Tom Moeller

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309i.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics indicated improvement in January's job market
conditions. The latest Job Openings &amp; Labor Turnover Survey
(JOLTS) showed that the January <b>job openings rate </b>improved
to 2.1% which was the highest level since last February. <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 doubled its December gain with a 7.6% increase and
remained off just 2.4% year-to-year. The latest figures reflect
benchmark revisions and the series dates back to December
2000.&nbsp;</p>
<p>The service sector led the improvement last month.
Educational &amp; health service jobs rose 13.2% (-0.5% y/y) and
leisure &amp; hospitality jobs increased 11.0% (7.2 y/y). Also, the
number of professional &amp; business service openings rose 6.9%
(-15.0% y/y. Deterioration in the factory sector reversed the December
gain with a 10.5% decline but openings were up by one-third from last
year<span style="color: black;">. </span>Construction
sector job openings also fell sharply for the third month in the last
four +81.8% y/y.</p>
<p>The <b>hires rate</b> has been stable
near 3.1% since the end of 2008.&nbsp;<i>The hires rate is
the number of hires during the month divided by employment.&nbsp;</i>The
actual number of hires reversed half of the December decline with a
2.1% m/m increase (-5.8% y/y). Professional &amp; business service
sector hires recouped most of the December decline with a 13.7%
increase (+2.1% y/y) while leisure &amp; hospitality hires gained
8.2% (-1.9% y/y). Factory sector hiring increased 3.3% (18.4% y/y) but
construction sector hiring fell 2.7% (-8.9% y/y).</p>
<p>The <b>job
separations rate </b>was stable at the series' low of 3.2% where
it's been since August with the actual number of separations off 19.5%
year-to-year. The layoff rate alone fell to a fifteen-month low of
1.5%. <i>Separations include quits, layoffs, discharges, and
other separations as well as retirements. </i>The layoff rate
alone ticked up to 1.6% but was down sharply from the January high of
1.9%.</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>
<p>A description of the Jolts survey and the
latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's <b>USECON</b>
database.&nbsp;&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309j.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309k.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>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>Jan. '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"><b>Job Openings, Total</b></td>
</tr>
<tr>
<td class="firstcol">Rate (%)</td>
<td>2.1</td>
<td>1.9</td>
<td>1.9</td>
<td>2.0</td>
<td>1.9</td>
<td>2.2</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol"> Total (000s)</td>
<td>2,724</td>
<td>2,531</td>
<td>2,456</td>
<td>2,792</td>
<td>2,531</td>
<td>3,078</td>
<td>4,378</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol"><b>Hires, Total</b></td>
</tr>
<tr>
<td class="firstcol">Rate (%)</td>
<td>3.1</td>
<td>3.1</td>
<td>3.2</td>
<td>3.2</td>
<td>37.3</td>
<td>41.1</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol"> Total (000s)</td>
<td>4,080</td>
<td>3,997</td>
<td>4,160</td>
<td>4,330</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>1.5</td>
<td>1.6</td>
<td>1.5</td>
<td>1.7</td>
<td>20.7</td>
<td>17.7</td>
<td>16.5</td>
</tr>
<tr>
<td class="firstcol">Total (000s)</td>
<td>1,890</td>
<td>2,049</td>
<td>1,973</td>
<td>2,641</td>
<td>27,683</td>
<td>24,589</td>
<td>22,606</td>
</tr>
</tbody>
</table>
</span>
</body></html>

The Bureau of Labor Statistics indicated improvement in January's job market conditions. The latest Job Openings & Labor Turnover Survey (JOLTS) showed that the January job openings rate improved to 2.1% which was the highest level [...]

