Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Euro consumer is not helping to lead growth to the
Promised Land. Retail sales came up lame in February after rising by
just the thinnest margin of 0.1% in January. The growth rate for retail
sales is steady over 3-and 6-months at under 1.5% in nominal terms. The
lift from auto sales is going, going gone as purchase incentive plans
have ended and the bulge in vehicle registrations is unwinding fast.
Retail sales in Germany, the big EMU economy, are off for two months in
a row. There is no leadership there.</p>
<p>Greece&#8217;s problems continue to worsen and to hang over growth
prospects for the Zone. No one is sure just what will happen, but
speculation is rife and that makes things worse. The German hard line
on Greece that delivers election protection to Angelina Merkel can&#8217;t
make the Zone look like a very attractive place to be. The cry we heard
in the past, &#8217;we are all Europeans now,&#8217; rings hollow. They are all
Europeans until a crisis hits then they are German, French, Greek and
etc. For now Greek bonds are suffering their widest spreads to bunds
since EMU was formed; credit default protection is getting to be very
expensive for Greek paper. A few market pundits push for Greece to
default but for the most part that is a fringe faction. Most realize
the potential dangers from such an event and the risk of knock-on
effects from having Greece actually default. Just think of the US and
what happened when Lehman Brothers failed. It is often hard to predict
the fallout from such events; German banks already hold a lot of Greek
bonds on their balance sheets.</p>
<p>Meanwhile the Germans are being tough on Greece. One must
wonder if Greece at some point does not simply succumb to the pressure
and call the German bluff and let the forces of default begin to run
their course, forcing Germany to either to deal with the fallout of
default or to back Greece more solidly. In the meantime the Greek
tragedy plays out as one of Europe&#8217;s longest running sold-out
performances. Uncertainty about Greece continues to adversely impact
growth in the Zone.</p>
<p>The main bright news for Europe has come from the UK where
industrial output has risen strongly (compared to flat output in
Germany this month) and rising home prices. The Bank of England is
continuing to given the markets there assistance with securities
purchases. Still growth in the UK is less than stellar, that&#8217;s why the
BOE is still providing market support after all.</p>
<p>The US recovery is looking better&#8230; then bleaker. While the
data clearly have improved, the jobless claims report from the current
week has shot up to a five-week high making it clear that jobs growth
is mounting no head of steam in the wake of the March jobs report. It&#8217;s
time to go back to playing fantasy baseball, not fantasy recovery. The
Fed Chairman is making it clear that job growth is not significantly in
gear, dashing the value of any analysis that was arguing that the Fed
is on the brink of a rate hike after one lukewarm job report.</p>
<p>Clearly the global economy is still sputtering. While the US
expansion seems to be the strongest that is in train; it continues to
be unable to get the various jobs metrics on the right path together
with any speed. Consumers remain the key to the global recovery since
there are many nations with the ability to supply goods. Germany and
China and Japan are exporting again. The US is exporting, too. But
exports need consumers, and consumers are holding back, especially in
Europe. Investment demand is not enough by itself to drive the kind of
recovery that the world needs.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Euro-Area
Retail
Sales</b>
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">Saar</td>
</tr>
<tr class="grey2">
<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">Zone Total Value</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">Food,Bev Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle Reg</td>
<td>2.6%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>-5.0%</td>
<td>-1.0%</td>
<td>5.6%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">NonFood
Country detail:
Volume</td>
</tr>
<tr>
<td class="firstcol">Germany Value</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.8%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">UK(EU) Volume</td>
<td>2.1%</td>
<td>-3.0%</td>
<td>-0.2%</td>
<td>-4.5%</td>
<td>-0.7%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body></html>

The Euro consumer is not helping to lead growth to the Promised Land. Retail sales came up lame in February after rising by just the thinnest margin of 0.1% in January. The growth rate for retail sales is steady over 3-and 6-months at [...]

