Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301d.jpg" style="width: 353px; height: 265px;" align="right">The rate of
factory sector improvement eased slightly last month, according to the
Institute for Supply Management. Perhaps due to cold weather, the
February composite index slipped to 56.5 from January's 58.4. The
latest remained the second highest reading of the economic recovery. It
was up from the low of 32.9 reached in December '08. The latest figure
fell short of Consensus expectations for a reading of 57.8. (Any figure
above the break-even point of 50 suggests rising activity.) The ISM
data is available in Haver's USECON database.Declines in the production and new orders components accounted for the
decline in the composite index. During the last ten years there has
been an 84% correlation between the level of the production component
of the composite index and the three-month growth in factory sector
industrial production. It is appropriate to correlate the ISM
index level with factory sector output growth
because the ISM index is a diffusion index. It measures
growth by using all of the positive changes in activity added to one
half of the zero change in activity measures. Finally, the
export order index fell to 56.5 and reversed half of its January
increase. It still was up, however, from the low of 35.5 in December
'08. During the last ten years there has been a 53% correlation between
the index and the q/q change in real exports of goods in the GDP
accounts.To the upside was the employment index with a gain to 56.1,
the highest level since 2005. It's up from a low reading of 25.9 last
February. Twenty-two percent of firms indicated a higher level of
payrolls versus 6% last February. Ten percent showed a lower level
versus 54% last February. During the last ten years there has been a
90% correlation between the index level and the three-month change in
manufacturing payrolls.The rise in the inventory component to 47.3
brought it back to the October high. Nineteen percent of respondents
reported lower inventories versus 43 percent last February. Seventeen
percent (NSA) of respondents indicated that they were raising inventory
levels versus 19% last February. During the strong 2005 inventory
accumulation 26% of firms indicated that they were raising inventories.
The vendor performance indicator, which measures the speed of
deliveries, rose and indicated the slowest speed since 2005.The
separate index of prices paid fell from its cycle-high to 67.0. That
still was up from the December '08 low of 18.0. During the last twenty
years there has been a 79% correlation between the price index and the
three-month change in the PPI for intermediate goods.
Thirty-nine&nbsp; percent of respondents reported higher prices
while only 5 percent indicated lower prices.The ISM data are
available in Haver's USECON database.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM">ISM
Mfg</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Feb. '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>56.5</td>
<td>58.4</td>
<td>54.9</td>
<td>35.7</td>
<td>46.2</td>
<td>45.5</td>
<td>51.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>59.5</td>
<td>65.9</td>
<td>64.8</td>
<td>33.9</td>
<td>51.6</td>
<td>42.1</td>
<td>54.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>56.1</td>
<td>53.3</td>
<td>50.2</td>
<td>25.9</td>
<td>40.5</td>
<td>43.3</td>
<td>50.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production</td>
<td>58.4</td>
<td>66.2</td>
<td>59.7</td>
<td>35.6</td>
<td>50.4</td>
<td>45.2</td>
<td>54.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Supplier Deliveries</td>
<td>61.1</td>
<td>60.1</td>
<td>56.8</td>
<td>46.6</td>
<td>51.4</td>
<td>51.6</td>
<td>51.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>47.3</td>
<td>46.5</td>
<td>43.0</td>
<td>36.7</td>
<td>37.1</td>
<td>45.5</td>
<td>45.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>67.0</td>
<td>70.0</td>
<td>61.5</td>
<td>29.0</td>
<td>48.3</td>
<td>66.5</td>
<td>64.6</td>
</tr>
</tbody>
</table>
</body></html>

The rate of factory sector improvement eased slightly last month, according to the Institute for Supply Management. Perhaps due to cold weather, the February composite index slipped to 56.5 from January's 58.4. The latest remained the [...]