JOLTS: U.S. Job Openings Highest Since February '09

Louise Curley

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The National Australia Bank (not to be confused with the
Reserve Bank of Australia, the central bank) publishes monthly
indicators of business confidence and current conditions in business
together with the data on business opinions of trading conditions,
profitability, employment, forward orders, inventories, labor costs,
purchases cost, prices, capacity utilization and exports.</p>
<p>Business confidence rose to a percent balance of 19.4% in
February from 15.0% in January. It has recovered from the dip in
December and is now close to the peak levels of the past as can be seen
in the attached chart. The loss of confidence in December may have been
due, in part, to the three 25 basis points rises in the central bank's
policy rate that took place in October, November and December.
Apparently, the business community has come to realize that increases
in the cash rate are appropriate given the pace of Australian economic
activity. A fourth rise 25 basis points to 4.0% in the cash rate took
place on March 2 did not weaken confidence. The favorable balance of
opinion about current conditions is up to 7.7% from 3.0% in January but
it remains well below previous peaks.</p>
<p>The Australian economy is benefitting from the rise in
activity among the emerging countries of the pacific region. China is
now the single, largest recipient of Australia's exports. Ten years ago
in 1999, China accounted for 4.7% of Australia's exports; in 2009 it
accounted for 21.6% .</p>
</span>
<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"><b>Feb 10</b></th>
<th scope="col"><b>Jan 10&nbsp;</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 08</b></th>
<th scope="col"><b>Oct 09</b></th>
<th scope="col"><b>Sep 09</b></th>
<th scope="col"><b>Aug 09</b></th>
<th scope="col"><b>Jul 09</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business
Confidence (% balance)</td>
<td>19.4</td>
<td>15.0</td>
<td>7.9</td>
<td>19.2</td>
<td>15.8</td>
<td>13.7</td>
<td>18.1</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">Business
Conditions&nbsp; (% balance)</td>
<td>7.7</td>
<td>3.0</td>
<td>10.1</td>
<td>10.3</td>
<td>11.8</td>
<td>3.2</td>
<td>3.8</td>
<td>1.0</td>
</tr>
</tbody>
</table>
</body></html>

The National Australia Bank (not to be confused with the Reserve Bank of Australia, the central bank) publishes monthly indicators of business confidence and current conditions in business together with the data on business opinions [...]

Business Confidence In Australia Rises

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>French exports and imports show a classic impact on those two
flows
as the domestic and global recessions hit. Now that recovery is in
gear, the trade flows reflect that as well. Exports and imports plunged
at the onset of the recession, imports fell because French domestic
demand shriveled up; exports contracted because foreign demand shut
down. The impact on the balance of trade was erratic. Generally,
however, the size of the French goods trade deficit was reduced. But
late in 2009 the trade deficit began to surge again reaching a monthly
maximum (deficit) of over &#8364;6bln. But over the last two months this
bulge in the deficit has diminished.</p>
<p>Exports have outpaced imports Yr/Yr, nearly doubling the
growth rate
of imports. Over six months exports contracted as imports began to
surge. But over the last three months exports are back solidly
outperforming imports, helping to shrink the French deficit.</p>
<p>The Yr/Yr trends in the chart tell a broad-brush story of
surging
trends. Both exports and imports are on a clear and solid upswing over
that period. Over shorter periods export and import growth both are
more chaotic. But the year-over-year statics tell a clear story of an
international sector in rebound. Trade figures across the globe echo
these same trends. Trade flows tell a story of an international economy
in a clear state of rebound not a story of tentative and sputtering
domestic growth which is the story we are often fed about the various
national expansions. Why do the trade data speak clearly to the subject
of revival while various national data do not? It is because the goods
sector which dominates trade is in a clear rebound while the services
sector, the sector that dominates job growth domestically, has been
slow to catch on. To make the various national recoveries durable,
services industries have to catch on and job growth must get into gear.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col"> <b>French
Trade trends for goods, Excl Miliarty Equip</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>-&#8364; 4,863.00</td>
<td>-&#8364; 5,346.00</td>
<td>-&#8364; 5,472.67</td>
<td>-&#8364; 4,983.00</td>
<td>-&#8364; 4,756.25</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">Exports</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>2.7%</td>
<td>0.4%</td>
<td style="font-weight: bold;">19.5%</td>
<td style="color: red; font-weight: bold;">-3.4%</td>
<td>7.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food,
Bev &amp;Tobacco</td>
<td>-2.6%</td>
<td>0.8%</td>
<td style="font-weight: bold;">14.5%</td>
<td style="color: red; font-weight: bold;">-4.4%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Transport Equip</td>
<td>8.4%</td>
<td>6.2%</td>
<td style="font-weight: bold;">16.2%</td>
<td style="color: red; font-weight: bold;">-8.7%</td>
<td>26.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other
Exp</td>
<td>1.7%</td>
<td>-1.2%</td>
<td style="font-weight: bold;">21.3%</td>
<td style="color: red; font-weight: bold;">-1.4%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">IMPORTS</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>0.9%</td>
<td>-2.1%</td>
<td style="font-weight: bold;">13.9%</td>
<td style="font-weight: bold;">11.1%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food,
Bev &amp;Tobacco</td>
<td>0.5%</td>
<td>-0.2%</td>
<td style="font-weight: bold;">7.8%</td>
<td style="color: red; font-weight: bold;">-4.7%</td>
<td style="font-weight: bold;">-<span style="color: red;">2.8%</span></td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Transport Equip</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>12.0%</td>
<td style="font-weight: bold;">13.1%</td>
<td>11.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other
Imp</td>
<td>1.1%</td>
<td>-2.5%</td>
<td>14.8%</td>
<td style="font-weight: bold;">12.3%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">All data
seasonally
adjusted *Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

French exports and imports show a classic impact on those two flows as the domestic and global recessions hit. Now that recovery is in gear, the trade flows reflect that as well. Exports and imports plunged at the onset of the [...]