Euro-Consumer Remains Sluggish

Tom Moeller

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Earlier improvement in the labor market paused last week,
according to the Bureau of Labor Statistics. Initial claims for jobless
insurance rose 18,000 to 460,000, the highest level in five weeks. The
increase followed a 3,000 decline during the prior week which was half
that reported initially. Nevertheless, the latest level is down from
the recession peak of 651,000 reached in March of 2009. Last week's
level exceeded Consensus expectations for 435,000 new claims but the
four-week moving average of initial claims rose just slightly to
450,250.</p>
<p>Continuing claims for unemployment insurance during the latest
week fell to a new cycle low and are down by one-third since the
late-June peak. The overall decline is a function of the improved job
market but also reflects the exhaustion of 26 weeks of unemployment
benefits. Continuing claims provide an indication of workers' ability
to find employment. The four-week average of continuing claims also
fell to a cycle low of 4.648 mil. This series dates back to 1966.</p>
<p>Extended benefits for unemployment insurance rose by
more-than-one half w/w to 214,393. Nevertheless, they were down by
two-thirds from a peak of 597,688 reached in November.Each state
administers a separate unemployment insurance program within guidelines
established by Federal law. Benefit amounts and the length of time
benefits are received are determined by state law. For example, in
Michigan and New York, an additional 73 weeks of benefits are available
while in California an additional 79 weeks are available.</p>
<p>The insured unemployment rate slipped to 3.5% after five weeks
at 3.6%. The rate reached a high of 4.9% during May. During the last
ten years, there has been a 96% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.</p>
<p>The highest insured unemployment rates in the week ending
March 19 were in Alaska (7.1% percent), Oregon (6.0), Wisconsin (5.7),
Pennsylvania (5.4), Michigan (5.4), Nevada (5.3), North Carolina (5.0)
and Connecticut (5.0). The lowest insured unemployment rates were in
Virginia (2.0), Texas (2.3), Georgia (3.0), Florida (3.2), Wyoming
(3.4), Maryland (3.4), Ohio (3.5), New York (3.9) and Maine (4.2).
These data are not seasonally adjusted but the overall insured
unemployment rate is.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408f.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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>04/02/10</b></th>
<th scope="col"><b>03/26/10</b></th>
<th scope="col"><b>03/19/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>460</td>
<td>442</td>
<td>445</td>
<td>-28.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,550</td>
<td>4,681</td>
<td>-22.1%</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.5</td>
<td>3.6</td>
<td>4.6 (4/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

Earlier improvement in the labor market paused last week, according to the Bureau of Labor Statistics. Initial claims for jobless insurance rose 18,000 to 460,000, the highest level in five weeks. The increase followed a 3,000 decline [...]

U.S. Initial Unemployment Insurance Claims Increase

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408a.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left"></p>
<p>Consumer borrowing continued its retrenchment during February.
Consumer credit outstanding fell $11.5B, reversing a revised $10.6B
January increase which was much larger than reported last month. The
Federal Reserve reported late-Wednesday that the resultant 4.0% y/y
decline in credit outstanding remained near the record. During the last
ten years, there has been a 60% correlation between the y/y change in
credit outstanding and the change in personal consumption expenditures.</p>
<p>Usage of revolving credit was cut sharply. The $9.5B drop
followed a modest January increase and left usage down a near-record
9.1% y/y. Versus February 2009, finance companies lowered lending by
14.3%, commercial bank lending fell 12.7%, pools of securitized assets
fell 7.4%. Loans from credit unions offset some of these declines with
a 6.5% increase while savings institution raised lending 1.6%.</p>
<p>Increased usage of non-revolving credit (autos &amp; other
consumer durables), which accounts for nearly two-thirds of the total,
fell a moderate $2.0B following a sharp $9.1B January gain. The 1.1%
y/y decline is clearly modest relative to the cutback in revolving
credit and it has been stable at that rate since the middle of last
year. Federal government &amp; Sallie Mae lending expanded by
nearly three-quarters y/y during February. That increase offset a 14.5%
decline in pools of securitized assets, a 13.7% fall in savings
institutions, an 11.8% decline in finance companies, a 2.8% fall in
credit union lending and a 0.1% downtick in commercial bank lending.</p>
<p>These figures are the major input to the Fed's quarterly Flow
of Funds accounts for the household sector.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Consumer
Credit Outstanding (m/m Chg, SAAR)</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-11.5B</td>
<td>$10.6B</td>
<td>$-7.5B</td>
<td>-4.0%</td>
<td>-4.4%</td>
<td>1.5%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-9.5B</td>
<td>$1.5B</td>
<td>$-9.4B</td>
<td>-9.1%</td>
<td>-9.6%</td>
<td>1.6%</td>
<td>8.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-2.0B</td>
<td>$9.1B</td>
<td>$1.9B</td>
<td>-1.1%</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>4.4%</td>
</tr>
</tbody>
</table>
</body></html>

Consumer borrowing continued its retrenchment during February. Consumer credit outstanding fell $11.5B, reversing a revised $10.6B January increase which was much larger than reported last month. The Federal Reserve reported late- [...]

