Robert Brusca

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<a href="/comment/100603k_big.png" name="modal"><img style="width: 353px; height: 265px;" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603k.png"></a>
Euro-Area Retail sales broke off from their strong upswing and fell
sharply in April. The 1.2% drop cut the Yr/Yr growth rate for sales to
1.0%. Meanwhile motor vehicle sales continued to plummet in the Zone
and have fallen at a 22% pace over three-months and by 5.7% Yr/Yr.
Motor Vehicle registrations dropped by 11.4% in April. 
Germany and the UK among the early reporters show
their sales in April each were up. Germany still shows a Yr/Yr sales
decline, however, while UK sales are up by 1.7% Yr/Yr. Overall e-Zone
sales have had their upward momentum cut. 
Also on the day the revised Services PMI indices
were released. The EMU index rose more strongly on revision while the
UK index showed a meager increase from the previous month.
On one hand the weakness in retail sales suggests
that all the problems in Greece and the knock-on effect on worries may
have damaged consumer willingness to spend. We have seen the more
topical consumer sentiment indices drop off already. But the services
sector numbers tell us that economic improvement is still in train –and
in the important job-creating services sector. The reality of the
improvement should dominate the ephemeral worries except in those
countries where real events are under strain such as Greece and
possibly in Spain where the fiscal measures will have some bite. We are
still waiting on the actions in other nations. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope=col" colspan=7>Euro-Area Retail Sales 
</th></tr>
<tr class="even">
<td>&nbsp;</td>
<td colspan=3>M/M</td>
<td colspan=3>Saar</td>
</tr></thead>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Zone
Total Volume</td>
<td>-1.2%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>-3.1%</td>
<td>1.8%</td>
<td>1.0%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=7>Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor
Vehicle Reg</td>
<td>-11.4%</td>
<td>3.3%</td>
<td>2.4%</td>
<td>-22.8%</td>
<td>-16.5%</td>
<td>-5.7%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=7>NonFood Country detail: Volume</td>
</tr>
<tr>
<td class="firstcol">Germany
Value</td>
<td>1.0%</td>
<td>-1.6%</td>
<td>1.6%</td>
<td>3.8%</td>
<td>-0.6%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)
Volume</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.4%</td>
<td>13.1%</td>
<td>-2.4%</td>
<td>1.7%</td>
</tr>

</table>

</html>

Euro-Area Retail sales broke off from their strong upswing and fell sharply in April. The 1.2% drop cut the Yr/Yr growth rate for sales to 1.0%. Meanwhile motor vehicle sales continued to plummet in the Zone and have fallen at a 22% [...]

EMU Retail Sales Tail Off Sharply

Tom Moeller

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<a href="/comment/100603h_big.png" name="modal"><img style="width: 353px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603h.png" align="left"></a>
 Employment gains continued last month. The latest
report from the payroll processor ADP, in their National Employment
Report, indicated that private nonfarm payroll levels rose in May by
55,000. The increase followed upwardly revised gains during the prior
two months and was the fourth consecutive monthly rise. 
ADP
compiled the estimate from its database of individual companies'
payroll information. Macroeconomic Advisers, LLC, the St. Louis
economic consulting firm, developed the methodology for transforming
the raw data into an economic indicator.The U.S. Bureau of Labor
Statistics will report May payroll employment tomorrow. As a comparison, the April increase of
65,000 in ADP's measure of private nonfarm payrolls was accompanied by
a rise of 231,000 jobs in the BLS measure of private sector payrolls.
According to ADP and Macro-Advisers, the correlation between the
monthly percentage change in the ADP estimate and that in the BLS data
is 0.90.
ADP reported that private service-producing
industry employment rose for the fourth&nbsp; consecutive month
with a gain of 78,000 (-0.5% y/y). Small-sized payrolls grew 37,000
(-0.3% y/y) while medium-sized payrolls grew 37,000 (-0.5% y/y). These
increases were accompanied by a modest 4,000 gain (-1.2% y/y) in large
service producing payrolls.
 Goods producing employment fell another
23,000 during May though the three-month change eased to -1.4% (AR)
versus -15.8% one year ago. In the manufacturing sector alone, however,
payrolls rose 15,000 (-3.7% y/y) for the fourth consecutive monthly
rise. Large goods producing payrolls slipped 1,000 (-6.3% y/y) while
small-sized payrolls fell 24,000 (-7.5% y/y). New figures provided for
construction employment indicated a moderating decline of 41,000 jobs.
The greatest drop, 120,000, was logged during March of 2009. Financial
activities jobs rose 5,000. 
The ADP National Employment Report
data is maintained in Haver's USECON
database; historical figures date back to December 2000. The figures in
this report cover only private sector jobs and exclude employment in
the public sector. The
full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_May_10.pdf">here</a>
and the ADP
methodology is explained <title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" >here.