ISM Manufacturing Index Fell From January High

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style></head>
<body>
 




<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301a.jpg" style="width: 353px; height: 265px;" align="right">Overall personal
income ticked up just 0.1% in January following downwardly
revised increases during the prior two months. The latest weak increase
disappointed Consensus expectations for a 0.4% rise.&nbsp; Declines spread
through much of the income spectrum. The weak housing market pulled
proprietors' income down 0.3% (+1.6% y/y) and rental income fell 0.3%,
the first decline since 2007. Lower interest rates caused interest
income also to fall 0.3% though the y/y change of -2.7% was improved
from the worst of&nbsp; last September (-8.2% y/y). Dividend income
fell 3.0% (-13.3% y/y) though that y/y change was half its worst.
Finally, the improved job market and the expiration of long-term
benefits caused a 2.2% decline in unemployment insurance payments, the
fourth consecutive monthly decline (+36.6% y/y).&nbsp;&nbsp;To the
upside, wages &amp; salaries improved 0.4% after an unrevised 0.1%
December increase. Year-to-year growth was still a negative 1.0% but
improved from -4.9% during last summer. Wages in the factory sector
rose 0.8% but still remained 5.8% lower than last year. In the private
service sector wages rose 0.3% following a downwardly revised 0.1%
December reading. Government sector wages did increase 0.5% but weak
hiring cut the y/y increase to 2.4%, its lowest since early
1994.&nbsp;Disposable income fell 0.4% and reversed the prior
month's increase as tax payments jumped 5.5%. The income decline caused
the savings rate to decline to 3.3%, its lowest since late-2008. The
rate still was up, however, from the 1.0% low at the beginning of the
last recession.Personal spending rose 0.5% last
month following little-revised increases of 0.3%-to-0.5% during the
prior three periods. A 7.0% m/m rise in spending on gasoline (41.5%
y/y) led the increase as prices spiked, but the real gain was just 2.1%
(0.8% y/y). Nominal apparel spending gained 0.6% (1.6% y/y) while
outlays on services rose a weakened 0.2% (2.1% y/y). To the downside,
spending on motor vehicles &amp; parts fell 1.2% (+5.6% y/y)
and&nbsp; spending on home furnishings fell for the third month in
the last four (-0.4% y/y).&nbsp; The PCE chain price index
ticked up just 0.2% during January and 2.1% y/y with higher gasoline
prices. The core PCE price deflator was unchanged during January and
that reflected weakness throughout the categories.The personal income
&amp; consumption figures are available in Haver's USECON
and USNA databases.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100301c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a>
(%)&nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.1</td>
<td>0.3</td>
<td>0.4</td>
<td>1.1</td>
<td>-1.7</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
&nbsp;Disposable Personal Income</td>
<td>-0.4</td>
<td>0.4</td>
<td>0.5</td>
<td>2.1</td>
<td>1.1</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.5</td>
<td>0.3</td>
<td>0.5</td>
<td>3.5</td>
<td>-0.4</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.3</td>
<td>4.2</td>
<td>4.1</td>
<td>4.4 (Jan.'09)</td>
<td>4.3</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2</td>
<td>0.1</td>
<td>0.2</td>
<td>2.1</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.4</td>
<td>1.5</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

Overall personal income ticked up just 0.1% in January following downwardly revised increases during the prior two months. The latest weak increase disappointed Consensus expectations for a 0.4% rise. Declines spread through much of [...]

U.S. Personal Income Remains Weak

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226k.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The EMU HICP has finalized for January. Headline prices fell
and core prices ( ex energy and unprocessed food) fell by 0.3%. Core
prices continue to drive their Yr/Yr rate lower to juts under 1%. Goods
prices in the Zone are up by 0.7% Yr/Yr while service prices are up
1.4%.over three months goods prices are falling.
EMU inflation among the large countries is fairly tightly
clustered. German inflation is 0.7% over 12-months and marks the low
while Italy at 1.3% over 12-months marks the high. The UK, a non
monetary union country, but an EU member has headline inflation at 3.5%
for 12-months.
Core inflation is clustered in the Union as well. Spain at
0.3% has the lowest Core rate over twelve months. Germany and France
are both at 0.9%. Italy at 1.5% has the highest core rate.
Over three and six months headline inflation in the Zone is
well-behaved while UK inflation continues to bulge, running up by as
much as a 6.2% at an annual rate over three months.
In the Zone core inflation is universally low over three
months; the large country with the lowest core inflation rate is
Germany at -0.7%, over six months Italy has the high at 1.9%
Inflation in the Zone is weak and economic activity has been
weakening. Weather has been severe in the US in Europe and it has hit
the UK hard in a few places. It is hard to know the role of weather in
blunting the forces of growth. For now central banks can take some
breathing room on the inflation front. Growth however has yet to turn
the corner in a strong dependable way.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> Trends in HICP
</th></tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">% mo/mo</td>
<td style="font-weight: bold;" colspan="3">Saar</td>
<td style="font-weight: bold;">&nbsp;</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</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;">Yr Ago</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>2.2%</td>
<td>1.0%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>0.9%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Goods</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-2.4%</td>
<td>1.4%</td>
<td>0.7%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-0.5%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>1.4%</td>
<td>2.4%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">HICP</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>1.2%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>1.3%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.9%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>6.2%</td>
<td>4.4%</td>
<td>3.5%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>0.8%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">Core:xFE&amp;A</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>-0.3%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>0.9%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
</body></html>

The EMU HICP has finalized for January. Headline prices fell and core prices ( ex energy and unprocessed food) fell by 0.3%. Core prices continue to drive their Yr/Yr rate lower to juts under 1%. Goods prices in the Zone are up by [...]

