Tom Moeller

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Earlier improvement in home prices continued to weaken during
February. Seasonally adjusted, the Case-Shiller Home Price Index
slipped 0.1% and continued its sideways pattern since September.
Nevertheless, the 0.7% increase versus last February compares to a
19.0% y/y rate of decline at its worst, roughly one year ago.
The narrower 10 City Composite Index rose a seasonally
adjusted 0.1% (1.5% y/y). Over the last year, prices rose 1.5% versus a
19.4% decline at its worst.
The performance of home prices continues to vary around the
country. During February, the 12-month gain in prices was strongest in
the West. Prices in Washington D.C. and Dallas rose moderately but
widespread declines were logged elsewhere.
The Case-Shiller home price series are value-weighted, i.e., a
greater index weight is assigned to more expensive homes. The
S&amp;P/Case-Shiller home price series can be found in Haver's USECON
database and the city data highlighted below is in the REGIONAL
database.
Achieving Fiscal Sustainability is the
title of this morning's speech by Fed Chairman Ben S. Bernanke and it
can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20100427a.htm">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" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (SA)</th>
<th scope="col">February m/m</th>
<th scope="col">January m/m</th>
<th scope="col">December m/m</th>
<th scope="col">Feb. 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">20 City Composite Index</td>
<td>-0.1</td>
<td>0.3</td>
<td>0.3</td>
<td>0.7</td>
<td>-13.3</td>
<td>-15.7</td>
<td>-3.8</td>
</tr>
<tr>
<td colspan="8"> Regional
Indicators</td>
</tr>
<tr class="odd">
<td class="firstcol">
Atlanta</td>
<td>-0.9</td>
<td>-0.5</td>
<td>0.0</td>
<td>-0.9</td>
<td>-11.6</td>
<td>-8.5</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">
Boston</td>
<td>-0.5</td>
<td>0.3</td>
<td>0.7</td>
<td>1.8</td>
<td>-4.9</td>
<td>-5.7</td>
<td>-4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">
Chicago</td>
<td>-1.0</td>
<td>-0.8</td>
<td>-0.7</td>
<td>-2.9</td>
<td>-14.2</td>
<td>-10.0</td>
<td>-1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">
Dallas</td>
<td>-1.4</td>
<td>-0.2</td>
<td>0.1</td>
<td>2.7</td>
<td>-2.3</td>
<td>-3.3</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">
Denver</td>
<td>-0.2</td>
<td>-0.1</td>
<td>-0.0</td>
<td>3.7</td>
<td>-2.8</td>
<td>-4.9</td>
<td>-1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">
Los Angeles</td>
<td>0.2</td>
<td>1.9</td>
<td>1.2</td>
<td>5.4</td>
<td>-15.4</td>
<td>-24.2</td>
<td>-5.2</td>
</tr>
<tr class="odd">
<td class="firstcol">
New York</td>
<td>-0.2</td>
<td>-0.2</td>
<td>-0.4</td>
<td>-4.1</td>
<td>-9.8</td>
<td>-7.4</td>
<td>-2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">
San Francisco</td>
<td>0.4</td>
<td>0.5</td>
<td>0.8</td>
<td>12.0</td>
<td>-18.4</td>
<td>-24.3</td>
<td>-4.5</td>
</tr>
</tbody>
</table>
U.S. Petroleum Prices Maintain
Their Higher Level 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 27, 2010


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April has been a firm month for energy prices and a gallon of regular
gasoline averaged its highest price since October 2008. Last
week, it remained near the prior week's high of $2.85 which was up by
77% since the December, 2008 low. Yesterday, the spot market price for
a gallon of regular gasoline held onto its level late last week. The
figures are reported by the U.S. Department of Energy and can be found
in Haver's WEEKLY &amp; DAILY databases.
Crude oil costs slipped last week but an upward trend has been
behind the rise in gasoline prices. The price for a barrel of light
sweet crude (WTI) again fell slightly last week to $83.04 but for the
month averaged $84.22 versus $81.01 during March. Prices remain up by
two-and-one half times the 2008 low.
A firming of demand has helped energy prices move higher.
Weekly gasoline usage was up 1.1% last week versus one year ago and
that compares with a 3.0% decline in early-February. The demand for
residual fuel oil jumped 10.5% but distillate demand fell 4.1% y/y.
Inventories of crude oil and petroleum products rose slightly last
month but were down slightly from one year ago. That contrasts with a
strong inventory accumulation into September of last year.
U.S. natural gas prices were steady last week at $4.00 per
mmbtu (+15.8% y/y). Prices reached a high of $6.50 early in January.
Nevertheless, prices remained nearly double the September low.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.

