Tom Moeller

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216f.jpg" style="width: 353px; height: 265px;" align="right">Low
interest rates and improved affordability have yet to generate strong
improvement in the housing market. The National Association of Home
Builders' index of housing market activity improved this month to 17
from 15 in January, but that was only back to the 4Q average.
Nevertheless, the index remained double the low of 8 hit last January.
The index is compiled from survey questions asking builders to rate
market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very
low&#8221;.<span> </span>The figure is thus a diffusion index
with numerical results over 50 indicating a predominance of &#8220;good&#8221;
readings.&nbsp;</p><p>The present sales index improved m/m to 17 and
equaled the 4Q and 3Q averages. The sub-index of sales during the next
six months also improved modestly versus January.&nbsp;The Home
Builders' Association also reported that the traffic of prospective
buyers languished at a reading of 12 which was below the averages from
2Q to 4Q of last year.&nbsp;</p><p>The regional housing market
indexes showed improvement versus last year throughout the country but
there has been modest backpedaling in the Northeast &amp; the
Midwest and relative stability in the South &amp; the
West.</p><p>The Home Builders' Housing Opportunity Index, which is
the share of homes sold that could be considered affordable to a family
earning the median income, fell in 3Q '09 (the latest available figure)
to 70.1%. It had jumped earlier to a record high of 72.5% buoyed by
lower home prices, lower interest rates and higher income. (There is a
break in the series from 2002 to 2003.).</p><p>&nbsp;The NAHB has compiled
the <b>Housing Market Index</b> since 1985.<span> </span>The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s <b>SURVEYS</b>
database.</p><p>&nbsp;<b>IMF Explores Contours of Future
Macroeconomic Policy f</b>rom the International Monetary Fund can
be found <a href="http://www.imf.org/external/pubs/ft/survey/so/2010/INT021210A.htm">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216g.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216h.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/SURVEYS/@S4/@S4.HTM" style="color: black;">Nat'l Association of Home Builders</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>&nbsp;February '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">Composite Housing Market Index
(All Good=100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>9</td>
<td>15</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>7</td>
<td>13</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>27</td>
<td>26</td>
<td>26</td>
<td>15</td>
<td>24</td>
<td>25</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>12</td>
<td>12</td>
<td>13</td>
<td>11</td>
<td>13</td>
<td>14</td>
<td>21</td>
</tr>
</tbody>
</table>
</span></body></html>

Low interest rates and improved affordability have yet to generate strong improvement in the housing market. The National Association of Home Builders' index of housing market activity improved this month to 17 from 15 in January, but [...]