EMU Inflation Stays Under Wraps

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226i.jpg" style="width: 353px; height: 265px;" align="right">
The National
Association of Realtors reported that January sales of
existing homes fell another 7.2% to 5.050M units (SAAR) after
a little-revised 16.2% December decline. The decline may have been
again influenced by the timing of a recently-extended home-buyer tax
credit. The fall in January home sales greatly exceeded Consensus
expectations for a decline to 5.90M.The home-buyer tax credit of up
to $8,000 now runs though April 30. Additionally, a new credit of up to
$6,500 is available to some existing home owners who move. The full
details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
Sales of single-family homes fell 6.9% but they remained up 8.6% y/y as
home affordability improved with lower prices and low interest rates.
Sales <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226j.jpg" style="width: 353px; height: 265px;" align="right">
of condos and co-ops alone fell 8.1% from December to 620,000 but
were up by one-third from twelve months ago. The median
price of all existing homes fell 3.4% last month after a much-reduced
0.3% December rise. The latest level equaled that of 12 months ago and
these were the lowest since May 2002. Some comfort may be taken from
the unchanged level of prices versus one year ago versus the
2.4%-to-12.4% declines during the last three years. These declines have
raised the affordability of a home to near its record high although the
rate of increase has slowed sharply. The number of unsold homes
(single-family &amp; co-ops) fell 0.5% in January (-9.6% y/y) to
the lowest level since March 2006. At the current sales rate there was
a slightly-increased 7.8 months' supply of homes on the market, near
the lowest since late 2006. The latest figure was down from a high of
11.3 months during April of 2008. For single-family homes, the
inventory rose to a 7.6 months' supply.&nbsp; The data on existing
home sales, prices and affordability can be found in Haver's USECON
database. The regional price, affordability and inventory data is
available in the REALTOR database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,050</td>
<td>5,440</td>
<td>6,590</td>
<td>11.5%</td>
<td>5,160</td>
<td>4,893</td>
<td>5,675</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>820</td>
<td>920</td>
<td>1,150</td>
<td>-22.4</td>
<td>863</td>
<td>847</td>
<td>1,009</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,080</td>
<td>1,160</td>
<td>1,540</td>
<td>8.0</td>
<td>1,166</td>
<td>1,125</td>
<td>1,329</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,870</td>
<td>2,020</td>
<td>2,380</td>
<td>-12.0</td>
<td>1,913</td>
<td>1,858</td>
<td>2,244</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,280</td>
<td>1,350</td>
<td>1,420</td>
<td>7.6</td>
<td>1,216</td>
<td>1,063</td>
<td>1,093</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,430</td>
<td>4,760</td>
<td>5,710</td>
<td>8.6</td>
<td>4,567</td>
<td>4,338</td>
<td>4,959</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $
(NSA)</td>
<td>164,700</td>
<td>170,500</td>
<td>170,000</td>
<td>0.0</td>
<td>172,742</td>
<td>197,233</td>
<td>216,633</td>
</tr>
</tbody>
</table>
</body></html>

The National Association of Realtors reported that January sales of existing homes fell another 7.2% to 5.050M units (SAAR) after a little-revised 16.2% December decline. The decline may have been again influenced by the timing of a [...]

U.S. Existing Home Sales Plummet As Prices Fall Sharply

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226a.jpg" align="right" border="0" height="265" width="353">
Rebuilding of depleted inventories was more of a factor behind
improvement in 4Q economic than previously estimated. The result
brought 4Q real GDP growth up to 5.9% (AR) from the advance estimate of
5.7%. Last quarter's growth was the strongest since 3Q 2003 and it
raised the y/y change into (slightly) positive territory for the first
time since early-2008. The revision slightly exceeded Consensus
expectations for 5.7% growth. 
 <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226b.jpg" style="width: 353px; height: 265px;" align="right">
Voluntary inventory accumulation now is estimated to have
added 3.9 percentage points to economic growth last quarter. It was
necessitated by vigorous and unprecedented decumulation dating back to
2005. Likely prompted by price deflation and poor demand, decumulation
had reduced desired inventory levels too far.
Improvement in the foreign trade deficit contributed slightly
less to growth than the previously estimated one-half percentage point.
An upwardly revised 22.4% (-0.8% y/y) rise in exports followed a 17.8%
3Q gain as the lower value of the dollar continued to improve the
competitiveness of U.S. products. That revision was offset, however, by
a larger upward revision to growth in real imports to 15.3% (-6.7% y/y).
Growth in domestic final demand was left roughly unchanged at
a moderate 1.6% after a 2.3% 3Q increase. These gains remain the first
back-to-back quarterly increases since 2007. Business investment in
equipment &amp; software led last quarter's growth with an 18.2%
(-7.7% y/y) increase after its 1.5% 3Q rise. Investment in business
construction, however, offset much of this increase with a 13.9%
decline (-24.3% y/y). Residential investment remained strong with a
little-revised 5.0% gain (-12.3% y/y) which was the second consecutive
quarterly increase. Personal consumption growth lagged with a
downwardly revised 1.7% (1.0% y/y) increase. Finally, quarterly
spending by government fell slightly more than initially estimated
(+1.3% y/y), mostly due to a drop in defense spending.
Price inflation was revised slightly downward to a 0.4% gain
as measured by the chained GDP price index after little or no inflation
during the prior two quarters. Diminished price gains for all of last
year pulled the annual increase down to 1.2% which was nearly its
weakest increase since the early 1960s. The personal consumption chain
price index rose a lessened 2.3% in 4Q and increased just 0.2% for the
whole year owing to the yearly decline in energy prices.
The U.S. National Income &amp; Product Account data are
available in Haver's USECON and the USNA
databases.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" style="color: white;">Chained 2005$, % AR</a></th>
<th scope="col">4Q '09&nbsp; Preliminary</th>
<th scope="col">4Q '09 Advance</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>-0.7</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Inventory
Effect</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>-1.4</td>
<td>0.1</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>0.7</td>
<td>-0.0</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Foreign
Trade Effect</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>1.7</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-0.9</td>
<td>-0.9</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>-0.0</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Rebuilding of depleted inventories was more of a factor behind improvement in 4Q economic than previously estimated. The result brought 4Q real GDP growth up to 5.9% (AR) from the advance estimate of 5.7%. Last quarter's growth was [...]

