Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

 
<a href="/comment/131108l_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108l.png" align="left"></a>
It was controversy large German current account deficit part of the release of December figures on trade. Now with exports growing strong in September imports dropping trade surplus as surge in higher Germany is going to feel even more pressure fellow EMU members for its growing trade imbalance. German exports rose by 1.7% in September and imports fell by 1.9%. With this combination of strong exports and weak imports, German trade balance rose to ?18.81 billion euros from ?15.79 billion euros in August.

Sequential growth rates the story that is equally disturbing more disturbing the standpoint of evaluating future German trade surpluses are supposed to look like. Three months German goods exports are rising to 7.9% annual rate of 4.6% over six months and 0.9% pace over 12 months.

That result to the strength of imports on the same horizon. Over three months imports are falling at a 6.3% annual rate. Over six months import growth is under 1%, as imports are advancing at a 0.7% annual rate. Over 12 months imports are contracting by 2%. Why isn't the strength in the German economy reflected in rising imports? 

<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/1311081.png" width="660" height="320">

You can see the strength in exports in the rising ratio exports and imports. Exports are 125.4% of imports in September 2013. This is up from 124.4% of imports 12 months ago and 117.9% of imports 24 months ago. Germany's economy is recovering, but it is another case of export-led growth with a rising German trade surplus. German exports are thriving on foreign demand while Germany, the largest economy in EMU, is piggybacking its growth on the domestic demand in other nations, some of them struggling fellow EMU members.

This is where German success begins to look a bit `unfair.' The European Commission has some metrics to determine if surpluses and deficits are too big. The table below looks at a group of countries the Commission singled out in December 2012.

The EU Commission has a Macroeconomic Imbalance Procedure which is triggered by an Alert Mechanism Report as the excepted passage below describes:

"The Commission monitors current account surpluses and deficits under the Macroeconomic Imbalance Procedure (MIP), which was introduced in December 2011. Its aim is to identify, prevent and correct harmful imbalances by ensuring that appropriate policy responses are adopted in Member States in a coordinated manner. The issues that fall under the scope of the MIP are wider than the external accounts, but the current account deficits and surpluses feature prominently in the procedure. The starting point of each round of the MIP is an Alert Mechanism Report (AMR), in which the Commission identifies Member States whose macroeconomic situation needs further scrutiny through an in-depth review. The analysis in the AMR is based, inter alia, on a scoreboard of eleven macroeconomic indicators. One of them is the three-year average of the current account balance as a percentage of GDP, with an indicative threshold of +6% and -4%. The asymmetry reflects the fact that the risks in connection with current account deficits are higher than for current account surpluses" (source can be found <a href="http://europa.eu/rapid/press-release_MEMO-12-1002_en.htm">here).</a>

The EU Commission sets triggers for launching these procedures (as described above) whose limits already are being violated. Yet there is no announcement of any investigations being initiated. 

A ratio of current account surplus to GDP of over 6% is supposed to be a trigger for a report. Yet as the table above shows EMU members Germany, The Netherlands and Luxembourg have been over this line for the last four quarters on average. And over the last 14 quarters Germany's four quarter average has exceed this mark without exception. The same is true of The Netherlands. Luxembourg has been in violation for 11 of these 14 quarters (again, based on the four-quarter average).

Moreover since 2004-Q4 Luxembourg's surplus ratio has AVERAGED 8.2%, The Netherlands has AVERAGED 7.7% and Germany's surplus ratio has AVERAGED 6.24%. Austria has AVERAGED an acceptable but still high 2.8%. Outside the Monetary Union but still in Europe, Sweden has an average surplus ratio for this period of 7.2% and Denmark of 4.3%. 

The European Commission right now is whistling past the grave yard. Under the old Maastricht (pronounced: Mass-Trick) criterion, Germany and France were supposed have had excess fiscal deficit procedures launched against them. But they pleaded themselves as a `special case' and used their power to undermine the procedure. The bite of the rule was eliminated, to detriment of the entire Community. Is the EU Commission doing this again? 

In its report on excess current account surpluses the EU Commission is very pragmatic in its assessment of the countries it inspects. It notes that we can't be too precise in thinking that we know what a country's deficit or surplus position should be. Countries have different circumstances as well as different tastes to saving and borrowing. But (the Commission does not say this) neither should we let this lack of precision keep us from making any determination or using sound judgment.

Saudi Arabia is this case of country that SHOULD be permitted to run a large current account surplus. Its revenues form its oil riches are just too steady and too big while the country is too small to be expected to spend all its revenue. 

China, once a large underdeveloped country, could have been excused for running large current account deficits, given its need to develop. Instead, China kept it exchange rate artificially low by hoarding foreign exchange reserves. These reserves were accruing some of the lowest returns available on planet, instead of being used for development domestically.

Of course we know why China did this. It was very interested in controlling the process of development for political purposes. Its ratio of consumption to GDP plunged as China `developed' further. China abused its standing as a developing country. It used its leverage with many multinational corporations located there who lobbied their home countries so that they could reap the benefits of their own direct foreign investment in China. China is a very good example of a county `allowed' to run surpluses that have proved to be unhealthy for it. 