French Deficit Shrinks

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309d.jpg" style="width: 353px; height: 265px;" align="right">Gasoline
prices continued their rally. At $2.75 per gallon last week, the <b>pump
price for regular gasoline </b>was at the highest level since
January which was the highest level since September 2008. Yesterday,
the spot market price for a gallon of regular gasoline increased to
$2.18, also its highest since 2008. The figures are reported by the
U.S. Department of Energy and can be found in Haver's <b>WEEKLY
&amp; DAILY </b>databases.</p>
<p>The price for a barrel of light
sweet crude (WTI) rose last week to $80.19 though it remained down from
the early-January high of $82.59. Nevertheless, prices have risen from
$71.53 early this past December and are more than double the December
2008 low of $32.37. Yesterday, the spot price rose further to $81.87.·
Demand for gasoline fell 2.5% last week versus one year ago. That
decline compared to a 3.9% increase at the beginning of October. The
demand for residual fuel oil spiked by one-third with falling
temperatures in the Northeast &amp; Midwest. However, distillate
demand fell 7.7% y/y, a decline more moderate than the 21.6% y/y
shortfall at the beginning of last July. Inventories of crude oil and
petroleum products slipped in February but were up 1.0% from one year
ago.</p>
<p>U.S. natural gas prices fell last week to an average $4.75 per
mmbtu (+11.8% y/y) from the high of $6.50 early in January.
Nevertheless, prices remained double the September low.</p>
<p> Outside of
energy, commodity prices also have been strong. Copper has led the gain
as prices have more-than doubled since early last year. Scrap steel
prices remain strong with a doubling during the same period. Aluminum
prices have leveled off since December but remain up by two-thirds
since the 2009 low. With improved housing activity has come strength in
lumber prices which have risen more than 50% since early-2009. Cotton
prices also have nearly doubled with improvement in consumer spending.
In the agricultural area, prices of foodstuffs including wheat, corn
&amp; butter, as well as livestock have risen by one-half. Finally,
gold prices near $1,126.50/pound have risen 50% since the fall of '08
and have roughly tripled since 2001.</p>
<p>The energy &amp; commodity
price data can be found in Haver's <b>WEEKLY </b>database
while the daily figures are in <b>DAILY</b>. The gasoline
demand figures are in <b>OILWKLY</b>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly Prices</b></a></th>
<th scope="col"><b>03/01/10</b></th>
<th scope="col"><b>03/01/10</b></th>
<th scope="col"><b>02/22/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.75</td>
<td>2.70</td>
<td>2.66</td>
<td>41.7%</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>80.19</td>
<td>79.26</td>
<td>78.30</td>
<td>85.4%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Gasoline prices continued their rally. At $2.75 per gallon last week, the pump price for regular gasoline was at the highest level since January which was the highest level since September 2008. Yesterday, the spot market price for a [...]

U.S. Gasoline Prices Are Highest Since 2008

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309a.jpg" style="width: 353px; height: 265px;" align="right">The
recession has been over for nearly nine months and that has done little
to improve small business' mood. The National Federation of Independent
Business (NFIB) reported their February small business optimism index
retraced the January gain and slipped to 88.0. Since the first quarter
of last year the index has been hovering near that level. During the
last ten years there has been an 85% correlation between the level of
the NFIB index and the two-quarter change in real GDP.</p><p>Reduced
expectations for overall economic improvement pulled this measure back
to its lowest level since March of last year as a majority of firms saw
further economic deterioration. Expectations for sales in six months
were neutral and the percentage thinking that now was a good time to
expand the business fell to four percent, its lowest since March '09.
Expectations for an easing of credit market conditions were skewed to
further tightening and that reading is little changed since the Fall of
2008. Offsetting a piece of this deterioration was that fewer firms
were&nbsp; planning to reduce inventory levels; in fact, it was the
fewest in over a year.&nbsp;</p><p> Hiring plans remain restrained. The percentage
of firms with one or more job openings improved slightly to its highest
level since last spring but the percentage planning to increase hiring
further has been moving sideways. During the last ten years there has
been a 74% correlation between the NFIB employment percentage and the
six-month change in nonfarm payrolls.</p><p>On the pricing front, weakness
continued. The percentage of firms <i>actually</i> raising
prices slipped to -21% (indicating deflation) and remained near the
record low. During the last ten years there has been a 51% correlation
between the six-month change in the producer price index and the level
of the NFIB price index.&nbsp;However, the percentage of firms <i>planning</i>
to raise prices improved to its highest level since late-2008. Finally,
the percentage planning to raise worker compensation improved to its
highest since late-2008.</p><p>The most important problems seen by business
were poor sales (34%), taxes (23%, close to its highest level since
2007), government requirements (12%), insurance cost &amp;
availability (7%), competition from large businesses (6%) and inflation
(3%).</p><p>About 24 million small businesses exist in the United
States. Small business creates 80% of all new jobs in America and the
NFIB figures can be found in Haver's <b>SURVEYS</b>
database.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM"><b>Nat'l
Federation of Independent Business</b></a></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 class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.0</td>
<td>89.3</td>
<td>88.0</td>
<td>82.6</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>-9</td>
<td>1</td>
<td>2</td>
<td>-21</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>11</td>
<td>10</td>
<td>10</td>
<td>11</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>12</td>
<td>14</td>
<td>15</td>
<td>13</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Pric1es (Net)</td>
<td>-21</td>
<td>-18</td>
<td>-22</td>
<td>-24</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>
<p></p>
</span>
</body></html>