U.S. GDP 4Q Increase Made Stronger By Inventories

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226a.jpg" align="right" border="0" height="265" width="353">
Rebuilding of depleted inventories was more of a factor behind
improvement in 4Q economic than previously estimated. The result
brought 4Q real GDP growth up to 5.9% (AR) from the advance estimate of
5.7%. Last quarter's growth was the strongest since 3Q 2003 and it
raised the y/y change into (slightly) positive territory for the first
time since early-2008. The revision slightly exceeded Consensus
expectations for 5.7% growth. 
 <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226b.jpg" style="width: 353px; height: 265px;" align="right">
Voluntary inventory accumulation now is estimated to have
added 3.9 percentage points to economic growth last quarter. It was
necessitated by vigorous and unprecedented decumulation dating back to
2005. Likely prompted by price deflation and poor demand, decumulation
had reduced desired inventory levels too far.
Improvement in the foreign trade deficit contributed slightly
less to growth than the previously estimated one-half percentage point.
An upwardly revised 22.4% (-0.8% y/y) rise in exports followed a 17.8%
3Q gain as the lower value of the dollar continued to improve the
competitiveness of U.S. products. That revision was offset, however, by
a larger upward revision to growth in real imports to 15.3% (-6.7% y/y).
Growth in domestic final demand was left roughly unchanged at
a moderate 1.6% after a 2.3% 3Q increase. These gains remain the first
back-to-back quarterly increases since 2007. Business investment in
equipment &amp; software led last quarter's growth with an 18.2%
(-7.7% y/y) increase after its 1.5% 3Q rise. Investment in business
construction, however, offset much of this increase with a 13.9%
decline (-24.3% y/y). Residential investment remained strong with a
little-revised 5.0% gain (-12.3% y/y) which was the second consecutive
quarterly increase. Personal consumption growth lagged with a
downwardly revised 1.7% (1.0% y/y) increase. Finally, quarterly
spending by government fell slightly more than initially estimated
(+1.3% y/y), mostly due to a drop in defense spending.
Price inflation was revised slightly downward to a 0.4% gain
as measured by the chained GDP price index after little or no inflation
during the prior two quarters. Diminished price gains for all of last
year pulled the annual increase down to 1.2% which was nearly its
weakest increase since the early 1960s. The personal consumption chain
price index rose a lessened 2.3% in 4Q and increased just 0.2% for the
whole year owing to the yearly decline in energy prices.
The U.S. National Income &amp; Product Account data are
available in Haver's USECON and the USNA
databases.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226d.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" style="color: white;">Chained 2005$, % AR</a></th>
<th scope="col">4Q '09&nbsp; Preliminary</th>
<th scope="col">4Q '09 Advance</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">4Q Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>5.9</td>
<td>5.7</td>
<td>2.2</td>
<td>-0.7</td>
<td>0.1</td>
<td>-2.4</td>
<td>0.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Inventory
Effect</td>
<td>3.9</td>
<td>3.4</td>
<td>0.7</td>
<td>-1.4</td>
<td>0.1</td>
<td>-0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>0.7</td>
<td>-0.0</td>
<td>-1.7</td>
<td>0.8</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Foreign
Trade Effect</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.8</td>
<td>1.7</td>
<td>0.9</td>
<td>1.0</td>
<td>-1.2</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.6</td>
<td>1.7</td>
<td>2.3</td>
<td>-0.9</td>
<td>-0.9</td>
<td>-2.7</td>
<td>-0.4</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.4</td>
<td>0.6</td>
<td>0.4</td>
<td>-0.0</td>
<td>0.7</td>
<td>1.2</td>
<td>2.1</td>
<td>2.9</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment
Revised Little And Remains Near High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226e.jpg" align="right" border="0" height="265" width="353">
Contrary to yesterday's troubling report of lower consumer
confidence, the Reuters/University of Michigan Index of Consumer
Sentiment for February fell just slightly to 73.6. The figure remained
near its two-year high of 74.4 reached last month and was little
different from the mid-month report. The latest figure fell just short
of Consensus expectations for 74.0 though it compares favorably to the
low of 55.3 in November 2008. During the last ten years there has been
a 61% correlation between the level of sentiment and the three-month
change real consumer spending.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226f.jpg" style="width: 353px; height: 265px;" align="right">
Expected economic conditions accounted for the m/m decline
with a lessened 2.4% m/m drop to the lowest level since November.
Expectations for business conditions during the next year and during
the next five years fell moderately but expectations for personal
finances fell to the lowest level in twelve months.
Sentiment about current economic conditions increased a
lessened 0.9% but that still was to the highest level since March 2008.
Assessments of current financial conditions were unchanged m/m at their
highest since September of 2008. Buying conditions for large household
goods, including furniture, refrigerators, stoves &amp;
televisions, moved up another 2.3% to the highest level since January
2008 but the view of current personal finances slipped (+15.4% y/y)
following two months of strength.
Expected price inflation during the next year was firmer than
indicated earlier at 3.6% and was up from the December 2008 reading of
1.7%.Respondents' view of government policy, which may eventually
influence economic expectations, fell to its lowest level in twelve
months. Just thirteen percent of respondents thought that a good job
was being done by government versus 41% who thought a poor job was
being done, a twelve-month high.
The Reuters/University of Michigan survey data are not
seasonally adjusted. The reading is based on telephone interviews with
about 500 households at month-end. These results are based on about 320
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.