In a nutshell, China attracted investment that was geared to exploit foreign demand. Then the financial crisis hit the developed countries hard. It revealed their unstable and exaggerated debt positions- for debt both private and public sectors. This led to a slowdown and has left China with the wrong investment. China can longer bootstrap its growth to exports. It can't be done by denying the pressure of a US Treasury secretary. The problem is now grass roots. US growth has slowed. Europe's growth has slowed. No one can absorb China's exports anymore as they did in the past. So now China must develop its own domestic demand. Since China grew based on its wage advantage it now has a conundrum. China cannot develop its own domestic demand without paying workers more (which it is doing). But doing that will erode its competitive position. China has some special problems too. But this wage/competiveness issue is one of the concerns that transfers to Germany.

Germany and EMU may not have the same threat to their economics as China did by ignoring some basic facts. But the EU Commission has a bad record when comes to ignoring its own rules by superimposing its own judgment. Luxembourg is a small county that thrives off being a banking center is it not the problem. The Netherlands too is small nation with many trans-shipments crisscrossing its borders. It seems to be less of an issue too.

But Germany is the Big Enchilada. And while you may not be able to assert causation, one country's surplus IS another country's deficit (or a deficit spread among a group of them). If countries were evaluated in EMU according their position in a queue off fellow nations instead of relative to the EMU norm, Germany would be the outlier more often than not. But because of Germany's weight it substantially IS the eurozone. Its economic results are always close to EMU norms. That is why its particular excess cannot go unaddressed. Germany is just too big to ignore. To ignore what its huge trade surpluses are doing to fellow members would be a crime. 


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108.png" width="650" height="350"></html>

It was controversy large German current account deficit part of the release of December figures on trade. Now with exports growing strong in September imports dropping trade surplus as surge in higher Germany is going to feel even [...]

Germany's Trade and Current Surpluses Continue to Rise

Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/131108i_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108i.png" align="left"></a>
 Personal income in September increased 0.5% (3.7% y/y) following
 a 0.5% August rise. The gain beat expectations for a 0.3% increase. It
 reflected outsized increases of 1.9% (12.2% y/y) in proprietors income and
 1.1% (10.3% y/y) in rental incomes. Wages and salaries rose a moderate
 0.4% (3.0% y/y). Personal dividend income increased 0.6% (9.6% y/y) while
 transfer receipts edged up 0.2% (3.8% y/y). Personal interest earnings
 notched 0.2% lower (+4.0% y/y) for the third straight month. Disposable
 income increased 0.5% (2.9% y/y) and, when adjusted for inflation, went up
 by 0.4% (2.0% y/y). 
 
 Personal consumption expenditures matched expectations and improved
 0.2% (2.7% y/y) last month, down from a 0.3% August rise. Motor
 vehicle purchases fell 3.6% (+2.7% y/y) and spending on clothing edged
 0.5% lower (+1.4% y/y). These declines were countered by a 0.1% uptick
 (4.4% y/y) in spending on furniture and a 0.3% rise (2.9% y/y) in outlays
 on services. 
 
 The personal savings rate moved up to 4.9%, its highest level
 since December. The total value of personal savings increased 6.4% during
 the last twelve months.
 
 The PCE chain price index in September inched 0.1% higher (1.2% y/y)
 for the third straight month. Durable goods prices were unchanged (-1.8%
 y/y) while prices for nondurables also were unchanged (-0.6% y/y).
 Services prices ticked up 0.1% (1.9% y/y). Less food &amp; energy, the
 chain price index rose 0.1% (1.2% y/y) for the third consecutive month.
 
 The personal income &amp; consumption figures are available in Haver's USECON
 and USNA databases. The consensus expectation figure is in the AS1REPNA
 database.
 
 <a href="/comment/131108j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108j.png"></a>
 <a href="/comment/131108k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108k.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Personal Income &amp;
 Outlays (%)</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Personal Income</td>
 <td >0.5</td>
 <td >0.5</td>
 <td >0.2</td>
 <td >3.7</td>
 <td >4.2</td>
 <td >6.1</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Wages &amp; Salaries</td>
 <td >0.4</td>
 <td >0.5</td>
 <td >-0.3</td>
 <td >3.0</td>
 <td >4.3</td>
 <td >4.1</td>
 <td >2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Disposable Personal Income</td>
 <td >0.5</td>
 <td >0.5</td>
 <td >0.3</td>
 <td >2.9</td>
 <td >3.9</td>
 <td >4.8</td>
 <td >2.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Personal Consumption Expenditures</td>
 <td >0.2</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >2.7</td>
 <td >4.1</td>
 <td >5.0</td>
 <td >3.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Personal Saving Rate</td>
 <td >4.9</td>
 <td >4.7</td>
 <td >4.6</td>
 <td >4.8 
 (Sep'12)</td>
 <td >5.6</td>
 <td >5.7</td>
 <td >5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >PCE Chain Price Index</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >0.9</td>
 <td >1.8</td>
 <td >2.4</td>
 <td >1.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Less Food &amp; Energy</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >1.2</td>
 <td >1.7</td>
 <td >1.4</td>
 <td >1.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Real Disposable Income</td>
 <td >0.4</td>
 <td >0.4</td>
 <td >0.2</td>
 <td >2.0</td>
 <td >1.7</td>
 <td >2.4</td>
 <td >1.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Real Personal Consumption
 Expenditures</td>
 <td >0.1</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >1.7</td>
 <td >2.2</td>
 <td >2.5</td>
 <td >2.0</td>
</tr>
 </tbody>
 </table>
 
</body></html>

Personal income in September increased 0.5% (3.7% y/y) following a 0.5% August rise. The gain beat expectations for a 0.3% increase. It reflected outsized increases of 1.9% (12.2% y/y) in proprietors income and 1.1% (10.3% y/y) in [...]