<a href="/comment/100603i_big.png" name="modal"><img style="width: 312px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603i.png"></a><a href="/comment/100603j_big.png" name="modal"><img style="width: 312px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603j.png"></a>


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>

<th scope="col"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP
National Employment Report</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr></thead>
<tbody>
<tr>
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>55</td>
<td>65</td>
<td>32</td>
<td>-1.5%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>

<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>13</td>
<td>18</td>
<td>8</td>
<td>-1.3</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>39</td>
<td>31</td>
<td>19</td>
<td>-1.4</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>3</td>
<td>16</td>
<td>5</td>
<td>-2.2</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>

<tr>
<td class="firstcol">&nbsp;&nbsp; Goods
Producing</td>
<td>-23</td>
<td>-10</td>
<td>-28</td>
<td>-6.2</td>
<td>-12.3</td>
<td>-3.7</td>
<td>-1.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Manufacturing</td>
<td>15</td>
<td>31</td>
<td>7</td>
<td>-3.7</td>
<td>-11.1</td>
<td>-3.0</td>
<td>-1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Service
Producing</td>
<td>78</td>
<td>75</td>
<td>60</td>
<td>-0.5</td>
<td>-3.3</td>
<td>0.0</td>
<td>1.7</td>
</tr>
</tbody>
</table>

</html>

Employment gains continued last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payroll levels rose in May by 55,000. The increase followed upwardly revised [...]

ADP Report: Moderate Job Growth Continues

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<a href="/comment/100603e_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603e.png" p align="left" height="265" width="353"></a>
The Bureau of Labor Statistics indicated that
initial claims for jobless insurance slipped another 10,000 to 453,000.
That followed last week's 11,000 decline which was less than initially
reported. The latest number matched Consensus expectations and claims
remained near this cycle's lowest. Last week's figure was down from the
recession peak of 651,000 reached in March of 2009 but the four-week
moving average of initial claims ticked up to 459,000.

A 31,000 increase in continuing claims for
unemployment insurance during the latest week reversed the declines
during the prior two weeks. Nevertheless, claims remained near the
cycle low and down by one-third from the June '09 peak. The overall
decline is a function of the improved job market but also reflects the
exhaustion of 26 weeks of unemployment benefits. Continuing claims
provide an indication of workers' ability to find employment. The
four-week average of continuing claims at 4.654M remained near the
cycle low. This series dates back to 1966.

Extended benefits for unemployment
insurance rose further w/w to 314,311 with recent changes to the
duration benefits paid. However, they were down sharply from a peak of
597,688 reached in November.

The insured unemployment rate remained at 3.6%
where it has been since mid-February. The rate reached a high of 4.9%
during May of 2009. During the last ten years, there has been a 96%
correlation between the level of the insured unemployment rate and the
overall rate of unemployment published by the Bureau of Labor
Statistics.

The highest insured unemployment rates in the
week ending May 15 were in Puerto Rico (5.9 percent), Alaska (5.8),
Oregon (5.2), Nevada (4.8), California (4.6), Pennsylvania (4.5),
Wisconsin (4.4), North Carolina (4.3), Connecticut (4.1), Michigan
(4.0), Montana (4.0), New Jersey (4.0), Rhode Island (4.0), and South
Carolina (4.0). The lowest insured unemployment rates were in Virginia
(1.8), Texas (2.2), Tennessee (2.6), Wyoming (2.7), Georgia (2.8),
Maryland (2.8), Ohio (2.9), Maine (3.0) Florida (3.2) and New York
(3.3). These data are not seasonally adjusted but the overall insured
unemployment rate is.

The unemployment insurance
claims data is available in Haver's WEEKLY database
and the state data is in the REGIONW database.


