <thead><tr>
 <th scope="col" class="firstcol"><a 
 href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
 <th scope="col">11/17/07 </th>
 <th scope="col">11/10/07 </th>
 <th scope="col">Y/Y</th>
 <th scope="col">2006</th>
 <th scope="col">2005</th>
 <th scope="col">2004</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Initial Claims</td>
 <td>&nbsp;330</td>
 <td>341</td>
 <td>2.5%</td>
 <td>313</td>
 <td>331</td>
 <td>343</td>
 </tr>
 <tr>
 <td class="firstcol">Continuing
Claims</td>
 <td>--</td>
 <td>2,566</td>
 <td>5.7%</td>
 <td>2,459</td>
 <td>2,662</td>
 <td>2,924</td>
 </tr>
 </tbody>
</table>

</body>
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Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071120f.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s order trends are not as
clear as the slowing in some other Euro area countries. True, the
3-month growth rates are lower and sharply lower especially for foreign
orders. But the chart on the left shows how erratic foreign orders have
been. Domestic orders that have slowed by less are negative and in a
clearer slowdown mode. On balance Italy&#8217;s pattern looks as though its
showdown is of domestic, not of foreign, origin. Domestic orders have
been weak and are now in negative territory. Sales, which have been
relatively firmer and even accelerated in the recent three months, fell
sharply in September after a strong rise in August. Orders give us a
clearer picture of slowing growth in Italy. The foreign sector is
unclear. But domestic orders are sending a pretty clear message of
slowdown in progress.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Italy Orders </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>-0.8%</td>
<td>-0.6%</td>
<td>-4.1%</td>
<td>6.3%</td>
<td>5.9%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>5.7%</td>
<td>-4.0%</td>
<td>-3.5%</td>
<td>-8.1%</td>
<td>15.7%</td>
<td>17.8%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-2.7%</td>
<td>1.1%</td>
<td>1.1%</td>
<td>-2.1%</td>
<td>1.3%</td>
<td>0.0%</td>
</tr>

<tr class="even">
<td class="firstcol">Memo:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Sales</td>
<td>-3.6%</td>
<td>4.0%</td>
<td>1.3%</td>
<td>6.7%</td>
<td>3.8%</td>
<td>5.9%</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s order trends are not as clear as the slowing in some other Euro area countries. True, the 3-month growth rates are lower and sharply lower especially for foreign orders. But the chart on the left shows how erratic foreign [...]

Italy's Orders Growth Slows as Foreign Orders Hold Erratically Higher

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071120e.jpg" align="left" border="0" height="265" width="353">
We continue to monitor order trends. Trends for France are
still higher over 12 months at +6.4%. Foreign orders are a half step
behind at +5.5%. But over six months the growth rate is lower and over
three months the growth rate is negative for both overall and foreign
orders. Total and foreign orders are lower in two of the most recent
three months.
The French economy has been losing momentum and now it is
beset with strikes. These are in sharp contrast with the post election
enthusiasm that kept sentiment strong well after the elections. The
prospect of change was invigorating; the reality of what it will really
mean appears to be disappointing. That swing from euphoria to worker
strikes could do damage to the economy. The
strong Euro has played a role in the slowing of the economy as well as
throughout the Euro area. Sarkozy has his work cut out for him. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> French Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-07</td>
<td> Aug-07</td>
<td> Jul-07</td>
<td> 3-mo</td>
<td> 6-mo</td>
<td> 12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-2.3%</td>
<td>-1.0%</td>
<td>0.5%</td>
<td>-10.7%</td>
<td>4.2%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>-3.1%</td>
<td>0.5%</td>
<td>-1.2%</td>
<td>-14.5%</td>
<td>2.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body></html>

We continue to monitor order trends. Trends for France are still higher over 12 months at +6.4%. Foreign orders are a half step behind at +5.5%. But over six months the growth rate is lower and over three months the growth rate is [...]

French Orders Weaken

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071120d.jpg" align="left" border="0" height="265" width="353">
UK orders jumped to a net balance reading of +8 from -6 in
October. The series has been somewhat see-saw as the chart on the left
shows. Export orders, also
showing some see-saw movement, are nonetheless rather better behaved
and showing a clearer trend move lower. Output
volume has been moving to lower readings but that net balance response
continues to be at a firm, positive, +9. The price reading shows an
unwelcome +21, its strongest reading in a while.