U.S. Personal Income Increase Remains Firm

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/131108g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108g.png"></a>
 <a href="/comment/131108h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108h.png"></a>
 
 Consumer sentiment, as measured in the Reuters/University of Michigan
 survey, fell in early-November to a reading of 72.0 (-12.9% y/y). That
 compares to 73.2 last month and the June high of 85.1. This latest level
 was the lowest since December 2011 and was weaker than Consensus
 expectations for a rise to 74.8. During the last ten years, there has been
 a 58% correlation between the level of sentiment and three-month growth in
 real PCE.
 Worries about current economic conditions weighed heavily on sentiment
 this month. The index fell to 87.2, the lowest level since January, while
 concern&nbsp; about the future persisted. The consumer expectations index
 fell marginally to 62.3 m/m, following three months of sharp decline.
 The Reuters/University of Michigan survey data are not seasonally
 adjusted. The monthly readings are based on telephone interviews with at
 least 500 households. Data can be found in Haver's USECON database.
 The expectations figure is from Action Economics and can be found in
 Haver's AS1REPNA database.
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Reuters/University of
 Michigan (Q1'66 = 100)</th>
 <th scope="col" >Mid-Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov '12</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Consumer Sentiment</td>
 <td >72.0</td>
 <td >73.2</td>
 <td >77.5</td>
 <td >82.7</td>
 <td >76.5</td>
 <td >67.3</td>
 <td >71.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Current Economic Conditions</td>
 <td >87.2</td>
 <td >89.9</td>
 <td >92.6</td>
 <td >90.6</td>
 <td >85.6</td>
 <td >79.1</td>
 <td >80.9</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Consumer Expectations</td>
 <td >62.3</td>
 <td >62.5</td>
 <td >67.8</td>
 <td >77.7</td>
 <td >70.7</td>
 <td >59.8</td>
 <td >66.0</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Consumer sentiment, as measured in the Reuters/University of Michigan survey, fell in early-November to a reading of 72.0 (-12.9% y/y). That compares to 73.2 last month and the June high of 85.1. This latest level was the lowest since [...]

U.S. Consumer Sentiment Continues To Fall

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/131108a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108a.png"></a>
 <a href="/comment/131108b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108b.png"></a>
 
 The job market posted surprising growth last month. Nonfarm payrolls
 increased 204,000 (1.7% y/y) during October following upwardly revised
 gains of 163,000 and 238,000 during the prior two months. A 122,000 gain
 had been expected according to the Action Economics Forecast Survey. The
 unemployment rate ticked up to 7.3% and matched expectations. The total
 unemployment rate, including workers who were marginally attached or part
 time for economic reasons, rose to 13.8%.&nbsp; 
 
 From the payroll job market survey, the 204,000 increase in
 employment left the three-month average increase at 202,000, its strongest
 in six months. Factory sector employment rose 19,000 (0.5% y/y), its
 strongest since February, while construction jobs added 11,000 (3.3% y/y).
 Private servicing payrolls improved by 177,000 (2.2% y/y). The gain was
 led by leisure &amp; hospitality employment which increased 55,000 (3.2%
 y/y) and retail trade payrolls that rose 44,400 (2.5% y/y). Professional
 &amp; business services jobs improved by 44,000 (3.6% y/y) with a slim
 3,300 rise (8.2% y/y) in temporary employment. Education &amp; health
 services jobs gained 23,000 (1.6% y/y). Government services jobs fell
 8,000 (-0.1% y/y). They reflected a 12,000 drop (-3.3% y/y) in federal
 government jobs and a 3,000 shortfall (+0.5% y/y) in local government
 hiring. State government jobs increased 7,000 but were unchanged y/y.
 
 <a href="/comment/131111a_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131111a.png"></a>
 <a href="/comment/131108d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108d.png"></a>
 
 The length of the average workweek was unchanged at 34.4 hours. Factory
 sector workers were on the job for an average 40.9 hours, up from 40.5
 hours twelve months ago. Construction workers put in 38.9 hours versus
 38.7 last October and private service employees worked 33.3 hours versus
 33.2 hours last year. 
 
 Average hourly earnings ticked up 0.1% (2.2% y/y). Earnings in the
 goods-producing sector increased 2.5% y/y while private service workers
 earned an additional 2.1% y/y. Within services, information industry
 workers earned 4.5% more than they did last year but professional &amp;
 business services workers got modest 1.6% pay increases. Construction
 workers earned 1.5% more versus last year.
 
 From the household sector survey, the unemployment rate ticked
 up m/m to 7.3% but remained down from 7.9% one year ago. Employment fell
 735,000 (+0.2% y/y), reflecting the federal government shutdown. That came
 with a 720,000 worker decline (-0.5% y/y) in the labor force. It lowered
 the labor force participation rate to 62.8%, its lowest since 1978. The
 average duration of unemployment fell to 36.1 hours but 26.7% of workers
 were jobless for 52 weeks or more. 
 