<a href="/comment/100603f_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603f.png" height="265" width="314"></a><a href="/comment/100603g_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603g.png" height="265" width="314"></a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>

 
 <th scope="col"><a 
 href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"
 ;="">Unemployment Insurance (000s)</a>
 </th><td scope="col"> 05/29/10</td>
 <td scope="col">05/22/10</td>
 <td scope="col">05/15/10</td>
 <td scope="col">Y/Y</td>
 <td scope="col">2009</td>
 <td scope="col">2008</td>
 <td scope="col">2007</td>
 </tr>
 </thead>
 <tr class"grey2">
 <td class="firstcol">Initial
Claims</td>
 <td>453</td>
 <td>463</td>
 <td>474</td>
 <td>-26.5%</td>
 <td>572</td>
 <td>419</td>
 <td>321</td>
 </tr>
 <tr>
 <td class="firstcol">Continuing
Claims</td>
 <td>--</td>
 <td>4,666</td>
 <td>4,635</td>
 <td>-28.4</td>
 <td>5,809</td>
 <td>3,340</td>
 <td>2,549</td>
 </tr>
 <tr>
 <td class="firstcol">Insured
Unemployment Rate (%)</td>
 <td>--</td>
 <td>3.6</td>
 <td>3.6</td>
 <td>4.9
(5/2009)</td>
 <td>4.4</td>
 <td>2.5</td>
 <td>1.9</td>
 </tr>
 
</table>


</body></html>

The Bureau of Labor Statistics indicated that initial claims for jobless insurance slipped another 10,000 to 453,000. That followed last week's 11,000 decline which was less than initially reported. The latest number matched Consensus [...]

U.S. Initial Unemployment Insurance Claims Are Lower Again

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<a href="/comment/100603a_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603a.png" height="265" width="314"></a><a href="/comment/100603b_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603b.png" height="265" width="314"></a>

The
rate of expansion in service sector
activity has been steady this Spring. The Institute for Supply
Management's (ISM) Composite Index for the service &amp;
construction sectors during May held at 55.4 for the third month,
though that still was the highest level since early-2006. In addition,
the series has risen considerably from a low of 37.2 late in 2008. The
latest figure roughly matched Consensus expectations for a reading of
55.7. Since the series' inception in 1997 there has been a 65%
correlation between the level of the composite index in the
nonmanufacturing sector and the q/q change in real GDP for the services
and the construction sectors.

The
employment index posted a gain to 50.4, its
first month above the break-even level since December 2007. Twenty-two
percent of respondents reported increased hiring while 13% reported
fewer jobs. Since the series' inception in 1997 there has been an 80%
correlation between the level of the ISM nonmanufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.&nbsp;The business activity index
also rose m/m but new orders fell. Thirty-five percent of respondents
reported higher orders while only 13% reported them lower. Vendor
delivery speeds sped up
marginally m/m but they're much slower than early last year.

The
pricing power index slipped to 60.6 but
remained up sharply from the 2008 low. Thirty-five percent of
respondents reported higher prices while 5% reported them lower. At the
worst, late in 2008, 41% reported lower prices. Since its inception ten
years ago, there has been a 73% correlation between the price index and
the q/q change in the GDP services chain price index.

Beginning with the January 2008 Nonmanufacturing <cite>Report
On
Business &#174;, </cite>the composite index is calculated as an
indication of overall economic conditions for the non-manufacturing
sector. It is a composite index based on the diffusion indices of four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.


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<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup><thead><tr>
<th scope="col"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM" ;="">ISM
Nonmanufacturing Survey</a>
</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May
'09
</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr></thead>
<tr>
<td class="firstcol">Composite Index</td>
<td>55.4</td>
<td>55.4</td>
<td>55.4</td>
<td>44.5</td>
<td>46.2</td>
<td>47.3</td>
<td>53.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Business Activity</td>
<td>61.1</td>
<td>60.3</td>
<td>60.0</td>
<td>43.6</td>
<td>48.0</td>
<td>47.4</td>
<td>56.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
New Orders</td>
<td>57.1</td>
<td>58.2</td>
<td>62.3</td>
<td>45.4</td>
<td>47.9</td>
<td>47.0</td>
<td>54.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Employment</td>
<td>50.4</td>
<td>49.5</td>
<td>49.8</td>
<td>38.9</td>
<td>39.9</td>
<td>43.8</td>
<td>52.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Supplier Deliveries (NSA)</td>
<td>53.0</td>
<td>53.5</td>
<td>49.5</td>
<td>50.0</td>
<td>49.0</td>
<td>51.1</td>
<td>51.1</td>
</tr>
<tr class="grey1">
<td class="firstcol">Prices
Index
</td>
<td>60.6</td>
<td>64.7</td>
<td>62.9</td>
<td>
47.4
</td>
<td>49.4</td>
<td>66.0</td>
<td>63.8</td>
</tr>

