Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503h.jpg" style="width: 312px; height: 265px;">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503i.jpg" style="width: 312px; height: 265px;">
Construction activity remains depressed. The negligible 0.2%
uptick in March after the 2.1% February collapse left it near the
lowest level since 2003. The latest rise barely beat Consensus
expectations for a 0.3% dip.
Total private construction activity continued lower in March,
led down by a 1.1% drop in residential building activity. The decline
reflected a 6.3% drop (-58.1% y/y) in multi-family building activity
and a 3.0% decline (+6.8% y/y) in improvements. Conversely,
single-family construction activity rose 1.6% (17.2% y/y). It has risen
consecutively m/m since last June.
Nonresidential building activity fell another 0.7% during
March and was off by one-quarter during the last twelve months.
Spending on lodging fell by nearly two-thirds during the last year
while office construction dropped 42%. Retail shopping centers also
have developed a hard downward trend (-39.8% y/y) in addition to school
construction (-12.6% y/y). Health care construction also has suffered
(-16.3% y/y).
In the public sector, building activity bucked the negative
trend and rose 2.3% in March. The gain was led by a 23.7% rise (-14.9%
y/y) in power-plant construction. Spending on health-care facilities
added to the gain with a 4.9% increase (0.0% y/y) while spending on
highways &amp; streets rose 1.5% (-1.4% y/y). Building in the
education sector fell 2.2% for the month and was down 16.9% y/y.
The construction put-in-place figures are available in Haver's
USECON database.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503j.jpg" style="width: 312px; height: 265px;"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
Put In Place (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</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>0.2</td>
<td>-2.1</td>
<td>-0.7</td>
<td>-12.3</td>
<td>-12.5</td>
<td>-6.9</td>
<td>-1.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Private</td>
<td>-0.9</td>
<td>-2.4</td>
<td>-0.1</td>
<td>-15.3</td>
<td>-18.8</td>
<td>-11.1</td>
<td>-5.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>-1.1</td>
<td>-3.4</td>
<td>3.8</td>
<td>1.2</td>
<td>-28.0</td>
<td>-29.1</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.7</td>
<td>-1.5</td>
<td>-3.3</td>
<td>-25.5</td>
<td>-11.1</td>
<td>13.2</td>
<td>23.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>2.3</td>
<td>-1.6</td>
<td>-1.9</td>
<td>-6.3</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
</tr>
</tbody>
</table>
</body></html>

Construction activity remains depressed. The negligible 0.2% uptick in March after the 2.1% February collapse left it near the lowest level since 2003. The latest rise barely beat Consensus expectations for a 0.3% dip. Total private [...]

U.S. Construction Activity Remains Near 2003 Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503e.jpg" align="left" border="0" height="265" width="353">
Employment growth is helping to underpin the recovery in
factory sector activity. According to the Institute for Supply
Management, the level of activity grew last month at the fastest pace
since June of 2004. The April composite index rose to 60.4 and slightly
beat Consensus expectation for a rise to 60.0. It was up from the low
of 32.9 reached in December '08. (Any figure above the break-even point
of 50 suggests rising activity.) The ISM data is available in Haver's USECON
database.
The index for factory sector hiring activity posted its
strongest monthly gain since last November and, at 58.5, was at its
highest since June of 2004. The reading is up from the low of 25.9 last
February. Twenty-six percent of firms indicated a higher level of
payrolls versus 7% last April. Just 6% showed a lower level versus 35%
one year ago. During the last ten years there has been a 90%
correlation between the index level and the three-month change in
manufacturing payrolls.
Boding well for future hiring, it actually was the production
component which posted the strongest m/m increase during April with a
rise to 66.9. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures.
The new orders index also rose and, at 65.7, it showed
improvement similar to the hiring index. Fifty-two percent of
respondents reported higher orders versus 31% last April. Just 8%
reported order declines versus 29% last year. Finally, the export order
index slipped just slightly to 61.0 after its March surge to 61.5 which
was its highest since 1988. That was up from the low of 35.5 in
December '08. During the last ten years there has been a 53%
correlation between the index and the q/q change in real exports of
goods in the GDP accounts.
Offsetting these increases was a lower inventory component
which fell to 49.4 from 55.3 in March. Still, 20% of respondents
indicated that they were raising inventory levels versus 11% last April
while just 19% indicated lower inventories versus 42% one year ago.
Also down and despite improvement in orders and production, the pace of
supplier deliveries quickened. The supplier delivery index fell to 61.3
from its March high.
The separate index of prices paid rose to 78.0, a new high for
this recovery. That was up from the December '08 low of 18.0. Sixty
percent of respondents reported higher prices while only 4% indicated
lower prices. During the last twenty years there has been an 83%
correlation between the price index and the three-month change in the
PPI for intermediate goods.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503g.jpg" style="width: 312px; height: 265px;">
<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/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>60.4</td>
<td>59.6</td>
<td>56.5</td>
<td>40.4</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>61.5</td>
<td>59.5</td>
<td>46.5</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>58.5</td>
<td>55.1</td>
<td>56.1</td>
<td>35.0</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.9</td>
<td>61.1</td>
<td>58.4</td>
<td>41.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.3</td>
<td>64.9</td>
<td>61.1</td>
<td>45.9</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>49.4</td>
<td>55.3</td>
<td>47.3</td>
<td>33.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>78.0</td>
<td>75.0</td>
<td>67.0</td>
<td>32.0</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
</body></html>