 By educational attainment, the unemployment rate for individuals with
 less than a high school diploma was 10.9%. For high school graduates with
 no college it was 7.3%. For those with some college employment, the rate
 was 6.3% and for college grads it was 3.8%.
 The figures referenced above are available in Haver's USECON
 database. Additional detail can be found in the LABOR and in the EMPL
 databases. The expectation figures are from Action Economics and are in
 the AS1REPNA database.
 
 <a href="/comment/131108e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108e.png"></a>
 <a href="/comment/131108f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131108f.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Employment:
 (M/M Chg., 000s)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Payroll Employment</td>
 <td>204</td>
 <td>163</td>
 <td>238</td>
 <td>1.7%</td>
 <td>1.7%</td>
 <td>1.2%</td>
 <td>-0.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Previous</td>
 <td>--</td>
 <td>148</td>
 <td>193</td>
 <td>--</td>
 <td>1.4</td>
 <td>1.2</td>
 <td>-0.7</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td>19</td>
 <td>4</td>
 <td>15</td>
 <td>0.5</td>
 <td>1.7</td>
 <td>1.7</td>
 <td>-2.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Construction</td>
 <td>11</td>
 <td>18</td>
 <td>1</td>
 <td>3.3</td>
 <td>2.0</td>
 <td>0.3</td>
 <td>-8.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Private Service
 Producing</td>
 <td>177</td>
 <td>123</td>
 <td>187</td>
 <td>2.2</td>
 <td>2.2</td>
 <td>1.9</td>
 <td>-0.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Government</td>
 <td>-8</td>
 <td>13</td>
 <td>31</td>
 <td>-0.1</td>
 <td>-0.8</td>
 <td>-1.8</td>
 <td>-0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Average Weekly Hours -
 Private Sector</td>
 <td >34.4</td>
 <td >34.4</td>
 <td >34.5</td>
 <td >34.3 
 (Oct'12)</td>
 <td >34.4</td>
 <td >34.4</td>
 <td >34.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Average Private Sector
 Hourly Earnings (%)</td>
 <td>0.1</td>
 <td>0.1</td>
 <td>0.3</td>
 <td>2.2</td>
 <td>1.9</td>
 <td>2.0</td>
 <td>1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Unemployment Rate (%)</td>
 <td >7.3</td>
 <td >7.2</td>
 <td >7.3</td>
 <td >7.9 
 (Oct'12)</td>
 <td >8.1</td>
 <td >8.9</td>
 <td >9.6</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The job market posted surprising growth last month. Nonfarm payrolls increased 204,000 (1.7% y/y) during October following upwardly revised gains of 163,000 and 238,000 during the prior two months. A 122,000 gain had been expected [...]

U.S. Payroll Job Gain Is Unexpectedly Strong; Jobless Rate Notches Up

<html>

<head>
<meta http-equiv="Content-Type" content="text/html; charset=windows-1252">
<meta name="GENERATOR" content="Microsoft FrontPage 4.0">
<meta name="ProgId" content="FrontPage.Editor.Document">
<title>U</title>
</head>

<body>

<div id="content">
 <div id="rightside">
 <div id="entire" class="col">
 
 
 The pace of economic growth
 picked up last quarter. At 2.8% (AR, 1.6% y/y), Q3 growth in GDP followed
 a 2.5% advance in Q2. It was the firmest rise in four quarters and beat
 expectations for 2.0% in the Action Economics Forecast Survey.
 A faster rate of inventory
 accumulation powered growth last quarter. Inventory accumulation added 0.8
 percentage points to the Q3 GDP increase, double the contribution in Q2.
 During the last year, however, inventories had a neutral effect on GDP
 growth. Improvement in the foreign trade deficit also helped growth. The
 0.3 percentage points contributed by trade was the most since Q4'12. It
 was the result of a 4.6% rise (3.0% y/y) in exports which outpaced 1.8%
 growth (1.5% y/y) in imports. 
 Growth in domestic final sales decelerated modestly
 to 1.7% and that pulled the y/y gain down to 1.4%, its weakest rise since
 early 2010. The deceleration owed to a 1.5% rise (1.8% y/y) in personal
 consumption expenditures, its weakest in just over two years. Weaker
 growth in spending on services of 0.1% (0.9% y/y) accounted for the
 slowdown. Spending on durable goods picked up to
 7.9% (7.6% y/y) while nondurable goods spending rose a faster 2.7% (1.9%
 y/y).
 Business fixed investment
 growth decelerated to 1.6% (2.7% y/y). Spending on equipment dropped at a
 3.7% rate (+2.4% y/y) as a 17.5% jump (5.5% y/y) in industrial equipment
 was countered by a 3.9% decline (+5.3% y/y) in spending on information
 processing equipment. Spending on nonresidential structures surged at a
 12.3% rate (3.6% y/y). Growth in residential investment remained near its
 peak at 14.6% (15.3% y/y).
 In the government sector, a 0.2% advance (-2.8% y/y)
 was the first positive posting in a year. It resulted from a 1.5% rise
 (-0.1% y/y) in state &amp; local outlays offset by a 1.7% decline (-6.5%
 y/y) in federal spending. Nondefense federal spending fell at a 3.4% rate
 (-2.3% y/y) which approximated the declines of the prior two quarters.
 Defense spending slipped at a 0.7 rate (-9.0% y/y).
 The GDP price index rose at a 1.9% rate (1.3% y/y),
 the quickest quarterly growth in a year. Strength centered on a diminished
 3.0% advance (4.6% y/y) in residential investment prices and a 1.9% gain
 (1.1% y/y) gain in consumer prices. Consumer prices excluding food &amp;
 energy rose at a 1.4% rate (1.2% y/y). The business fixed investment price
 index rose at a 1.1% rate (1.1% y/y). 
 