</table>
</body></html>

The rate of expansion in service sector activity has been steady this Spring. The Institute for Supply Management's (ISM) Composite Index for the service & construction sectors during May held at 55.4 for the third month, though that [...]

U.S. ISM Nonmanufacturing Index Is Unchanged But Job Growth At New High

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<a href="/comment/100603a_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603a.png" height="265" width="314"></a><a href="/comment/100603b_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603b.png" height="265" width="314"></a>

The
rate of expansion in service sector
activity has been steady this Spring. The Institute for Supply
Management's (ISM) Composite Index for the service &amp;
construction sectors during May held at 55.4 for the third month,
though that still was the highest level since early-2006. In addition,
the series has risen considerably from a low of 37.2 late in 2008. The
latest figure roughly matched Consensus expectations for a reading of
55.7. Since the series' inception in 1997 there has been a 65%
correlation between the level of the composite index in the
nonmanufacturing sector and the q/q change in real GDP for the services
and the construction sectors.

The
employment index posted a gain to 50.4, its
first month above the break-even level since December 2007. Twenty-two
percent of respondents reported increased hiring while 13% reported
fewer jobs. Since the series' inception in 1997 there has been an 80%
correlation between the level of the ISM nonmanufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.&nbsp;The business activity index
also rose m/m but new orders fell. Thirty-five percent of respondents
reported higher orders while only 13% reported them lower. Vendor
delivery speeds sped up
marginally m/m but they're much slower than early last year.

The
pricing power index slipped to 60.6 but
remained up sharply from the 2008 low. Thirty-five percent of
respondents reported higher prices while 5% reported them lower. At the
worst, late in 2008, 41% reported lower prices. Since its inception ten
years ago, there has been a 73% correlation between the price index and
the q/q change in the GDP services chain price index.

Beginning with the January 2008 Nonmanufacturing <cite>Report
On
Business &#174;, </cite>the composite index is calculated as an
indication of overall economic conditions for the non-manufacturing
sector. It is a composite index based on the diffusion indices of four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.


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<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup><thead><tr>
<th scope="col"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM" ;="">ISM
Nonmanufacturing Survey</a>
</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May
'09
</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr></thead>
<tr>
<td class="firstcol">Composite Index</td>
<td>55.4</td>
<td>55.4</td>
<td>55.4</td>
<td>44.5</td>
<td>46.2</td>
<td>47.3</td>
<td>53.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Business Activity</td>
<td>61.1</td>
<td>60.3</td>
<td>60.0</td>
<td>43.6</td>
<td>48.0</td>
<td>47.4</td>
<td>56.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
New Orders</td>
<td>57.1</td>
<td>58.2</td>
<td>62.3</td>
<td>45.4</td>
<td>47.9</td>
<td>47.0</td>
<td>54.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Employment</td>
<td>50.4</td>
<td>49.5</td>
<td>49.8</td>
<td>38.9</td>
<td>39.9</td>
<td>43.8</td>
<td>52.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Supplier Deliveries (NSA)</td>
<td>53.0</td>
<td>53.5</td>
<td>49.5</td>
<td>50.0</td>
<td>49.0</td>
<td>51.1</td>
<td>51.1</td>
</tr>
<tr class="grey1">
<td class="firstcol">Prices
Index
</td>
<td>60.6</td>
<td>64.7</td>
<td>62.9</td>
<td>47.4</td>
<td>49.4</td>
<td>66.0</td>
<td>63.8</td>
</tr>

</table>
U.S. Initial Unemployment
Insurance Claims Are Lower Again
 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 3, 2010


<a href="/comment/100603e_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603e.png" p align="left" height="265" width="353"></a>
The Bureau of Labor Statistics indicated that
initial claims for jobless insurance slipped another 10,000 to 453,000.
That followed last week's 11,000 decline which was less than initially
reported. The latest number matched Consensus expectations and claims
remained near this cycle's lowest. Last week's figure was down from the
recession peak of 651,000 reached in March of 2009 but the four-week
moving average of initial claims ticked up to 459,000.