U.S. Home Builders’ Index Improves Slightly

Louise Curley

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216d.jpg" style="width: 353px; height: 265px;" align="right">
The financial community in Germany has become less enthusiastic about
economic prospects in Germany and in the Euro Area as a whole. The
results of the latest ZEW survey of analysts and institutional
investors showed that the balance of those looking for improved
conditions six months ahead in Germany over those looking for
deteriorating conditions was 45.4% in February, down 1.8 points from
47.2% in January and down 12.6 points from the peak, 57.7%, in
September of last year. Although the majority of the participants still
view current conditions negatively, the excess of pessimists over
optimists declined slightly from 56.6% to 54.8%.</p>
<p> <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216e.jpg" style="width: 353px; height: 265px;" align="right">The
participants in the latest survey are generally less optimistic about
profit prospects. Among the thirteen industries covered, only
construction and services showed an increased balance of optimists over
pessimists. The negative balances of opinion on the outlook for profits
in the automobile and the retail/consumer goods industries increased in
February. The balance on the profit outlook for the automobile industry
was -29.7% in February compared with -23.2% in January. The comparable
figures for the consumption/trade industries were-18.9% and -12.1%. The
balances of opinion on the out look for profits in the remaining
industries are still positive after declines in February. The balances
of opinion for the thirteen industries in February and their changes
from January are shown in the table below.</p>
<p> In addition to an appraisal of current economic conditions
and expectations of conditions six months ahead for Germany, the
participants in the ZEW survey also provide a similar appraisal for the
Euro Area. The balance of those expecting an improvement in the economy
of the entire Euro Area was 40.2% in February, 4.9 points lower than
that for Germany and the balance on current conditions was -62.7%, 6.1
points more unfavorable than the -56.6% for Germany. The two attached
charts compare the balances of opinion on (1) current conditions and
(2) expectations for Germany and for the Euro Area. No doubt the
severity of the financial crisis in Greece together with continued
concern over the economies of Ireland, Portugal and Spain account for
the more cautious appraisal of prospects for the entire Euro Area than
that for Germany.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS (% Balance)</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">Jan 10</th>
<th scope="col">&nbsp;Peak</th>
<th scope="col">M/M Chg</th>
<th scope="col">Chg from Peak</th>
<th scope="col">Industry</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">M/M Chg</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="6"><b>Germany</b></td>
<td>Banks</td>
<td>15.8</td>
<td>-6.8</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-92.8**</td>
<td>1.8</td>
<td>38.0</td>
<td>Insurance</td>
<td>11.0</td>
<td>-5.6</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>45.1</td>
<td>47.2</td>
<td>57.7*</td>
<td>-1.9</td>
<td>-12.6</td>
<td>Automobile</td>
<td>-29.7</td>
<td>-6.5</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Chem/Pharma</td>
<td>35.8</td>
<td>-4.9</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol"><b>Euro
Area</b></td>
<td>Steel</td>
<td>23.8</td>
<td>-5.5</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-62.1</td>
<td>-62.7</td>
<td>-93.2**</td>
<td>1.6</td>
<td>31.1</td>
<td>Electronics</td>
<td>22.0</td>
<td>-5.0</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>40.2</td>
<td>46.2</td>
<td>59.6*</td>
<td>-6.0</td>
<td>-19.4</td>
<td>Mech. Eng</td>
<td>29.6</td>
<td>-4.2</td>
</tr>
<tr class="grey2">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Retail/ Cons</td>
<td>-18.9</td>
<td>-6.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Construction</td>
<td>4.2</td>
<td>+3.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td class="firstcol"> Utilities
</td>
<td>21.4</td>
<td>-0.6</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Services</td>
<td>22.1</td>
<td>+1.0</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Telecom</td>
<td>6.4</td>
<td>-3.1</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">* September
2009&nbsp; ** May 2009</td>
<td>Info Tech</td>
<td>33.5</td>
<td>-2.9</td>
</tr>
</tbody>
</table>
</p>
</span>
</body></html>

The financial community in Germany has become less enthusiastic about economic prospects in Germany and in the Euro Area as a whole. The results of the latest ZEW survey of analysts and institutional investors showed that the balance [...]