Employment growth is helping to underpin the recovery in factory sector activity. According to the Institute for Supply Management, the level of activity grew last month at the fastest pace since June of 2004. The April composite [...]

Job Gains Help Lift ISM Factory Sector Index

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503b.jpg" style="width: 312px; height: 265px;">
U.S. consumers love to spend, even if they don't have the
money. Personal consumption expenditures increased
an expected 0.6% during March as spending grew faster than income for
the second month in a row. During the last six months spending
increases have been between 0.3% and 0.6% as consumers have dug into
their wallets to buy more costly gasoline. Though spending on gasoline
slipped during the last two months, it's up by one-third during the
last twelve. In constant dollars, spending on gasoline actually fell
1.3% y/y.
Leading the rise in March spending was a 9.2% increase (14.9%
y/y) in spending on motor vehicles. In real terms spending rose 8.9%.
Also strong was the 1.5% increase (4.9% y/y) in nominal apparel
spending which followed a similar February gain; both were led by
discount pricing. In real terms March spending rose 5.3% y/y. Also
strong was spending on home furnishings. The 1.1% gain followed an even
stronger February increase. A 4.4% y/y rise (8.9% in real terms)
follows the 6.2% decline during all of last year. Spending on services
continued firm at 2.9% y/y but that was bloated by a 4.6% y/y jump in
health care expenditures.
These spending gains outpaced personal income
which rose an expected 0.3% after a 0.1% February increase (3.0% y/y).
Help from lower taxes has now faded. March disposable income rose 0.3%
(3.4% y/y) after having been unchanged during the prior month. Higher
gasoline prices also cut into income growth such that the y/y gain in
real disposable income amounted to only 1.4%, barely improved from last
year's 0.9% increase. The combination of spending gains that outpaced
income growth lowered the personal savings rate to
2.7%, its lowest since late-2008. The rate still was up, however, from
the 1.0% low at the beginning of the last recession.
Moderate employment declines left wages &amp; salaries up
just 0.2% (1.1% y/y) after the 0.1% February uptick. Nevertheless the
modest y/y gain is improved from the sharp 4.0% decline last year.
Wages in the factory sector, however, were unchanged in March (-3.4%
y/y) but that still contrasted well to the 11.3% shortfall last year.
In the private service sector, wages increased 0.2% (2.3% y/y). Workers
in the government have seen better wage growth. A 0.2% March gain
pulled wages up 2.2% y/y though that was a deceleration from the 3.6%
rise last year.
Improvement in the housing market pulled proprietors' income
up 3.7% y/y, its strongest gain since late 2006. The stabilization of
interest rates left interest income up 1.1% y/y, its best since 2008.
Dividend income remained down 6.1% y/y but that compared favorably to
last year's 19.3% drop and the 10.3% 2007 decline. Finally,
unemployment insurance benefits rose 8.7% m/m though the one-third
increase versus last year was down from its doubling last year.
The PCE chain price index rose just 0.1%
with the 1.0% slip (+35.2% y/y) in gasoline prices. The core PCE price
deflator also rose just 0.1%, held back by a 0.6% decline (-0.4% y/y)
in apparel prices and a 0.1% slip (-4.1% y/y) in furniture prices
(-1.6% y/y). Services prices also ticked up just 0.1% (1.6% y/y) for
the second month. but health care prices rose 0.2% (2.5% y/y).
Offsetting some of this strength was an 11.0% y/y drop in personal
computer prices.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM" style="color: black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</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="odd">
<td class="firstcol">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>3.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.2</td>
<td>3.4</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.6</td>
<td>0.5</td>
<td>0.3</td>
<td>4.5</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.7</td>
<td>3.0</td>
<td>3.5</td>
<td>3.5 (Mar. '09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.0</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.1</td>
<td>0.0</td>
<td>0.0</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

U.S. consumers love to spend, even if they don't have the money. Personal consumption expenditures increased an expected 0.6% during March as spending grew faster than income for the second month in a row. During the last six months [...]