The recession has been over for nearly nine months and that has done little to improve small business' mood. The National Federation of Independent Business (NFIB) reported their February small business optimism index retraced the [...]

U.S. Small Business Optimism Slips

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100308d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Economy Watchers in Japan found current business conditions
improving in February for the third successive month. The diffusion
index rose 8.5% from 38.8% in January to 42.1% in February. The index
was more than twice--a 117.0% increase over--that of a year ago. The
index for the total has almost recovered from the big drop last
November as can be seen in the attached chart.</p>
<p>Current conditions in all the components improved in February
as can be seen in the table below and, like the total, were
substantially above February 2009. Eating and Drinking establishments
and retail sales showed growth above the average in February.
Substantial improvements were also found in the corporate sector and in
employment The Current conditions index for Non manufacturing
corporations increased 10.5% between January and February and was
164.4% above the February 2009 index. Comparable figures for
manufacturing corporations were 6.9% and 161.6%. The diffusion index
for employment increased 8.4% in February from January and was over
300% above February, 2009.</p>
<p>The Economy Watchers' overall appraisal of future conditions
is generally more optimistic or less pessimistic that the appraisals of
current conditions but the direction of changes in the future
conditions index are much like those in the current conditions index.
Apparently, the Economy Watchers estimates of future conditions are
highly influenced by their appraisal of current conditions. The
correlation between the two series is .98, as shown in the attached
chart. As for the component series, they, too, show high correlations
between current and future appraisals. Correlations between current and
future conditions for the component series are shown in the table
below. The correlations are high, the lowest being .82 for the Eating
and Drinking establishments.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ECONOMY
WATCHERS SURVEY</th>
<th scope="col"><b>Feb 10&nbsp;</b></th>
<th scope="col"><b>Jan 10&nbsp;</b></th>
<th scope="col"><b>Feb 09</b></th>
<th scope="col"><b>M/M % Chg</b></th>
<th scope="col"><b>Y/Y% Chg</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">Current Conditions
(Diffusion Index %)</td>
<td>42.1</td>
<td>38.8</td>
<td>14.4</td>
<td>8.51</td>
<td>117.01</td>
<td>34.6</td>
<td>28.9</td>
<td>44.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Future
Conditions</td>
<td>44.8</td>
<td>41.9</td>
<td>26.5</td>
<td>6.92</td>
<td>69.06</td>
<td>38.3</td>
<td>31.6</td>
<td>46.9</td>
</tr>
<tr class="grey3">
<td style="font-weight: bold;" colspan="7" class="firstcol">Current Conditions</td>
<td style="font-weight: bold;">Correlation</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>42.1</td>
<td>38.8</td>
<td>19.4</td>
<td>8.51</td>
<td>117.01</td>
<td colspan="1" rowspan="10"></td>
<td>.98</td>
<td colspan="1" rowspan="10"></td>
</tr>
<tr class="odd">
<td class="firstcol">Households</td>
<td>40.6</td>
<td>37.4</td>
<td>21.5</td>
<td>8.56</td>
<td>88.84</td>
<td>.97</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Sales</td>
<td>40.6</td>
<td>36.8</td>
<td>21.1</td>
<td>10.33</td>
<td>92.42</td>
<td>.97</td>
</tr>
<tr class="odd">
<td class="firstcol">Eating and Drinking</td>
<td>36.0</td>
<td>32.7</td>
<td>17.2</td>
<td>10.09</td>
<td>109.30</td>
<td>.82</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>42.1</td>
<td>39.3</td>
<td>22.6</td>
<td>7.12</td>
<td>86.28</td>
<td>.93</td>
</tr>
<tr class="odd">
<td class="firstcol">Housing</td>
<td>39.7</td>
<td>38.6</td>
<td>25.0</td>
<td>2.85</td>
<td>58.80</td>
<td>.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Corporations</td>
<td>43.8</td>
<td>40.4</td>
<td>16.7</td>
<td>8.42</td>
<td>162.28</td>
<td>.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing</td>
<td>45.0</td>
<td>42.1</td>
<td>17.2</td>
<td>6.89</td>
<td>161.63</td>
<td>.94</td>
</tr>
<tr class="odd">
<td class="firstcol">Nonmanufacturing</td>
<td>43.1</td>
<td>39.0</td>
<td>16.3</td>
<td>10.51</td>
<td>164.42</td>
<td>.97</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>48.0</td>
<td>44.3</td>
<td>11.9</td>
<td>8.35</td>
<td>303.36</td>
<td>.98</td>
</tr>
</tbody>
</table>
</body></html>