<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226g.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226h.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM" style="color: white;">University of Michigan</a></th>
<th scope="col">Final - February</th>
<th scope="col">Mid-February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Feb. y/y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>73.6</td>
<td>73.7</td>
<td>74.4</td>
<td>72.5</td>
<td>30.7%</td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>81.8</td>
<td>84.1</td>
<td>81.1</td>
<td>78.0</td>
<td>24.9</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.4</td>
<td>66.9</td>
<td>70.1</td>
<td>68.9</td>
<td>35.4</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Plummet
As Prices Fall Sharply 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 26, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226i.jpg" style="width: 353px; height: 265px;" align="right">The
National
Association of Realtors reported that January sales of
existing homes fell another 7.2% to 5.050M units (SAAR) after
a little-revised 16.2% December decline. The decline may have been
again influenced by the timing of a recently-extended home-buyer tax
credit. The fall in January home sales greatly exceeded Consensus
expectations for a decline to 5.90M.
The home-buyer tax credit of up
to $8,000 now runs though April 30. Additionally, a new credit of up to
$6,500 is available to some existing home owners who move. The full
details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
Sales of single-family homes fell 6.9% but they remained up
8.6% y/y as
home affordability improved with lower prices and low interest rates.
Sales <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226j.jpg" style="width: 353px; height: 265px;" align="right">
of condos and co-ops alone fell 8.1% from December to 620,000 but
were up by one-third from twelve months ago.
 The median
price of all existing homes fell 3.4% last month after a much-reduced
0.3% December rise. The latest level equaled that of 12 months ago and
these were the lowest since May 2002. Some comfort may be taken from
the unchanged level of prices versus one year ago versus the
2.4%-to-12.4% declines during the last three years. These declines have
raised the affordability of a home to near its record high although the
rate of increase has slowed sharply. 
 The number of unsold homes
(single-family &amp; co-ops) fell 0.5% in January (-9.6% y/y) to
the lowest level since March 2006. At the current sales rate there was
a slightly-increased 7.8 months' supply of homes on the market, near
the lowest since late 2006. The latest figure was down from a high of
11.3 months during April of 2008. For single-family homes, the
inventory rose to a 7.6 months' supply.&nbsp;
 The data on existing
home sales, prices and affordability can be found in Haver's USECON
database. The regional price, affordability and inventory data is
available in the REALTOR database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,050</td>
<td>5,440</td>
<td>6,590</td>
<td>11.5%</td>
<td>5,160</td>
<td>4,893</td>
<td>5,675</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>820</td>
<td>920</td>
<td>1,150</td>
<td>-22.4</td>
<td>863</td>
<td>847</td>
<td>1,009</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,080</td>
<td>1,160</td>
<td>1,540</td>
<td>8.0</td>
<td>1,166</td>
<td>1,125</td>
<td>1,329</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,870</td>
<td>2,020</td>
<td>2,380</td>
<td>-12.0</td>
<td>1,913</td>
<td>1,858</td>
<td>2,244</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,280</td>
<td>1,350</td>
<td>1,420</td>
<td>7.6</td>
<td>1,216</td>
<td>1,063</td>
<td>1,093</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,430</td>
<td>4,760</td>
<td>5,710</td>
<td>8.6</td>
<td>4,567</td>
<td>4,338</td>
<td>4,959</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $
(NSA)</td>
<td>164,700</td>
<td>170,500</td>
<td>170,000</td>
<td>0.0</td>
<td>172,742</td>
<td>197,233</td>
<td>216,633</td>
</tr>
</tbody>
</table>

EMU Inflation Stays Under Wraps 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 26, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100226k.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
The EMU HICP has finalized for January. Headline prices fell
and core prices ( ex energy and unprocessed food) fell by 0.3%. Core
prices continue to drive their Yr/Yr rate lower to juts under 1%. Goods
prices in the Zone are up by 0.7% Yr/Yr while service prices are up
1.4%.over three months goods prices are falling.
EMU inflation among the large countries is fairly tightly
clustered. German inflation is 0.7% over 12-months and marks the low
while Italy at 1.3% over 12-months marks the high. The UK, a non
monetary union country, but an EU member has headline inflation at 3.5%
for 12-months.
Core inflation is clustered in the Union as well. Spain at
0.3% has the lowest Core rate over twelve months. Germany and France
are both at 0.9%. Italy at 1.5% has the highest core rate.
Over three and six months headline inflation in the Zone is
well-behaved while UK inflation continues to bulge, running up by as
much as a 6.2% at an annual rate over three months.
In the Zone core inflation is universally low over three
months; the large country with the lowest core inflation rate is
Germany at -0.7%, over six months Italy has the high at 1.9%
Inflation in the Zone is weak and economic activity has been
weakening. Weather has been severe in the US in Europe and it has hit
the UK hard in a few places. It is hard to know the role of weather in
blunting the forces of growth. For now central banks can take some
breathing room on the inflation front. Growth however has yet to turn
the corner in a strong dependable way.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Trends
in HICP
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">%
mo/mo</td>
<td style="font-weight: bold;" colspan="3">Saar</td>
<td style="font-weight: bold;">&nbsp;</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</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;">Yr Ago</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>2.2%</td>
<td>1.0%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>0.9%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Goods</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-2.4%</td>
<td>1.4%</td>
<td>0.7%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-0.5%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>1.4%</td>
<td>2.4%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">HICP</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>1.2%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>1.3%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.9%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>6.2%</td>
<td>4.4%</td>
<td>3.5%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>0.8%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">Core:xFE&amp;A</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>-0.3%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>0.9%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. GDP 4Q Increase Made StrongerBy Inventories