<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>Nov 
07</td>
<td>Oct 
07</td>
<td>Sep 
07</td>
<td>Aug 
07</td>
<td>12MO Avg</td>
<td>Pctile</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>8</td>
<td>-6</td>
<td>6</td>
<td>9</td>
<td>2</td>
<td>98%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="grey1">
<td class="firstcol">Export Orders</td>
<td>-4</td>
<td>-9</td>
<td>-2</td>
<td>-3</td>
<td>-4</td>
<td>87%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks:Finished Goods</td>
<td>14</td>
<td>14</td>
<td>7</td>
<td>9</td>
<td>10</td>
<td>57%</td>
<td>26</td>
<td>-2</td>
<td>28</td>
</tr>
<tr class="grey1">
<td class="firstcol">Output Volume: Next 3M</td>
<td>9</td>
<td>10</td>
<td>17</td>
<td>13</td>
<td>16</td>
<td>66%</td>
<td>28</td>
<td>-28</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>21</td>
<td>14</td>
<td>16</td>
<td>16</td>
<td>17</td>
<td>93%</td>
<td>25</td>
<td>-30</td>
<td>55</td>
</tr>
</tbody>
</table>
</body></html>

UK orders jumped to a net balance reading of +8 from -6 in October. The series has been somewhat see-saw as the chart on the left shows. Export orders, also showing some see-saw movement, are nonetheless rather better behaved and [...]

UK Orders Bounce Higher in Survey Unexpectedly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071120c.jpg" align="left" border="0" height="265" width="353">
We are hearing more concerns about inflation not just
inflation risk from Euro area officials. Germany has its core PPI
heading lower and the headline as well but not in a clear cut way. Also
the declines are slow and energy prices are still threatening. Germany
has not had its year/year PPI core rate below 2% since April of 2006
when it rose by 1.8%. The Bundesbank has been issuing such warnings
especially Weber. Today Austrian CB president Liebscher says that the
harmonized CPI is &#8216;striking me with concern.&#8217; At the same time groups
like the German engineering Association warn of the impact of a too
strong euro on the economy. These very clear, well founded, and
completely opposite concerns put the ECB in a tough spot.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Germany PPI
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-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>0.4%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>1.7%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.5%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>3.0%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Core: ex
food beverages, tobacco
&amp; Petroleum</td>
</tr>
</tbody>
</table>
</body></html>

We are hearing more concerns about inflation not just inflation risk from Euro area officials. Germany has its core PPI heading lower and the headline as well but not in a clear cut way. Also the declines are slow and energy prices [...]

German PPI Drifts Lower but no Clear Deceleration is in Sight

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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250829A1.jpg

250829B1.jpg

The **PCE chain price index** increased 0.2% (2.6% y/y) after rising an unrevised 0.3% in June and an unrevised 0.2% in May. The y/y gain steadied at 2.6%. It was increased from 2.2% y/y in April. Energy prices fell 1.1% (-2.7% y/y) after rising 0.9%, while food & beverage prices eased 0.1% (+1.9% y/y) following a 0.3% rise. The price index excluding food & energy rose a steady 0.3%, after two straight 0.2% increases. The y/y gain edged up to 2.9% last month from 2.8% in June. It was increased from a low of 2.6% in April.

Durable goods prices eased 0.1% (+1.1% y/y) in July, after rising 0.5% in June. Home furnishings & appliance prices edged 0.1% higher (2.5% y/y), after increasing 1.3%. Recreational goods & vehicle costs declined 0.9% (-0.3% y/y) and reversed the 0.9% June strengthening. Motor vehicle & parts prices rose 0.2% (1.6% y/y), after a 0.4% June decline.

Prices of nondurable goods eased 0.1% (+0.2% y/y) last month after rising 0.4% in June. Clothing prices held steady both m/m and y/y after rising 0.3% in June. Food & beverage prices eased 0.1% (+1.9% y/y), following a 0.4% June increase. Gasoline & other energy prices fell 1.7% (-9.6% y/y), after rising 0.9% in June.

Services prices in July rose 0.3% (3.6% y/y), after four straight 0.2% increases. Housing & utility prices rose 0.2% (4.3% y/y), after two consecutive 0.3% increases, and services prices excluding energy & healthcare gained 0.4% (3.7% y/y) after two 0.2% gains. Healthcare prices rose 0.2% (2.7% y/y), after rising 0.4%. The cost of financial services & insurance jumped 1.2% (5.5% y/y) after rising 0.4% in June. Recreation services costs rose 0.3% (3.2% y/y) after rising 0.1%. Transportation prices gained 0.2% (4.4% y/y), following a 0.1% rise, while hotel & restaurant prices improved 0.1% (2.8% y/y) after a slight June decline.