U.S. Personal Spending & Income Firm

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503b.jpg" style="width: 312px; height: 265px;">
U.S. consumers love to spend, even if they don't have the
money. Personal consumption expenditures increased
an expected 0.6% during March as spending grew faster than income for
the second month in a row. During the last six months spending
increases have been between 0.3% and 0.6% as consumers have dug into
their wallets to buy more costly gasoline. Though spending on gasoline
slipped during the last two months, it's up by one-third during the
last twelve. In constant dollars, spending on gasoline actually fell
1.3% y/y.
Leading the rise in March spending was a 9.2% increase (14.9%
y/y) in spending on motor vehicles. In real terms spending rose 8.9%.
Also strong was the 1.5% increase (4.9% y/y) in nominal apparel
spending which followed a similar February gain; both were led by
discount pricing. In real terms March spending rose 5.3% y/y. Also
strong was spending on home furnishings. The 1.1% gain followed an even
stronger February increase. A 4.4% y/y rise (8.9% in real terms)
follows the 6.2% decline during all of last year. Spending on services
continued firm at 2.9% y/y but that was bloated by a 4.6% y/y jump in
health care expenditures.
These spending gains outpaced personal income
which rose an expected 0.3% after a 0.1% February increase (3.0% y/y).
Help from lower taxes has now faded. March disposable income rose 0.3%
(3.4% y/y) after having been unchanged during the prior month. Higher
gasoline prices also cut into income growth such that the y/y gain in
real disposable income amounted to only 1.4%, barely improved from last
year's 0.9% increase. The combination of spending gains that outpaced
income growth lowered the personal savings rate to
2.7%, its lowest since late-2008. The rate still was up, however, from
the 1.0% low at the beginning of the last recession.
Moderate employment declines left wages &amp; salaries up
just 0.2% (1.1% y/y) after the 0.1% February uptick. Nevertheless the
modest y/y gain is improved from the sharp 4.0% decline last year.
Wages in the factory sector, however, were unchanged in March (-3.4%
y/y) but that still contrasted well to the 11.3% shortfall last year.
In the private service sector, wages increased 0.2% (2.3% y/y). Workers
in the government have seen better wage growth. A 0.2% March gain
pulled wages up 2.2% y/y though that was a deceleration from the 3.6%
rise last year.
Improvement in the housing market pulled proprietors' income
up 3.7% y/y, its strongest gain since late 2006. The stabilization of
interest rates left interest income up 1.1% y/y, its best since 2008.
Dividend income remained down 6.1% y/y but that compared favorably to
last year's 19.3% drop and the 10.3% 2007 decline. Finally,
unemployment insurance benefits rose 8.7% m/m though the one-third
increase versus last year was down from its doubling last year.
The PCE chain price index rose just 0.1%
with the 1.0% slip (+35.2% y/y) in gasoline prices. The core PCE price
deflator also rose just 0.1%, held back by a 0.6% decline (-0.4% y/y)
in apparel prices and a 0.1% slip (-4.1% y/y) in furniture prices
(-1.6% y/y). Services prices also ticked up just 0.1% (1.6% y/y) for
the second month. but health care prices rose 0.2% (2.5% y/y).
Offsetting some of this strength was an 11.0% y/y drop in personal
computer prices.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM" style="color: black;">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</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="odd">
<td class="firstcol">Personal Income</td>
<td>0.3</td>
<td>0.1</td>
<td>0.4</td>
<td>3.0</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.2</td>
<td>3.4</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.6</td>
<td>0.5</td>
<td>0.3</td>
<td>4.5</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.7</td>
<td>3.0</td>
<td>3.5</td>
<td>3.5 (Mar. '09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.0</td>
<td>0.2</td>
<td>2.0</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.1</td>
<td>0.0</td>
<td>0.0</td>
<td>1.3</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
Job Gains Help Lift ISM Factory
Sector Index 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 3, 2010 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503e.jpg" align="left" border="0" height="265" width="353">