A 31,000 increase in continuing claims for
unemployment insurance during the latest week reversed the declines
during the prior two weeks. Nevertheless, claims remained near the
cycle low and down by one-third from the June '09 peak. The overall
decline is a function of the improved job market but also reflects the
exhaustion of 26 weeks of unemployment benefits. Continuing claims
provide an indication of workers' ability to find employment. The
four-week average of continuing claims at 4.654M remained near the
cycle low. This series dates back to 1966.

Extended benefits for unemployment
insurance rose further w/w to 314,311 with recent changes to the
duration benefits paid. However, they were down sharply from a peak of
597,688 reached in November.

The insured unemployment rate remained at 3.6%
where it has been since mid-February. The rate reached a high of 4.9%
during May of 2009. During the last ten years, there has been a 96%
correlation between the level of the insured unemployment rate and the
overall rate of unemployment published by the Bureau of Labor
Statistics.

The highest insured unemployment rates in the
week ending May 15 were in Puerto Rico (5.9 percent), Alaska (5.8),
Oregon (5.2), Nevada (4.8), California (4.6), Pennsylvania (4.5),
Wisconsin (4.4), North Carolina (4.3), Connecticut (4.1), Michigan
(4.0), Montana (4.0), New Jersey (4.0), Rhode Island (4.0), and South
Carolina (4.0). The lowest insured unemployment rates were in Virginia
(1.8), Texas (2.2), Tennessee (2.6), Wyoming (2.7), Georgia (2.8),
Maryland (2.8), Ohio (2.9), Maine (3.0) Florida (3.2) and New York
(3.3). These data are not seasonally adjusted but the overall insured
unemployment rate is.

The unemployment insurance
claims data is available in Haver's WEEKLY database
and the state data is in the REGIONW database.


<a href="/comment/100603f_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603f.png" height="265" width="314"></a><a href="/comment/100603g_big.png" name="modal"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603g.png" height="265" width="314"></a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>

 
 <th scope="col"><a 
 href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"
 ;="">Unemployment Insurance (000s)</a>
 </th><td scope="col"> 05/29/10</td>
 <td scope="col">05/22/10</td>
 <td scope="col">05/15/10</td>
 <td scope="col">Y/Y</td>
 <td scope="col">2009</td>
 <td scope="col">2008</td>
 <td scope="col">2007</td>
 </tr>
 </thead>
 <tr class"grey2">
 <td class="firstcol">Initial
Claims</td>
 <td>453</td>
 <td>463</td>
 <td>474</td>
 <td>-26.5%</td>
 <td>572</td>
 <td>419</td>
 <td>321</td>
 </tr>
 <tr>
 <td class="firstcol">Continuing
Claims</td>
 <td>--</td>
 <td>4,666</td>
 <td>4,635</td>
 <td>-28.4</td>
 <td>5,809</td>
 <td>3,340</td>
 <td>2,549</td>
 </tr>
 <tr>
 <td class="firstcol">Insured
Unemployment Rate (%)</td>
 <td>--</td>
 <td>3.6</td>
 <td>3.6</td>
 <td>4.9
(5/2009)</td>
 <td>4.4</td>
 <td>2.5</td>
 <td>1.9</td>
 </tr>
 
</table>
ADP Report: Moderate Job Growth Continues
 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 3, 2010