Economy Watchers in Japan found current business conditions improving in February for the third successive month. The diffusion index rose 8.5% from 38.8% in January to 42.1% in February. The index was more than twice--a 117.0% [...]

Economy Watchers In Japan Find Improvement In Current And Future Business Conditions

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100308c.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The sharp German recovery in the Yr/Yr growth of industrial
production is being led by an upsurge in intermediate goods output.
Capital goods output is rising briskly as well. Consumer goods continue
to make snail&#8217;s pace progress. Only intermediate goods output is rising
Yr/Yr to any significant degree, but capital goods output now has
broken that threshold as well. Still, on a different venue all this is
turned upside down.</p>
<p>Although the Yr/Yr rise in IP seems to have strong
acceleration across sectors this is NOT confirmed by the sequential
growth rates that look at annualized rates of growth over telescoped
periods. The table shows that the annualized growth rate over three
months for overall IP is just 1.3%, down from 6.8% over six months and
below the Yr/Yr rate of 2.1%.Capital goods and intermediate goods
output have decelerated sharply over three months compared to six
months. But consumer goods output surprisingly is in a sharp
accelerating phase with growth at a 12% pace over three months compared
to an 8% pace over six months and to -1.2% Yr/Yr.</p>
<p>In the brand new quarter consumer output is rising at an 8.8%
annual rate along with intermediate goods where output is up at a
strong 5% pace. Capital goods output is falling by 3.2% early in
2010-Q1. Of course the best news for the sector is that orders have
stepped up their pace in January after a period of meandering weakness.
So whatever hint of slowing or erratic movement we see in the
industrial production report, the sector seems to be well underpinned
by new orders so that IP growth should continue to be strong in the
months to come.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col">Total
German IP </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Saar exept m/m</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">Nov-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;">Quarter<br>
to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.6%</td>
<td>-1.0%</td>
<td>0.7%</td>
<td>1.3%</td>
<td>6.8%</td>
<td>2.1%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>-0.1%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>11.9%</td>
<td>8.2%</td>
<td>-1.2%</td>
<td>8.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Capital</td>
<td>-1.0%</td>
<td>0.3%</td>
<td>0.7%</td>
<td>0.0%</td>
<td>8.1%</td>
<td>0.2%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Intermed</td>
<td>3.3%</td>
<td>-4.1%</td>
<td>1.3%</td>
<td>1.2%</td>
<td>11.5%</td>
<td>7.9%</td>
<td>5.0%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-14.3%</td>
<td>-2.0%</td>
<td>0.6%</td>
<td>-49.2%</td>
<td>-28.2%</td>
<td>-9.4%</td>
<td>-63.1%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>0.9%</td>
<td>-1.2%</td>
<td>0.9%</td>
<td>2.5%</td>
<td>9.3%</td>
<td>3.6%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>4.3%</td>
<td>-1.6%</td>
<td>0.0</td>
<td>23.7%</td>
<td>14.2%</td>
<td>19.7%</td>
<td>27.5%</td>
</tr>
</tbody>
</table>
</body></html>

The sharp German recovery in the Yr/Yr growth of industrial production is being led by an upsurge in intermediate goods output. Capital goods output is rising briskly as well. Consumer goods continue to make snail’s pace progress. [...]

German IP Advances

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

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Winnie Tapasanun

260113F29.jpg

260113G29.jpg

New single-family home sales dipped 0.1% m/m (+18.7% y/y) to a seasonally adjusted annual rate of 737,000 units in October following rises of 3.8% to 738,000 in September and 11.3% to 711,000 in August (+20.5%, 800,000 previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected sales of 710,000 for October. The October figure was the first m/m decline since July, though sales remained 42.0% up from the July 2022 low of 519,000. The sales dip occurred alongside a drop in the average 30-year fixed mortgage rate to 6.25% in October, the lowest since September 2024, after declining to 6.35% in September; it had subsequently continued trending downward, according to Freddie Mac.