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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" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">04/26/10</th>
<th scope="col">04/19/10</th>
<th scope="col">04/12/10</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">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.85</td>
<td>2.86</td>
<td>2.86</td>
<td>39.0%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>83.04</td>
<td>84.60</td>
<td>85.97</td>
<td>73.6%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
U.S. Consumer Confidence Improves
Further 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> April 27, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100427i.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Improvement in consumers' mood continued this month according
to the Conference Board. Their consumer confidence index rose 10.7% m/m
to 57.9, its highest level since September 2008. The gain handily
outpaced the Consensus expectation for a rise to 53.5. During the last
ten years there has been an 86% correlation between the level of
consumer confidence and the y/y change in real consumer spending. The
Conference Board data can be found in Haver's CBDB
database.
Consumers' assessment of the present situation jumped 13.5%
m/m after a similar March rise, off a near-record low. Jobs were seen
as hard to get by a reduced 45.0% of respondents but jobs were seen as
plentiful by only 4.8%. That was up just slightly from the series'
historic low reached in November. Also improved was the percentage of
respondents who saw business conditions as good. The percentage of
consumers who thought business conditions were bad fell to 40.2%, off
ten points from its peak during the recession.
The expectations component of confidence also improved m/m to
its highest level just before the recession. Improved expectations for
employment led the gain but expectations for business conditions and
income rose just slightly. Expectations for the inflation rate in
twelve months slipped to 5.3% and that remained down from last year's
high of 7.7%. Interest rates in twelve months were expected to be
higher by an increased 56.3%, the highest since 2007. A much-reduced
12.2% expected rates to fall. An increased 35.0% of respondents
expected stock prices to rise. That was near the recent high.
A reduced 2.0% of those surveyed plan to buy a home during the
next six months. An improved 27.4% plan to buy a major appliance,
though 30.9% planned to buy one back in 2007. An improved 5.1% plan to
buy an automobile versus 6.0% in 2007 and a greater 2.3% plan to buy a
new one, just off the series' historic low.

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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" class="firstcol">Conference
Board&nbsp;(SA, 1985=100)</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="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>57.9</td>
<td>52.3</td>
<td>46.4</td>
<td>41.9</td>
<td>45.2</td>
<td>57.9</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>28.6</td>
<td>25.2</td>
<td>21.7</td>
<td>12.2</td>
<td>24.0</td>
<td>69.9</td>
<td>128.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>77.4</td>
<td>70.4</td>
<td>62.9</td>
<td>51.8</td>
<td>59.3</td>
<td>50.0</td>
<td>86.4</td>
</tr>
</tbody>
</table>
An Assortment Of Consumer
Confidence Indicators 
by <a href="/comment/Curley.html">Louise
Curley</a> April 27, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100427l.jpg" style="width: 353px; height: 265px;" align="right">France,
Germany, Italy and Switzerland released indicators of consumer
confidence today.&nbsp; The latest data for the Swiss indicator,
the UBS Consumption Indicator, are for March.&nbsp; Those for
Italy, ISAE's consumer survey, and France, INSEE's household survey,
are for April and those for Germany, GfK's consumer climate survey,
May.
After some loss of confidence at the end of last year and
early
this year, due largely to the rise in energy prices, consumer
confidence in Switzerland, Italy and Germany has recovered as can be
seen in the first chart.&nbsp; French consumers, however, have on
balance become more negative, as shown in the second chart.&nbsp;
It should be noted that since its inception in April, 1986, that the
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100427m.jpg" style="width: 353px; height: 265px;" align="right">only
time the non seasonally adjusted French measure of consumer
confidence has reported a positive balance of opinion was during the
period from July 1999 to May 2001, as seen in the second
chart.&nbsp; The average balance of opinion over the whole span is
-18.&nbsp;&nbsp;
 The measures of consumer confidence vary from
country to country.&nbsp; Balances of opinion in German and France,
an index with a base year of 1980 for Italy and a so-called index for
Switzerland.&nbsp; The Swiss indicator has no base year and is an
index in the sense that "it points to, identifies or highlights a
particular trend or condition" (Definition of index, no.3 in Chambers
21st Century Dictionary).&nbsp; One way to judge current values is
to relate them to the average of the data over its history, which is
shown in the last column of the following table.&nbsp; Consumer
confident in Germany at 3.8 in May is above its long term average of
3.3, as is Swiss consumer confidence, which in March was 1.708 compared
with its long term average of 1.501.&nbsp; In April, French
consumer confidence at -37 was well below its long term average of -18
while Italian consumer confidence of 107.7 was&nbsp; moderately
below its long term average of 112.7
(1980=100).&nbsp;&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">May 10&nbsp;</th>
<th scope="col">Apr 10&nbsp;</th>
<th scope="col">Mar 10</th>
<th scope="col">Feb 10</th>
<th scope="col">Jan 10</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Average*</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany: GFK
Consumer Climate % Bal</td>
<td>3.8</td>
<td>3.4</td>
<td>3.2</td>
<td>3.3</td>
<td>3.4</td>
<td>3.6</td>
<td>3.9</td>
<td>3.3</td>
</tr>
<tr class="odd">
<td class="firstcol">France: INSEE
Household Survey</td>
<td>&nbsp;--</td>
<td>-37</td>
<td>-35</td>
<td>-34</td>
<td>-29</td>
<td>-33</td>
<td>-32</td>
<td>-18</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy: ISAE
Consumer Survey1980=100</td>
<td>&nbsp;--</td>
<td>107.7</td>
<td>105.3</td>
<td>107.2</td>
<td>112.1</td>
<td>111.2</td>
<td>111.2</td>
<td>112.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Switzerland: UBS
Consumption Indicator</td>
<td>&nbsp;--</td>
<td>&nbsp;--</td>
<td>1.708</td>
<td>1.201</td>
<td>1.322</td>
<td>1.201</td>
<td>1.279</td>
<td>1.501</td>
</tr>
<tr>
<td class="firstcol" colspan="9">*Average
over the span
of available
data</td>
</tr>
</tbody>
</table>