U.S. Consumer Credit Decline Reverses Earlier Gain

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408a.jpg" style="border: 0px solid ; width: 363px; height: 265px; float: left;" align="left"></p>
<p>Consumer borrowing continued its retrenchment during February.
Consumer credit outstanding fell $11.5B, reversing a revised $10.6B
January increase which was much larger than reported last month. The
Federal Reserve reported late-Wednesday that the resultant 4.0% y/y
decline in credit outstanding remained near the record. During the last
ten years, there has been a 60% correlation between the y/y change in
credit outstanding and the change in personal consumption expenditures.</p>
<p>Usage of revolving credit was cut sharply. The $9.5B drop
followed a modest January increase and left usage down a near-record
9.1% y/y. Versus February 2009, finance companies lowered lending by
14.3%, commercial bank lending fell 12.7%, pools of securitized assets
fell 7.4%. Loans from credit unions offset some of these declines with
a 6.5% increase while savings institution raised lending 1.6%.</p>
<p>Increased usage of non-revolving credit (autos &amp; other
consumer durables), which accounts for nearly two-thirds of the total,
fell a moderate $2.0B following a sharp $9.1B January gain. The 1.1%
y/y decline is clearly modest relative to the cutback in revolving
credit and it has been stable at that rate since the middle of last
year. Federal government &amp; Sallie Mae lending expanded by
nearly three-quarters y/y during February. That increase offset a 14.5%
decline in pools of securitized assets, a 13.7% fall in savings
institutions, an 11.8% decline in finance companies, a 2.8% fall in
credit union lending and a 0.1% downtick in commercial bank lending.</p>
<p>These figures are the major input to the Fed's quarterly Flow
of Funds accounts for the household sector.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Consumer
Credit Outstanding (m/m Chg, SAAR)</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-11.5B</td>
<td>$10.6B</td>
<td>$-7.5B</td>
<td>-4.0%</td>
<td>-4.4%</td>
<td>1.5%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-9.5B</td>
<td>$1.5B</td>
<td>$-9.4B</td>
<td>-9.1%</td>
<td>-9.6%</td>
<td>1.6%</td>
<td>8.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-2.0B</td>
<td>$9.1B</td>
<td>$1.9B</td>
<td>-1.1%</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>4.4%</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Initial Unemployment
Insurance Claims Increase </span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> April 8, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Earlier improvement in the labor market paused last week,
according to the Bureau of Labor Statistics. Initial claims for jobless
insurance rose 18,000 to 460,000, the highest level in five weeks. The
increase followed a 3,000 decline during the prior week which was half
that reported initially. Nevertheless, the latest level is down from
the recession peak of 651,000 reached in March of 2009. Last week's
level exceeded Consensus expectations for 435,000 new claims but the
four-week moving average of initial claims rose just slightly to
450,250.</p>
<p>Continuing claims for unemployment insurance during the latest
week fell to a new cycle low and are down by one-third since the
late-June peak. The overall decline is a function of the improved job
market but also reflects the exhaustion of 26 weeks of unemployment
benefits. Continuing claims provide an indication of workers' ability
to find employment. The four-week average of continuing claims also
fell to a cycle low of 4.648 mil. This series dates back to 1966.</p>
<p>Extended benefits for unemployment insurance rose by
more-than-one half w/w to 214,393. Nevertheless, they were down by
two-thirds from a peak of 597,688 reached in November.Each state
administers a separate unemployment insurance program within guidelines
established by Federal law. Benefit amounts and the length of time
benefits are received are determined by state law. For example, in
Michigan and New York, an additional 73 weeks of benefits are available
while in California an additional 79 weeks are available.</p>
<p>The insured unemployment rate slipped to 3.5% after five weeks
at 3.6%. The rate reached a high of 4.9% during May. During the last
ten years, there has been a 96% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.</p>
<p>The highest insured unemployment rates in the week ending
March 19 were in Alaska (7.1% percent), Oregon (6.0), Wisconsin (5.7),
Pennsylvania (5.4), Michigan (5.4), Nevada (5.3), North Carolina (5.0)
and Connecticut (5.0). The lowest insured unemployment rates were in
Virginia (2.0), Texas (2.3), Georgia (3.0), Florida (3.2), Wyoming
(3.4), Maryland (3.4), Ohio (3.5), New York (3.9) and Maine (4.2).
These data are not seasonally adjusted but the overall insured
unemployment rate is.</p>
<p>The unemployment insurance claims data is available in Haver's
<b>WEEKLY</b> database and the state data is in the <b>REGIONW</b>
database.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408f.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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></b></th>