<a href="/comment/100603h_big.png" name="modal"><img style="width: 353px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603h.png" align="left"></a>
 Employment gains continued last month. The latest
report from the payroll processor ADP, in their National Employment
Report, indicated that private nonfarm payroll levels rose in May by
55,000. The increase followed upwardly revised gains during the prior
two months and was the fourth consecutive monthly rise. 
ADP
compiled the estimate from its database of individual companies'
payroll information. Macroeconomic Advisers, LLC, the St. Louis
economic consulting firm, developed the methodology for transforming
the raw data into an economic indicator.The U.S. Bureau of Labor
Statistics will report May payroll employment tomorrow. As a comparison, the April increase of
65,000 in ADP's measure of private nonfarm payrolls was accompanied by
a rise of 231,000 jobs in the BLS measure of private sector payrolls.
According to ADP and Macro-Advisers, the correlation between the
monthly percentage change in the ADP estimate and that in the BLS data
is 0.90.
ADP reported that private service-producing
industry employment rose for the fourth&nbsp; consecutive month
with a gain of 78,000 (-0.5% y/y). Small-sized payrolls grew 37,000
(-0.3% y/y) while medium-sized payrolls grew 37,000 (-0.5% y/y). These
increases were accompanied by a modest 4,000 gain (-1.2% y/y) in large
service producing payrolls.
 Goods producing employment fell another
23,000 during May though the three-month change eased to -1.4% (AR)
versus -15.8% one year ago. In the manufacturing sector alone, however,
payrolls rose 15,000 (-3.7% y/y) for the fourth consecutive monthly
rise. Large goods producing payrolls slipped 1,000 (-6.3% y/y) while
small-sized payrolls fell 24,000 (-7.5% y/y). New figures provided for
construction employment indicated a moderating decline of 41,000 jobs.
The greatest drop, 120,000, was logged during March of 2009. Financial
activities jobs rose 5,000. 
The ADP National Employment Report
data is maintained in Haver's USECON
database; historical figures date back to December 2000. The figures in
this report cover only private sector jobs and exclude employment in
the public sector. The
full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_May_10.pdf">here</a>
and the ADP
methodology is explained <title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" >here.

<a href="/comment/100603i_big.png" name="modal"><img style="width: 312px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603i.png"></a><a href="/comment/100603j_big.png" name="modal"><img style="width: 312px; height: 265px;" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603j.png"></a>


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>

<th scope="col"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP
National Employment Report</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr></thead>
<tbody>
<tr>
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>55</td>
<td>65</td>
<td>32</td>
<td>-1.5%</td>
<td>-4.9%</td>
<td>-0.7%</td>
<td>1.1%</td>
</tr>

<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>13</td>
<td>18</td>
<td>8</td>
<td>-1.3</td>
<td>-4.1</td>
<td>-0.1</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>39</td>
<td>31</td>
<td>19</td>
<td>-1.4</td>
<td>-5.7</td>
<td>-0.9</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>3</td>
<td>16</td>
<td>5</td>
<td>-2.2</td>
<td>-5.6</td>
<td>-1.8</td>
<td>-0.2</td>
</tr>

<tr>
<td class="firstcol">&nbsp;&nbsp; Goods
Producing</td>
<td>-23</td>
<td>-10</td>
<td>-28</td>
<td>-6.2</td>
<td>-12.3</td>
<td>-3.7</td>
<td>-1.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Manufacturing</td>
<td>15</td>
<td>31</td>
<td>7</td>
<td>-3.7</td>
<td>-11.1</td>
<td>-3.0</td>
<td>-1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Service
Producing</td>
<td>78</td>
<td>75</td>
<td>60</td>
<td>-0.5</td>
<td>-3.3</td>
<td>0.0</td>
<td>1.7</td>
</tr>
</tbody>
</table>
EMU Retail Sales Tail Off Sharply
 