**Personal consumption expenditures (PCE)** rose 0.5% (4.7% y/y) last month after increasing 0.4% in June, revised from 0.3%, after holding steady in May. The July rise matched expectations in the Action Economics Forecast Survey. When adjusted for price changes, PCE improved 0.3% in July (2.1% y/y) after rising 0.1% in June.

Real spending on durable goods increased 2.0% (3.2% y/y) in July, after falling for three straight months. Real spending on motor vehicles jumped 4.5% (3.5% y/y), after falling sharply in both June and May. Real outlays on furnishings & appliances improved 0.2% (0.9% y/y), after falling in each of the prior month. Real spending on recreational goods & vehicles increased 1.5% (4.9% y/y) last month, after falling 0.4% in June. Spending on “other” durable goods improved 0.4% (2.6% y/y) after rising 0.2% in June.

Nondurable goods spending in real terms rose 0.3% (2.7% y/y) in July after gaining 0.6% in June. Real clothing & footwear purchases rose 0.6% (4.9% y/y) last month, following a 0.5% rise during June. Real food & beverage purchases strengthened 0.7% (1.7% y/y) after rising 0.4%. Real outlays on gasoline & other energy products fell 1.3% (-1.5% y/y), after rising 1.5%. Real spending on “other” nondurable goods edged 0.1% higher (4.1% y/y) last month, following a 0.6% rise in June.

Real spending on services improved 0.1% (1.7% y/y) in July for the second straight month. Real spending on housing & utilities rose 0.1% (1.1% y/y) in July, for a second consecutive month, while real health care spending also rose 0.1% (3.9% y/y) after rising 0.2%. Real spending on food services & accommodations eased 0.2% (+1.7% y/y), after rising 0.4% in June. Real spending on financial services & insurance rose 0.2% (2.4% y/y) after increasing 0.4% in June. Real spending on transportation services rose 0.3% (-0.0% y/y) in July, after falling 0.6% in June. Recreation spending slipped 0.1% (+1.0% y/y), the same as in June. Spending on “other” services rose 0.3% (2.7% y/y) for the second straight month.

250829F1.jpg

250829G1.jpg

**Personal income** rose 0.4% last month (5.0% y/y) after increasing 0.3% in June. A 0.5% gain was expected. Wages & salaries moved 0.6% higher (5.3% y/y), following a 0.1% increase during June. Rental income increased 0.5% (4.0% y/y) in July, after falling for three straight months. Proprietors’ income improved 0.7% (2.3% y/y), after a minimal 0.1% increase. Income from assets rose 0.1% (1.4% y/y), after holding steady in June, and current transfer receipts were unchanged (8.3% y/y) following a 1.1% June increase.

Disposable personal income increased 0.4% (4.6% y/y) during July following a 0.3% June rise. After adjusting for price changes, disposable income improved 0.2% (2.0% y/y) after holding steady in June.

The personal saving rate held steady in July at 4.4%, after falling from 5.0% in April. It still stands well above low of 3.5% in December of last year. Personal saving fell 1.7% (+5.8% y/y) in July, after declining 0.9% in June.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

**Let’s Get On with It** from Fed Governor Christopher J. Waller is available [here](https://www.federalreserve.gov/newsevents/speech/waller20250828a.htm).

250829C1.jpg

250829D1.jpg

- Core price increase y/y matches highest since February.
- Real spending moderation centers on services.
- Real disposable income improves; personal savings rate steadies.

U.S. Core PCE Price Inflation Up in July; Real Spending Slows Y/Y 

Winnie Tapasanun

250829H.jpg

250829I.jpg

The advance estimate of the U.S. international trade deficit in goods widened to a larger-than-expected $103.57 billion in July after narrowing to $84.85 billion in June, data from the U.S. Census Bureau showed. The July reading, the second widening in the goods trade deficit in three months, was slightly smaller than a $103.92 billion shortfall in July 2024. A deficit of $90.2 billion for July had been expected by the Action Economics Forecast Survey. The deficit reached a record $161.95 billion in March. In Q2'25, the goods trade deficit narrowed to $266.96 billion, the smallest since Q4'23, after ballooning to a record $465.035 billion in Q1'25; the monthly deficit averaged $88.99 billion in Q2'25, down from a record $155.01 billion in Q1'25.

