Tom Moeller

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100203a.jpg" style="width: 353px; height: 265px;" align="right">
There's no
gain in payroll levels yet, but the shrinkage continued to lessen last
month. The latest report from the payroll processor ADP, in their
National Employment Report, indicated that January nonfarm payroll
levels declined 22,000 following a revised 61,000 December drop that
was less than initially reported. The latest reading was the
twenty-fourth consecutive monthly decline. <span class="style1"></span></p>
<p><span class="style1">ADP
compiled the estimate from its database of individual companies'
payroll information. Macroeconomic Advisers, LLC, the St. Louis
economic consulting firm, developed the methodology for transforming
the raw data into an economic indicator.&nbsp;</span><span class="style1"></span></p>
<p><span class="style1"></span>The U.S. Bureau
of Labor
Statistics will report January payroll employment this Friday<span class="style1">. For comparison, the December decline of
61,000 in ADP's measure of private nonfarm payrolls was accompanied by
a similar loss of 64,000 jobs in the BLS measure of private sector
payrolls.</span><span class="style1"> According to
ADP and Macro-Advisers, the correlation between the monthly percentage
change in the ADP estimate and that in the BLS data is 0.90.</span><span class="style1"></span></p>
<p><span class="style1"> ADP reported that
service-producing
industry employment rose for the second consecutive month with a gain
of 38,000 (-2.0% y/y). Small-sized payrolls grew 16,000 (-1.7% y/y)
while medium-sized payrolls grew a larger 22,000 (-2.2% y/y). These
increases were accompanied by no-change (-2.3% y/y) in large service
producing payrolls.</span><span class="style1"></span></p>
<p><span class="style1">In
the goods producing sector employment fell another 60,000 during
January (-10.9% y/y). The three-month annual rate of decline eased
again to -4.8% versus -17.3% at its worst last March. Small-sized
payrolls fell 28,000 (-11.1% y/y) while medium-sized payrolls fell
13,000 (-10.3% y/y). Large payrolls fell 19,000 (-11.9% y/y). In the
manufacturing sector alone, payrolls fell 25,000 (-9.8% y/y). That was
the easiest m/m decline in two years and the three-month change
moderated to -3.5% from -17.4% last March.</span><span class="style1"></span></p>
<p><span class="style1">The ADP National Employment
Report
data is maintained in Haver's </span><strong>USECON</strong><span class="style1" style="font-family: Verdana; font-size: 10pt;">
database; historical figures date back to December 2000. The figures in
this report cover only private sector jobs and exclude employment in
the public sector.</span><span class="style1">&nbsp;The
full ADP National Employment Report can be found </span><span class="style1"><a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_January_10.pdf">here</a></span>
<span class="style1">and the ADP methodology is
explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.</span>&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100203b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100203c.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"><strong><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">ADP National Employment
Report</a></strong></th>
<th scope="col"><strong>January</strong></th>
<th scope="col"><strong>December</strong></th>
<th scope="col"><strong>November</strong></th>
<th scope="col"><strong>Y/Y</strong></th>
<th scope="col"><strong>2009</strong></th>
<th scope="col"><strong>2008</strong></th>
<th scope="col"><strong>2007</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll
Employment (m/m Chg., 000s)</td>
<td>-22</td>
<td>-61</td>
<td>-121</td>
<td>-3.6%</td>
<td>-4.4%</td>
<td>-0.5%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small
Payroll (1-49)</td>
<td>-12</td>
<td>-17</td>
<td>-50</td>
<td>-3.1</td>
<td>-3.7</td>
<td>-0.0</td>
<td>1.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium
Payroll (50-499)</td>
<td>9</td>
<td>-16</td>
<td>-37</td>
<td>-3.8</td>
<td>-5.0</td>
<td>-0.5</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large
Payroll (&gt;500)</td>
<td>-19</td>
<td>-28</td>
<td>-34</td>
<td>-4.4</td>
<td>-5.1</td>
<td>-1.6</td>
<td>-0.1</td>
</tr>
</tbody>
</table>
</span>
</body></html>

There's no gain in payroll levels yet, but the shrinkage continued to lessen last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that January nonfarm payroll levels declined [...]

ADP Report: Payroll Employment Decline Continues To Shrink

Louise Curley

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202h.jpg" style="width: 353px; height: 265px;" align="right">Data
for
retail sales, excluding motor vehicles and motorcycles, in France and
in Germany were released today.&nbsp; The latest date for France is
November and for Germany, December.</p>
<p>Retail trade in Germany continues
to disappoint.&nbsp; Both the volume and value of trade increased
0.8% in December but they are no higher than they were
October.&nbsp; The volume of trade in December was 97.0 (2005=100)
compared with 97.9 in October.&nbsp; The corresponding figures for
the value of trade were 98.9 and 100.0. With the GfK Consumer Climate
Survey released last week pointing to a continuing deterioration of the
consumer climate in January and February, the outlook for retail sales
is not encouraging. The first chart shows that the declining trends in
both the value and the volume of retail trade, which began in early
2008, are continuing.&nbsp;</p>
<p>The picture in France is more
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202i.jpg" style="width: 353px; height: 265px;" align="right">encouraging.&nbsp;
Although both volume and value have had their
ups and down, the declines in the volume and value of retail trade have
been less severe than those in Germany and the trends for both appear
to have begun to turn up since May of this year.&nbsp; There was no
change in the value of trade in November--the index remaining at 105.2;
there was a slight decline in the volume of trade to 107.8 from 107.9
in October.&nbsp; The value and volume of retail trade in France
are shown in the second chart.</p>
<p>Since the data are available only in
index form, the absolute volume and value of retail trade are
unknown.&nbsp; All we know is that, in the case of Germany, the
volume of retail trade in December was 3% below its volume in 2005 and
the value, 1.1% below 2005.&nbsp; In France, the volume of retail
trade in November was 7.8% above its 2005 volume and the value, 5.2%
above.&nbsp; The volume and value of retail sales in Germany are
still below levels reached in 2005, while in France the volume and
value of retail sales have surpassed 2005 levels.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Value
of Retail Trade (2005=100)</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 08</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>98.9</td>
<td>98.1</td>
<td>100.0</td>
<td>99.0</td>
<td>98.8</td>
<td>99.8</td>
<td>99.1</td>
<td>99.9</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>105.2</td>
<td>105.2</td>
<td>104.6</td>
<td>105.2</td>
<td>104.2</td>
<td>104.9</td>
<td>103.6</td>
</tr>
<tr>
<td colspan="9">Volume of Retail
Trade
(2005=100)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>97.0</td>
<td>96.2</td>
<td>97.9</td>
<td>97.0</td>
<td>96.5</td>
<td>98.1</td>
<td>96.8</td>
<td>97.7</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>107.8</td>
<td>107.9</td>
<td>107.1</td>
<td>107.9</td>
<td>107.1</td>
<td>107.9</td>
<td>106.7</td>
</tr>
</tbody>
</table>
</p>
</span>
</body></html>

Data for retail sales, excluding motor vehicles and motorcycles, in France and in Germany were released today. The latest date for France is November and for Germany, December. Retail trade in Germany continues to disappoint. Both the [...]

German And French Retail Sales

Robert Brusca

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202g.jpg" align="left" border="0" height="265" width="353"></p>
<p>German retail sales rose by 0.8% in both real and nominal
terms (ex autos) in December. The rise still leaves the 3-month nominal
growth rate for sales in a mild negative path while in real terms
retail sales are flat over three months. In the quarter the annual rate
pace for both real and nominal sales is just below 1%. Car sales that
had boosted consumer activity due to government incentives to buy a new
car and scrap an old one have now left sales week. Auto registration
fell by 15.7% in December after falling by 9.8% in November. Auto
registrations are now off by 4.7% Yr/Yr</p>
<p>The trend for the German consumer is still poor. There is a
very gradual improvement as the negative growth rates are climbing
slowly back toward zero. But at this pace the German consumer is not
posed to take the German economy anywhere.</p>
</span>
German Real and Nominal Retail Sales
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> <b>German
Real and Nominal Retail Sales</b></th>
<th scope="col"><b>QTR</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Retaill Ex auto</td>
<td>0.8%</td>
<td style="color: red;">-1.9%</td>
<td>1.0%</td>
<td>-0.4%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-1.8%</td>
<td>3.2%</td>
<td style="color: red;">-0.8%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>0.8%</td>
<td style="color: red;">-1.7%</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.4%</td>
<td style="color: red;">-2.5%</td>
<td>3.4%</td>
<td style="color: red;">-0.7%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>1.0%</td>
<td style="color: red;">-0.5%</td>
<td style="color: red;">-0.9%</td>
<td>-1.6%</td>
<td>0.4%</td>
<td style="color: red;">-0.9%</td>
<td>4.1%</td>
<td style="color: red;">-5.1%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.4%</td>
<td style="color: red;">-9.3%</td>
<td>8.8%</td>
<td>8.0%</td>
<td>2.1%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>10.6%</td>
</tr>
<tr>
<td class="firstcol">car registrations
(units)</td>
<td style="color: red;">-15.7%</td>
<td style="color: red;">-9.8%</td>
<td style="color: red;">-0.1%</td>
<td style="color: red;">-66.6%</td>
<td style="color: red;">-60.2%</td>
<td style="color: red;">-4.7%</td>
<td style="color: red;">-6.7%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Retail
Ex auto</td>
<td>0.8%</td>
<td style="color: red;">-1.7%</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.4%</td>
<td style="color: red;">-2.5%</td>
<td>3.4%</td>
<td style="color: red;">-0.7%</td>
</tr>
</tbody>
</table>
</body></html>

German retail sales rose by 0.8% in both real and nominal terms (ex autos) in December. The rise still leaves the 3-month nominal growth rate for sales in a mild negative path while in real terms retail sales are flat over three [...]

German Retail Sales In Very Slow-Motion Recovery

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202d.jpg" style="width: 353px; height: 265px;" align="right">
After
hitting the high last June the <b>pump price for regular
gasoline </b>has been roughly unchanged. Last week, the price
slipped to $2.66 and compares to $2.69 reached during June.
Nevertheless, prices remained up 41% from last year. Yesterday, the
spot market price for a gallon of regular gasoline was near last week's
level at $1.94 but down from the January high of $2.14. The figures are
reported by the U.S. Department of Energy and can be found in Haver's <b>WEEKLY
&amp; DAILY </b>databases.</p><p> Earlier strength in the price
for a barrel of light sweet crude (WTI) oil eased somewhat. Last week's
price of $74.03 for a barrel of light sweet crude (WTI) was down from
the high of $82.59 reached three weeks earlier. Yesterday, the spot
price of $74.43 was up slightly from last week. Nevertheless, prices
have risen from $71.53 early this past December and are more than
double the December 2008 low of $32.37.· Demand for gasoline last week
posted a 1.0% decline versus one year ago. That decline compared to a
3.9% increase at the beginning of October. Breaking away from earlier
y/y strength, the demand for residual fuel oil fell 19.8% y/y.
Distillate demand fell 9.8% y/y, a decline more moderate than the 21.6%
y/y shortfall at the beginning of last July. Inventories of crude oil
and petroleum products fell in January by 6.1% from the July high and
were up just 0.4% from one year ago.</p><p> As temperatures moderated, U.S.
natural gas prices backed off to an average $5.46 per mmbtu (15.0% y/y)
from the high of $6.50 early in January. Nevertheless they remained up
from $3.35 in November, triple the September low but down by half from
the high reached in early-July of 2008 of $13.19/mmbtu.</p><p> The energy
price data can be found in Haver's <b>WEEKLY </b>database
while the daily figures are in <b>DAILY</b>. The gasoline
demand figures are in <b>OILWKLY</b>.·&nbsp;<b>Real-time
inflation Forecasting in a Changing World</b> from the Federal
Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr388.pdf">here</a>&nbsp;</p>
 
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly
Prices</b></a></th>
<th scope="col"><b>02/01/10</b></th>
<th scope="col"><b>01/25/10</b></th>
<th scope="col"><b>01/18/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.66</td>
<td>2.71</td>
<td>2.74</td>
<td>40.6%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>74.03</td>
<td>76.76</td>
<td>80.07</td>
<td>74.1%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
</span></body></html>

After hitting the high last June the pump price for regular gasoline has been roughly unchanged. Last week, the price slipped to $2.66 and compares to $2.69 reached during June. Nevertheless, prices remained up 41% from last year. [...]

U.S. Weekly Gasoline Prices Meander

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202a.jpg" style="width: 353px; height: 265px;" align="right">
Home sales
recovered during December after falling sharply in November with the
(since-extended) expiration of an $8,000 first-time home buyers tax
credit. The National Association of Realtors (NAR) reported that
December pending home sales rose 1.0% from November. Home sales
remained up 20.1% from the January low and the latest increase matched
Consensus expectations.</p><p> Modest monthly gains in home sales were
recorded across the country.&nbsp;</p><p>These home sales figures are analogous
to the new home sales data from the Commerce Department in that they
measure existing home sales when the sales contract is signed, not at
the time the sale is closed. The series dates back to 2001 and the data
is available in Haver's <b>PREALTOR </b>database.<span style="font-weight: bold;"></span></p><p><span style="font-weight: bold;"></span><b>Recent
Development in Mortgage Finance </b>from the Federal Reserve
Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-33.html">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: white;">Pending Home Sales (2001=100)&nbsp;</a></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>98.6</td>
<td>95.6</td>
<td>114.3</td>
<td>&nbsp;&nbsp;10.9%</td>
<td>95.1</td>
<td>86.8</td>
<td>95.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>76.1</td>
<td>74.4</td>
<td>100.2</td>
<td>15.0</td>
<td>76.6</td>
<td>73.1</td>
<td>85.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>86.9</td>
<td>82.6</td>
<td>110.3</td>
<td>8.6</td>
<td>88.7</td>
<td>80.6</td>
<td>89.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>98.4</td>
<td>96.3</td>
<td>115.1</td>
<td>14.8</td>
<td>98.2</td>
<td>89.6</td>
<td>107.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>119.9</td>
<td>124.6</td>
<td>128.1</td>
<td>18.6</td>
<td>111.5</td>
<td>99.5</td>
<td>92.3</td>
</tr>
</tbody>
</table>
</span></body></html>

Home sales recovered during December after falling sharply in November with the (since-extended) expiration of an $8,000 first-time home buyers tax credit. The National Association of Realtors (NAR) reported that December pending home [...]

U.S. Pending Home Sales Improve

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<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202a.jpg" style="width: 353px; height: 265px;" align="right">Home
sales
recovered during December after falling sharply in November with the
(since-extended) expiration of an $8,000 first-time home buyers tax
credit. The National Association of Realtors (NAR) reported that
December pending home sales rose 1.0% from November. Home sales
remained up 20.1% from the January low and the latest increase matched
Consensus expectations.</p>
<p> Modest monthly gains in home sales were
recorded across the country.&nbsp;</p>
<p>These home sales figures are analogous
to the new home sales data from the Commerce Department in that they
measure existing home sales when the sales contract is signed, not at
the time the sale is closed. The series dates back to 2001 and the data
is available in Haver's <b>PREALTOR </b>database.<span style="font-weight: bold;"></span></p>
<p><span style="font-weight: bold;"></span><b>Recent
Development in Mortgage Finance </b>from the Federal Reserve
Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-33.html">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM" style="color: white;">Pending Home Sales (2001=100)&nbsp;</a></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>98.6</td>
<td>95.6</td>
<td>114.3</td>
<td>&nbsp;&nbsp;10.9%</td>
<td>95.1</td>
<td>86.8</td>
<td>95.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>76.1</td>
<td>74.4</td>
<td>100.2</td>
<td>15.0</td>
<td>76.6</td>
<td>73.1</td>
<td>85.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>86.9</td>
<td>82.6</td>
<td>110.3</td>
<td>8.6</td>
<td>88.7</td>
<td>80.6</td>
<td>89.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>98.4</td>
<td>96.3</td>
<td>115.1</td>
<td>14.8</td>
<td>98.2</td>
<td>89.6</td>
<td>107.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>119.9</td>
<td>124.6</td>
<td>128.1</td>
<td>18.6</td>
<td>111.5</td>
<td>99.5</td>
<td>92.3</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">U.S. Weekly Gasoline Prices Meander</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> February 2, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202d.jpg" style="width: 353px; height: 265px;" align="right">After
hitting the high last June the <b>pump price for regular
gasoline </b>has been roughly unchanged. Last week, the price
slipped to $2.66 and compares to $2.69 reached during June.
Nevertheless, prices remained up 41% from last year. Yesterday, the
spot market price for a gallon of regular gasoline was near last week's
level at $1.94 but down from the January high of $2.14. The figures are
reported by the U.S. Department of Energy and can be found in Haver's <b>WEEKLY
&amp; DAILY </b>databases.</p>
<p> Earlier strength in the price
for a barrel of light sweet crude (WTI) oil eased somewhat. Last week's
price of $74.03 for a barrel of light sweet crude (WTI) was down from
the high of $82.59 reached three weeks earlier. Yesterday, the spot
price of $74.43 was up slightly from last week. Nevertheless, prices
have risen from $71.53 early this past December and are more than
double the December 2008 low of $32.37.· Demand for gasoline last week
posted a 1.0% decline versus one year ago. That decline compared to a
3.9% increase at the beginning of October. Breaking away from earlier
y/y strength, the demand for residual fuel oil fell 19.8% y/y.
Distillate demand fell 9.8% y/y, a decline more moderate than the 21.6%
y/y shortfall at the beginning of last July. Inventories of crude oil
and petroleum products fell in January by 6.1% from the July high and
were up just 0.4% from one year ago.</p>
<p> As temperatures moderated, U.S.
natural gas prices backed off to an average $5.46 per mmbtu (15.0% y/y)
from the high of $6.50 early in January. Nevertheless they remained up
from $3.35 in November, triple the September low but down by half from
the high reached in early-July of 2008 of $13.19/mmbtu.</p>
<p> The energy
price data can be found in Haver's <b>WEEKLY </b>database
while the daily figures are in <b>DAILY</b>. The gasoline
demand figures are in <b>OILWKLY</b>.·&nbsp;<b>Real-time
inflation Forecasting in a Changing World</b> from the Federal
Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr388.pdf">here</a>&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202e.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly
Prices</b></a></th>
<th scope="col"><b>02/01/10</b></th>
<th scope="col"><b>01/25/10</b></th>
<th scope="col"><b>01/18/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.66</td>
<td>2.71</td>
<td>2.74</td>
<td>40.6%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>74.03</td>
<td>76.76</td>
<td>80.07</td>
<td>74.1%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">German Retail Sales In Very
Slow-Motion Recovery</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> February 2, 2010</span>
<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202g.jpg" align="left" border="0" height="265" width="353"></p>
<p>German retail sales rose by 0.8% in both real and nominal
terms (ex autos) in December. The rise still leaves the 3-month nominal
growth rate for sales in a mild negative path while in real terms
retail sales are flat over three months. In the quarter the annual rate
pace for both real and nominal sales is just below 1%. Car sales that
had boosted consumer activity due to government incentives to buy a new
car and scrap an old one have now left sales week. Auto registration
fell by 15.7% in December after falling by 9.8% in November. Auto
registrations are now off by 4.7% Yr/Yr</p>
<p>The trend for the German consumer is still poor. There is a
very gradual improvement as the negative growth rates are climbing
slowly back toward zero. But at this pace the German consumer is not
posed to take the German economy anywhere.</p>
</span>
German Real and Nominal Retail Sales
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> <b>German
Real and Nominal Retail Sales</b></th>
<th scope="col"><b>QTR</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Retaill Ex auto</td>
<td>0.8%</td>
<td style="color: red;">-1.9%</td>
<td>1.0%</td>
<td>-0.4%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-1.8%</td>
<td>3.2%</td>
<td style="color: red;">-0.8%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>0.8%</td>
<td style="color: red;">-1.7%</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.4%</td>
<td style="color: red;">-2.5%</td>
<td>3.4%</td>
<td style="color: red;">-0.7%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>1.0%</td>
<td style="color: red;">-0.5%</td>
<td style="color: red;">-0.9%</td>
<td>-1.6%</td>
<td>0.4%</td>
<td style="color: red;">-0.9%</td>
<td>4.1%</td>
<td style="color: red;">-5.1%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.4%</td>
<td style="color: red;">-9.3%</td>
<td>8.8%</td>
<td>8.0%</td>
<td>2.1%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>10.6%</td>
</tr>
<tr>
<td class="firstcol">car registrations
(units)</td>
<td style="color: red;">-15.7%</td>
<td style="color: red;">-9.8%</td>
<td style="color: red;">-0.1%</td>
<td style="color: red;">-66.6%</td>
<td style="color: red;">-60.2%</td>
<td style="color: red;">-4.7%</td>
<td style="color: red;">-6.7%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Retail
Ex auto</td>
<td>0.8%</td>
<td style="color: red;">-1.7%</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.4%</td>
<td style="color: red;">-2.5%</td>
<td>3.4%</td>
<td style="color: red;">-0.7%</td>
</tr>
</tbody>
</table>
<span id="articletitle"> German And French Retail Sales</span><br>
<span id="byline">by <a href="/comment/Curley.html">Louise
Curley</a> February 2, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202h.jpg" style="width: 353px; height: 265px;" align="right">Data
for
retail sales, excluding motor vehicles and motorcycles, in France and
in Germany were released today.&nbsp; The latest date for France is
November and for Germany, December.</p>
<p>Retail trade in Germany continues
to disappoint.&nbsp; Both the volume and value of trade increased
0.8% in December but they are no higher than they were
October.&nbsp; The volume of trade in December was 97.0 (2005=100)
compared with 97.9 in October.&nbsp; The corresponding figures for
the value of trade were 98.9 and 100.0. With the GfK Consumer Climate
Survey released last week pointing to a continuing deterioration of the
consumer climate in January and February, the outlook for retail sales
is not encouraging. The first chart shows that the declining trends in
both the value and the volume of retail trade, which began in early
2008, are continuing.&nbsp;</p>
<p>The picture in France is more
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100202i.jpg" style="width: 353px; height: 265px;" align="right">encouraging.&nbsp;
Although both volume and value have had their
ups and down, the declines in the volume and value of retail trade have
been less severe than those in Germany and the trends for both appear
to have begun to turn up since May of this year.&nbsp; There was no
change in the value of trade in November--the index remaining at 105.2;
there was a slight decline in the volume of trade to 107.8 from 107.9
in October.&nbsp; The value and volume of retail trade in France
are shown in the second chart.</p>
<p>Since the data are available only in
index form, the absolute volume and value of retail trade are
unknown.&nbsp; All we know is that, in the case of Germany, the
volume of retail trade in December was 3% below its volume in 2005 and
the value, 1.1% below 2005.&nbsp; In France, the volume of retail
trade in November was 7.8% above its 2005 volume and the value, 5.2%
above.&nbsp; The volume and value of retail sales in Germany are
still below levels reached in 2005, while in France the volume and
value of retail sales have surpassed 2005 levels.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Value
of Retail Trade (2005=100)</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 08</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>98.9</td>
<td>98.1</td>
<td>100.0</td>
<td>99.0</td>
<td>98.8</td>
<td>99.8</td>
<td>99.1</td>
<td>99.9</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>105.2</td>
<td>105.2</td>
<td>104.6</td>
<td>105.2</td>
<td>104.2</td>
<td>104.9</td>
<td>103.6</td>
</tr>
<tr>
<td colspan="9">Volume of Retail
Trade
(2005=100)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>97.0</td>
<td>96.2</td>
<td>97.9</td>
<td>97.0</td>
<td>96.5</td>
<td>98.1</td>
<td>96.8</td>
<td>97.7</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>107.8</td>
<td>107.9</td>
<td>107.1</td>
<td>107.9</td>
<td>107.1</td>
<td>107.9</td>
<td>106.7</td>
</tr>
</tbody>
</table>
</p>
</span>
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<br>

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100201k.jpg" style="width: 353px; height: 265px;" align="right">Russia
announced today that real GDP declined 7.9% in 2009, somewhat less than
the 8.5% the government had estimated earlier, but still the deepest
decline among the BRIC countries--Brazil, Russia, India and China as
can be seen in the first chart.&nbsp;</p>
<p>Russia's dependence on oil
was largely responsible for its poor performance.&nbsp; As shown in
the second chart, the price of Urals crude oil fell almost 75% from its
peak of $140.80 a barrel in July 2008 to $35.56 at year
end.&nbsp;&nbsp; By now the price of oil, at $73 a barrel, has
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100201l.jpg" style="width: 353px; height: 265px;" align="right">more
than doubled the low point.&nbsp; The annual decline of 7.9%
in GDP implies a significant improvement in the fourth quarter year to
year decline.&nbsp; While there may be revisions in the earlier
data when the actual fourth quarter result is released, an estimate of
the fourth quarter can be derived by subtracting the unseasonally
adjusted published quarterly data for the first three quarters from the
annual total.&nbsp; The implied figure for the fourth quarter, not
shown on the chart, but shown in the table below, is 2.6% below the
year ago figure, a significant improvement over the declines of 9-10%
in the first three quarters.&nbsp;&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col"><b>Q4 09&nbsp;</b></th>
<th scope="col"><b>Q3 09</b></th>
<th scope="col"><b>Q2 09</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">GDP (Billions,
Chained 2003 Rubles)&nbsp;</td>
<td>4756.2*</td>
<td>4570.6</td>
<td>4014.6</td>
<td>3736.3</td>
<td>17077.7</td>
<td>18552.5</td>
<td>17570.9</td>
<td>16255.5</td>
</tr>
<tr>
<td class="firstcol">Y/Y Pct Change</td>
<td>-2.6*</td>
<td>-8.9</td>
<td>-10.9</td>
<td>-9.8</td>
<td>7.9</td>
<td>5.6</td>
<td>8.1</td>
<td>7.7</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">*&nbsp;
Computed:
Reported annual total minus reported quarterly totals for first three
quarters.</td>

</tr>
</tbody>
</table>
</p>
</span>
</body></html>

Russia announced today that real GDP declined 7.9% in 2009, somewhat less than the 8.5% the government had estimated earlier, but still the deepest decline among the BRIC countries--Brazil, Russia, India and China as can be seen in [...]

Russian GDP Declined 7.9% In 2009

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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Tian Yong Woon

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

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

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

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

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

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

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

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

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

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Asia

Economic Letter from Asia: A Bumpy Start

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.

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**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.

Germany

German Industrial Production Perks Up-Surprise!

Andrew Cates

**Global growth**
This first chart below highlights a still-fragmented global growth picture, with momentum and current activity levels varying markedly across economies. India stands out at the top-left of the chart, combining a very strong composite PMI reading with some recent cooling in momentum, suggesting activity remains robust even as growth rates moderate. Brazil and Spain sit at another end of the spectrum, pairing solid expansionary PMI levels with strong positive three-month momentum, signalling accelerating activity into year-end. By contrast, much of continental Europe — including France, Germany and Italy — remains clustered close to the 50 threshold, with modest (or no) improvements in momentum and only tentative signs of underlying expansion, underscoring the euro area’s sluggish growth backdrop. The US occupies a middle ground by remaining in expansionary territory, but recent momentum has softened, consistent with a gradual cooling rather than a downturn. Overall, the chart reinforces the message that while global growth remains positive, it is neither synchronised nor particularly strong.


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**Supply chain pressures and inflation surprises**
The NY Fed’s Global Supply Chain Pressure Index has remained subdued in recent months, reinforcing the view that supply-side frictions are no longer a material source of inflation risk. After the extreme dislocations of 2021–22, the index has settled close to, and at times below, its long-run average, consistent with largely normalised delivery times, inventories and transportation costs. The latest reading for December 2025, however, does point to some marginal tightening in supply-chain conditions, though from very low levels and still well within historical norms. Still, this modest firming has so far coincided with a broadly benign profile for inflation surprises across the G10. While geopolitical risks and trade fragmentation remain medium-term considerations, the current signal from global supply chains continues to point to limited immediate upside pressure on inflation.

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**Policy rate expectations**
In the meantime, policy-rate expectations across the major economies continue to diverge, reflecting differences in inflation dynamics and where central banks sit in their respective cycles. The latest Blue Chip survey of Financial Forecasts points to further easing over the next 12 months in the UK and the US. By contrast, expectations for the euro area and Canada are more subdued, in part because both central banks are already at a more advanced stage of their easing campaigns, leaving less scope for additional near-term adjustment. Australia stands apart, with lingering inflation pressures tempering expectations for rate cuts despite softer growth momentum. Japan, meanwhile, remains at a very different point in the cycle: having only recently begun a less accommodative campaign from ultra-loose policy, it is the sole major economy where forecasters still anticipate modest further policy tightening rather than easing.

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**Venezuela, the oil market and implications**
Venezuela’s outsized share of _world crude oil proved reserves_ — nearly one-fifth of the global total — looms large in market narratives even as its _actual production_ has languished well below historic highs. At the start of 2026, dramatic political and strategic events — including the capture of President Nicolás Maduro by U.S. forces and a tightening U.S. oil blockade that has halted Venezuelan exports — have injected fresh uncertainty into oil markets. While immediate impacts on global prices have been modest amid ample global supplies, geopolitical risk premiums have briefly lifted crude benchmarks, reflecting market sensitivity to potential supply disruptions and future policy shifts. In the short run, sustained low exports and production cuts due to storage constraints could tighten crude balances marginally, but most analysts see limited influence on overall market fundamentals this year. Over the longer term, however, any successful revival of Venezuelan output — contingent on massive investment, infrastructure rehabilitation and changes to sanctions policy — could eventually expand heavy crude availability and weigh on prices, with broader implications for OPEC+ dynamics and energy security in the Western Hemisphere.

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**China’s excess capacity and traded goods price disinflation** 
China’s export sector looks set to remain a key swing factor for the global economy in the year ahead, not least because of persistent surplus manufacturing capacity and weak domestic demand. As the chart illustrates, periods of falling relative export prices have tended to coincide with rising export volumes, highlighting China’s ability — and willingness — to clear excess capacity through external markets. With producer prices still under pressure and policy support focused more on supply than demand, the risk is that excess capacity is once again exported via more aggressive price competition, rather than absorbed domestically. If sustained, this dynamic would reinforce global disinflation forces, intensify competitive pressures on manufacturers elsewhere, and heighten trade tensions, particularly in sectors already sensitive to Chinese overcapacity such as autos, machinery and green technologies. In that sense, China’s export pricing behaviour may prove as important for the global inflation and trade outlook in 2026 as any shift in domestic growth momentum.

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**Public sector indebtedness**
This next chart, drawn up by the IMF, underlines a defining feature of the post-pandemic macro landscape: public debt is not only higher than before Covid, but is set to keep rising — and at a faster pace — with the largest economies doing much of the heavy lifting. The clustering of the biggest bubbles in the upper-right quadrant shows that countries accounting for roughly two-thirds of global GDP have already experienced sizeable increases in debt-to-GDP ratios since 2019 and are projected to see further rises through the second half of the decade. This combination of elevated starting points and ongoing fiscal expansion reflects the persistence of structural pressures — higher interest costs, ageing populations, defence spending and climate-related investment — rather than temporary crisis measures. For the global economy, the implication is a world in which fiscal policy remains active but increasingly constrained, raising difficult questions about debt sustainability, the tolerance for higher real interest rates, and the scope for counter-cyclical fiscal support when the next downturn arrives.

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Over the past few weeks, global financial markets have taken comfort from cooling inflation, resilient earnings and continued upside surprises in the dataflow, with equity markets extending gains as confidence in a soft-landing outcome has firmed. While AI-related optimism was questioned toward the end of last year, amid valuation concerns and uncertainty over near-term payoffs, sentiment has improved again in recent days. Latest business surveys suggest little immediate cause for alarm on the global growth front (chart 1), despite clear signs of divergence across regions. At the same time, there are few near-term inflation concerns evident in the data, with global supply-chain pressures remaining subdued (chart 2). Taken together, these developments leave little immediate challenge to the prevailing outlook for monetary policy, with expectations for further gradual easing across several major economies remaining broadly intact (chart 3). At the same time, geopolitical shocks — most notably the upheaval in Venezuela — have reignited focus on energy market risks and sovereign debt uncertainties, adding complexity to oil price expectations and fiscal trajectories (chart 4). Shifting focus, China’s role also continues to remain pivotal: surplus industrial capacity and competitive export pricing continue to shape global trade and exert disinflationary influence (chart 5). Against this backdrop, public debt levels that are both elevated and still rising in many large economies underscore the structural imbalances that could limit policy flexibility and amplify market sensitivities in the immediate months ahead (chart 6).

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