 The latest GDP figures can be found in Haver's USECON and USNA
 databases; USNA contains basically all of the Bureau of Economic
 Analysis' detail in the national accounts, including the new integrated
 economics accounts and the recently added GDP data for U.S. Territories.
 The Action Economics consensus estimates can be found in AS1REPNA.
 <table class="centered" border="0" cellSpacing="0" width="1231">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="394"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $, %, AR</a></th>
 <th scope="col" width="119">Q3'13 (Preliminary)</th>
 <th scope="col" width="119">Q2'13</th>
 <th scope="col" width="119">Q1'13</th>
 <th scope="col" width="119">Q3 Y/Y</th>
 <th scope="col" width="119">2012</th>
 <th scope="col" width="119">2011</th>
 <th scope="col" width="119">2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="394">Gross Domestic Product</td>
 <td width="119" align="center">2.8</td>
 <td width="119" align="center">2.5</td>
 <td width="119" align="center">1.1</td>
 <td width="119" align="center">1.6</td>
 <td width="119" align="center">2.8</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="394">&nbsp;Inventory Effect</td>
 <td width="119" align="center">0.8</td>
 <td width="119" align="center">0.4</td>
 <td width="119" align="center">0.9</td>
 <td width="119" align="center">0.0</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">-0.2</td>
 <td width="119" align="center">1.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">Final Sales</td>
 <td width="119" align="center">2.0</td>
 <td width="119" align="center">2.1</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">1.6</td>
 <td width="119" align="center">2.6</td>
 <td width="119" align="center">2.0</td>
 <td width="119" align="center">1.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="394">&nbsp;Foreign Trade Effect</td>
 <td width="119" align="center">0.3</td>
 <td width="119" align="center">-0.1</td>
 <td width="119" align="center">-0.3</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">-0.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">Domestic Final Sales</td>
 <td width="119" align="center">1.7</td>
 <td width="119" align="center">2.1</td>
 <td width="119" align="center">0.5</td>
 <td width="119" align="center">1.4</td>
 <td width="119" align="center">2.4</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">1.5</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1108">Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">Personal Consumption</td>
 <td width="119" align="center">1.5</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">2.3</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">2.2</td>
 <td width="119" align="center">2.5</td>
 <td width="119" align="center">2.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="394">Business Fixed Investment</td>
 <td width="119" align="center">1.6</td>
 <td width="119" align="center">4.7</td>
 <td width="119" align="center">-4.6</td>
 <td width="119" align="center">2.7</td>
 <td width="119" align="center">7.3</td>
 <td width="119" align="center">7.6</td>
 <td width="119" align="center">2.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">Residential Investment</td>
 <td width="119" align="center">14.6</td>
 <td width="119" align="center">14.2</td>
 <td width="119" align="center">12.5</td>
 <td width="119" align="center">15.3</td>
 <td width="119" align="center">12.9</td>
 <td width="119" align="center">0.5</td>
 <td width="119" align="center">-2.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="394">Government Spending</td>
 <td width="119" align="center">0.2</td>
 <td width="119" align="center">-0.4</td>
 <td width="119" align="center">-4.2</td>
 <td width="119" align="center">-2.8</td>
 <td width="119" align="center">-1.0</td>
 <td width="119" align="center">-3.2</td>
 <td width="119" align="center">0.1</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1108">Chain-Type Price
 Index</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">GDP&nbsp;&nbsp; &nbsp;&nbsp;</td>
 <td width="119" align="center">1.9</td>
 <td width="119" align="center">0.6</td>
 <td width="119" align="center">1.3</td>
 <td width="119" align="center">1.3</td>
 <td width="119" align="center">1.7</td>
 <td width="119" align="center">2.0</td>
 <td width="119" align="center">1.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="394">Personal Consumption</td>
 <td width="119" align="center">1.9</td>
 <td width="119" align="center">-0.1</td>
 <td width="119" align="center">1.1</td>
 <td width="119" align="center">1.1</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">2.4</td>
 <td width="119" align="center">1.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="394">&nbsp;Less Food/Energy</td>
 <td width="119" align="center">1.4</td>
 <td width="119" align="center">0.6</td>
 <td width="119" align="center">1.4</td>
 <td width="119" align="center">1.2</td>
 <td width="119" align="center">1.8</td>
 <td width="119" align="center">1.4</td>
 <td width="119" align="center">1.3</td>
 </tr>
 </tbody>
 </table>
 