Total goods exports dipped 0.1% m/m (+3.0% y/y), the third consecutive monthly decline, to $177.97 billion in July, the lowest level since January, after a 0.7% decrease to $178.08 billion in June. April registered a record high of $190.08 billion. Exports were up 9.6% from a June 2023 low but down 2.1% from a July 2022 high. The m/m decline in exports in July reflected exports m/m drops of 2.4% (+16.3% y/y) in other goods, 0.9% (+5.1% y/y) in nonfood consumer goods excluding autos, and 0.8% (-1.2% y/y) in industrial supplies & materials. To the upside, exports for the following end-use categories rose m/m in July: automotive vehicles & parts (2.2%; -4.0% y/y), capital goods excluding autos (0.7%; 7.0% y/y), and foods, feeds & beverages (0.5%; 1.4% y/y).

Total goods imports rebounded 7.1% m/m (1.7% y/y), the first monthly increase since March, to a four-month-high $281.54 billion in July following a 4.6% drop to $262.94 billion in June. March registered a record high of $344.59 billion. Imports were up 11.9% from a June 2023 low but down 2.6% from a March 2022 high. The m/m rebound in imports in July reflected m/m rises in most imports end-use categories. These included a 25.4% surge (the first m/m increase and the largest since January; 4.9% y/y) in industrial supplies & materials as well as rises of 11.5% (23.5% y/y) in other goods, 4.8% (14.7% y/y) in capital goods excluding autos, 2.4% (4.9% y/y) in foods, feeds & beverages, and 2.1% (-12.2% y/y) in nonfood consumer goods excluding autos. In contrast, imports of automotive vehicles & parts, the only end-use category with a monthly decline in July, fell 3.2% (-14.1% y/y), the third m/m fall in four months, on top of a 3.6% June decrease.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $103.57 bil. in July, jumping 22.1% from June’s $84.85 bil.
- Exports -0.1%, down for the third straight month, led by a 2.4% decline in exports of other goods.
- Imports +7.1%, up for the first time since March, led by a 25.4% surge in imports of industrial supplies & materials.

U.S. Goods Trade Deficit Balloons in July; Largest Since March’s Record High

250829E.jpg

Inflation in the monetary union was tepid across the large, early-reporting, economies in August. The HICP rose by 0.2% on the month in Germany, rose by 0.1% in France, while it was flat in both Italy and Spain. However, these outstanding readings followed several months of stronger inflation; in particular in July German prices rose by 0.2%, in Italy the gauge rose by 0.3%, in France by 0.4%, and in Spain by 0.5%.

As a result, over three months, inflation is running hot on the headline gauge, over 2% in France, Italy, and Spain, and just below it, at a 1.8% annual rate in Germany. Over 12 months, inflation is well behaved, but that headline is up 0.8% in France, rises by 1.7% over 12 months in Italy, by 2.1% in Germany, and at a 2.6% pace in Spain. That is a bit more mixed but still quite solid set of results. The EMU-wide HICP for July – on a one-month lag- rises by 2.1% over 12 months with a core at 2.3%.

Core inflation is not well reported on an early basis. The Italian core rate rose 0.2% in August with Spain at 0.3%; both Italy and Spain logged increases of 0.3% in July and in June and as a result the 3-month inflation rate on the core for Italy and Spain runs at 2.7% in Italy and at 3.8% for Spain. These, of course, are much higher and more disturbing numbers for inflation. The 6-month inflation rate for core Italy and Spain runs at 2.9% and 3.1%, respectively, while over 12 months the Italian core is up by only 2.1% and the Spanish core is up by only 2.4%. The kick up and inflation for the core is a relatively recent phenomenon.

250829.jpg

These statistics give the ECB some room and some time to maneuver, since headline inflation is in pretty good shape and the inflation issues are scattered and have emerged more recently from the core and with growth still weak and with rising unemployment in Germany where it just topped 3 million for the first time in a decade. There may not be any impetus to have to raise rates to cool inflation. The European Central Bank, like the Federal Reserve, is likely playing a watch and wait game with the economic statistics, and this month the watch and wait game turned pretty much in its favor with very good headline figures although still having some difficult core figures. It will take a little time before we get the core numbers for the rest of the monetary union members to fill in to understand exactly where those trends sit.

However, based on the early returns, the ECB is probably relatively happy with how inflation is sitting even with the core rates slightly excessive and varied. There doesn't appear to be any burgeoning inflation problem; there's some kind of a modest core inflation issue building in Italy and Spain and we'll have to watch that in the coming months. For now, the ECB should be relatively content.