Employment growth is helping to underpin the recovery in
factory sector activity. According to the Institute for Supply
Management, the level of activity grew last month at the fastest pace
since June of 2004. The April composite index rose to 60.4 and slightly
beat Consensus expectation for a rise to 60.0. It was up from the low
of 32.9 reached in December '08. (Any figure above the break-even point
of 50 suggests rising activity.) The ISM data is available in Haver's USECON
database.
The index for factory sector hiring activity posted its
strongest monthly gain since last November and, at 58.5, was at its
highest since June of 2004. The reading is up from the low of 25.9 last
February. Twenty-six percent of firms indicated a higher level of
payrolls versus 7% last April. Just 6% showed a lower level versus 35%
one year ago. During the last ten years there has been a 90%
correlation between the index level and the three-month change in
manufacturing payrolls.
Boding well for future hiring, it actually was the production
component which posted the strongest m/m increase during April with a
rise to 66.9. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures.
The new orders index also rose and, at 65.7, it showed
improvement similar to the hiring index. Fifty-two percent of
respondents reported higher orders versus 31% last April. Just 8%
reported order declines versus 29% last year. Finally, the export order
index slipped just slightly to 61.0 after its March surge to 61.5 which
was its highest since 1988. That was up from the low of 35.5 in
December '08. During the last ten years there has been a 53%
correlation between the index and the q/q change in real exports of
goods in the GDP accounts.
Offsetting these increases was a lower inventory component
which fell to 49.4 from 55.3 in March. Still, 20% of respondents
indicated that they were raising inventory levels versus 11% last April
while just 19% indicated lower inventories versus 42% one year ago.
Also down and despite improvement in orders and production, the pace of
supplier deliveries quickened. The supplier delivery index fell to 61.3
from its March high.
The separate index of prices paid rose to 78.0, a new high for
this recovery. That was up from the December '08 low of 18.0. Sixty
percent of respondents reported higher prices while only 4% indicated
lower prices. During the last twenty years there has been an 83%
correlation between the price index and the three-month change in the
PPI for intermediate goods.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503g.jpg" style="width: 312px; height: 265px;">
<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/@S2/@S201/@S201.HTM" style="color: black;">ISM Mfg</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">April '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>60.4</td>
<td>59.6</td>
<td>56.5</td>
<td>40.4</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.7</td>
<td>61.5</td>
<td>59.5</td>
<td>46.5</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>58.5</td>
<td>55.1</td>
<td>56.1</td>
<td>35.0</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>66.9</td>
<td>61.1</td>
<td>58.4</td>
<td>41.0</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.3</td>
<td>64.9</td>
<td>61.1</td>
<td>45.9</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>49.4</td>
<td>55.3</td>
<td>47.3</td>
<td>33.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>78.0</td>
<td>75.0</td>
<td>67.0</td>
<td>32.0</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
U.S. Construction Activity Remains
Near 2003 Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 3, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503i.jpg" style="width: 312px; height: 265px;">
Construction activity remains depressed. The negligible 0.2%
uptick in March after the 2.1% February collapse left it near the
lowest level since 2003. The latest rise barely beat Consensus
expectations for a 0.3% dip.
Total private construction activity continued lower in March,
led down by a 1.1% drop in residential building activity. The decline
reflected a 6.3% drop (-58.1% y/y) in multi-family building activity
and a 3.0% decline (+6.8% y/y) in improvements. Conversely,
single-family construction activity rose 1.6% (17.2% y/y). It has risen
consecutively m/m since last June.
Nonresidential building activity fell another 0.7% during