By region, October new home sales fell m/m in all major regions except the South. Sales in the West plunged 36.3% (-24.8% y/y) to 109,000 in October, the lowest level since July 2022, after a 9.6% increase in September. Sales in the Northeast dropped 14.3% (-40.0% y/y) to 24,000 after holding steady at 28,000 in September and August. Sales in the Midwest fell 9.0% (+21.3% y/y) to 91,000 following a strong 25.0% September gain. For these three regions, October marked the first m/m decline since July. In contrast, sales in the South surged 16.9% (42.1% y/y) to 513,000, the highest level since March 2021, after a 1.8% September decline. The South remained the dominant region, accounting for 69.6% of total U.S. new home sales.

The median sales price of a new home fell 3.3% (-8.0% y/y) to $392,300 in October on top of a 3.4% decline to $405,800 in September, marking the fourth m/m fall in five months and the lowest level since July 2021. The median sales price had fallen 14.8% since its record high of $460,300 in October 2022. Meanwhile, the average sales price of a new home rose 3.0% (-4.6% y/y) to $498,000 in October after an 8.1% drop to $483,500. The average price was 8.0% below a high of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market held steady at 488,000 (+1.7% y/y) in October after four straight m/m declines. The latest figure was 14.6% above a low of 426,000 in July 2023. The seasonally adjusted months' supply of new homes for sale remained at 7.9 months in October and September—the lowest reading since September 2024—after falling to 8.3 months in August. The latest reading, while above a low of 6.9 months in May 2023, remained below a high of 10.6 months in July 2022.

The median number of months a new home stayed on the market rose to 2.7 months in October, the highest since March 2025, after registering at 2.4 months in September and August. The latest number was above its record low of 1.5 months in both September and October of 2022 but well below a peak of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

260113H29.jpg

260113I29.jpg

- October sales -0.1% (+18.7% y/y) to 737,000; still 42.0% above the July ’22 low.
- Sales fall m/m in all major regions except the South (+16.9%).
- Median sales price down to $392,300, lowest since July ’21; avg. price up to $498,000.
- Months' supply of new homes for sale holds steady at 7.9 mths., lowest since Sept. '24.

U.S. New Home Sales Ease in October After Two Straight M/M Increases

Michael J. Moran

260113L.jpg

260113M.jpg

The consumer price index rose 0.3% in December, while the core index (prices excluding food and energy) rose 0.2%. Both measures were faster than the averages of 0.1 percent in the prior two months. (The Bureau of Labor Statistics did not publish a CPI for October because of the government shutdown. Both the headline and core indexes showed increases of 0.2% for the two-month period from September to November.)

The December results were not pronounced enough to suggest that the restraint in October and November reflected distortions triggered by the government shutdown. At the same time, they were not soft enough to suggest that October and November were signaling faster deceleration in inflation. The past three months seemed to be showing the same degree of random volatility seen in the prior two years, with the underlying trends showing a slight degree of deceleration. The year-over-year increase in headline CPI totaled 2.7%, only slightly slower than 3.0% in mid-2024. The Core has eased a bit more: 2.6% in December versus 3.3% in mid 2024.

260113N.jpg

Prices of core goods and services have been following different paths in the past few years, and they carried different signals in December. Prices of core goods showed no month-to-month change in December, which kept the year-over-year trajectory moving sideways. The flat pattern is encouraging in that it suggests that core goods inflation is perhaps steadying after trending upward since mid-2024. Core service prices rose 0.3 percent in December, in line with the recent average. Core service inflation showed little easing in the early part of 2025, but hints of slowing emerged from September to November. December results, though, raised questions about faster deceleration in service inflation.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

- Not by enough to suggest that restraint in October and November reflected distortions from the government shutdown
- But by enough to suggest that October and November reflected normal volatility rather than the beginning of a slower trend.

December CPI: Price Increases Quickened After Two Slow Months

260112E.jpg

Swiss consumer confidence at end-2025 (in Q4) fell to -34.5 from -32.7 in 2025-Q3. The average level for the confidence reading on data back to 1982 is -16.7 and the current queue standing is 13.9%. The Q4 reading is clearly weak- well below its own average and weaker than this month, less than 15% of the time.

Outlook confidence in Q4 fell to -44.9 from -38.0 in Q3, registering a 15.6 percentile standing. The past confidence reading at -61.2 at end-2025 is down from -43.5 at the end of the third quarter. The standing for this reading is in its 19th percentile. All of these are extremely weak readings.