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Earlier improvement in home prices continued to weaken during February. Seasonally adjusted, the Case-Shiller Home Price Index slipped 0.1% and continued its sideways pattern since September. Nevertheless, the 0.7% increase versus [...]

Case-Shiller Home PriceIndexContinues Sideways Movement

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100426a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Almost two weeks ago, the Department of Statistics in
Singapore released its flash estimate of first quarter year over the
year growth of the economy of the city state--13.1%. The year to year
growth in the manufacturing sector was estimated at 30.0%, as shown in
the first chart.
Today March data for industrial production and five industry
clusters--Electronics, Chemicals, Biomedicals, Precision Engineering
and Transport were released. We have aggregated the monthly data to
quarterly data for comparison with the GDP data. The year to year
increases in Industrial Production are very close to those for
Manufacturing in the GNP data, as can be seen in the table below.
The 30.0% year to year change in the quarterly GNP data for
manufacturing in the first quarter of 2010 was due to a 70.3% year to
year increase in the production of Electronics, a 37.2% increase in the
production of Biomedicals, a 32.0% increase in the production of
Precision Engineering products and a 17.3% increase in the production
of Chemicals. The production of Transport equipment actually declined
14.2% in the first quarter. The year to year percent changes in the
quarterly data for the production of Electronics, Chemicals, Precision
Engineering and Transport clusters are shown in the second chart. The
year to year changes in the production of Biomedicals is shown in a
separate, the third, chart. The pattern of production in all five has
been erratic but most notably in that of Biomedicals.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100426b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100426c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Singapore:
Year to Year % Change</th>
<th scope="col">Q1 10&nbsp;</th>
<th scope="col">Q4 09&nbsp;</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Gross Domestic
Product</td>
<td>13.1</td>
<td>4.0</td>
<td>0.6</td>
<td>-3.1</td>
<td>-9.4</td>
<td>-4.2</td>
<td>0.0</td>
<td>2.5</td>
<td>6.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Manufacturing</td>
<td>30.0</td>
<td>2.2</td>
<td>2.6</td>
<td>-0.4</td>
<td>-23.8</td>
<td>-10.7</td>
<td>-11.0</td>
<td>-5.6</td>
<td>12.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2007=100)y/y%</td>
<td>32.9</td>
<td>2.5</td>
<td>7.5</td>
<td>-0.6</td>
<td>-23.8</td>
<td>-10.7</td>
<td>-10.9</td>
<td>-5.6</td>
<td>12.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Electronics</td>
<td>70.3</td>
<td>28.0</td>
<td>-1.2</td>
<td>-19.4</td>
<td>-36.6</td>
<td>-23.2</td>
<td>-5.4</td>
<td>-0.9</td>
<td>3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Chemicals</td>
<td>17.3</td>
<td>12.9</td>
<td>-5.3</td>
<td>-16.5</td>
<td>-22.6</td>
<td>-16.9</td>
<td>-0.1</td>
<td>1.0</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Biomedicals</td>
<td>37.2</td>
<td>-24.2</td>
<td>64.3</td>
<td>64.9</td>
<td>-23.5</td>
<td>1.46</td>
<td>-35.8</td>
<td>-28.1</td>
<td>49.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Precision Engineering</td>
<td>32.0</td>
<td>5.5</td>
<td>-15.8</td>
<td>-22.0</td>
<td>-29.1</td>
<td>-15.5</td>
<td>-7.1</td>
<td>-2.7</td>
<td>-2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Transport</td>
<td>-14.2</td>
<td>-16.7</td>
<td>-8.6</td>
<td>-2.0</td>
<td>7.2</td>
<td>8.2</td>
<td>5.4</td>
<td>9.9</td>
<td>4.7</td>
</tr>
</tbody>
</table>
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Almost two weeks ago, the Department of Statistics in Singapore released its flash estimate of first quarter year over the year growth of the economy of the city state--13.1%. The year to year growth in the manufacturing sector was [...]

The Components Of The 30% Y/Y Growth In Singapore's Manufacturing Production In Q 1

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
It's not that an $8,000 home-buyer tax credit alone lifted
March new home sales, it's that it will no longer be offered by the
Federal government after next week.The result was that new
home sales jumped 26.9% from February to 411,000 (AR). March
sales were the highest level since last July but it followed four
consecutive months of decline. The latest greatly exceeded of Consensus
expectations for 325,000 sales.
Home prices dipped last month, but that followed a firm
February increase. The net-result was a 4.3% price increase versus last
March which was the cycle low. Nevertheless, prices remain down 18.5%
from the 2007 peak.Price discounts have been lowering the inventory of
unsold homes to its lowest level since 1991. At the current sales rate,
the months' supply of unsold homes dropped to 6.7 from its 2009 high of
12.4 months. However, despite all this improvement it still
took a record median 14.4 months to sell a new home as of March.
A rebound from severe winter weather probably helped sales in
the Northeast. They rose by more than one-third from February and were
double last year's level. That monthly increase failed, however, to
make up the February decline. Sales in South also showed a hefty 43.5%
rise m/m but were up just 18.5% from last March. Elsewhere, the
credit's positive effect seemed smaller. Sales in the West sales rose
5.7% but they were up by one-quarter from last year while sales in the
Mid-west rose just 4.3% after a 13.0% February decline.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423g.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">US
New Homes</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">Total Sales
(SAAR, 000s)</td>
<td>411</td>
<td>324</td>
<td>338</td>
<td>23.8%</td>
<td>372</td>
<td>481</td>
<td>769</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>38</td>
<td>28</td>
<td>41</td>
<td>100.0</td>
<td>31</td>
<td>35</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>49</td>
<td>47</td>
<td>54</td>
<td>11.4</td>
<td>54</td>
<td>69</td>
<td>118</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>231</td>
<td>161</td>
<td>168</td>
<td>18.5</td>
<td>201</td>
<td>264</td>
<td>409</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93</td>
<td>88</td>
<td>75</td>
<td>25.7</td>
<td>87</td>
<td>113</td>
<td>178</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>214,000</td>
<td>221,600</td>
<td>215,800</td>
<td>4.3</td>
<td>214,500</td>
<td>230,408</td>
<td>243,742</td>
</tr>
</tbody>
</table>
</body></html>

It's not that an $8,000 home-buyer tax credit alone lifted March new home sales, it's that it will no longer be offered by the Federal government after next week.The result was that new home sales jumped 26.9% from February to 411,000 [...]

U.S. New Home Sales Jump With Tax Credit, But It Still Took A Long Time To Close The Deal

Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
IFO surges: Germany&#8217;s
IFO indicators are rising very sharply in April. The biz climate index
lies 6.5% above its average; the Biz expectations index lies some 8.2%
above its average mark as well. Biz expectations a positioned in the
94.5th percentile of their range, an extremely high standing, while
current conditions are only at the 51.2 percentile&#8217; just above the
mid-point.
Sectors are
strong: Services, retailing, and MFG sectors all are
advancing with retailing making a strong move in the past month after
having languished badly. The MFG sector is driving higher at a
consistent and vibrant pace.
Report aligns
with strength elsewhere despite irregularities in e-Zone -
The IFO report reinforces the strong readings earlier by the Zew survey
of financial experts. It is a survey for April and is very up-to-date.
e-Zone orders though March were released today and were also quite
solid. The UK, however, reported a somewhat disappointing Q2 GDP gain.
Greece threw in the towel and asked for aid. Obviously the EU/EMU is a
melting pot of differing economic circumstances.
Strength seems
to dominate worries: For now the good news is that the
German economy is firing on all cylinders. The MFG sector continues to
be strong and the retailing sector has started to show some strong
gains at long last. The Markit indices on services and MFG were not
just up in April, but were up strongly. On the back of that strong
report from Markit we can conclude that the growth prospects for Europe
are looking up despite the irregularities and challenges it faces.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">IFO
Survey: Germany </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="5">Percent:
Yr/Yr</td>
<td style="font-weight: bold;" colspan="4">INDEX
NUMBERS</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Apr 
10</td>
<td>Mar 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>CURRENT</td>
<td>Mar 
10</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td>21.5%</td>
<td>19.6%</td>
<td>15.2%</td>
<td>15.5%</td>
<td>14.8%</td>
<td>101.6</td>
<td>98.2</td>
<td>106.5%</td>
<td>72.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current
Situation</td>
<td>19.4%</td>
<td>14.5%</td>
<td>6.5%</td>
<td>5.3%</td>
<td>2.1%</td>
<td>99.3</td>
<td>94.5</td>
<td>104.6%</td>
<td>51.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Biz
Expectations</td>
<td>23.8%</td>
<td>24.8%</td>
<td>24.4%</td>
<td>26.8%</td>
<td>28.9%</td>
<td>104.0</td>
<td>102.0</td>
<td>108.2%</td>
<td>94.5%</td>
</tr>
<tr class="odd">
<td colspan="10" class="firstcol">Average
&amp;
Range Since Jul-92</td>
</tr>
</tbody>
</table>
</body></html>

IFO surges: Germany’s IFO indicators are rising very sharply in April. The biz climate index lies 6.5% above its average; the Biz expectations index lies some 8.2% above its average mark as well. Biz expectations a positioned in the [...]

IFO Follows Zew Lead And Pops

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Durable goods orders figures can be volatile month-to-month,
thus discerning trends can be challenging. The latest figures present
that difficulty. March orders slid 1.3% after a revised 1.1% February
increase. Consensus expectations had been for a 0.2% uptick. These
numbers on the surface give the appearance of a stall in the factory
sector's improvement. However, volatility of big-ticket aircraft orders
accounts for much of the variation. They slid 42.2% m/m as nondefense
aircraft orders plunged by two-thirds (-10.1% y/y).
In addition, a 2.5% increase (5.3% y/y) in March motor vehicle
orders made up declines in the prior two months. Excluding the
transportation sector altogether, durable goods orders continued to
firm after the recent recession. A 2.8% rise last month (13.5% y/y) was
the fourth strong gain in five months and the 13.5% y/y surge was the
strongest since mid-2006. As a result, further strength in shipments
and production of manufactured durable goods is likely.
Improvement in other sectors of durable manufacturing
continued last month, and it was broad-based. Primary metals orders
increased 3.5% and they're up by one-half from last March. Machinery
orders rose 8.6% (22.3% y/y) for the fourth strong gain in five months
while electrical equipment orders jumped 4.9% (11.0% y/y). The
technology sector also improved. Orders for computers &amp; related
equipment jumped 3.4% (6.9% y/y).
Shipments of durable goods followed the gains in orders and
they posted a 1.2% increase (4.8% y/y) after two months of slight
decline. Shipments of primary metals led the gain with a 4.4% increase
(33.7% y/y) along with a 4.3% jump in machinery shipments (2.4% y/y). A
1.9% increase (0.2% y/y) in transportation sector shipments along with
a 1.1% rise (2.8% y/y) in electrical equipment. Shipments of computers
&amp; electronic products lagged and posted a 2.3% decline (+8.0%
y/y), the fourth in five months. Semiconductor shipments were notably
weak (10.7% y/y) for the second consecutive month.
A turn away from inventory decumulation is helping the factory
sector's improvement. Durable goods inventories rose 0.2% (-7.2% y/y)
for the third month of modest increase. Nevertheless, inventories
remained well below past levels. Since the December 2008 peak
inventories were down 11.1%. Finally, backlogs of durable goods orders
slipped 0.3% and remained down 5.2% y/y.
The durable goods figures are available in Haver's USECON
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423c.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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification
</a>(%)</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">Durable Goods Orders</td>
<td>-1.3</td>
<td>1.1</td>
<td>3.8</td>
<td>11.9</td>
<td>-19.8</td>
<td>-6.0</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">
Excluding Transportation</td>
<td>2.8</td>
<td>1.7</td>
<td>-0.8</td>
<td>13.5</td>
<td>-17.3</td>
<td>-1.4</td>
<td>-0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-7.5</td>
<td>6.1</td>
<td>3.9</td>
<td>12.7</td>
<td>-23.9</td>
<td>-7.0</td>
<td>3.6</td>
</tr>
<tr>
<td class="firstcol">Excluding Aircraft</td>
<td>4.0</td>
<td>2.1</td>
<td>-4.4</td>
<td>12.6</td>
<td>-18.2</td>
<td>-0.5</td>
<td>-2.7</td>
</tr>
</tbody>
</table>
</body></html>

Durable goods orders figures can be volatile month-to-month, thus discerning trends can be challenging. The latest figures present that difficulty. March orders slid 1.3% after a revised 1.1% February increase. Consensus expectations [...]

U.S. Durable Goods Orders Slump With Aircraft

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423a.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Durable goods orders figures can be volatile month-to-month,
thus discerning trends can be challenging. The latest figures present
that difficulty. March orders slid 1.3% after a revised 1.1% February
increase. Consensus expectations had been for a 0.2% uptick. These
numbers on the surface give the appearance of a stall in the factory
sector's improvement. However, volatility of big-ticket aircraft orders
accounts for much of the variation. They slid 42.2% m/m as nondefense
aircraft orders plunged by two-thirds (-10.1% y/y).
In addition, a 2.5% increase (5.3% y/y) in March motor vehicle
orders made up declines in the prior two months. Excluding the
transportation sector altogether, durable goods orders continued to
firm after the recent recession. A 2.8% rise last month (13.5% y/y) was
the fourth strong gain in five months and the 13.5% y/y surge was the
strongest since mid-2006. As a result, further strength in shipments
and production of manufactured durable goods is likely.
Improvement in other sectors of durable manufacturing
continued last month, and it was broad-based. Primary metals orders
increased 3.5% and they're up by one-half from last March. Machinery
orders rose 8.6% (22.3% y/y) for the fourth strong gain in five months
while electrical equipment orders jumped 4.9% (11.0% y/y). The
technology sector also improved. Orders for computers &amp; related
equipment jumped 3.4% (6.9% y/y).
Shipments of durable goods followed the gains in orders and
they posted a 1.2% increase (4.8% y/y) after two months of slight
decline. Shipments of primary metals led the gain with a 4.4% increase
(33.7% y/y) along with a 4.3% jump in machinery shipments (2.4% y/y). A
1.9% increase (0.2% y/y) in transportation sector shipments along with
a 1.1% rise (2.8% y/y) in electrical equipment. Shipments of computers
&amp; electronic products lagged and posted a 2.3% decline (+8.0%
y/y), the fourth in five months. Semiconductor shipments were notably
weak (10.7% y/y) for the second consecutive month.
A turn away from inventory decumulation is helping the factory
sector's improvement. Durable goods inventories rose 0.2% (-7.2% y/y)
for the third month of modest increase. Nevertheless, inventories
remained well below past levels. Since the December 2008 peak
inventories were down 11.1%. Finally, backlogs of durable goods orders
slipped 0.3% and remained down 5.2% y/y.
The durable goods figures are available in Haver's USECON
database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423c.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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification
</a>(%)</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">Durable Goods Orders</td>
<td>-1.3</td>
<td>1.1</td>
<td>3.8</td>
<td>11.9</td>
<td>-19.8</td>
<td>-6.0</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">
Excluding Transportation</td>
<td>2.8</td>
<td>1.7</td>
<td>-0.8</td>
<td>13.5</td>
<td>-17.3</td>
<td>-1.4</td>
<td>-0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-7.5</td>
<td>6.1</td>
<td>3.9</td>
<td>12.7</td>
<td>-23.9</td>
<td>-7.0</td>
<td>3.6</td>
</tr>
<tr>
<td class="firstcol">Excluding Aircraft</td>
<td>4.0</td>
<td>2.1</td>
<td>-4.4</td>
<td>12.6</td>
<td>-18.2</td>
<td>-0.5</td>
<td>-2.7</td>
</tr>
</tbody>
</table>
IFO Follows Zew Lead And Pops 
by <a href="/comment/Brusca.html">Robert
Brusca</a> April 23, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
IFO surges: Germany&#8217;s
IFO indicators are rising very sharply in April. The biz climate index
lies 6.5% above its average; the Biz expectations index lies some 8.2%
above its average mark as well. Biz expectations a positioned in the
94.5th percentile of their range, an extremely high standing, while
current conditions are only at the 51.2 percentile&#8217; just above the
mid-point.
Sectors are
strong: Services, retailing, and MFG sectors all are
advancing with retailing making a strong move in the past month after
having languished badly. The MFG sector is driving higher at a
consistent and vibrant pace.
Report aligns
with strength elsewhere despite irregularities in e-Zone -
The IFO report reinforces the strong readings earlier by the Zew survey
of financial experts. It is a survey for April and is very up-to-date.
e-Zone orders though March were released today and were also quite
solid. The UK, however, reported a somewhat disappointing Q2 GDP gain.
Greece threw in the towel and asked for aid. Obviously the EU/EMU is a
melting pot of differing economic circumstances.
Strength seems
to dominate worries: For now the good news is that the
German economy is firing on all cylinders. The MFG sector continues to
be strong and the retailing sector has started to show some strong
gains at long last. The Markit indices on services and MFG were not
just up in April, but were up strongly. On the back of that strong
report from Markit we can conclude that the growth prospects for Europe
are looking up despite the irregularities and challenges it faces.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">IFO
Survey: Germany </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="5">Percent:
Yr/Yr</td>
<td style="font-weight: bold;" colspan="4">INDEX
NUMBERS</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Apr 
10</td>
<td>Mar 
10</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>CURRENT</td>
<td>Mar 
10</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td>21.5%</td>
<td>19.6%</td>
<td>15.2%</td>
<td>15.5%</td>
<td>14.8%</td>
<td>101.6</td>
<td>98.2</td>
<td>106.5%</td>
<td>72.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current
Situation</td>
<td>19.4%</td>
<td>14.5%</td>
<td>6.5%</td>
<td>5.3%</td>
<td>2.1%</td>
<td>99.3</td>
<td>94.5</td>
<td>104.6%</td>
<td>51.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Biz
Expectations</td>
<td>23.8%</td>
<td>24.8%</td>
<td>24.4%</td>
<td>26.8%</td>
<td>28.9%</td>
<td>104.0</td>
<td>102.0</td>
<td>108.2%</td>
<td>94.5%</td>
</tr>
<tr class="odd">
<td colspan="10" class="firstcol">Average
&amp;
Range Since Jul-92</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Jump With Tax
Credit, But It Still Took A Long Time To Close The Deal 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 23, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
It's not that an $8,000 home-buyer tax credit alone lifted
March new home sales, it's that it will no longer be offered by the
Federal government after next week.The result was that new
home sales jumped 26.9% from February to 411,000 (AR). March
sales were the highest level since last July but it followed four
consecutive months of decline. The latest greatly exceeded of Consensus
expectations for 325,000 sales.
Home prices dipped last month, but that followed a firm
February increase. The net-result was a 4.3% price increase versus last
March which was the cycle low. Nevertheless, prices remain down 18.5%
from the 2007 peak.Price discounts have been lowering the inventory of
unsold homes to its lowest level since 1991. At the current sales rate,
the months' supply of unsold homes dropped to 6.7 from its 2009 high of
12.4 months. However, despite all this improvement it still
took a record median 14.4 months to sell a new home as of March.
A rebound from severe winter weather probably helped sales in
the Northeast. They rose by more than one-third from February and were
double last year's level. That monthly increase failed, however, to
make up the February decline. Sales in South also showed a hefty 43.5%
rise m/m but were up just 18.5% from last March. Elsewhere, the
credit's positive effect seemed smaller. Sales in the West sales rose
5.7% but they were up by one-quarter from last year while sales in the
Mid-west rose just 4.3% after a 13.0% February decline.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100423g.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">US
New Homes</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">Total Sales
(SAAR, 000s)</td>
<td>411</td>
<td>324</td>
<td>338</td>
<td>23.8%</td>
<td>372</td>
<td>481</td>
<td>769</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>38</td>
<td>28</td>
<td>41</td>
<td>100.0</td>
<td>31</td>
<td>35</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>49</td>
<td>47</td>
<td>54</td>
<td>11.4</td>
<td>54</td>
<td>69</td>
<td>118</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>231</td>
<td>161</td>
<td>168</td>
<td>18.5</td>
<td>201</td>
<td>264</td>
<td>409</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93</td>
<td>88</td>
<td>75</td>
<td>25.7</td>
<td>87</td>
<td>113</td>
<td>178</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>214,000</td>
<td>221,600</td>
<td>215,800</td>
<td>4.3</td>
<td>214,500</td>
<td>230,408</td>
<td>243,742</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders SlumpWith Aircraft

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100422j.jpg" style="width: 353px; height: 265px;" align="right">The
EMU PMIs
for MFG and Services each made strong gains in April. The gain in MFG
was strong and is the 22nd greatest gain out of 154, a top 13% gain.
The services index rise in April ranked 9th out of 141 observations
placing it in the top 6% of its range. April was a good month of
stepped up activity in the Euro-Area. The levels of the MFG and Service
indices place the MFG index in the 89th percentile of its range and the
services measure in the 70th percentile of its range. Both are strong
readings (top 11th percentile and top 30th percentiles, respectively).&nbsp;The services index is structurally higher than the MFG index. Its
average is 53.66 compared to 51.18 for MFG over the past 140 months
when both indices existed.&nbsp;The sharp rebound in the PMIs this month
is another step in the direction of believing in a rebound in the
Euro-Area region. To be sure other macro-data continue to run hot and
cold. The UK may have the most mercurial readings in Europe (it is an
EU member, not an EMU member). Greece&#8217;s fortunes also continue to blow
hot and cold. But the strong EMU PMIs are reassuring. The services
index is at its strongest Since August 2007. The MFG index is at its
strongest level since June of 2006. These are substantial benchmarks in
establishing the new relative strength of the ongoing expansion.
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col">FLASH
Readings </th>
</tr>
<tr>
<th colspan="3" scope="col">Markit
PMIs for the
Euro-Area</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr class="odd">
<td class="firstcol">Apr-10</td>
<td>57.55</td>
<td>55.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Mar-10</td>
<td>56.65</td>
<td>54.08</td>
</tr>
<tr class="odd">
<td class="firstcol">Feb-10</td>
<td>54.23</td>
<td>51.81</td>
</tr>
<tr class="odd">
<td class="firstcol">Jan-10</td>
<td>52.39</td>
<td>52.50</td>
</tr>
<tr class="even">
<td colspan="3" class="firstcol">Segment
Averages</td>
</tr>
<tr class="odd">
<td class="firstcol">3-Mo</td>
<td>54.42</td>
<td>53.71</td>
</tr>
<tr class="odd">
<td class="firstcol">6-Mo</td>
<td>52.80</td>
<td>53.39</td>
</tr>
<tr class="odd">
<td class="firstcol">12-Mo</td>
<td>48.39</td>
<td>50.63</td>
</tr>
<tr class="even">
<td colspan="3" class="firstcol">140-Mo
Range</td>
</tr>
<tr class="odd">
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr class="odd">
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr class="odd">
<td class="firstcol">% Range</td>
<td>89.2%</td>
<td>70.4%</td>
</tr>
<tr>
<td class="firstcol">Range</td>
<td>26.92</td>
<td>23.12</td>
</tr>
<tr>
<td class="firstcol">AVERAGE</td>
<td>51.18</td>
<td>53.66</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<thead><tr>
<a href="http://www.haver.com/COMMENT/archive.htm"> 
</a></tr>
</thead>
</table>

</body></html>

The EMU PMIs for MFG and Services each made strong gains in April. The gain in MFG was strong and is the 22nd greatest gain out of 154, a top 13% gain. The services index rise in April ranked 9th out of 141 observations placing it in [...]

EMU PMIs Make Strong April Gains

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.

260205C15.jpg

260205D15.jpg

- 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

260205B2.jpg

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.

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EMU PMIs Make Strong April Gains