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100225g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Manufacturing orders are up by 0.8% in December but the
sequential growth rates do not show that the growth of orders continues
to accelerate. MFG sales are also slowing as capital goods and
intermediate goods sales rates over three-months are weaker than sales
rates for six months
The overall EU index of confidence rose in February but the
EMU index edged lower. Among the largest EU/EMU nations France and
Italy saw declines. Germany posted a gain of 0.9% in the month while
Spain&#8216;s index advanced by 1.2%. The UK saw confidence edge up by a tiny
0.1%.
The overall EMU confidence measure stands in the 62nd
percentile of its range but if we position it by queue among past
values it stands in the bottom third among all confidence measures
since 1989. Oddly the strongest relative standing of any sector is by
retailing which is in the 64th percentile of its range and in the 57th
percentile of its queue. The industrial sector and consumer confidence
in their respective 50th to 55th range percentiles and in their
respective 29th to 34th queue percentiles. The service sector stands
just below its range mid point in its 49th percentile but sags back to
a 23rd percentile standing in its queue
The difference between the range and queue percentiles tells
us something about the density of the distribution of values for these
readings. The queue percentile gives us a good fix on where the index
stands compared to where it has been historically since a queue
standing of 54% says that the indicator is weaker than this 54 percent
of the time and stronger only 46 percent of the time.
The range standing simply positions the current reading
between the best and worst readings in some historic span (since 1989).
For now the range readings are higher than the queue readings because
the current levels are elevated substantially from recession lows and
the lows skew the range. But compared to the full spectrum of readings
the current levels are not yet higher than they have been on average
except for retailing (in the 57th percentile of its queue). So Europe
is still lagging in its recovery. It is well short of getting back to
neutral even though the recovery has slowed and this month has brought
slippage to the EMU reading.
All the large countries continued to show overall sentiment
readings that are below their queue midpoints, although four exceed
their range midpoints. The highest queue standing is oddly and
surprisingly in Italy with confidence in the 44th percentile of its
queue followed by Germany, France and the UK all of which are in the
37th percentile of their respective queues. Spain is in the 16th
percentile; EMU is in the 26th percentile.
So EMU is better than this nearly 75% of the time and this is
after a 10 straight monthly rises in sentiment. That metric should stop
you in your tracks. Even though the overall EMU reading stands in the
55th percentile between its worst and best readings, the &#8216;queue
standing&#8217; is just above the lower quartile. In addition to this Europe
has big problems with Greece. You can see the dour mood in Spain with
its 19% unemployment rate and then there is beleaguered Portugal. The
ECB is on the cusp of new leadership &#8211; who will that be? Will it
inspire stability? Will it be a tough inflexible guy like Weber from
the Bundesbank or someone else? Europe is just a series of question
marks. And if it backslides who does the US export to? The US has
emerging troubles of its own
Welcome to 2010.