People provide a job security response in Q4 that eases to -50.1, still well above its historic average of -58.2 for a queue ranking at its 57th percentile.

Personal financial readings are moderate to weak across the board. However, current financial conditions rose to 38.4 in Q4 from 35.2 at the end of Q3 and a queue standing above its median at its 56th percentile. But the outlook for financial conditions is much weaker and also weakened quarter-to-quarter to -31.4 in Q4 from a level of -28.6 in Q3 to a queue ranking in its 8.7 percentile. The evaluation of past financial conditions improved by a very small margin, rising to -38.3 in Q4 from -38.7 in Q3, and to a queue standing at the 11.6 percentile.

The spending environment in Switzerland improved slightly but remained weak, rising to -23.3 in Q4 from -25.5 in Q3 to a standing at their 23.1 percentile standing.

The best part of the report is that the perception of job security is above average, and the current financial situation is above its median. After that, all the individual assessment metrics are weak including overall confidence – everything except assessments for inflation.

On the inflation front, the price outlook is high, rising to a reading of 97.7 in Q4 from 95.8 in Q3 but is still below the second quarter reading at 113.1. The price outlook has a moderately high standing at its 70.5 percentile. This standing is slightly below the standing for prices past which is at 76.3%. The past metric was still rising in the fourth quarter but was weaker than its reading in both Q1 and Q2 of 2025.

260112.jpg

**Summing up**
Inflation fears appear to still linger, but they are not as intense as they once were. Confidence overall is weak, but the most important aspects of job security and assessment of financial conditions have the strongest readings; yet, the environment for major purchases is still at a weak position. In Switzerland, people do not feel threatened or financially unstable, but they are not positive enough to spend freely either. And inflation fears are creeping up again all key trends to watch.

Switzerland

Swiss Confidence Sags at End-2025

Tian Yong Woon

This week, we highlight several pertinent developments that have shaped the start of the year and may carry longer-lasting implications. To begin with, the recent capture of former Venezuelan President Maduro by the US authorities and the subsequent crude oil trade deal could have far-reaching effects—potentially altering China’s imports of Venezuelan crude and broader bilateral trade dynamics (chart 1), as well as global energy supply considerations (chart 2).

In Japan, Prime Minister Takaichi’s reported consideration of early snap elections, if enacted, would likely inject near-term political uncertainty (chart 3). However, should her gambit succeed, it could reduce  policy uncertainty and pave the way for more fiscal policy activism. Against this backdrop, it is unsurprising that investors remain divided over the timing of the Bank of Japan’s next policy tightening, although the upcoming Spring wage negotiations (chart 4) ought to provide clearer signals for the monetary policy outlook.

Turning to investor expectations from the latest Blue Chip survey, India is once again seen as the growth leader among major Asian economies, while also poised to record the highest inflation (chart 5). China, by contrast, is expected to deliver sub-5% growth this year alongside muted inflation. Lastly, in Southeast Asia, pockets of geopolitical tension persist—notably between Thailand and Cambodia (chart 6)—as Thailand prepares for snap elections next month.

**The US, Venezuela, and China**
2026 got off to a turbulent start following a recent US military operation in Venezuela that resulted in the capture of former President Maduro and his transfer to the US to face drug-related charges. In the aftermath, Venezuela’s former vice president (Delcy Rodriguez) was sworn in as interim leader, while US and Venezuelan authorities have reportedly already reached a new crude oil deal. Under the agreement, Venezuela would sell 30–50 million barrels of crude to the US at market prices, with the proceeds controlled by the US. These developments have several potential implications. First, some Venezuelan crude initially destined for China would likely be diverted to the US. China has been the main buyer of Venezuelan oil in recent years, although this is likely underreported in official data (chart 1), which would tighten conditions for the crude-import-dependent country. Second, an eventual increase in Venezuelan crude supply—previously constrained by heavy US sanctions—would likely exert downward pressure on global oil prices, all else equal, although significant challenges remain, as discussed below.

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To illustrate the potential significance of Venezuela’s crude oil industry, chart 2 shows that the country holds nearly a fifth of the world’s proved crude oil reserves. However, output remains disproportionately low relative to reserves, possibly reflecting years of US sanctions as well as mismanagement and chronic underinvestment. Given the current state of the industry, substantial investment will likely be required for Venezuela to restore production to historically high levels and to more fully tap its deep proved reserves. As a result, any meaningful surge in Venezuelan crude output is likely to take time, which may help explain the muted market response to recent US–Venezuelan developments. Also of note, China has been a major lender to Venezuela, including through “oil-for-loan” arrangements in which repayments are made in crude oil. It remains to be seen how these existing and future agreements may be affected by recent developments.