Europe

EMU Large Country Inflation Runs Cold – Over Tepid Cores

Andrew Cates

**The US labour market**
The latest data highlight a growing sense of fragility in the US labour market. The unemployment rate, while still relatively low by historical standards, has been edging higher through the course of this year. More telling, however, is the signal from this week’s consumer confidence survey from Conference Board and specifically the labour market differential — the gap between the share of consumers saying jobs are plentiful versus those saying jobs are hard to get. That balance has narrowed sharply, moving back toward levels historically associated with softer labour demand and rising unemployment.

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**Goods and services inflation** 
Haver’s breakdown of goods and services CPI inflation in the advanced economies highlights where fresh risks are emerging. Goods inflation, which had been receding sharply after the pandemic supply shocks, has recently shown signs of firming again. Some of this probably reflects the impact of US tariff policies, which are raising import costs and putting renewed upward pressure on traded goods prices. While services inflation remains the more stubborn component in most advanced economies, the risk is that tariffs could reintroduce stickiness into goods prices, slowing the overall disinflation process.

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**China, Europe and US trade policy**
A consequence of US tariff policies has been a sharp contraction in Chinese exports to the US market, with much of the surplus redirected elsewhere. Europe in particular has recorded near double-digit import growth in recent months, raising concerns that Beijing is deflecting its industrial overcapacity problem rather than resolving it, effectively transferring the pressure onto trading partners. China’s authorities, however, have begun to push back, introducing measures to curb excess supply and rein in so-called “involution,” including clampdowns on price wars across several industries.

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**China’s excess capacity and Europe**
A closer look at Europe–China trade shows that electric vehicles remain a key flashpoint. Import volumes from China have continued to rise even as per-unit prices fall sharply from a year ago —evidence suggesting that industrial overcapacity persists, with low-cost Chinese EVs increasingly challenging European automakers. The surge has carried on despite EU tariffs of up to 45% on battery EVs, as Chinese producers have adapted by pushing plug-in hybrids and expanding onshore production in Europe to bypass duties and defend market share.

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**Wage growth in the US and Europe** 
Turning back to inflation dynamics, the UK stands out for its persistent wage pressures. While posted wage growth has cooled across the US and euro area, the UK measure has remained elevated at around 6% year-on-year, well above pre-pandemic norms. This stickiness reflects a still-tight labour market in key service sectors, even as broader activity has slowed and unemployment has edged higher. For the Bank of England, it underscores the dilemma: headline inflation is easing, but underlying pay growth risks keeping services inflation uncomfortably high, complicating the timing and scale of policy easing.

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**The UK economy**
The UK’s net international investment position has deteriorated noticeably in recent years, with both direct investment and portfolio flows showing persistent weakness. The latest data underline how net FDI has turned increasingly negative, while the portfolio investment balance has also eroded, leaving the UK more reliant on volatile short-term funding sources. This deterioration comes against a backdrop of heightened investor unease about the riskiness of UK debt markets, where elevated gilt yields and rising debt-servicing costs have amplified concerns over fiscal sustainability. Taken together, these trends underscore the vulnerability of the UK’s external position at a time when global capital is arguably proving more selective and risk sensitive.

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Global markets have continued to rally into late summer, buoyed by AI optimism, dovish signals from central bankers at Jackson Hole, and expectations of easier policy ahead. Yet beneath the surface, risks to the world economy are accumulating. In the US, labour market indicators point to softening conditions (chart 1), while tariff-driven pressures are beginning to push goods prices higher (chart 2). Global trade flows are being reshaped by US policy, with China’s excess capacity increasingly diverted toward Europe, most visibly through surging exports of electric vehicles (EVs) (charts 3 and 4). At the same time, wage growth remains stubbornly elevated in the UK, complicating disinflation (chart 5), while concerns are mounting over the country’s external vulnerabilities as net FDI and portfolio positions weaken against the backdrop of jittery debt markets (chart 6). Together, these dynamics highlight the tension between buoyant market performance and a global economy still grappling with structural fragilities.

Charts of the Week: Riskbusters

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Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

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Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

Economy in Brief: 2007

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Japanese Trade Surplus Widens in October with Strong Exports to China and Europe

U.S. Initial Claims for Jobless Insurance Fell Back

Michigan Consumer Sentiment Remained Depressed

Michigan Consumer Sentiment Remained Depressed

Italy's Orders Growth Slows as Foreign Orders Hold Erratically Higher

French Orders Weaken

UK Orders Bounce Higher in Survey Unexpectedly

German PPI Drifts Lower but no Clear Deceleration is in Sight