 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead><tr>
<th colspan="13" scope="col"> EU
Sectors and Country level Overall Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EU</td>
<td>Feb 
10</td>
<td>Jan 
10</td>
<td>Dec 
09</td>
<td>Nov 
09</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
<td>Average 
Level</td>
</tr>
<tr>
<td class="firstcol">Overall Index</td>
<td>97.4</td>
<td>97.2</td>
<td>95</td>
<td>91.5</td>
<td>62.4</td>
<td>166</td>
<td>115</td>
<td>68</td>
<td>47</td>
<td>100</td>
<td>33.9%</td>
<td>100.5</td>
</tr>
<tr>
<td class="firstcol">Industrial</td>
<td>-13</td>
<td>-13</td>
<td>-16</td>
<td>-19</td>
<td>56.5</td>
<td>178</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>29.1%</td>
<td>-7.8</td>
</tr>
<tr>
<td class="firstcol">Consumer Confid</td>
<td>-14</td>
<td>-13</td>
<td>-14</td>
<td>-15</td>
<td>52.9</td>
<td>165</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>34.3%</td>
<td>-11.1</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-5</td>
<td>-3</td>
<td>-6</td>
<td>-6</td>
<td>64.5</td>
<td>108</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>57.0%</td>
<td>-5.7</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-32</td>
<td>-34</td>
<td>-33</td>
<td>-32</td>
<td>21.7</td>
<td>203</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>19.1%</td>
<td>-17.1</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>0</td>
<td>-2</td>
<td>-2</td>
<td>-9</td>
<td>49.2</td>
<td>123</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>23.1%</td>
<td>12.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% m/m</td>
<td>Feb 
10</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td colspan="2">&nbsp;&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; &nbsp;EMU</td>
<td>-0.1%</td>
<td>2.0%</td>
<td>2.4%</td>
<td>95.9</td>
<td>55.4</td>
<td>185</td>
<td>116</td>
<td>71</td>
<td>46</td>
<td>100</td>
<td>26.3%</td>
<td>100.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Germany</td>
<td>0.9%</td>
<td>0.6%</td>
<td>1.6%</td>
<td>97.0</td>
<td>47.8</td>
<td>158</td>
<td>121</td>
<td>75</td>
<td>46</td>
<td>101</td>
<td>37.1%</td>
<td>100.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>-1.9%</td>
<td>1.7%</td>
<td>4.1%</td>
<td>98.4</td>
<td>54.4</td>
<td>157</td>
<td>119</td>
<td>74</td>
<td>44</td>
<td>100</td>
<td>37.5%</td>
<td>100.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Italy</td>
<td>-1.7%</td>
<td>4.3%</td>
<td>2.6%</td>
<td>99.7</td>
<td>58.6</td>
<td>139</td>
<td>120</td>
<td>71</td>
<td>50</td>
<td>100</td>
<td>44.6%</td>
<td>100.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Spain</td>
<td>1.2%</td>
<td>0.3%</td>
<td>1.3%</td>
<td>90.1</td>
<td>41.2</td>
<td>210</td>
<td>116</td>
<td>72</td>
<td>44</td>
<td>100</td>
<td>16.3%</td>
<td>100.2</td>
</tr>
<tr>
<td class="firstcol">Memo:UK</td>
<td>0.1%</td>
<td>3.4%</td>
<td>6.9%</td>
<td>98.3</td>
<td>66.1</td>
<td>158</td>
<td>115</td>
<td>65</td>
<td>50</td>
<td>100</td>
<td>37.1%</td>
<td>100.2</td>
</tr>
<tr>
<td colspan="2">All since Feb 1989</td>
<td colspan="2">251</td>
<td colspan="2">-Count</td>
<td colspan="2">Services:</td>
<td></td>
<td>160</td>
<td>-Count</td>
<td></td>
<td></td>
</tr>
<tr>
<td colspan="11" class="firstcol">Sentiment
is an index,
sector readings are net balance diffusion measures</td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body></html>

Manufacturing orders are up by 0.8% in December but the sequential growth rates do not show that the growth of orders continues to accelerate. MFG sales are also slowing as capital goods and intermediate goods sales rates over three- [...]

A Pause And Backtrack In EU/EMU Growth In February

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

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.

260112T1.jpg

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.

260112T2.jpg

**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).

260112T3.jpg

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.

260112T4.jpg

**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.

260112T5.jpg

**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.

260112T6.jpg

Asia

Economic Letter from Asia: A Bumpy Start

Michael J. Moran

260109A.jpg

260109B.jpg

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.

260109C.jpg

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.

A Soft Tone in the Labor Market

Winnie Tapasanun

260109F17.jpg

260109G17.jpg

Total housing starts fell 4.6% m/m in October to a seasonally adjusted annual rate of 1.246 million units—below expectations—following a 1.2% increase to 1.306 million in September and a 9.1% drop to 1.291 million in August (-8.5% m/m, 1.307 million previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected 1.321 million starts for October. The October figure marked the lowest level since May 2020 and represented the second m/m decline in three months after m/m increases in July and June. The year-on-year rate was at -7.8% in October, the steepest y/y drop since November 2024, following -3.8% in September and -1.2% in October 2024. Overall, starts remained 31.5% below the April 2022 peak of 1.820 million.

Single-family starts rebounded 5.4% (-7.8% y/y) to 874,000 in October, the highest level since July, after declines of 4.6% to 829,000 in September and 8.6% to 869,000 in August (890,000 previously). They reached a high of 1.218 million in November 2021 and a high of 1.273 in December 2020. Multi-family starts plunged 22.0% (-7.9% y/y) to 372,000, the lowest level since May, following a 13.0% September gain to 477,000 and a 10.0% August drop to 422,000 (417,000 previously). They reached a high of 629,000 units in November 2022 and a high of 616,000 units in April 2022.

By region, housing starts delivered a mixed performance. Starts in the West slumped 21.9% (-25.9% y/y) to 243,000 in October, the lowest level since July, after a 1.6% increase in September. Starts in the Northeast slid 0.6% (+41.3% y/y) to 154,000, the third m/m slide in four months, after a 58.2% September surge. To the upside, starts in the South rebounded 1.2% (-2.1% y/y) to 650,000 in October after a 3.6% decline in September and starts in the Midwest rose 0.5% (-20.7% y/y) to 199,000 after a 10.4% September decrease; for both regions, October represented the first m/m increase since July. Notably, the South continued to lead all regions with 650,000 starts, accounting for 52.2% of total U.S. housing starts; the region previously peaked at 1.044 million in April 2022.