by <a href="/comment/Brusca.html">Robert Brusca</a> June 3, 2010




<a href="/comment/100603k_big.png" name="modal"><img style="width: 353px; height: 265px;" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100603k.png"></a>
Euro-Area Retail sales broke off from their strong upswing and fell
sharply in April. The 1.2% drop cut the Yr/Yr growth rate for sales to
1.0%. Meanwhile motor vehicle sales continued to plummet in the Zone
and have fallen at a 22% pace over three-months and by 5.7% Yr/Yr.
Motor Vehicle registrations dropped by 11.4% in April. 
Germany and the UK among the early reporters show
their sales in April each were up. Germany still shows a Yr/Yr sales
decline, however, while UK sales are up by 1.7% Yr/Yr. Overall e-Zone
sales have had their upward momentum cut. 
Also on the day the revised Services PMI indices
were released. The EMU index rose more strongly on revision while the
UK index showed a meager increase from the previous month.
On one hand the weakness in retail sales suggests
that all the problems in Greece and the knock-on effect on worries may
have damaged consumer willingness to spend. We have seen the more
topical consumer sentiment indices drop off already. But the services
sector numbers tell us that economic improvement is still in train –and
in the important job-creating services sector. The reality of the
improvement should dominate the ephemeral worries except in those
countries where real events are under strain such as Greece and
possibly in Spain where the fiscal measures will have some bite. We are
still waiting on the actions in other nations. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope=col" colspan=7>Euro-Area Retail Sales 
</th></tr>
<tr class="even">
<td>&nbsp;</td>
<td colspan=3>M/M</td>
<td colspan=3>Saar</td>
</tr></thead>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>Feb-10</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Zone
Total Volume</td>
<td>-1.2%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>-3.1%</td>
<td>1.8%</td>
<td>1.0%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=7>Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor
Vehicle Reg</td>
<td>-11.4%</td>
<td>3.3%</td>
<td>2.4%</td>
<td>-22.8%</td>
<td>-16.5%</td>
<td>-5.7%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=7>NonFood Country detail: Volume</td>
</tr>
<tr>
<td class="firstcol">Germany
Value</td>
<td>1.0%</td>
<td>-1.6%</td>
<td>1.6%</td>
<td>3.8%</td>
<td>-0.6%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)
Volume</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.4%</td>
<td>13.1%</td>
<td>-2.4%</td>
<td>1.7%</td>
</tr>

</table>
</html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602e.jpg" align="left" height="265" width="353">
Producer price trends have been rising sharply in EMU over the
past few months. The PPI has taken a decided and sharp turn for the
worse. Prices are accelerating in two of the three main sectors of the
PPI. Only consumer prices fail to show acceleration from three-months
to six months. Consumer prices and intermediate prices are still lower
Yr/Yr but their trends are nonetheless rising sharply. Intermediate
goods prices are up very strongly from past weakness.
Germany and France show manufacturing prices ex-energy or
ex-energy and ex-food trends (the former for Germany, the latter for
France) with accelerations in train. UK manufactures prices are
accelerating (the UK is an EU member). Italy&#8217;s prices are actually
decelerating over three months compared to stronger pressures earlier.
While the PPI is not the price a gauge of choice for the ECB,
having such pressures stirred up will not be good news. The dropping
euro undoubtedly has something to do with this.
Still Yr/Yr prices are contained for consumer goods and
capital goods. Intermediate goods prices are the biggest problem. There
the rise in the dollar price of oil and the dropping euro form a
double-whammy on prices. If these trends develop in the HICP they will
put the ECB on the spot since growth in the Zone is not doing well and
the ECB will not want inflation trends like this to take hold in
consumer prices.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area and UK
PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-Area</td>
<td>Apr-10</td>
<td>Mar-10</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">TotalxConstruct</td>
<td>0.7%</td>
<td>0.6%</td>
<td>5.8%</td>
<td>6.4%</td>
<td>2.8%</td>
<td>-4.7%</td>
</tr>
<tr>
<td class="firstcol">Capital Gds</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Consurmer Gds</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.3%</td>
<td>-1.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate&amp;Cap
Gds</td>
<td>1.0%</td>
<td>0.8%</td>
<td>8.1%</td>
<td>6.8%</td>
<td>2.7%</td>
<td>-5.1%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.4%</td>
<td>0.6%</td>
<td>3.9%</td>
<td>6.2%</td>
<td>3.7%</td>
<td>-5.9%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Germany</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gy
ExEnergy</td>
<td>0.5%</td>
<td>0.2%</td>
<td>4.3%</td>
<td>3.1%</td>
<td>1.1%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td colspan="7">France:Tot</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fr
ExF&amp;Energy</td>
<td>0.6%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>3.3%</td>
<td>1.0%</td>
<td>-1.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>0.5%</td>
<td>0.5%</td>
<td>3.7%</td>
<td>6.7%</td>
<td>4.1%</td>
<td>-6.2%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.9%</td>
<td>0.6%</td>
<td>8.1%</td>
<td>7.1%</td>
<td>5.8%</td>
<td>1.3%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">Euro-Area
Harmonized
PPI ex construction</td>
</tr>
</tbody>
</table>
</body></html>

Producer price trends have been rising sharply in EMU over the past few months. The PPI has taken a decided and sharp turn for the worse. Prices are accelerating in two of the three main sectors of the PPI. Only consumer prices fail [...]