<th scope="col"><b>04/02/10</b></th>
<th scope="col"><b>03/26/10</b></th>
<th scope="col"><b>03/19/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>460</td>
<td>442</td>
<td>445</td>
<td>-28.5%</td>
<td>572</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,550</td>
<td>4,681</td>
<td>-22.1%</td>
<td>5,809</td>
<td>3,340</td>
<td>2,549</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.5</td>
<td>3.6</td>
<td>4.6 (4/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
<span id="articletitle">Euro-Consumer Remains Sluggish</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> April 8, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100408g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Euro consumer is not helping to lead growth to the
Promised Land. Retail sales came up lame in February after rising by
just the thinnest margin of 0.1% in January. The growth rate for retail
sales is steady over 3-and 6-months at under 1.5% in nominal terms. The
lift from auto sales is going, going gone as purchase incentive plans
have ended and the bulge in vehicle registrations is unwinding fast.
Retail sales in Germany, the big EMU economy, are off for two months in
a row. There is no leadership there.</p>
<p>Greece&#8217;s problems continue to worsen and to hang over growth
prospects for the Zone. No one is sure just what will happen, but
speculation is rife and that makes things worse. The German hard line
on Greece that delivers election protection to Angelina Merkel can&#8217;t
make the Zone look like a very attractive place to be. The cry we heard
in the past, &#8217;we are all Europeans now,&#8217; rings hollow. They are all
Europeans until a crisis hits then they are German, French, Greek and
etc. For now Greek bonds are suffering their widest spreads to bunds
since EMU was formed; credit default protection is getting to be very
expensive for Greek paper. A few market pundits push for Greece to
default but for the most part that is a fringe faction. Most realize
the potential dangers from such an event and the risk of knock-on
effects from having Greece actually default. Just think of the US and
what happened when Lehman Brothers failed. It is often hard to predict
the fallout from such events; German banks already hold a lot of Greek
bonds on their balance sheets.</p>
<p>Meanwhile the Germans are being tough on Greece. One must
wonder if Greece at some point does not simply succumb to the pressure
and call the German bluff and let the forces of default begin to run
their course, forcing Germany to either to deal with the fallout of
default or to back Greece more solidly. In the meantime the Greek
tragedy plays out as one of Europe&#8217;s longest running sold-out
performances. Uncertainty about Greece continues to adversely impact
growth in the Zone.</p>
<p>The main bright news for Europe has come from the UK where
industrial output has risen strongly (compared to flat output in
Germany this month) and rising home prices. The Bank of England is
continuing to given the markets there assistance with securities
purchases. Still growth in the UK is less than stellar, that&#8217;s why the
BOE is still providing market support after all.</p>
<p>The US recovery is looking better&#8230; then bleaker. While the
data clearly have improved, the jobless claims report from the current
week has shot up to a five-week high making it clear that jobs growth
is mounting no head of steam in the wake of the March jobs report. It&#8217;s
time to go back to playing fantasy baseball, not fantasy recovery. The
Fed Chairman is making it clear that job growth is not significantly in
gear, dashing the value of any analysis that was arguing that the Fed
is on the brink of a rate hike after one lukewarm job report.</p>
<p>Clearly the global economy is still sputtering. While the US
expansion seems to be the strongest that is in train; it continues to
be unable to get the various jobs metrics on the right path together
with any speed. Consumers remain the key to the global recovery since
there are many nations with the ability to supply goods. Germany and
China and Japan are exporting again. The US is exporting, too. But
exports need consumers, and consumers are holding back, especially in
Europe. Investment demand is not enough by itself to drive the kind of
recovery that the world needs.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"><b>Euro-Area
Retail
Sales</b>
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">Saar</td>
</tr>
<tr class="grey2">
<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">Zone Total Value</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">Food,Bev Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle Reg</td>
<td>2.6%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>-5.0%</td>
<td>-1.0%</td>
<td>5.6%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">NonFood
Country detail:
Volume</td>
</tr>
<tr>
<td class="firstcol">Germany Value</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.8%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">UK(EU) Volume</td>
<td>2.1%</td>
<td>-3.0%</td>
<td>-0.2%</td>
<td>-4.5%</td>
<td>-0.7%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Consumer Credit DeclineReverses Earlier Gain