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**Japan**
Setting aside the interplay between the US, Venezuela, and China, another economy worth watching early this year is Japan. Developments continue to unfold following renewed China–Japan tensions after Prime Minister Takaichi assumed office. With her approval ratings having remained consistently high since taking the helm, Takaichi is reportedly considering snap elections as early as next month to strengthen her ruling coalition’s parliamentary position. While a stronger mandate could reduce policy uncertainty, near-term political uncertainty would be the likely case. This interim uncertainty may be weighing on the yen. It is being compounded by expectations of upcoming pro-growth measures, including the $118 million supplementary budget passed last December and the prospect of additional fiscal stimulus next fiscal year, contingent on an electoral win (chart 3).

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Turning back to Japan and the monetary policy outlook, investors remain divided over the timing of the Bank of Japan’s (BoJ) next policy move following its December rate hike. This uncertainty is understandable given the multiple moving parts shaping the BoJ’s path, including the factors discussed above. Looking ahead, the upcoming annual wage negotiations and broader trends in wage growth (chart 4) will be closely watched by the BoJ as key preconditions for further rate hikes. Reflecting this uncertainty, our latest Blue Chip Economic Indicators survey shows investors split between expectations for a hike in March and views that the next move will only come after April.

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**Blue Chip Economic Indicators**
Delving into the latest Blue Chip survey results, chart 5 summarizes panellists’ expectations for growth and inflation this year. Focusing on major Asian economies, and as in 2025, India is seen to be leading the pack in terms of both real GDP growth and CPI inflation. That said, the inflation outlook may be subject to further revisions should India’s currently muted inflation—driven by falling food prices—persist for longer. For China, panellists currently expect sub-5% growth this year, implying a likely miss should a 5% growth target again be pursued. Inflation in China is once again expected to remain subdued. Japan, meanwhile, is forecast to post sub-1% real GDP growth, while CPI inflation is expected to hover around the authorities’ preferred 2% level. Looking ahead, attention will also turn to the IMF’s upcoming World Economic Outlook forecasts, due later this month.

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**Southeast Asia**
Last but not least, turning to Southeast Asia, promising AI- and tech-related growth continues in economies such as Malaysia and Vietnam. However, pockets of geopolitical tension persist, notably between Thailand and Cambodia, where border clashes have occurred despite previous attempts at peace, including one co-brokered by US President Trump. Against this backdrop, Thailand’s Prime Minister Anutin is preparing for snap elections in early February, amid a reported rise in nationalist sentiment linked to the ongoing clashes. These developments create latent risks for both Thailand and Cambodia (chart 6), while the uncertainty surrounding the elections also clouds the implementation of longer-term policies aimed at addressing Thailand’s deeper structural challenges.

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Asia

Economic Letter from Asia: A Bumpy Start

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Nonfarm payrolls rose 50,000 in December, continuing a pattern of modest increases that began in early 2025 and intensified last spring. The December results were constrained by an outright decline in the goods-producing sector, with both construction companies and manufacturers shedding workers. The private service sector was in the plus column, but the gain of 58,000 was not especially impressive. The retail trade sector was notably soft (-25,000), and a drop of 9,000 among firms in the business-service area was disappointing.

Revisions to results in October and November were more notable than the new figures for December, as downward adjustments of 76,000 more than offset the gain in December and left a net decline in the fourth quarter. Several areas contributed to the revisions (retail trade, construction, health care, transportation & warehousing, business services).

Not only were the recent job numbers soft, but the average workweek among those employed eased 0.1 hour to 34.2 hours. The reading was still within the range of observations from the past two years, but it moved to the bottom of the range. A dip of 0.1 hour might seem trivial, but when applied to 160 million workers, it represents a constraint on production. This decline added to the soft tone of the report.

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Although the payroll numbers were soft, the unemployment rate dipped 0.1 percentage point to 4.4%. The drop reflected a jump of 232,000 in employment as measured by the survey of households. This employment measure is more volatile than the payroll figures from the survey of business establishments, and thus the gain might contain a healthy dose of random volatility. Still, it offered encouragement in that December marked the fifth consecutive gain, perhaps signaling that the bottom was not falling out of the labor market. 

Average hourly earnings also suggested that the labor market still had a pulse. December showed an increase of 0.3% in average hourly earnings, and results in the prior month were firmer than previously estimated (0.2% growth rather than 0.1%). The underlying trend is still cooling, but the year-over-year advance of 3.8% still represents a gain in real earnings.

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

- Modest job growth in December, and downward revisions in October & November.
- The unemployment rate, though, inched lower.

Economy in Brief

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