Building permits fell 0.2% (-1.1% y/y) to 1.412 million in October, the sixth m/m fall in seven months, following a 6.4% rise to 1.415 million in September and a 2.3% decline to 1.330 million in August. They remained well below a high of 1.920 million in January 2022 and a high of 1.855 million in January 2021. Single-family permits fell 0.5% (-9.4% y/y) to 876,000, the second m/m fall in three months, after a 2.6% September increase to 880,000. They reached highs of 1.243 million in both January 2022 and January 2021. In contrast, multi-family permits rose 0.2% (16.3% y/y) to 536,000, the highest level since February 2024, after a 13.3% September gain to 535,000. They reached a peak of 817,000 units in February 2023 and a high of 787,000 units in June 2022. Regionally, permits fell m/m in the South (-3.3%; -3.9% y/y), the Midwest (-2.0%; -0.5% y/y), and the Northeast (-1.4%; +5.8% y/y), but increased m/m in the West (+9.1%; +2.1% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

260109H17.jpg

260109I17.jpg

- Housing starts -4.6% (-7.8% y/y) to 1.246 mil. in Oct.; second m/m fall in three months.
- Single-family starts up to a three-month high; multi-family starts down to a five-month low.
- Housing starts m/m down the West and Northeast but up in the South and Midwest.
- Building permits fall for the sixth time in seven months, led by a drop in single-family permits.

U.S. Housing Starts Decline in October; Lowest Level Since May ’20

260109E.jpg

German industrial production advanced by 0.8% month-to-month in November performing better than had been expected. Consumer goods output fell by 0.3% month-to-month, capital goods output soared with a 4.9% gain, while intermediate goods output fell back by 0.8%.  

On the whole, manufacturing output had been expected to be weak. But looking at manufacturing alone, rather than total industrial production, the gain was even stronger at 2.1% month-to-month. Real manufacturing orders in November rose by 5.6%, real sales in manufacturing rose by 2.7%. This is solid performance.

**Survey data have been weak and listless**
However, apart from anecdotal evidence, as monthly data unfold, the kinds of numbers that we have to look at first are various economic surveys that come from diffusion data. The ZEW’s current index was slightly stronger month-to-month at a still very weak -78.7 (net) reading compared to -80 in October although both of those were weaker than the ZEW net September reading of -76.4. IFO manufacturing weakened month-to-month in November at 87.1 compared to 88.1 in October and it was slightly weaker than its September value as well. IFO manufacturing expectations slipped to 94.1 in November from 96.9 in October although expectations were slightly higher than their level in September. The EU Commission index weakened in November to -18.9 from -18.1 in October although there was an improvement from -20.1 in September.

These comparisons show us that the survey data which we had in hand before getting the industrial production reading from Germany had given us a lot of weak readings and a lot of very weak momentum.

**Compare survey data to IP data using ranking technique**
We can compare industrial production data to survey data using two different columns in this table. The first is the queue standing column where we see the industrial production data with rankings mostly in their 50th percentile: intermediate goods have a ranking of 37.7% with construction at 33.4%; they are the weaker exceptions. We rank IP data by sector according to their annual growth rates compared to past growth rates.  However, by comparison the survey data (that we rank on levels) range between 12.1% and 29.8%; all of those are very weak readings. No wonder a focus on survey data leads to a weak upcoming assessment of production data. We can also look at a slightly more up-to-date, but shorter ranking, from January 2021. There we see that the industrial production data average rankings from the mid-60th percentile up to the 81.4 percentile for total industrial production. Surveys generally have rankings in the 20th and 30th percentile with the exception of IFO manufacturing expectations which reaches 67.8%, which is a solid reading.

260109.jpg

**Survey data signals should be downgraded?**
These comparisons show us that while it's hard to compare industrial output directly to the diffusion readings if we take those two metrics over the same timeline and compare the level of the diffusion index to the growth rate of the manufacturing index we get the capability to compare the two on more even footing. When we do that, we see that manufacturing data are doing better than the survey data very broadly speaking. So, while there's some surprise on the strength of manufacturing data, maybe we should place a greater emphasis on it because those data come from a real accounting process rather than from a survey process that is much less closely linked to magnitudes. And, essentially, we are really much more interested in magnitudes than just if something is higher and lower.

**Other Europe doing ‘well’, too**
Not so incidentally the industrial production readings for France, Spain, Portugal, and Norway, all of whom are fairly early reporters of industrial production data, rank well on the queue standing column as well as in the shorter rank standing column from January 2021. In fact, for these countries the difference in ranking between the two periods is not markedly different, certainly not as markedly different as it is for Germany. On the whole, it may be that Europe has been doing better than we thought because we've been spending too much time looking at the more up-to-date survey data on a PMI basis, rather than waiting for the more traditional and lagging industrial production reports that are accounting-based data and more thorough.

Economy in Brief

Jump to:

ISM Manufacturing Index Fell From January High

U.S. Personal Income Remains Weak

U.S. Personal Income Remains Weak

EMU Inflation Stays Under Wraps

U.S. Existing Home Sales Plummet As Prices Fall Sharply

U.S. GDP 4Q Increase Made Stronger By Inventories

U.S. GDP 4Q Increase Made StrongerBy Inventories

A Pause And Backtrack In EU/EMU Growth In February