German Investors Continue To Lower Expectations

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216a.jpg" style="width: 353px; height: 265px;" align="right">Business
conditions in the Northeast improved this month.
The Federal Reserve Bank of New York reported that its February Empire
State Factory Index of General Business Conditions rose to 24.91, the
highest level since October, and remained near the highest level since
2004. The latest reading compares to sharply negative levels at the
recession low and suggests positive growth in factory sector activity.
The latest level exceeded Consensus expectations for a reading of
18.0.</p>
<p> The figure is a diffusion index. Since the series' inception
in
2001, there has been a 74% correlation between its level and the
three-month change in U.S. factory sector industrial production. Like
the Philadelphia Fed Index of General Business Conditions, the Empire
State Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.</p>
<p>Amongst the separate survey questions,
the inventory series improved the most this month to 0.0 from -17.3,
which was the first reading out of negative territory since August
2008. Most other series fell m/m except employment which improved to
its highest level since October. There has been an 87% correlation
between the employment index and the three-month growth in factory
sector employment as reported by the Labor Department.&nbsp;</p>
<p>The prices
paid index held near the highest level since September 2008 and was up
sharply from the early-2009 low. Since inception in 2001, there has
been a 77% correlation between the index of prices paid and the
three-month change in the core intermediate materials PPI.&nbsp;</p>
<p>The Empire State <b>index of expected business
conditions in six
months</b> slipped during February from levels which were the
highest since early 2004. The inventory subseries rose sharply to its
highest since early 2008.</p>
<p>The Empire State Manufacturing Survey is a
monthly survey of manufacturers in New York State. Participants from
across the state in a variety of industries respond to a questionnaire
and report the change in indicators from the previous month. Each index
is seasonally adjusted. Respondents also state the likely direction of
these same indicators six months ahead.<span> For more on the
Empire State Manufacturing Survey, including methodologies and the
latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.</span>
<span>The Empire State data is available in Haver's <b>SURVEYS
</b>database.</span><span style="font-weight: bold;"></span></p>
<p><span style="font-weight: bold;"></span><b>Equipping
financial
regulators with the tools necessary to monitor systemic risk</b>
is last Friday's Senate testimony by Fed Governor Governor Daniel K.
Tarullo and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20100212a.htm">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216c.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/SURVEYS/@S5/@S511/@S511.HTM">Empire State
Manufacturing Survey</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>February '09&nbsp;</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">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>24.91</td>
<td>15.92</td>
<td>4.5</td>
<td>-31.61</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>8.78</td>
<td>20.48</td>
<td>2.77</td>
<td>-27.20</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>0.00</td>
<td>-17.33</td>
<td>-18.42</td>
<td>-8.05</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>5.56</td>
<td>4.00</td>
<td>-5.26</td>
<td>-39.08</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>31.94</td>
<td>32.00</td>
<td>19.74</td>
<td>-13.79</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Business conditions in the Northeast improved this month. The Federal Reserve Bank of New York reported that its February Empire State Factory Index of General Business Conditions rose to 24.91, the highest level since October, and [...]