 </div>
 </div>
</div>

<div id="footer" class="sprites">
 <ul>
 </ul>
</div>
<div id="content">
 <div id="rightside">
 <div id="entire" class="col">
 U.S. Consumers Ramp Up Credit Usage 
 by <a href="http://www.haver.com/comment/Moeller.html">Tom
 Moeller</a>&nbsp;&nbsp;November 7, 2013
 Consumer credit outstanding increased by $13.7 billion during September
 following a $14.2 billion August rise, revised from $13.6 billion.
 Expectations had been for a $12.0 billion increase, according to the
 Action Economics survey.
 Usage of non-revolving credit jumped $15.8 billion (8.5% y/y) in
 September. Federal government loans increased 20.0% y/y. These constitute
 roughly&nbsp; one-third of total non-revolving credit. Finance company
 lending (28% of the total) edged up 0.8% y/y and commercial bank consumer
 loans (24% of the total) gained 5.6% y/y. Borrowing at credit unions (10%
 of the total) advanced 11.5% y/y and borrowing from savings institutions
 (1.0% of the total) increased 4.3% y/y.
 During all of last quarter, student loan balances rose 8.9% y/y, down
 from nearly 15.0% growth in 2008. Motor vehicle loans outstanding
 increased 8.0% y/y, nearly a new high and up from the 7.5% rate of
 liquidation in 2009.
 Revolving credit outstanding slipped $2.1 billion (+0.2% y/y) in
 September. Commercial bank lending (73% of the total) edged 0.4% y/y
 higher while savings institution&nbsp; lending (8% of the total) gained 7.1%
 y/y. Finance company balances (8% of the total) fell 4.1% y/y while
 borrowing from credit unions (5% of the total) gained 7.8% y/y.
 Nonfinancial business accounts (3% of the total) fell another 19.5% y/y
 and securitized credit card balances (4% of the total) inched up 0.5%.
 These Federal Reserve Board figures are break-adjusted and calculated
 by Haver Analytics. There is a break in the credit outstanding data from
 November 2010 to December 2010 due to the Fed's benchmarking process.
 Benchmark estimates are based on the Census of Finance Companies (CFC) and
 the Survey of Finance Companies (SFC) conducted in 2010 and 2011,
 respectively. The consumer credit data are available in Haver's USECON
 database. The Action Economics figures are contained in the AS1REPNA
 database.
 (Unmet ) Credit Demand of U.S. Households from the
 Federal Reserve Bank of New York can be found here <a href="http://libertystreeteconomics.newyorkfed.org/2013/11/unmet-credit-demand-of-american-households.html">http://libertystreeteconomics.newyorkfed.org/2013/11/unmet-credit-demand-of-american-households.html</a>
 <table class="centered" border="0" cellSpacing="0" width="1231" height="105">
 <thead>
 <tr>
 <th class="firstcol" scope="col" height="25" width="646">Consumer
 Credit Outstanding (M/M Chg, SA)</th>
 <th scope="col" height="25" width="83">Sep</th>
 <th scope="col" height="25" width="83">Aug</th>
 <th scope="col" height="25" width="83">Jul</th>
 <th scope="col" height="25" width="83">Y/Y</th>
 <th scope="col" height="25" width="83">2012</th>
 <th scope="col" height="25" width="83">2011</th>
 <th scope="col" height="25" width="83">2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" height="26" width="646">Total</td>
 <td height="26" width="83" align="center">$13.7B</td>
 <td height="26" width="83" align="center">$14.2B</td>
 <td height="26" width="83" align="center">$10.9B</td>
 <td height="26" width="83" align="center">6.1%</td>
 <td height="26" width="83" align="center">6.1%</td>
 <td height="26" width="83" align="center">4.1%</td>
 <td height="26" width="83" align="center">-1.0%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" height="26" width="646">&nbsp; &nbsp;Revolving</td>
 <td height="26" width="83" align="center">-2.1</td>
 <td height="26" width="83" align="center">-0.9</td>
 <td height="26" width="83" align="center">-1.8</td>
 <td height="26" width="83" align="center">0.2</td>
 <td height="26" width="83" align="center">0.4</td>
 <td height="26" width="83" align="center">0.2</td>
 <td height="26" width="83" align="center">-7.5</td>
 </tr>
 <tr>
 <td class="firstcol" height="26" width="646">&nbsp; &nbsp;Non-revolving</td>
 <td height="26" width="83" align="center">15.8</td>
 <td height="26" width="83" align="center">15.0</td>
 <td height="26" width="83" align="center">12.7</td>
 <td height="26" width="83" align="center">8.5</td>
 <td height="26" width="83" align="center">8.6</td>
 <td height="26" width="83" align="center">5.9</td>
 <td height="26" width="83" align="center">2.7</td>
 </tr>
 </tbody>
 </table>
 
 </div>
 </div>
</div>

<div id="footer" class="sprites">
 <ul>
 </ul>
</div>

</body>

</html>

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail in the national accounts, including the new integrated economics accounts and the [...]

U.S. GDP Growth Improves To A 2.8% Rate

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/131107l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107l.png"></a>
 <a href="/comment/131107m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107m.png"></a>
 
 Consumer credit outstanding increased by $13.7 billion during September
 following a $14.2 billion August rise, revised from $13.6 billion.
 Expectations had been for a $12.0 billion increase, according to the
 Action Economics survey.
 