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<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100407e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The Bureau of Labor Statistics reported yesterday that the
rate of improvement in job market conditions eased in February. The
latest Job Openings &amp; Labor Turnover Survey (JOLTS) indicated
that the <b>job openings rate </b>slipped to 2.1% from an
upwardly revised 2.2% in January. Nevertheless the rate was near the
highest in roughly one year. <i>The job openings rate is the
number of job openings on the last business day of the month as a
percent of total employment plus job openings. </i>Job
availability fell 4.6% and retraced nearly half of its upwardly revised
January increase. It remained off 3.8% year-to-year. Last year job
availability fell 17.8% following a 29.7% decline during 2008. The
series dates back to December 2000.</p>
<p>The government sector led the latest decline in the job
openings rate. It fell to the lowest level since November after several
months of improvement. A slip in the private sector rate reflected
fewer professional, education &amp; health services jobs but
factory and retail jobs grew strongly.</p>
<p>The <b>hires rate</b> has been stable near 3.1%
since the end of 2008.<i>The hires rate is the number of hires
during the month divided by employment.</i>The actual number of
hires reversed all of the January increase (-3.3% y/y) but the rate of
decline has moderated substantially since the recession.</p>
<p>The <b>job separations rate </b>eased to a new
series' low of 3.1% with the actual number of separations off 18.7%
year-to-year. The layoff rate alone fell to a nineteen-month low of
1.4%. <i>Separations include quits, layoffs, discharges, and
other separations as well as retirements. </i>The layoff rate
alone fell to 1.4% from 2.0% twelve months earlier.</p>
<p>The JOLTS survey dates only to December 2000 but has followed
the movement in nonfarm payrolls, though the actual correlation between
the two series is low.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100407f.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100407g.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"><b><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS (Job Openings &amp; Labor
&nbsp;Turnover Survey)</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Feb. '09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8" class="firstcol"><b>Job
Openings, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.1</td>
<td>2.2</td>
<td>1.9</td>
<td>2.1</td>
<td>1.9</td>
<td>2.2</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,723</td>
<td>2,854</td>
<td>2,531</td>
<td>2,830</td>
<td>2,531</td>
<td>3,078</td>
<td>4,378</td>
</tr>
<tr class="odd">
<td colspan="8"><b>Hires, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.1</td>
<td>3.2</td>
<td>3.1</td>
<td>3.1</td>
<td>37.3</td>
<td>41.1</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,961</td>
<td>4,087</td>
<td>3,997</td>
<td>4,095</td>
<td>48,649</td>
<td>56,082</td>
<td>63,234</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol"><b>Layoffs
&amp;
Discharges, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.4</td>
<td>1.5</td>
<td>1.6</td>
<td>2.0</td>
<td>20.7</td>
<td>17.7</td>
<td>16.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>1,822</td>
<td>1,953</td>
<td>2,049</td>
<td>2,593</td>
<td>27,683</td>
<td>24,589</td>
<td>22,606</td>
</tr>
</tbody>
</table>
</body></html>

The Bureau of Labor Statistics reported yesterday that the rate of improvement in job market conditions eased in February. The latest Job Openings & Labor Turnover Survey (JOLTS) indicated that the job openings rate slipped to 2.1% [...]