Euro-Area PPI Takes Off Slowly I Turn... Err Scratch That

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602d.jpg" align="left" height="265" width="353">
According to the outplacement firm of Challenger, Grey
&amp; Christmas the level of layoffs rose slightly m/m during May
to 38,810. Nevertheless, the figure was off by roughly two-thirds from
last year and just slightly above the lowest level since 2000. Planned
layoffs announced during the first five months of 2010 totaled 258,319,
down 68.6% from the 822,282 announced during early-2009. In virtually
all industries except entertainment/leisure and pharmaceutical layoffs
were down last month versus May 2009.
Challenger also samples firms' hiring plans. During May plans
fell slightly after a strong gain during April. Versus May '09 plans
rose 83.7% but during the first five months of this year they've fallen
slightly y/y. Plans eased during May in the transportation, health care
&amp; financial sectors but strengthened in the auto, energy,
industrial goods &amp; services industries.
During the last ten years there has been a 67% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change in payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
The Challenger figures are available in Haver's SURVEYS
database.

<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/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp;
Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>38,810</td>
<td>38,326</td>
<td>67,611</td>
<td>-65.1%</td>
<td>1,288,030</td>
<td>1,223,993</td>
<td>768,264</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>14,922</td>
<td>15,654</td>
<td>13,994</td>
<td>83.7%</td>
<td>272,573</td>
<td>118,600</td>
<td>365,583</td>
</tr>
</tbody>
</table>
</body></html>

According to the outplacement firm of Challenger, Grey & Christmas the level of layoffs rose slightly m/m during May to 38,810. Nevertheless, the figure was off by roughly two-thirds from last year and just slightly above the lowest [...]

Challenger Layoffs Near Lowest in Ten Years

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602a.jpg" p align="left" height="265" width="353">
The National Association of Realtors (NAR) reported that
pending sales of existing single-family homes rose 6.0% during April
versus March. The gain left home sales up 37.8% from the low in January
of last year. The latest marginally beat Consensus expectations for a
5.0% increase.
The m/m performance of home sales continued to vary across the
country. Last month sales rose in the Northeast (24.4 y/y), Midwest
(18.0% y/y) and in the West (12.0% y/y). A modest decline in sales was
logged in the South but sales still rose by nearly one-third versus
last year.
Pending home sales figures are analogous to the new home sales
data from the Commerce Department in that they measure existing home
sales when the sales contract is signed, not at the time the sale is
closed. The series dates back to 2001 and the data is available in
Haver's PREALTOR database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602b.jpg" height="265" width="314"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100602c.jpg" height="265" width="314">
<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/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y %</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total</td>
<td>110.9</td>
<td>104.6</td>
<td>97.7</td>
<td>22.4</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>97.9</td>
<td>75.6</td>
<td>77.7</td>
<td>24.4</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>104.2</td>
<td>100.1</td>
<td>97.7</td>
<td>18.0</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>123.9</td>
<td>124.6</td>
<td>107.5</td>
<td>31.4</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>107.9</td>
<td>100.4</td>
<td>98.0</td>
<td>12.0</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</body></html>

The National Association of Realtors (NAR) reported that pending sales of existing single-family homes rose 6.0% during April versus March. The gain left home sales up 37.8% from the low in January of last year. The latest marginally [...]

U.S. Pending Home Sales Strong Again

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

260205A2.jpg

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

260205C2.jpg

260205D2.jpg

- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief

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EMU Retail Sales Tail Off Sharply

ADP Report: Moderate Job Growth Continues

U.S. Initial Unemployment Insurance Claims Are Lower Again

U.S. ISM Nonmanufacturing Index Is Unchanged But Job Growth At New High

U.S. ISM Nonmanufacturing Index Is Unchanged But Job Growth At New High

Euro-Area PPI Takes Off Slowly I Turn... Err Scratch That

Challenger Layoffs Near Lowest in Ten Years

U.S. Pending Home Sales Strong Again