March and was off by one-quarter during the last twelve months.
Spending on lodging fell by nearly two-thirds during the last year
while office construction dropped 42%. Retail shopping centers also
have developed a hard downward trend (-39.8% y/y) in addition to school
construction (-12.6% y/y). Health care construction also has suffered
(-16.3% y/y).
In the public sector, building activity bucked the negative
trend and rose 2.3% in March. The gain was led by a 23.7% rise (-14.9%
y/y) in power-plant construction. Spending on health-care facilities
added to the gain with a 4.9% increase (0.0% y/y) while spending on
highways &amp; streets rose 1.5% (-1.4% y/y). Building in the
education sector fell 2.2% for the month and was down 16.9% y/y.
The construction put-in-place figures are available in Haver's
USECON database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503j.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
Put In Place (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">January</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>0.2</td>
<td>-2.1</td>
<td>-0.7</td>
<td>-12.3</td>
<td>-12.5</td>
<td>-6.9</td>
<td>-1.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Private</td>
<td>-0.9</td>
<td>-2.4</td>
<td>-0.1</td>
<td>-15.3</td>
<td>-18.8</td>
<td>-11.1</td>
<td>-5.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>-1.1</td>
<td>-3.4</td>
<td>3.8</td>
<td>1.2</td>
<td>-28.0</td>
<td>-29.1</td>
<td>-19.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.7</td>
<td>-1.5</td>
<td>-3.3</td>
<td>-25.5</td>
<td>-11.1</td>
<td>13.2</td>
<td>23.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>2.3</td>
<td>-1.6</td>
<td>-1.9</td>
<td>-6.3</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
</tr>
</tbody>
</table>
World Wide, Purchasing Managers In
Manufacturing Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> May 3, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503l.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
World wide, purchasing managers in the manufacturing industry
have become increasingly optimistic. The Markit Economic Survey
expresses the responses of the purchasing managers in the form of
diffusion indexes that are based on percent balances between those
expecting improvement and those expecting deterioration. Values of the
index above 50 represent expansion and those below, contraction.
Data for April, 2010 are currently being reported and most of
the data show indexes that are now above the 50 level. The first to
show expansion were the purchasing manages in the Far East. The first
chart shows the diffusion indexes for the purchasing managers of
Taiwan, Korea and India, three countries in the Far East for which
April data are available. In these countries the indexes began to rise
above 50 in early 2009. The second chart shows the indexes for Italy,
France and Germany. Purchasing manager in these countries only became
optimistic in late 2009. And in the troubled countries of the Euro Area
that have reported--Greece, Ireland and Spain--the purchasing managers
in Greece have yet to predict expansion while those in Ireland and
Spain have only begun to predict expansion in March and April of this
year, as can be seen in the third chart.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503m.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100503n.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;
&nbsp; PMI Diffusion
Indexes Manufacturing</th>
<th scope="col">April 10&nbsp;</th>
<th scope="col">Mar 10&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Italy</td>
<td>54.29</td>
<td>53.73</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; France</td>
<td>56.55</td>
<td>56.47</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
Germany</td>
<td>61.51</td>
<td>60.23</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Taiwan</td>
<td>60.72</td>
<td>62.74</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Korea</td>
<td>57.06</td>
<td>55.62</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; India</td>
<td>57.24</td>
<td>57.73</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Greece</td>
<td>43.64</td>
<td>42.94</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
Ireland</td>
<td>53.41</td>
<td>52.99</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Spain</td>
<td>53.31</td>
<td>51.85</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Personal Spending &Income Firm