Empire State Factory Conditions Improve; Inventories End Decumulation

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216a.jpg" style="width: 353px; height: 265px;" align="right">Business
conditions in the Northeast improved this month.
The Federal Reserve Bank of New York reported that its February Empire
State Factory Index of General Business Conditions rose to 24.91, the
highest level since October, and remained near the highest level since
2004. The latest reading compares to sharply negative levels at the
recession low and suggests positive growth in factory sector activity.
The latest level exceeded Consensus expectations for a reading of
18.0.</p>
<p> The figure is a diffusion index. Since the series' inception
in
2001, there has been a 74% correlation between its level and the
three-month change in U.S. factory sector industrial production. Like
the Philadelphia Fed Index of General Business Conditions, the Empire
State Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.</p>
<p>Amongst the separate survey questions,
the inventory series improved the most this month to 0.0 from -17.3,
which was the first reading out of negative territory since August
2008. Most other series fell m/m except employment which improved to
its highest level since October. There has been an 87% correlation
between the employment index and the three-month growth in factory
sector employment as reported by the Labor Department.&nbsp;</p>
<p>The prices
paid index held near the highest level since September 2008 and was up
sharply from the early-2009 low. Since inception in 2001, there has
been a 77% correlation between the index of prices paid and the
three-month change in the core intermediate materials PPI.&nbsp;</p>
<p>The Empire State <b>index of expected business
conditions in six
months</b> slipped during February from levels which were the
highest since early 2004. The inventory subseries rose sharply to its
highest since early 2008.</p>
<p>The Empire State Manufacturing Survey is a
monthly survey of manufacturers in New York State. Participants from
across the state in a variety of industries respond to a questionnaire
and report the change in indicators from the previous month. Each index
is seasonally adjusted. Respondents also state the likely direction of
these same indicators six months ahead.<span> For more on the
Empire State Manufacturing Survey, including methodologies and the
latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.</span>
<span>The Empire State data is available in Haver's <b>SURVEYS
</b>database.</span><span style="font-weight: bold;"></span></p>
<p><span style="font-weight: bold;"></span><b>Equipping
financial
regulators with the tools necessary to monitor systemic risk</b>
is last Friday's Senate testimony by Fed Governor Governor Daniel K.
Tarullo and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20100212a.htm">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216c.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/SURVEYS/@S5/@S511/@S511.HTM">Empire
State
Manufacturing Survey</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>February '09&nbsp;</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">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>24.91</td>
<td>15.92</td>
<td>4.5</td>
<td>-31.61</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>8.78</td>
<td>20.48</td>
<td>2.77</td>
<td>-27.20</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>0.00</td>
<td>-17.33</td>
<td>-18.42</td>
<td>-8.05</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>5.56</td>
<td>4.00</td>
<td>-5.26</td>
<td>-39.08</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>31.94</td>
<td>32.00</td>
<td>19.74</td>
<td>-13.79</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">German Investors Continue To Lower
Expectations </span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> February 16, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216d.jpg" style="width: 353px; height: 265px;" align="right">
The financial community in Germany has become less enthusiastic about
economic prospects in Germany and in the Euro Area as a whole. The
results of the latest ZEW survey of analysts and institutional
investors showed that the balance of those looking for improved
conditions six months ahead in Germany over those looking for
deteriorating conditions was 45.4% in February, down 1.8 points from
47.2% in January and down 12.6 points from the peak, 57.7%, in
September of last year. Although the majority of the participants still
view current conditions negatively, the excess of pessimists over
optimists declined slightly from 56.6% to 54.8%.</p>
<p> <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216e.jpg" style="width: 353px; height: 265px;" align="right">The
participants in the latest survey are generally less optimistic about
profit prospects. Among the thirteen industries covered, only
construction and services showed an increased balance of optimists over
pessimists. The negative balances of opinion on the outlook for profits
in the automobile and the retail/consumer goods industries increased in
February. The balance on the profit outlook for the automobile industry
was -29.7% in February compared with -23.2% in January. The comparable
figures for the consumption/trade industries were-18.9% and -12.1%. The
balances of opinion on the out look for profits in the remaining
industries are still positive after declines in February. The balances
of opinion for the thirteen industries in February and their changes
from January are shown in the table below.</p>
<p> In addition to an appraisal of current economic conditions
and expectations of conditions six months ahead for Germany, the
participants in the ZEW survey also provide a similar appraisal for the
Euro Area. The balance of those expecting an improvement in the economy
of the entire Euro Area was 40.2% in February, 4.9 points lower than
that for Germany and the balance on current conditions was -62.7%, 6.1
points more unfavorable than the -56.6% for Germany. The two attached
charts compare the balances of opinion on (1) current conditions and
(2) expectations for Germany and for the Euro Area. No doubt the
severity of the financial crisis in Greece together with continued
concern over the economies of Ireland, Portugal and Spain account for
the more cautious appraisal of prospects for the entire Euro Area than
that for Germany.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS (% Balance)</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">Jan 10</th>
<th scope="col">&nbsp;Peak</th>
<th scope="col">M/M Chg</th>
<th scope="col">Chg from Peak</th>
<th scope="col">Industry</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">M/M Chg</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="6"><b>Germany</b></td>
<td>Banks</td>
<td>15.8</td>
<td>-6.8</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-92.8**</td>
<td>1.8</td>
<td>38.0</td>
<td>Insurance</td>
<td>11.0</td>
<td>-5.6</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>45.1</td>
<td>47.2</td>
<td>57.7*</td>
<td>-1.9</td>
<td>-12.6</td>
<td>Automobile</td>
<td>-29.7</td>
<td>-6.5</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Chem/Pharma</td>
<td>35.8</td>
<td>-4.9</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol"><b>Euro
Area</b></td>
<td>Steel</td>
<td>23.8</td>
<td>-5.5</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-62.1</td>
<td>-62.7</td>
<td>-93.2**</td>
<td>1.6</td>
<td>31.1</td>
<td>Electronics</td>
<td>22.0</td>
<td>-5.0</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>40.2</td>
<td>46.2</td>
<td>59.6*</td>
<td>-6.0</td>
<td>-19.4</td>
<td>Mech. Eng</td>
<td>29.6</td>
<td>-4.2</td>
</tr>
<tr class="grey2">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Retail/ Cons</td>
<td>-18.9</td>
<td>-6.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Construction</td>
<td>4.2</td>
<td>+3.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td class="firstcol"> Utilities
</td>
<td>21.4</td>
<td>-0.6</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Services</td>
<td>22.1</td>
<td>+1.0</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Telecom</td>
<td>6.4</td>
<td>-3.1</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">* September
2009&nbsp; ** May 2009</td>
<td>Info Tech</td>
<td>33.5</td>
<td>-2.9</td>
</tr>
</tbody>
</table>
</p>
</span>
<span id="articletitle">U.S. Home Builders&#8217; Index Improves
Slightly</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> February 16, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216f.jpg" style="width: 353px; height: 265px;" align="right">Low
interest rates and improved affordability have yet to generate strong
improvement in the housing market. The National Association of Home
Builders' index of housing market activity improved this month to 17
from 15 in January, but that was only back to the 4Q average.
Nevertheless, the index remained double the low of 8 hit last January.
The index is compiled from survey questions asking builders to rate
market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very
low&#8221;.<span> </span>The figure is thus a diffusion index
with numerical results over 50 indicating a predominance of &#8220;good&#8221;
readings.&nbsp;</p>
<p>The present sales index improved m/m to 17 and
equaled the 4Q and 3Q averages. The sub-index of sales during the next
six months also improved modestly versus January.&nbsp;The Home
Builders' Association also reported that the traffic of prospective
buyers languished at a reading of 12 which was below the averages from
2Q to 4Q of last year.&nbsp;</p>
<p>The regional housing market
indexes showed improvement versus last year throughout the country but
there has been modest backpedaling in the Northeast &amp; the
Midwest and relative stability in the South &amp; the
West.</p>
<p>The Home Builders' Housing Opportunity Index, which is
the share of homes sold that could be considered affordable to a family
earning the median income, fell in 3Q '09 (the latest available figure)
to 70.1%. It had jumped earlier to a record high of 72.5% buoyed by
lower home prices, lower interest rates and higher income. (There is a
break in the series from 2002 to 2003.).</p>
<p>&nbsp;The NAHB has compiled
the <b>Housing Market Index</b> since 1985.<span> </span>The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s <b>SURVEYS</b>
database.</p>
<p>&nbsp;<b>IMF Explores Contours of Future
Macroeconomic Policy f</b>rom the International Monetary Fund can
be found <a href="http://www.imf.org/external/pubs/ft/survey/so/2010/INT021210A.htm">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216g.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216h.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/SURVEYS/@S4/@S4.HTM" style="color: black;">Nat'l Association of Home Builders</a></b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>&nbsp;February '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">Composite Housing Market Index
(All Good=100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>9</td>
<td>15</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>7</td>
<td>13</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>27</td>
<td>26</td>
<td>26</td>
<td>15</td>
<td>24</td>
<td>25</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>12</td>
<td>12</td>
<td>13</td>
<td>11</td>
<td>13</td>
<td>14</td>
<td>21</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Empire State Factory ConditionsImprove; Inventories End Decumulation

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<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100215a.jpg" width="353"></p>
<p>Japan&#39;s fourth quarter real Gross Domestic Product rose more than expected--4.6% at an annual rate. However, the third quarter was revised downward from 1.3% annual rate to no change. The biggest contributor to growth was foreign trade: exports increased 21.7% (saar) while imports increased only 5.3% (saar). Data for inventories are not yet available, so there are no data for Gross Capital Formation, but Fixed Capital Formation showed only a minimal decline after four quarters of double digit declines (The fourth quarter of 2008, not shown below, declined 17.3% (saar). Nominal GDP rose only 0.9% at an annual rate. As a result, deflation intensified. The first chart shows the widening gap between real and nominal GDP.</p>
<p>Masaaki Shirakawa, Governor of the Bank of Japan, recently addressed the problem of deflation in a January 29, 2010 speech. The rationalization of the distribution system and deregulation of the eighties and nineties played a significant and benign role in reducing Japan&#39;s high cost economy; but once the price level had become more in line with that of other developed countries, the continued decline in prices has become malign. Fundamentally, the cause of deflation is decreased demand and its cure, increased demand. But, since the latter half of the nineties, there has been an almost continuous decline in wages accompanied by a decline in expectations of further growth both of which have tended to reduce demand. Governor Shirakawa stressed measures that would improve the economic structure of the economy rather than monetary expansion to increase demand.He urged the Japanese to make the most of global demand, especially from emerging and developing economies by introducing more flexibility in their economic structure, easing entries and exits of businesses and encouraging the development of new products.<br></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"><b>JAPAN GDP (SAAR)</b></th>
<th scope="col"><b>Q4/09&nbsp;</b></th>
<th scope="col"><b>Q3/09</b></th>
<th scope="col"><b>Q2/00</b></th>
<th scope="col"><b>Q1/ 09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
<th scope="col"><b>2006</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>2.7</td>
<td>2.4</td>
<td>4.6</td>
<td>-5.2</td>
<td>1.1</td>
<td>-1.7</td>
<td>1.2</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol">Government Consumption</td>
<td>3.3</td>
<td>0.5</td>
<td>1.1</td>
<td>3.4</td>
<td>2.1</td>
<td>-0.5</td>
<td>2.7</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">Gross Capital Formation</td>
<td>n.a</td>
<td>-10.6</td>
<td>-23.2</td>
<td>-26.6</td>
<td>n.a.</td>
<td>-3.1</td>
<td>-3.0</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fixed Capital Formation</td>
<td>-0.6</td>
<td>-11.8</td>
<td>-11.1</td>
<td>-22.7</td>
<td>-11.5</td>
<td>-5.0</td>
<td>-4.6</td>
<td>-2.0</td>
</tr>
<tr>
<td class="firstcol">Exports&nbsp;</td>
<td>21.7</td>
<td>39.8</td>
<td>42.3</td>
<td>-66.3</td>
<td>8.9</td>
<td>-10.1</td>
<td>9.8</td>
<td>6.5</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>5.3</td>
<td>23.3</td>
<td>-14.7</td>
<td>-53.9</td>
<td>-10.0</td>
<td>1.3</td>
<td>2.3</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Total Real GDP&nbsp;</td>
<td>4.6</td>
<td>0.0</td>
<td>5.2</td>
<td>-12.3</td>
<td>-1.6</td>
<td>-1.3</td>
<td>1.7</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">Total Nominal GDP</td>
<td>0.9</td>
<td>-1.8</td>
<td>-0.5</td>
<td>-13.0</td>
<td>-3.6</td>
<td>-3.9</td>
<td>0.5</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">n.a. not available</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
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Japan's fourth quarter real Gross Domestic Product rose more than expected--4.6% at an annual rate. However, the third quarter was revised downward from 1.3% annual rate to no change. The biggest contributor to growth was foreign [...]

Deflation Intensifies in Japan

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100212e.jpg" style="width: 353px; height: 265px;" align="right">The
Reuters/University of Michigan Index of Consumer Sentiment for
mid-February fell modestly to 73.7 from is two-year high of to 74.4
reached last month. The latest figure fell short of Consensus
expectations for a higher reading of 75.0; however, it compares
favorably to the low of 55.3 in November 2008. During the last ten
years there has been a two-thirds correlation between the level of
sentiment and the three-month change real consumer spending.&nbsp;</p>
<p>Expected economic conditions accounted for the decline with a
4.6% 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.</p><p> Sentiment about current economic conditions
increased by another 3.7% to its 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, also moved up another 5.3% to the highest level since
January 2008.&nbsp;&nbsp;</p>
<p> Expected price inflation during the
next year slipped m/m to 3.3% but it was up from the December 2008
reading of 1.7%.&nbsp;Respondents' view of government policy, which
may eventually influence economic expectations, slipped. Just sixteen
percent of respondents thought that a good job was being done by
government versus 40% who thought a poor job was being done, a
twelve-month high.&nbsp;&nbsp;</p>
<p>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 <b>USECON </b>database with details in the
proprietary <b>UMSCA </b>database.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100212f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100212g.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/@EF/@EF14/@EF1402/@EF1402.HTM"><b>University of Michigan</b></a></th>
<th scope="col"><b>Mid-February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>Feb. y/y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>73.7</td>
<td>74.4</td>
<td>72.5</td>
<td><span>30.9%</span></td>
<td>66.3</td>
<td>63.8</td>
<td>85.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>84.1</td>
<td>81.1</td>
<td>78.0</td>
<td>28.4</td>
<td>69.6</td>
<td>73.7</td>
<td>101.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>66.9</td>
<td>70.1</td>
<td>68.9</td>
<td>32.5</td>
<td>64.1</td>
<td>57.3</td>
<td>75.6</td>
</tr>
</tbody>
</table>
</span>
</body></html>

The Reuters/University of Michigan Index of Consumer Sentiment for mid-February fell modestly to 73.7 from is two-year high of to 74.4 reached last month. The latest figure fell short of Consensus expectations for a higher reading of [...]

Michigan Consumer Sentiment Dips From Recent High

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100212h.jpg" style="width: 353px; height: 265px;" align="right">

A developing
trend towards accumulation of business inventories was cut short in
December. The 0.2% yearend decline partially reversed gains during the
prior two months which were the first in over a year. For the year
business inventories fell a record 9.7% as prices and volumes declined.
Perhaps the earlier accumulation resulted from slower sales growth.
Business sales in December were below the pace during three of the
prior four months. As a result, the inventory/sales ratio fell back to
the cycle low of 1.26 from a January '09 high of 1.46.</p><p>Lower
manufacturing and wholesale inventories led the December decline after
earlier gains which, in the case of wholesalers, was led by higher
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100212i.jpg" style="width: 353px; height: 265px;" align="right">
petroleum prices.&nbsp;Total retail inventories were unchanged
after steady declines since August 2008. Cuts last month were led by
food &amp; beverage stores with a 1.5% (-0.6% y/y) decline.
Elsewhere, inventory cutting slowed from earlier strong declines.
Furniture inventories even have risen during three of the last four
months while clothing and general merchandise inventories are falling
at slower rates. Auto dealer inventories slipped m/m and are down by
one-quarter y/y.</p><p>Retailers' inventory/sales ratio fell to a new cycle
low with sales gains and little inventory growth. The I/S ratio for
department stores led the decline with little increase elsewhere.
Wholesalers' ratio also fell to a near-record low while the I/S ratio
in the factory sector fell to the lowest level since July 2008.&nbsp;</p><p> The
business sales and inventory data are available in Haver's <b>USECON</b>
database.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Business
Inventories (%)</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>October</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.3</td>
<td>-9.7</td>
<td>-9.7</td>
<td>0.4</td>
<td>4.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.0</td>
<td>-0.2</td>
<td>-0.0</td>
<td>-10.6</td>
<td>-10.6</td>
<td>-3.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Auto</td>
<td>0.2</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-5.1</td>
<td>-5.1</td>
<td>-1.9</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.8</td>
<td>1.6</td>
<td>0.6</td>
<td>-10.2</td>
<td>-10.2</td>
<td>2.5</td>
<td>6.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.4</td>
<td>-8.6</td>
<td>-8.6</td>
<td>2.2</td>
<td>3.7</td>
</tr>
</tbody>
</table>
</span></body></html>

A developing trend towards accumulation of business inventories was cut short in December. The 0.2% yearend decline partially reversed gains during the prior two months which were the first in over a year. For the year business [...]

U.S. Business Inventories Slip After Two-Month Increase

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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Robert Brusca

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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.

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**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.

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

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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.

A Soft Tone in the Labor Market

Winnie Tapasanun

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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.

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- 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

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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

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