 Usage of non-revolving credit jumped $15.8 billion (8.5% y/y) in
 September. Federal government loans increased 20.0% y/y. These constitute
 roughly&nbsp; one-third of total non-revolving credit. Finance company
 lending (28% of the total) edged up 0.8% y/y and commercial bank consumer
 loans (24% of the total) gained 5.6% y/y. Borrowing at credit unions (10%
 of the total) advanced 11.5% y/y and borrowing from savings institutions
 (1.0% of the total) increased 4.3% y/y.
 
 During all of last quarter, student loan balances rose 8.9% y/y, down
 from nearly 15.0% growth in 2008. Motor vehicle loans outstanding
 increased 8.0% y/y, nearly a new high and up from the 7.5% rate of
 liquidation in 2009.
 
 Revolving credit outstanding slipped $2.1 billion (+0.2% y/y) in
 September. Commercial bank lending (73% of the total) edged 0.4% y/y
 higher while savings institution&nbsp; lending (8% of the total) gained 7.1%
 y/y. Finance company balances (8% of the total) fell 4.1% y/y while
 borrowing from credit unions (5% of the total) gained 7.8% y/y.
 Nonfinancial business accounts (3% of the total) fell another 19.5% y/y
 and securitized credit card balances (4% of the total) inched up 0.5%.
 
 These Federal Reserve Board figures are break-adjusted and calculated
 by Haver Analytics. There is a break in the credit outstanding data from
 November 2010 to December 2010 due to the Fed's benchmarking process.
 Benchmark estimates are based on the Census of Finance Companies (CFC) and
 the Survey of Finance Companies (SFC) conducted in 2010 and 2011,
 respectively. The consumer credit data are available in Haver's USECON
 database. The Action Economics figures are contained in the AS1REPNA
 database.
 
 (Unmet) Credit Demand of American Households from the
 Federal Reserve Bank of New York can be found <a href="http://libertystreeteconomics.newyorkfed.org/2013/11/unmet-credit-demand-of-american-households.html">here.</a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 <thead>
 <tr>
 <th class="firstcol" scope="col" >Consumer
 Credit Outstanding (M/M Chg, SA)</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2012</th>
 <th scope="col" >2011</th>
 <th scope="col" >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >$13.7B</td>
 <td >$14.2B</td>
 <td >$10.9B</td>
 <td >6.1%</td>
 <td >6.1%</td>
 <td >4.1%</td>
 <td >-1.0%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; &nbsp;Revolving</td>
 <td >-2.1</td>
 <td >-0.9</td>
 <td >-1.8</td>
 <td >0.2</td>
 <td >0.4</td>
 <td >0.2</td>
 <td >-7.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Non-revolving</td>
 <td >15.8</td>
 <td >15.0</td>
 <td >12.7</td>
 <td >8.5</td>
 <td >8.6</td>
 <td >5.9</td>
 <td >2.7</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Consumer credit outstanding increased by $13.7 billion during September following a $14.2 billion August rise, revised from $13.6 billion. Expectations had been for a $12.0 billion increase, according to the Action Economics survey. [...]

U.S. Consumers Ramp Up Credit Usage

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

 
<a href="/comment/131107k_big.png" name="modal"><img class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107k.png" align="left"></a>
German orders are rising strongly despite a sharp drop in industrial output in September. As goes capital goods so goes German output. So it is not surprising that a 0.9% drop in output was caused mostly by a 2.1% drop in the output of capital goods. Over 12-months the 0.9% increase in industrial production is led by a 2.2% gain in the output of capital goods. 

However, in September output was weak on a broad front. This weakness followed strong gains in August. But over three-months IP is falling.

Because of the pattern of the strength, IP is still rising strongly in Q3 compared to Q2. In September the quarter to date calculation is a full quarterly growth calculation. On that basis IP is up at a 2.4% annual rate in Q3 driven by a 3.7% gain in capital goods output. Construction output is surging in the quarter, rising at a 6.4% annual rate. Manufacturing output is only up at a 1.1% annual rate in the quarter. However, the reason to remain optimistic on German output is that orders are so strong. Real orders are rising at a torrid 6.7% real annual rate in the quarter. And orders bear a close correlation to German manufacturing IP. 
 
The growth rate for contemporaneous German manufacturing IP and Real Orders year-over-year growth strikes a strong R-squared relationship of 0.82, marking a strong and positive correlation between real orders and real manufacturing output. But with the orders gain led by one-month the correlation on the year-over-year growth rates rises to 0.90. Then, if we lead orders by two months, the R-square rises to 0.94. On longer leads the correlation diminishes. 

With these statistical results in hand, the one month set back to output is hardly disturbing given the strong guidance we are provided with for the future by German orders.

Other early-reporting EMU countries echo strength in Q2. Ireland and Portugal, among the EMU and non-EMU countries in the table, show falling IP in Q3. The UK leads the pack in IP growth in Q3, but that has been a clear developing theme for the UK recently. Its economy is looking more stable and UK auto production has continued to churn out steady gains.