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
European unemployment continues to rise in March and the
figure reported for 2010 in-Q1 in Spain reached 20%; We report monthly
data in the table above. Only Germany shows any hint of a turn to lower
rates of unemployment. Of course we know that the unemployment rate
lags the cycle, but we are now pretty well into this cycle and the
ongoing unemployment difficulties are beyond what has been cyclical
normalcy.
The chart at the top juxtaposes the EMU trend to the US trend
for employment. Two things stand out. One is that the US series is more
volatile than the European series with generally higher highs and lower
lows. The other is that the low in this recent recession was much worse
in the US than it was for Europe where the social safety net is much
cushier. Still the turn after the fall has been much sharper in the US
where Yr/Yr job losses are now occurring at a slower pace than they are
in Europe.
One price that Europe pays for more government intervention in
its economy is less economic vitality. The US economy is mending faster
from what was admittedly a harder fall. But the US appears to be on the
road to repair as jobs and GDP are showing sharper turnarounds even if
they are still struggling
In Europe unemployment is very slow to repair and unemployment
rates are generally still rising. Spain&#8217;s 20% rate of unemployment in
2010 Q1 is a huge burden to that economy. Also it socks a wicked punch
to the rate for all of EMU that will give even the
inflation-angst-ridden ECB pause on how it views inflation risks.
One of the biggest problems for the ECB is making policy in a
one currency zone that has multiple fiscal policies. The regional
unemployment rates in Europe have a different meaning than the regional
and state-level reports in the United States where the country,
currency and fiscal situation all are under one umbrella (except for
state and local budgets, of course).
The recent problems in Greece and credit down grades meted out
to Spain and to Portugal simply underline the sort minefield though
which the ECB must pick its way. Even the tough-minded Germans did a
sharp about face yesterday when the situation in Greece turned sharply
for the worse. True, Germany&#8217;s stance is complicated by its being in
the middle of elections. But such is the risk in such a community. With
such a disparate flock of counties; there are always going to be
elections somewhere in Europe. The game of musical chairs played in
economics and by financial markets does not agree to let the music keep
going just because one key country has an election. Contrarily, chances
are that such an event brings more attention to bear on a tough call
that is in the middle of deciding.
Having separate fiscal policies has just revealed what its
risks are. Germans are hot that Greeks &#8216;lied&#8217; bout their fiscal
position and did it for the second time. But I really don&#8217;t see any
reason for surprise. These countries want to have separate fiscal
polices and separate political relations. Still they do want to become
a single economic zone but not a country called &#8216;Europe.&#8217; Their
tendency to call themselves European breaks down into a laughable faced
of falsity when things go wrong. Then they return to being German, or
Dutch, or Greek, or whatever.
As to their relations, nations have always lied to one
another. It is known as diplomacy. Diplomats are among the best trained
in their respective countries and they are taught to meet you face to
face and to mis-represent their country&#8217;s views from time to time for
their own advantage speaking to you in your language and doing it with
eloquence. I don&#8217;t see why Germans are so upset that Greeks fudged
their fiscal position because to the Greeks it may have seemed &#8216;fair
game.&#8217; Clearly the Mass-Trick laws do not punish a county enough for
cheating yet its restrictions are burdensome enough to make nations
want to avoid them and cheat. Are the Mass-trick restrictions too
severe to be obeyed?
Europe must take a good hard look at itself and decide what
relations it wants to reserve for its member countries and which it
wants to assign to an amalgamated European zone ( it already has done
this is the treaty that was &#8216;approved across member countries. But it
may need to do some fine tuning on what the &#8216;state&#8217;s&#8217; rights and
responsibilities really are). We need to know in what sense EMU is
Europe and what sense is it not. And Europeans need to figure out when
they draw that line exactly what it means.
If they are going to continue to have the usual diplomatic
relations, and if they do not want those standards to percolate to
their economic relations, then they are in need of requiring an
independent AUDIT for each country just as there is such a requirement
for a bank. Because either you can believe the numbers or you can&#8217;t.
Europe needs to adopt one common set of budget accounting rules and to
stick to them, to monitor them (audit compliance to them) and to
enforce them. Then it may have a chance to succeed under its separate
country/budget model should it choose to stick with it.
Even if it does this it will find its economic results will
remain disparate because Europe is not uniform.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Unemployment rate and changes
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Rate</td>
<td style="font-weight: bold;" colspan="3">&nbsp;Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Feb-10</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EU-Urate</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>0.2</td>
<td>0.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EMU-Urate</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;Unemployment rate and changes</td>
<td style="font-weight: bold;" colspan="3">m/m%</td>
<td style="font-weight: bold;" colspan="3">Changes (ar)</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EU-U 000s</td>
<td>0.6%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>4.3%</td>
<td>15.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;EMU-U 000s</td>
<td>0.4%</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.4%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;
&nbsp;U-Rates</td>
<td style="font-weight: bold;" colspan="3">&nbsp;Level</td>
<td style="font-weight: bold;" colspan="3">Simple Changes</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Germany</td>
<td>7.5</td>
<td>7.5</td>
<td>7.5</td>
<td>0</td>
<td>-0.1</td>
<td>0.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;France</td>
<td>10.1</td>
<td>10</td>
<td>10</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Spain</td>
<td>19</td>
<td>18.9</td>
<td>18.9</td>
<td>0</td>
<td>0.3</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;USA</td>
<td>9.7</td>
<td>9.7</td>
<td>10</td>
<td>-0.3</td>
<td>0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp;Japan</td>
<td>4.9</td>
<td>4.9</td>
<td>5.2</td>
<td>-0.4</td>
<td>-0.5</td>
<td>0.5</td>
</tr>
</tbody>
</table>
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European unemployment continues to rise in March and the figure reported for 2010 in-Q1 in Spain reached 20%; We report monthly data in the table above. Only Germany shows any hint of a turn to lower rates of unemployment. Of course [...]

Euro Unemployment Bucks Image Of Recovering Region

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430a.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430b.jpg" style="width: 312px; height: 265px;">
A slower rate of inventory replenishment was warranted because
products weren't leaving the shelves quickly. As a result, real GDP
growth eased last quarter to 3.2% after the 5.6% jump during 4Q '09.
The latest roughly matched Consensus expectations for 3.4% growth.
Regardless, it was the third consecutive quarter of positive growth
after the recession when GDP fell 3.7% peak-to-trough, a postwar record.
The addition to growth from inventories fell to 1.6 percentage
points which was roughly half the 4Q add. Inventories also helped the
economy initially emerge from recession with a moderate 0.7
contribution to 3Q '09 GDP growth. Prior to these additions, inventory
liquidation had subtracted from GDP growth since 2005, a length of time
unprecedented in postwar history.
Growth in domestic final demand picked up last quarter to a
still-modest 2.2% after 1.4% 4Q growth. These rates compare to up to
9.0% in the early stages of earlier economic recoveries. Last quarter's
improvement was due to consumer spending growth of 3.6% after 1.6% 4Q
growth. Motor vehicle purchases fell for the second straight quarter
(+1.4% y/y) but spending on other consumer durables and clothing (2.1%
y/y) jumped. Spending on services also improved (1.1% y/y). Fixed
business investment growth remained moderate at 4.0% compared to
double-digit growth early in past recoveries. Equipment spending surged
13.4% (6.9% y/y) offset by a 14.0% decline (-17.0% y/y) in structures.
With an on again-off again pattern, residential investment fell 10.9%
after just two quarters of positive growth. Finally, government
spending fell at a 1.8% rate as budget cutbacks caused state &amp;
local spending to fall (-0.7% y/y) for the fifth time in the last six
quarters.
Deterioration in the foreign trade deficit subtracted 0.6
percentage points from last quarter's gain in GDP. It was the second
negative effect in the last three quarters. Growth in exports of 5.8%
(10.1% y/y) was much lower than during prior two quarters. In addition
import growth of 8.9% (6.9% y/y) was reduced from double-digit rates in
3Q &amp; 4Q '09.
Price inflation remained low at 0.9% as measured by the
chained GDP price index. The y/y gain of just 0.4% was the lowest since
the early-1950s. The personal consumption chain price index rose a
reduced 1.5% but year-to-year prices increased an improved 2.0%, the
quickest since 2008. The price index for fixed business investment fell
1.7% (-3.0% y/y), the fifth consecutive quarterly decline, but the
residential investment price index rose for the second consecutive
quarter (-1.0% y/y).

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100430d.jpg" style="width: 312px; height: 265px;">
<table>
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2005$, % AR</a></th>
<th scope="col">1Q '10</th>
<th scope="col">4Q '09&nbsp; </th>
<th scope="col">3Q '09</th>
<th scope="col">1Q Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.2</td>
<td>5.6</td>
<td>2.2</td>
<td>2.5</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Inventory Effect</td>
<td>1.6</td>
<td>3.8</td>
<td>0.7</td>
<td>1.1</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.4</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Foreign Trade Effect</td>
<td>-0.6</td>
<td>0.3</td>
<td>-0.8</td>
<td>0.2</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.2</td>
<td>1.4</td>
<td>2.3</td>
<td>1.2</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Personal Consumption</td>
<td>3.6</td>
<td>1.6</td>
<td>2.8</td>
<td>1.8</td>
<td>-0.6</td>
<td>-0.2</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Business Fixed Investment</td>
<td>4.0</td>
<td>5.3</td>
<td>-5.9</td>
<td>-1.7</td>
<td>-17.8</td>
<td>1.6</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Residential Investment</td>
<td>-10.9</td>
<td>3.7</td>
<td>18.9</td>
<td>4.2</td>
<td>-20.5</td>
<td>-22.9</td>
<td>-18.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Government Spending</td>
<td>-1.8</td>
<td>-1.3</td>
<td>2.7</td>
<td>2.5</td>
<td>1.8</td>
<td>3.1</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.9</td>
<td>0.5</td>
<td>0.4</td>
<td>0.4</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

A slower rate of inventory replenishment was warranted because products weren't leaving the shelves quickly. As a result, real GDP growth eased last quarter to 3.2% after the 5.6% jump during 4Q '09. The latest roughly matched [...]

U.S. GDP Growth Moderates As Lift From Inventories Fades

U.S. GDP Growth Moderates As LiftFrom Inventories Fades

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100429g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Money growth rates in Europe are starting to edge higher, but
ever so slowly. At a 2.2% annual rate pace over three months compared
to a 1.5% pace Yr/Yr is not much of an acceleration. Credit growth is
however weaker over three months than over 12-months. In the US money
growth is decelerating. In Japan it&#8217;s decelerating. In the UK, where
inflation has started to flash some less than comfortable numbers,
there is an issue. Money growth is in a major acceleration in the UK
for M4 which is up at nearly a 40% annual rate pace over three months.
While the growth rates are different, the main themes remain
in tact when we look at the growth rates of real money balances - money
growth deflated by inflation.
Basically money is not much of a stimulant anywhere except in
the UK.
Still we have great concerns among some economists that the
fiscal spending and coming monetary excesses (paradoxically, fiscal
issues already are taking what must be regarded as a deflationary toll
in Europe) will result in a bout of inflation. For the most part,
market pricing does not see that risk. Some of the hardest-money
economists still are very worried. Some worry that the economy will
recover and banks will begin to loan and this excess of reserves at the
Fed will be unleashed into something that can become a torrent of
inflation.
Then, others among us worry about getting hit by meteors from
outer space.
While a cyclical pick up in lending is something we do expect
in every business cycle, right now bankers are hunkered down. It is
very hard to see how they are going to turn the lending spigot from a
slow drip to full throttle in some quick fashion. Bank lending
committees are notoriously slow in shifting their policy stance. The US
economy and the European economies have a huge amount of slack.
Conservative hard-money economists also point out that a lot of
capacity was destroyed in the economic downturn. They warn that capital
may appear to be less utilized than it really is. While that is a good
point it is largely academic. The amount of slack in the economy is so
great it&#8217;s like warning that the other rim of the Grand Canyon might be
five feet closer than we thought so be careful about what might want to
&#8216;fit inside of it.&#8217;
There will come a time to worry about these things. But
unemployment in Europe is high. In the US 8.5 million people net were
taken off the job rolls. In addition, many first-time job seekers were
not able to find work. There is a great deal of slack. Money supply
growth is slow. Europe&#8217;s fiscal situation has deteriorated making it a
drag on the outlook despite some recent upbeat reports on growth. The
question of the role of the deterioration in confidence in the e-Zone
will play out over months not over hours. The US has its own fiscal
challenge which will make public policy more contractionary ahead. Why
all the worry about excess stimulus and inflation?
For the time being, despite high oil prices and some pressures
on commodity prices, we have to signal the &#8216;all clear&#8217; on the inflation
front. Not enough growth remains as the near term clear and present
danger. Inflation always lurks but it is, for the moment, unarmed and
not very dangerous. Inflation is more lost in the woods and confused
than it is dangerously lurking in some dark alley-way to mug an
unsuspecting policymaker.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> Look at Global and Euro Liquidity Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Saar-all</td>
<td colspan="3">Euro Measures (E13):
Money &amp; Credit</td>
<td colspan="3">G-10 Major Markets:
Money</td>
<td>Memo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&#8364;-Supply M2</td>
<td>Credit:Resid</td>
<td>Loans</td>
<td>$US M2</td>
<td>&#163;UK M4</td>
<td>&#165;Jpn M2+Cds</td>
<td>OIL:WTI</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3-MO</td>
<td>2.2%</td>
<td>-0.6%</td>
<td>0.8%</td>
<td>-1.5%</td>
<td>39.5%</td>
<td>1.8%</td>
<td>38.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 6-MO</td>
<td>0.9%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>19.5%</td>
<td>2.1%</td>
<td>35.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 12-MO</td>
<td>1.6%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>1.5%</td>
<td>10.6%</td>
<td>2.6%</td>
<td>70.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 2Yr</td>
<td>4.5%</td>
<td>2.5%</td>
<td>1.5%</td>
<td>5.3%</td>
<td>13.7%</td>
<td>2.4%</td>
<td>-12.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3Yr</td>
<td>6.4%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>5.9%</td>
<td>13.0%</td>
<td>2.4%</td>
<td>10.1%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Real Balances: deflated
by Own CPI. Oil deflated by US CPI</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3-MO</td>
<td>0.3%</td>
<td>-2.5%</td>
<td>-1.1%</td>
<td>-2.4%</td>
<td>32.8%</td>
<td>0.6%</td>
<td>37.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 6-MO</td>
<td>-1.4%</td>
<td>-2.9%</td>
<td>-2.1%</td>
<td>-0.3%</td>
<td>14.7%</td>
<td>1.9%</td>
<td>33.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 12-MO</td>
<td>0.2%</td>
<td>-1.6%</td>
<td>-1.9%</td>
<td>-0.9%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>66.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
&nbsp; 2Yr</td>
<td>3.4%</td>
<td>1.5%</td>
<td>0.5%</td>
<td>4.2%</td>
<td>10.2%</td>
<td>3.1%</td>
<td>-13.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp; 3Yr</td>
<td>4.5%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>3.9%</td>
<td>9.8%</td>
<td>2.4%</td>
<td>8.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Japan's March CPI is
estimated to complete this table; The February value is used</td>
</tr>
</tbody>
</table>
</body></html>

Money growth rates in Europe are starting to edge higher, but ever so slowly. At a 2.2% annual rate pace over three months compared to a 1.5% pace Yr/Yr is not much of an acceleration. Credit growth is however weaker over three months [...]

Globally Money Growth Is Just Not Getting Into Gear. So Where’s The Real Risk?

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

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**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

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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.

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- 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

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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.