JOLTS: U.S. Job Openings Slip

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100407d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>German orders were flat in February as they held the 5.1% m/m
gain from the month before. Foreign orders built on a 3.7% gain in
January by rising an additional 1.8% m/m as domestic orders gave back
1.9 percentage points of their 6.7 percentage point spurt in January.
Over three months foreign orders are rising at an 11.8% pace while
domestic orders are right behind at a 9.7% pace. Overall orders are up
by 24.5% Yr/Yr, they are lower over six months, but are back strong on
the three-month horizon.</p>
<p>In the quarter to date German orders are showing a strong lift
rising at a 24.1% annual rate, with nearly identical foreign and
domestic order rates of growth. Sales of consumer durables and capital
goods are advancing the fastest in Germany in the quarter.</p>
<p>The orders news in Germany for February is good buffer to the
revised Q4 e-Zone GDP growth rate which has been cut to show zero
growth. But, looking ahead, the OECD now expects G-7 growth to slow
although growth in the US is expected to lead the pack. Europe is
having a hard time getting growth lined up. Its broader social safety
net put a quicker bottom on the decline in GDP in the Zone during the
downturn, but the enlarged public sector deficits and fiscal problems
throughout the e-Zone put any further fiscal help off limits. Europe&#8217;s
more stifled job market means that private sector jobs will not
comeback quickly leaving its hope for stronger growth in the hands of
the export sector.</p>
<p>German orders data are encouraging from that standpoint.
Germany seems to making its export-led progress and the domestic sector
appears to be in tow. The Service sector is coming along in Europe as
well. That is important because that will be the sector of job creation
that will sustain recovery.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> <b>German
Orders and Sales By Sector and Origin</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Real and SA</td>
<td style="font-weight: bold;" colspan="3">% M/M</td>
<td style="font-weight: bold;" colspan="4">% Saar</td>
<td style="font-weight: bold;">&nbsp;QTR <br>
to Date</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">3-MO</td>
<td style="font-weight: bold;">6-Mo</td>
<td style="font-weight: bold;">12-Mo</td>
<td style="font-weight: bold;">YrAgo</td>
<td style="font-weight: bold;"></td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>0.0%</td>
<td>5.1%</td>
<td>-2.4%</td>
<td>10.5%</td>
<td style="color: red;">5.1%</td>
<td>24.5%</td>
<td style="color: red;">-36.2%</td>
<td>24.1%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>1.8%</td>
<td>3.7%</td>
<td>-2.5%</td>
<td>11.8%</td>
<td style="color: red;">5.7%</td>
<td>30.1%</td>
<td style="color: red;">-40.7%</td>
<td>23.5%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-1.9%</td>
<td>6.7%</td>
<td>-2.1%</td>
<td>9.7%</td>
<td style="color: red;">4.8%</td>
<td>18.7%</td>
<td style="color: red;">-30.6%</td>
<td>24.9%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="9" class="firstcol">Real
Sector Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>-1.1%</td>
<td>0.4%</td>
<td style="color: red;">0.2%</td>
<td>8.2%</td>
<td style="color: red;">-24.1%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>-2.0%</td>
<td>-4.0%</td>
<td>2.2%</td>
<td style="color: red;">-14.6%</td>
<td style="color: red;">-7.6%</td>
<td>-1.5%</td>
<td>-11.7%</td>
<td>-12.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Durables</td>
<td>-2.5%</td>
<td>4.1%</td>
<td>-2.1%</td>
<td style="color: red;">-2.6%</td>
<td style="color: red;">-1.3%</td>
<td>5.3%</td>
<td style="color: red;">-22.2%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Non-Durable</td>
<td>-2.0%</td>
<td>-5.0%</td>
<td>2.8%</td>
<td style="color: red;">-16.3%</td>
<td style="color: red;">-8.5%</td>
<td>-2.4%</td>
<td>-9.8%</td>
<td>-15.6%</td>
</tr>
<tr>
<td class="firstcol">Captial Gds</td>
<td>1.0%</td>
<td>2.6%</td>
<td>-1.3%</td>
<td>9.4%</td>
<td style="color: red;">4.6%</td>
<td>10.9%</td>
<td style="color: red;">-29.9%</td>
<td>11.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-2.8%</td>
<td style="color: red;">-1.2%</td>
<td style="color: red;">-0.6%</td>
<td>12.3%</td>
<td style="color: red;">-24.3%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">All MFG-Sales</td>
<td>0.0%</td>
<td>1.2%</td>
<td>-1.1%</td>
<td>0.4%</td>
<td style="color: red;">0.2%</td>
<td>8.4%</td>
<td style="color: red;">-24.3%</td>
<td>2.6%</td>
</tr>
</tbody>
</table>
</body></html>

German orders were flat in February as they held the 5.1% m/m gain from the month before. Foreign orders built on a 3.7% gain in January by rising an additional 1.8% m/m as domestic orders gave back 1.9 percentage points of their 6.7 [...]

German Orders Hold Gains

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100405g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>So far only the UK is showing a sharp shift in its rate of
money growth. But the e-Zone is showing a small money growth revival.
US money growth has been dropping very rapidly but is showing a hint of
stability- still its sequential rates of growth continue to ramp down.
Japan&#8217;s money growth that has so very steady has taken a step lower.
But Japan&#8217;s Tankan report suggests that the economy there is getting
better and that the downturn in money growth may not be signaling a new
round of weakness. In truth central banks have not taken their cues
from money growth for some time. Is that about to change?</p>
<p>EMU, the US and the UK have seen the biggest winding down in
money growth rates from their cycle peaks. The UK has seen that
wind-down give way to a bounce. The US shows a hint of some
stabilization in money growth but real balances are contacting over the
most recent three-months. EMU shows only a slowing in the pace of money
supply deceleration in its Yr/Yr trends but real balances over
three-months have posted positive growth. . In the Zone Credit to
residents and loans continue to contract in real terms but they are
slowing their pace of contraction, too.</p>
<p>Money growth rates seem to be showing signs - or at least
hints -of stabilization. In the US the jobs figures for March hint that
the period of job contraction may have some to a close. In Japan the
tankan report was better than expected. EMU and the UK continue to blow
and hot and cold reports back and forth. Europe still seems to be
having a tough time posting consistent growth numbers. EMU, in
particular is dealing with PR issues and the reality of very divergent
circumstances across member countries, challenging the ECB. The UK
continues to get battered with some seasonably extreme weather but also
to continue to issue a very uneven stream of economic reports.</p>
<p>In the wake of the US jobs report the entire global picture is
looking better. Commodity prices tell a story of new confidence in
growth prospects. Money supply trends do not wave any cautionary flags
about building inflation, however. The UK has persistently high money
growth and is also experiencing an inflation overshoot. The Bank of
England has said it will let it run its course since it views the
overshoot as being not problematical. In the US, with job growth coming
on stream, &#8216;inflationists&#8217; are sounding warning signals. In Europe
recent German inflation reports have been boosted by rising oil prices,
this will make the ECB wary regardless of other zone issues. Bond
yields are moving up.</p>
<p>It is true that there is a shifting of trends and of risks but
it is really even more subtle than what it seems. There remains a great
deal of slack in the global economy. In the US alone the recession
displaced eight and one-half million people (net!). Putting 162,000
back to work in one month can&#8217;t ramp up much of an inflation risk can
it? I suspect that fears of inflation are overdone and commodity prices
which are reacting to something else (call it perceived scarcity) are
acting as a misaligned lighting rod for inflation fears.</p>
<p>We do think this cycle is entering a different, better, growth
phase globally, but we do not think inflation is much of a threat. We
think this confusion will however drive prices and bond yields quite
possibly too far ahead whatever risks may emerge.</p>
<a href="http://www.haver.com/COMMENT/archive.htm">
</a>
<p></p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"><b>Look at
Global and Euro Liquidity Trends</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Saar-all</td>
<td style="font-weight: bold;" colspan="3">Euro Measures (E13):
Money &amp; Credit</td>
<td style="font-weight: bold;" colspan="3">G-10 Major Markets:
Money</td>
<td style="font-weight: bold;">Memo</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">&#8364;-Supply M2</td>
<td style="font-weight: bold;">Credit:Resid</td>
<td style="font-weight: bold;">Loans</td>
<td style="font-weight: bold;">$US M2</td>
<td style="font-weight: bold;">&#163;UK M4</td>
<td style="font-weight: bold;">&#165;Jpn M2+Cds</td>
<td style="font-weight: bold;">OIL:WTI</td>
</tr>
<tr class="odd">
<td class="firstcol">3-MO</td>
<td>3.1%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>0.4%</td>
<td>33.8%</td>
<td>1.6%</td>
<td style="color: red;">-10.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">6-MO</td>
<td>0.6%</td>
<td style="color: red;">-0.2%</td>
<td style="color: red;">-0.1%</td>
<td>2.5%</td>
<td>21.1%</td>
<td>2.4%</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">12-MO</td>
<td>1.4%</td>
<td style="color: red;">-0.2%</td>
<td style="color: red;">-0.8%</td>
<td>2.1%</td>
<td>11.0%</td>
<td>2.7%</td>
<td>94.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">2Yr</td>
<td>4.7%</td>
<td>3.0%</td>
<td>1.9%</td>
<td>5.7%</td>
<td>14.3%</td>
<td>2.4%</td>
<td style="color: red;">-10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">3Yr</td>
<td>6.9%</td>
<td>6.4%</td>
<td>4.9%</td>
<td>6.1%</td>
<td>13.4%</td>
<td>2.4%</td>
<td>8.8%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="8" class="firstcol">Real Balances: deflated
by Own CPI. Oil deflated by US CPI</td>
</tr>
<tr class="odd">
<td class="firstcol">3-MO</td>
<td>1.9%</td>
<td style="color: red;">-1.2%</td>
<td style="color: red;">-0.5%</td>
<td style="color: red;">-0.9%</td>
<td>27.3%</td>
<td>0.8%</td>
<td style="color: red;">-11.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">6-MO</td>
<td style="color: red;">-0.8%</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-1.5%</td>
<td>0.6%</td>
<td>16.4%</td>
<td>2.4%</td>
<td>12.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">12-MO</td>
<td>0.5%</td>
<td style="color: red;">-1.1%</td>
<td style="color: red;">-1.7%</td>
<td style="color: red;">-0.1%</td>
<td>7.7%</td>
<td>3.9%</td>
<td>90.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">2Yr</td>
<td>3.6%</td>
<td>2.0%</td>
<td>0.9%</td>
<td>4.5%</td>
<td>10.9%</td>
<td>3.0%</td>
<td style="color: red;">-11.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">3Yr</td>
<td>5.0%</td>
<td>4.6%</td>
<td>3.1%</td>
<td>3.9%</td>
<td>10.3%</td>
<td>2.4%</td>
<td>6.5%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">All figures
are through February</td>
</tr>
</tbody>
</table>
</body></html>

So far only the UK is showing a sharp shift in its rate of money growth. But the e-Zone is showing a small money growth revival. US money growth has been dropping very rapidly but is showing a hint of stability- still its sequential [...]

Money Supply Growth Begins To Shift – Is That All?

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<br>

<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100405d.jpg" align="left" border="0" height="265" width="353"></p>
<p>It appears that snow-storms in February didn't dampen home
sales as much as during the prior month. The National Association of
Realtors (NAR) reported that pending sales of existing single-family
homes recovered virtually all of the January decline with an 8.2%
increase. The recovery left home sales up nearly one-quarter from the
low in January of last year. The latest gain compares with Consensus
expectations for a slight m/m decline.</p>
<p>The m/m performance of home sales varied across the country. A
large increase in the Midwest was accompanied by smaller increases in
the Northeast and in the South while sales fell in the West.</p>
<p>These home sales figures are analogous to the new home sales
data from the Commerce Department in that they measure existing home
sales when the sales contract is signed, not at the time the sale is
closed. The series dates back to 2001 and the data is available in
Haver's <b>PREALTOR </b>database.</p>
<p><b>How Much Is That Home Really Worth? Appraisal Bias
and House-Price Uncertainty </b>from the Federal Reserve Bank of
Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2010/q1/brq110_home-worth-appraisal-bias.pdf">here</a>.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100405e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100405f.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"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>97.6</td>
<td>90.2</td>
<td>97.8</td>
<td>&nbsp;&nbsp;17.3%</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>77.7</td>
<td>71.3</td>
<td>78.1</td>
<td>18.8</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>97.9</td>
<td>80.4</td>
<td>89.2</td>
<td>18.7</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>107.0</td>
<td>98.0</td>
<td>100.2</td>
<td>17.5</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>98.0</td>
<td>102.9</td>
<td>118.5</td>
<td>14.6</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</body></html>

It appears that snow-storms in February didn't dampen home sales as much as during the prior month. The National Association of Realtors (NAR) reported that pending sales of existing single-family homes recovered virtually all of the [...]

U.S. Pending Home Sales Unexpectedly Recover

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.