Industrial output tends to be more volatile than GDP. What we see in the table are encouraging signs of IP growth in Q3. That is encouraging for GDP results as well. But the eurozone still has issues. The European Central Bank just cut its key lending rate from 1% to 0.5%, acknowledging the region's need for more help. Unfortunately 50bp lower in rates is no panacea. One of the main problems in EMU as in the US is the lack of credit growth. Such a small drop in rates will not increase demand much and may make lenders more wary to advance funds at such low rates believing that rates are going to have to rise from these levels, possibly adversely impacting borrowers. To counter such expectations both the Federal Reserve and the ECB are trying to use forward guidance. We have yet to see any evidence that it is working.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107.png" width="660" height="350"></html>

German orders are rising strongly despite a sharp drop in industrial output in September. As goes capital goods so goes German output. So it is not surprising that a 0.9% drop in output was caused mostly by a 2.1% drop in the output [...]

German IP Drops but Expansion Lies Ahead

Carol Stone, CBE

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 
 
 <a href="/comment/131107g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107g.png"></a>
 <a href="/comment/131107h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107h.png"></a>
 
Initial claims for unemployment insurance fell to 336,000 (-7.4% y/y) during the week ended November 2 from the
previous week's 345,000, which was revised up 5,000 from its first report. The
Labor Department indicated that the claims processing difficulties in California
have stopped affecting the data. The latest result was very close to consensus
expectations of 335,000.&nbsp; The four-week moving average of initial claims decreased
to 348,250 from the prior week's 357,250. During the last ten years there has
been a 74% correlation between the level of claims and the m/m change in payroll
employment.

Continuing claims for unemployment insurance in the week ended October 26 rose to 2.868 million (-10.1%
y/y), but the prior week was revised down by 17,000 to 2.864 million. The figure
remained up from the early-September low of 2.788 million. The four-week moving
average of continuing claims eased to 2.866 million. The insured rate of
unemployment remained at 2.2%, where it's been since late-August. This
particular count covers only &quot;regular&quot; programs and does not include
all extended benefit and other specialized jobless insurance programs. In the
week of October 19, the latest available, the total of all benefit recipients
rose to 3.959 million (-22.1% y/y). This broader measure is not seasonally
adjusted. It compares to a cycle peak of 12.060 million in January 2010 and
pre-recession figures that averaged 2.596 million for 2007. The number of
individuals collecting emergency and extended payments in the week of October 19
increased to 1.371 million (-35.3% y/y) from a downward revised 1.305 million in
the October 12 week, which is the low for the economic recovery.

By state, the insured rate of unemployment continued to vary greatly with North Dakota (0.36%), South Dakota
(0.37%), Nebraska (0.85%), New Hampshire (1.04%), Utah (1.04%), Virginia (1.11%)
and Florida (1.14%) at the low end of the range. At the high end were Illinois
(2.39%), the District of Columbia (2.62%), Pennsylvania (2.70%), Connecticut
(2.74%), California (2.99%), New Jersey (3.05%), and Alaska (4.45%).&nbsp; These
data are not seasonally adjusted; the latest figures cover the October 19 week,
with the October 26 state breakout due for release tomorrow.

Data on weekly unemployment insurance are contained in Haver's WEEKLY
 database and they are summarized monthly in USECON. Data for
 individual states are in REGIONW. The consensus estimates come from
 the Action Economics survey, carried in the AS1REPNA database.
 
 <a href="/comment/131107i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107i.png"></a>
 <a href="/comment/131107j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/131107j.png"></a>
 
 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
 
 <thead>
 <tr>
 <th class="firstcol" 0801 >Unemployment Insurance (000s)</th>
 <th 0801 >11/02/13</th>
 <th 0801 >10/26/13</th>
 <th 0801 >10/19/13</th>
 <th 0801 >Y/Y %</th>
 <th 0801 >2012</th>
 <th 0801 >2011</th>
 <th 0801 >2010</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 >Initial Claims</td>
 <td 0801 >336</td>
 <td 0801 >345</td>
 <td 0801 >350</td>
 <td 0801 >-7.4</td>
 <td 0801 >375</td>
 <td 0801 >409</td>
 <td 0801 >459</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Continuing Claims</td>
 <td 0801 >--</td>
 <td 0801 >2,868</td>
 <td 0801 >2,864</td>
 <td 0801 >-10.1</td>
 <td 0801 >3,318</td>
 <td 0801 >3,744</td>
 <td 0801 >4,544</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 >Insured Unemployment Rate (%)</td>
 <td 0801 >--</td>
 <td 0801 >2.2</td>
 <td 0801 >2.2</td>
 <td 0801 >2.5 
 (10/12)</td>
 <td 0801 >2.6</td>
 <td 0801 >3.0</td>
 <td 0801 >3.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Total &quot;All Programs&quot;
 (NSA)</td>
 <td 0801 >--</td>
 <td 0801 >--</td>
 <td 0801 >3.959 mil.</td>
 <td 0801 >-22.1</td>
 <td 0801 >6.047 mil.</td>
 <td 0801 >7.750 mil.</td>
 <td 0801 >9.850 mil.</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Initial claims for unemployment insurance fell to 336,000 (-7.4% y/y) during the week ended November 2 from the previous week's 345,000, which was revised up 5,000 from its first report. The Labor Department indicated that the claims [...]

U.S. Initial Jobless Claims Decline

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250502A5.jpg

250502B5.jpg

Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

250502C5.jpg

250502D5.jpg

The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250502X5.jpg

250502F5.jpg

- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

250502H32.jpg

250502I32.jpg

- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

250502E.jpg

The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

250502.jpg

Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?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: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

250501H20.jpg

250501I20.jpg

- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: 2013

Jump to: