Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113a.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics continued to indicate little improvement in hiring,
but layoffs have diminished. In its Job Openings &amp; Labor
Turnover Survey (JOLTS) job availability during November fell 6.1% from
October and is off 27.1% year-to-year. The series dates back to
December 2000.&nbsp;As a result of the decline the job
openings rate fell to 1.8% and remained off sharply from the
3.1% rate before the current recession began. The job
openings rate is the number of job openings on the last business day of
the month as a percent of total employment plus job openings.
The service sector weakened last month. The number of retail
job
openings fell 15.8% (-49.3% y/y) and the number of professional
&amp; business service jobs fell 9.2% (-13.7% y/y). Leisure
&amp; hospitality jobs also were off, by 7.8% (-21.2% y/y), but
educational &amp; health service jobs rose 4.2% (-21.7% y/y). Even
the number of government sector job openings fell 9.8% (-10.3% y/y).
Countering weakness in service sector hiring was the factory sector
where job openings rose for the fourth consecutive month but they remained off 28.6% y/y. 
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113b.jpg" style="width: 353px; height: 265px;" align="right">Construction
sector job openings were firm for the third of the last four months and
posted an 11.6% (+1.3% y/y) increase.
 The hires rate
picked up slightly m/m to 3.2% and was improved from the series' low of
3.0% last spring.&nbsp;The hires rate is the number of
hires during the month divided by employment.&nbsp;The
actual number of hires also rose 3.2% m/m but was down 1.2%
year-to-year. Professional &amp; business service sector hires rose
14.1% (7.2% y/y) while leisure &amp; hospitality hires rose 8.4%
(4.0% y/y). Factory sector hiring slipped 0.8% and was off a diminished
5.4% y/y while construction sector hiring also dipped m/m (-10.0%
y/y).
 The job separations rate increased
modestly
from the series' low to 3.3% with the actual number of separations off
10.8% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements. The
layoff rate alone held steady at 1.6% for the third consecutive month.
That was down sharply from the rate's high of 1.9% last winter.
 The
JOLTS survey dates only to December 2000 but has followed the movement
in nonfarm payrolls, though the actual correlation between the two
series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.&nbsp;&nbsp;
<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/@EB/@EB14/@EB14.HTM" style="color: white;">JOLTS (Job Openings &amp; Labor
&nbsp;Turnover Survey)</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8" class="firstcol">Job
Openings, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.9</td>
<td>1.9</td>
<td>2.4</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,415</td>
<td>2,571</td>
<td>2,586</td>
<td>3,311</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Hires,
Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.2</td>
<td>3.1</td>
<td>3.1</td>
<td>3.1</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,176</td>
<td>4,045</td>
<td>4,061</td>
<td>4,226</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Layoffs
&amp;
Discharges, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.6</td>
<td>1.6</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,054</td>
<td>2,128</td>
<td>2,128</td>
<td>2,253</td>
<td>24,362</td>
<td>22,613</td>
<td>21,546</td>
</tr>
</tbody>
</table>

U.S. Small Business Optimism Slips
Again As Credit Remains Tight 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 13, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113c.jpg" style="width: 353px; height: 265px;" align="right">Earlier
improvement in small business' optimism slipped again last month. The
National Federation of Independent Business (NFIB) reported their
December small business optimism index dipped 0.3% to 88.0. This second
consecutive slight decline followed several months of increase after
reaching a March low of 81.0.&nbsp;During the last ten years, there
has been an 85% correlation between the level of the NFIB index and the
two-quarter change in real GDP.
 Credit conditions remained as tight as
they've been since the "credit crunch" recession of 1980. The
percentage of firms reporting that credit was harder to get was stable
m/m at a net 15 but that was roughly triple the percentage from 1994 to
2007. The percent borrowing at least once last quarter was stable at
33% but that was down from the high of 46% during 2006.
The percentage
of small businesses expecting the economy to improve dipped slightly
m/m to 2 after a sharp November decline. The latest was down from the
May high of 12. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113d.jpg" style="width: 353px; height: 265px;" align="right">
The percentage which thought that now was a good time
to expand the business also slipped to 7 though it remained sharply
improved from this winter.
 Hiring intentions have responded negatively
to recent weakness in overall business sentiment. The percentage of
firms planning to raise employment remained in a net-layoff region,
though it has improved from the March low. For now, the percentage of
firms with one or more job openings improved modestly to 10% during
December. During the last ten years there has been a 74% correlation
between the NFIB employment percentage and the six-month change in
nonfarm payrolls. Also stable in the negative region was the percentage
expecting credit conditions to ease.
On the pricing front deflation
continued. The percentage of firms actually raising
prices at -22% (indicating deflation) slipped from the prior several
months and was near the record low. During the last ten years there has
been a 60% correlation between the six-month change in the producer
price index and the level of the NFIB price index<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113e.jpg" style="width: 353px; height: 265px;" align="right">

The
percentage of firms planning to raise prices
slipped again to a net 3 though that remained up from the March low of
zero. Finally, the percentage planning to raise worker compensation
fell to 1.
The largest, single most important problems seen by
business were poor sales (34%), taxes (20%, near its highest level
since 2007), government requirements (13%), insurance cost &amp;
availability (7%), competition from large businesses (6%) and inflation
(2%).
About 24 million small businesses exist in the United
States. Small business creates 80% of all new jobs in America and the
NFIB figures can be found in Haver's SURVEYS
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.0</td>
<td>88.3</td>
<td>89.1</td>
<td>3.3%</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>2</td>
<td>3</td>
<td>11</td>
<td>-13</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>10</td>
<td>8</td>
<td>8</td>
<td>14</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>15</td>
<td>15</td>
<td>14</td>
<td>12</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Pric1es (Net)</td>
<td>-22</td>
<td>-17</td>
<td>-17</td>
<td>-6</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>

Industrial Output Is Making
Continued Gains In Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 13, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113f.jpg" align="left" border="0" height="265" width="353">
Europe&#8217;s recovery remains on track in November as industrial
production has risen in all the large EMU states. The UK, an EU member,
only saw a very minor set back to MFG IP with output dropping by 0.1%
in November. Of the largest EMU states, the rise in the Italy was
disappointing at just 0.2%. The UK&#8217;s small drop actually out did
expectations.
Year-over-year the IP drops have been trimmed to the range of
-4% to -10% for this group of countries. Despite the set back to UK IP
in November at -5.4% it demonstrates one of the smaller Yr/Yr drops in
IP and exhibits a strong improvement from its result in October (-7.8%,
Yr/Yr). All large countries show an improvement in their Yr/Yr drop in
November compared to October and for most the difference is large.
The chart above shows how strong the recoveries have been.
Despite all that strength over the last 3- and 6-months, 2009 has been
a very bad year for Europe.
German GDP is just reported to have posted an outsized drop of
5% in 2009 as its exports and investment goods sectors were hard hit.
As it was, government programs produced a boost that kept the steep GDP
decline from being even larger. Public consumption rose by 2.7% from
2008 while private consumption edged ahead by just 0.2%.
The recovery in IP is however a good development. Germany&#8217;s
industrial sector depends on exports which fell by 14.7% in 2009.
Exports have begun to get traction again and IP is on the rise as a
result. 2010 promises to be a much better year, but then 2009 put all
of Europe in a very deep hole and the real question is not 'Will 2010
be better?' but, 'How much better will 2010 be?' That is not yet
resolved and is a point of some contention. So far, good strong growth
is in train and seems to have staying power. Perhaps more optimism is
warranted.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">Main
Euro-Area Countries and UK IP in MFG </th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 
Date</td>
</tr>
<tr class="grey1">
<td class="firstcol"> Germany:</td>
<td>0.8%</td>
<td>-1.8%</td>
<td>3.6%</td>
<td>10.6%</td>
<td>16.6%</td>
<td>9.1%</td>
<td>18.6%</td>
<td>-9.1%</td>
<td>-13.7%</td>
<td>8.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France: 
IPxConstruct'n</td>
<td>1.1%</td>
<td>-0.6%</td>
<td>-1.2%</td>
<td>-2.6%</td>
<td>4.2%</td>
<td>6.1%</td>
<td>8.6%</td>
<td>-3.8%</td>
<td>-8.0%</td>
<td>0.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>1.0%</td>
<td>-5.2%</td>
<td>-15.3%</td>
<td>6.4%</td>
<td>7.0%</td>
<td>5.9%</td>
<td>-10.2%</td>
<td>-13.2%</td>
<td>-2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain</td>
<td>1.2%</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-5.5%</td>
<td>-20.2%</td>
<td>17.9%</td>
<td>-0.2%</td>
<td>-3.9%</td>
<td>-13.0%</td>
<td>-14.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK: EU
member</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>6.1%</td>
<td>-1.8%</td>
<td>0.9%</td>
<td>-0.4%</td>
<td>-5.4%</td>
<td>-7.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
</body></html>

The Bureau of Labor Statistics continued to indicate little improvement in hiring, but layoffs have diminished. In its Job Openings & Labor Turnover Survey (JOLTS) job availability during November fell 6.1% from October and is off [...]

JOLTS: U.S. Job Openings Remain AtSeries' Low

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112i.jpg" style="width: 353px; height: 265px;" align="right">Industrial
production in India increased 3.0% from 298.8 (FY 1993=100) in October
to 307.8 in November and was 11.7% greater than November
2008.&nbsp; This follows October's year over year increase of
10.4%.&nbsp; The production of electricity was down 1.7% for the
month but was 3.3% above the year ago level.&nbsp; Mining
production increased less than a third of a percent in November but was
almost 10 above the year ago level.&nbsp; Production in the
manufacturing sector was strong, increasing 4.2% in the month and 12.7%
over a year ago.&nbsp; The trends in total production and its major
components over the past six years are shown in the first
chart.&nbsp; The rising trend in production halted in 2008 and
early 2009, but never actually reversed into a decline.
Industrial
production for India is also reported for Market Groups, some of which
are shown in the second chart.&nbsp; (Recent levels and percentage
changes for those market groups not shown in the chart are shown in the
table below.) Production of consumer durables was a standout in
November with production up 14.0%.&nbsp; A steadily increasing rate
of production has brought the production of consumer durable goods
37.4% above that of November 2008&nbsp;&nbsp; Although capital
goods production increased only 0.39% in the month of November it was
11.6% greater than in November 2008.&nbsp; There was a similar
pattern in the production of Intermediate Goods, which increased 1.5%
in November but was 19.4% above the year ago
level.
 Rising industrial production in the first
two months of the fourth quarter bodes well for growth in the total
economy in the fourth quarter.&nbsp; Industrial production has
accounted for between 18% and 20% of GDP over the past six years as
shown in the third chart.&nbsp;&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (FY1993=100)</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov 08</th>
<th scope="col">M/M % Chg</th>
<th scope="col">Y/Y % Chg</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total</td>
<td>307.8</td>
<td>298.8</td>
<td>275.5</td>
<td>3.01</td>
<td>11.72</td>
<td>275.0</td>
<td>263.3</td>
<td>239.6</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>194.0</td>
<td>193.4</td>
<td>176.6</td>
<td>0.31</td>
<td>9.85</td>
<td>175.5</td>
<td>169.2</td>
<td>159.9</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>333.0</td>
<td>319.7</td>
<td>295.5</td>
<td>4.16</td>
<td>12.69</td>
<td>294.9</td>
<td>282.0</td>
<td>255.0</td>
</tr>
<tr>
<td class="firstcol">Electricity</td>
<td>232.2</td>
<td>236.7</td>
<td>224.7</td>
<td>-1.69</td>
<td>3.34</td>
<td>222.1</td>
<td>214.1</td>
<td>201.5</td>
</tr>
<tr>
<td class="firstcol">Basic Goods</td>
<td>243.3</td>
<td>241.7</td>
<td>229.5</td>
<td>0.66</td>
<td>6.01</td>
<td>229.5</td>
<td>221.2</td>
<td>203.5</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>440.1</td>
<td>438.4</td>
<td>394.5</td>
<td>0.39</td>
<td>11.56</td>
<td>392.7</td>
<td>359.6</td>
<td>300.5</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>305.7</td>
<td>291.7</td>
<td>256.0</td>
<td>1.46</td>
<td>19.41</td>
<td>260.8</td>
<td>259.7</td>
<td>234.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>335.4</td>
<td>329.2</td>
<td>302.2</td>
<td>1.88</td>
<td>10.99</td>
<td>306.4</td>
<td>288.3</td>
<td>269.6</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Durable&nbsp;</td>
<td>516.9</td>
<td>453.3</td>
<td>376.1</td>
<td>14.03</td>
<td>37.44</td>
<td>389.7</td>
<td>377.9</td>
<td>378.5</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Nondurable</td>
<td>294.4</td>
<td>298.0</td>
<td>286.0</td>
<td>-1.21</td>
<td>2.94</td>
<td>287.3</td>
<td>267.7</td>
<td>244.4</td>
</tr>
</tbody>
</table>

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Industrial production in India increased 3.0% from 298.8 (FY 1993=100) in October to 307.8 in November and was 11.7% greater than November 2008. This follows October's year over year increase of 10.4%. The production of electricity [...]

Industrial Production In India Continues To Advance

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112g.jpg" style="width: 353px; height: 265px;" align="right">The holiday
spirit faded last week. That was reflected in a 3.0% w/w decline in
chain store sales which left purchases at the lowest level since March
of last year. Nevertheless, sales rose 1.7% y/y. Most likely the latest
weakness as much reflects post-holiday price discounts as a decline in
sales' volume.The
ICSC-Goldman Sachs retail chain-store sales index is constructed using
the same-store sales (stores open for one year) reported by 78 stores
of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.During the last ten years
there has been a 69% correlation between the year-to-year growth in
chain store sales and the growth in general merchandise retail sales.<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112h.jpg" style="width: 353px; height: 265px;" align="right">

The weekly figures are available in Haver's SURVEYW database.
Also suffering from post-Holiday blues was the leading indicator of
chain store sales. It slipped marginally early in January but its level
was near the highest since January of last year. This composite leading
economic indicator is compiled from four series: (1) the MBA's volume
index of mortgage applications for home purchase (2) the ABC News/Money
magazine's survey of consumer buying conditions (3) new filings for
jobless benefits and (4) the 30-year government bond yield
<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/surveyw/@S2/@S2.HTM" style="color: rgb(0, 0, 0);">ICSC-UBS (SA,
1977=100)</a></th>
<th scope="col">01/09/10</th>
<th scope="col">01/02/10</th>
<th scope="col">12/26/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>482.6</td>
<td>497.6</td>
<td>490.1</td>
<td>1.7%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</body></html>

The holiday spirit faded last week. That was reflected in a 3.0% w/w decline in chain store sales which left purchases at the lowest level since March of last year. Nevertheless, sales rose 1.7% y/y. Most likely the latest weakness as [...]

Weekly Chain Store Sales Likely Suffered From Price Discounting

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112d.jpg" style="width: 353px; height: 265px;" align="right">Energy
prices are responding to evidence of economic recovery. Last week the pump
price for regular gasoline rose to $2.75 per gallon, the
highest level since October 2008 and up 71% from the December 2008 low
of $1.61. Yesterday, strength in gasoline prices eased somewhat. The
spot market price for a gallon of regular gasoline held at $2.12 per
gallon, the same as last week's level. The figures are reported by the
U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Earlier gains in the price for a
barrel of light sweet crude (WTI) oil also stabilized. Yesterday, the
spot price of $82.52 was roughly unchanged from the prior week.
Nevertheless, prices have risen from $71.53 averaged in early-December.
Moreover, prices were up sharply from the December 2008 low of $32.37.

Demand for gasoline last week posted a 0.9% 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 a sharp 50.4% y/y while distillate demand fell
10.9% 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 early-January by 6.2% from the July high and were up a
diminished 3.1% from one year ago. 
 Reflecting the cold temperatures
throughout the U.S. natural gas prices also strengthened significantly.
Last week prices averaged $6.50 per mmbtu (11.1% y/y), up from $3.35 in
November and triple the September low. Nevertheless, prices remained
down by half from the high reached in early-July of 2008 of
$13.19/mmbtu.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.
 The
Case for "Inflation First" Monetary Policy from the Federal
Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0947.pdf">here</a>&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">01/11/10</th>
<th scope="col">01/04/10</th>
<th scope="col">12/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.75</td>
<td>2.67</td>
<td>2.61</td>
<td>54.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>82.59</td>
<td>79.14</td>
<td>75.09</td>
<td>85.6%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

</body></html>

Energy prices are responding to evidence of economic recovery. Last week the pump price for regular gasoline rose to $2.75 per gallon, the highest level since October 2008 and up 71% from the December 2008 low of $1.61. Yesterday, [...]

Weekly Chain Store Sales LikelySuffered From Price Discounting

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112a.jpg" align="right" border="0" height="265" width="353">
Economic
recovery hit the U.S. trade accounts with a double-whammy during
November. It generated a 2.6% m/m rise in imports and it increased the
international trade deficit to $36.4B which was the highest since
January. The rise followed October's deficit of $33.2B which&nbsp;
was revised up slightly from the initial estimate. Export growth lagged
with a 0.9% increase that followed two months of stronger increase. The
latest figure was quite a bit higher than Consensus expectations for a
deficit of $34.5B.Imports rose 2.6% in part due to a rise in crude
oil prices to $72.54 per barrel which was the highest level since
October of 2008. Overall, however, the gain in petroleum imports was
held back by a 4.6% m/m decline (-8.2% y/y) in the quantity of
energy-related products. U.S. economic recovery continued to be
apparent in a 1.5% increase (-6.3% y/y) in real nonoil imports which
was the fifth increase in six months. Real non-auto capital goods
imports jumped 3.5% (-13.0% y/y) after a 2.8% September rise. Real
nonauto consumer goods imports surged 3.7% and by 12.5% since June.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112b.jpg" align="right" border="0" height="265" width="353">
These are turnarounds from earlier sharp declines. Real automotive
vehicles &amp; parts imports, however, slipped 0.4% (-0.1% y/y) but
they were up by one-half since the spring. Real capital goods imports
also have been strong and rose 3.6% for the fourth increase in five
months. They have risen 14.5% since June. Finally, services imports
rose a modest 0.3% (-4.0% y/y) for the fifth increase in six months.
U.S. travels abroad were discouraged by the lower dollar. Travel
imports slipped 0.9% (-7.1% y/y and passenger fares rose 1.5% (-25.6%
y/y). Reflecting the competitive value of the dollar, nominal exports
rose 0.9% m/m and by 13.6% from the April low. Adjusted for price
inflation, however, the gain is more impressive. Though real
merchandise exports slipped 0.6% during November (-4.4% y/y), they have
risen 13.9% since April. Offsetting a 5.4% decline (-2.3% y/y) decline
in real non-auto consumer goods exports was a 9.0% rise in auto exports
(-6.1% y/y) and a 0.4% uptick (-7.6% y/y) uptick in real capital goods
exports. Exports of services ticked up 0.2% (-0.8% y/y) following
earlier strong monthly gains.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112c.jpg" align="right" border="0" height="265" width="353">
By country, the trade deficit
with mainland China lessened to $20.2B, its least since June, as
exports rose 41.4% y/y and imports fell 2.5%. With Japan, the trade
deficit deteriorated to $5.4B from 5.1B one year earlier as exports
fell 16.3% while imports fell just 4.4%. With the European Union, the
trade deficit deteriorated to $6.4B as exports declined 9.4% y/y and
imports fell a lesser 5.3%. The international
trade data can be found in Haver's USECON database.
Detailed figures are available in the USINT
database.The Determinants of International Flows of U.S.
Currency from the Federal Reserve Bank of New York can be
found <a href="http://www.newyorkfed.org/research/staff_reports/sr400.pdf">
here</a>.&nbsp;
<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/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">U.S. Trade Deficit</td>
<td>$36.4</td>
<td>$33.2</td>
<td>$35.7B</td>
<td>$43.2B (11/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>0.9%</td>
<td>2.7%</td>
<td>2.8%</td>
<td>-2.3%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>2.6%</td>
<td>0.7%</td>
<td>5.6%</td>
<td>-5.5%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.3%</td>
<td>-10.6%</td>
<td>20.7%</td>
<td>1.0%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>2.4%</td>
<td>3.2%</td>
<td>4.2%</td>
<td>-6.9%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body></html>

Economic recovery hit the U.S. trade accounts with a double-whammy during November. It generated a 2.6% m/m rise in imports and it increased the international trade deficit to $36.4B which was the highest since January. The rise [...]

U.S. Trade Deficit Increases With Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112a.jpg" align="right" border="0" height="265" width="353">Economic
recovery hit the U.S. trade accounts with a double-whammy during
November. It generated a 2.6% m/m rise in imports and it increased the
international trade deficit to $36.4B which was the highest since
January. The rise followed October's deficit of $33.2B which&nbsp;
was revised up slightly from the initial estimate. Export growth lagged
with a 0.9% increase that followed two months of stronger increase. The
latest figure was quite a bit higher than Consensus expectations for a
deficit of $34.5B.
Imports rose 2.6% in part due to a rise in crude
oil prices to $72.54 per barrel which was the highest level since
October of 2008. Overall, however, the gain in petroleum imports was
held back by a 4.6% m/m decline (-8.2% y/y) in the quantity of
energy-related products. U.S. economic recovery continued to be
apparent in a 1.5% increase (-6.3% y/y) in real nonoil imports which
was the fifth increase in six months. Real non-auto capital goods
imports jumped 3.5% (-13.0% y/y) after a 2.8% September rise. Real
nonauto consumer goods imports surged 3.7% and by 12.5% since June.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112b.jpg" align="right" border="0" height="265" width="353">These are turnarounds from
earlier sharp declines. Real automotive
vehicles &amp; parts imports, however, slipped 0.4% (-0.1% y/y) but
they were up by one-half since the spring. Real capital goods imports
also have been strong and rose 3.6% for the fourth increase in five
months. They have risen 14.5% since June. Finally, services imports
rose a modest 0.3% (-4.0% y/y) for the fifth increase in six months.
U.S. travels abroad were discouraged by the lower dollar. Travel
imports slipped 0.9% (-7.1% y/y and passenger fares rose 1.5% (-25.6%
y/y).
 Reflecting the competitive value of the dollar, nominal
exports
rose 0.9% m/m and by 13.6% from the April low. Adjusted for price
inflation, however, the gain is more impressive. Though real
merchandise exports slipped 0.6% during November (-4.4% y/y), they have
risen 13.9% since April. Offsetting a 5.4% decline (-2.3% y/y) decline
in real non-auto consumer goods exports was a 9.0% rise in auto exports
(-6.1% y/y) and a 0.4% uptick (-7.6% y/y) uptick in real capital goods
exports. Exports of services ticked up 0.2% (-0.8% y/y) following
earlier strong monthly gains.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112c.jpg" align="right" border="0" height="265" width="353">By
country, the trade deficit
with mainland China lessened to $20.2B, its least since June, as
exports rose 41.4% y/y and imports fell 2.5%. With Japan, the trade
deficit deteriorated to $5.4B from 5.1B one year earlier as exports
fell 16.3% while imports fell just 4.4%. With the European Union, the
trade deficit deteriorated to $6.4B as exports declined 9.4% y/y and
imports fell a lesser 5.3%.
 The international
trade data can be found in Haver's USECON database.
Detailed figures are available in the USINT
database.
The Determinants of International Flows of U.S.
Currency from the Federal Reserve Bank of New York can be
found <a href="http://www.newyorkfed.org/research/staff_reports/sr400.pdf">
here</a>.&nbsp;
<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/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">U.S. Trade Deficit</td>
<td>$36.4</td>
<td>$33.2</td>
<td>$35.7B</td>
<td>$43.2B (11/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>0.9%</td>
<td>2.7%</td>
<td>2.8%</td>
<td>-2.3%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>2.6%</td>
<td>0.7%</td>
<td>5.6%</td>
<td>-5.5%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.3%</td>
<td>-10.6%</td>
<td>20.7%</td>
<td>1.0%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>2.4%</td>
<td>3.2%</td>
<td>4.2%</td>
<td>-6.9%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>

Weekly Chain Store Sales
LikelySuffered From Price Discounting 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 12, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112d.jpg" style="width: 353px; height: 265px;" align="right">Energy
prices are responding to evidence of economic recovery. Last week the pump
price for regular gasoline rose to $2.75 per gallon, the
highest level since October 2008 and up 71% from the December 2008 low
of $1.61. Yesterday, strength in gasoline prices eased somewhat. The
spot market price for a gallon of regular gasoline held at $2.12 per
gallon, the same as last week's level. The figures are reported by the
U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Earlier gains in the price for a
barrel of light sweet crude (WTI) oil also stabilized. Yesterday, the
spot price of $82.52 was roughly unchanged from the prior week.
Nevertheless, prices have risen from $71.53 averaged in early-December.
Moreover, prices were up sharply from the December 2008 low of $32.37.

Demand for gasoline last week posted a 0.9% 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 a sharp 50.4% y/y while distillate demand fell
10.9% 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 early-January by 6.2% from the July high and were up a
diminished 3.1% from one year ago. 
 Reflecting the cold temperatures
throughout the U.S. natural gas prices also strengthened significantly.
Last week prices averaged $6.50 per mmbtu (11.1% y/y), up from $3.35 in
November and triple the September low. Nevertheless, prices remained
down by half from the high reached in early-July of 2008 of
$13.19/mmbtu.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.
 The
Case for "Inflation First" Monetary Policy from the Federal
Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0947.pdf">here</a>&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">01/11/10</th>
<th scope="col">01/04/10</th>
<th scope="col">12/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.75</td>
<td>2.67</td>
<td>2.61</td>
<td>54.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>82.59</td>
<td>79.14</td>
<td>75.09</td>
<td>85.6%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

Weekly Chain Store Sales Likely
Suffered From Price Discounting 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 12, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112g.jpg" style="width: 353px; height: 265px;" align="right">The
holiday
spirit faded last week. That was reflected in a 3.0% w/w decline in
chain store sales which left purchases at the lowest level since March
of last year. Nevertheless, sales rose 1.7% y/y. Most likely the latest
weakness as much reflects post-holiday price discounts as a decline in
sales' volume.
The
ICSC-Goldman Sachs retail chain-store sales index is constructed using
the same-store sales (stores open for one year) reported by 78 stores
of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.During the last ten years
there has been a 69% correlation between the year-to-year growth in
chain store sales and the growth in general merchandise retail sales.<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112h.jpg" style="width: 353px; height: 265px;" align="right">
The weekly figures are available in Haver's SURVEYW
database.
Also suffering from post-Holiday blues was the leading
indicator of
chain store sales. It slipped marginally early in January but its level
was near the highest since January of last year. This composite leading
economic indicator is compiled from four series: (1) the MBA's volume
index of mortgage applications for home purchase (2) the ABC News/Money
magazine's survey of consumer buying conditions (3) new filings for
jobless benefits and (4) the 30-year government bond yield
<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/surveyw/@S2/@S2.HTM" style="color: rgb(0, 0, 0);">ICSC-UBS (SA,
1977=100)</a></th>
<th scope="col">01/09/10</th>
<th scope="col">01/02/10</th>
<th scope="col">12/26/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>482.6</td>
<td>497.6</td>
<td>490.1</td>
<td>1.7%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>

Industrial Production In India
Continues To Advance 
by <a href="/comment/Moeller.html">Louise
Curley</a> January 12, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112i.jpg" style="width: 353px; height: 265px;" align="right">Industrial
production in India increased 3.0% from 298.8 (FY 1993=100) in October
to 307.8 in November and was 11.7% greater than November
2008.&nbsp; This follows October's year over year increase of
10.4%.&nbsp; The production of electricity was down 1.7% for the
month but was 3.3% above the year ago level.&nbsp; Mining
production increased less than a third of a percent in November but was
almost 10 above the year ago level.&nbsp; Production in the
manufacturing sector was strong, increasing 4.2% in the month and 12.7%
over a year ago.&nbsp; The trends in total production and its major
components over the past six years are shown in the first
chart.&nbsp; The rising trend in production halted in 2008 and
early 2009, but never actually reversed into a decline.
Industrial
production for India is also reported for Market Groups, some of which
are shown in the second chart.&nbsp; (Recent levels and percentage
changes for those market groups not shown in the chart are shown in the
table below.) Production of consumer durables was a standout in
November with production up 14.0%.&nbsp; A steadily increasing rate
of production has brought the production of consumer durable goods
37.4% above that of November 2008&nbsp;&nbsp; Although capital
goods production increased only 0.39% in the month of November it was
11.6% greater than in November 2008.&nbsp; There was a similar
pattern in the production of Intermediate Goods, which increased 1.5%
in November but was 19.4% above the year ago
level.
 Rising industrial production in the first
two months of the fourth quarter bodes well for growth in the total
economy in the fourth quarter.&nbsp; Industrial production has
accounted for between 18% and 20% of GDP over the past six years as
shown in the third chart.&nbsp;&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (FY1993=100)</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov 08</th>
<th scope="col">M/M % Chg</th>
<th scope="col">Y/Y % Chg</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total</td>
<td>307.8</td>
<td>298.8</td>
<td>275.5</td>
<td>3.01</td>
<td>11.72</td>
<td>275.0</td>
<td>263.3</td>
<td>239.6</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>194.0</td>
<td>193.4</td>
<td>176.6</td>
<td>0.31</td>
<td>9.85</td>
<td>175.5</td>
<td>169.2</td>
<td>159.9</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>333.0</td>
<td>319.7</td>
<td>295.5</td>
<td>4.16</td>
<td>12.69</td>
<td>294.9</td>
<td>282.0</td>
<td>255.0</td>
</tr>
<tr>
<td class="firstcol">Electricity</td>
<td>232.2</td>
<td>236.7</td>
<td>224.7</td>
<td>-1.69</td>
<td>3.34</td>
<td>222.1</td>
<td>214.1</td>
<td>201.5</td>
</tr>
<tr>
<td class="firstcol">Basic Goods</td>
<td>243.3</td>
<td>241.7</td>
<td>229.5</td>
<td>0.66</td>
<td>6.01</td>
<td>229.5</td>
<td>221.2</td>
<td>203.5</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>440.1</td>
<td>438.4</td>
<td>394.5</td>
<td>0.39</td>
<td>11.56</td>
<td>392.7</td>
<td>359.6</td>
<td>300.5</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>305.7</td>
<td>291.7</td>
<td>256.0</td>
<td>1.46</td>
<td>19.41</td>
<td>260.8</td>
<td>259.7</td>
<td>234.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>335.4</td>
<td>329.2</td>
<td>302.2</td>
<td>1.88</td>
<td>10.99</td>
<td>306.4</td>
<td>288.3</td>
<td>269.6</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Durable&nbsp;</td>
<td>516.9</td>
<td>453.3</td>
<td>376.1</td>
<td>14.03</td>
<td>37.44</td>
<td>389.7</td>
<td>377.9</td>
<td>378.5</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Nondurable</td>
<td>294.4</td>
<td>298.0</td>
<td>286.0</td>
<td>-1.21</td>
<td>2.94</td>
<td>287.3</td>
<td>267.7</td>
<td>244.4</td>
</tr>
</tbody>
</table>

</body></html>

U.S. Trade Deficit Increases WithEconomic Recovery

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100111e.jpg" align="left" border="0" height="265" width="353">
French IP is on the mend. Yr/Yr its decline has been reduced
to under a 5% drop, at -3.8%. Over six months IP is expanding at a
growth rate of 6.1%. Output of consumer durable goods is holding back
the recovery although output of consumer durables rose in November.
Auto output surged in November.
France is seeing output rise in Q4 at a very modest annual
rate pace of 0.5%. Consumer durables output is falling at a 7% annual
rate in Q4. Consumer nondurables and capital goods output are creeping
ahead in the new quarter. Intermediate goods output is rising at a
strong 6.3%.
The industrial sector globally is making a strong recovery
from a disastrous drop in the recession. France&#8217;s recovery is about as
advanced as that in any major industrial country. Still it has lost
some momentum. This recovery continues to go in fits and starts.
France&#8217;s IP advance in November is heartening but it does not turn up
the speed of the expansion in any clear way.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">French IP Excluding
Construction 
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter -to-date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>1.1%</td>
<td>-0.6%</td>
<td>-1.2%</td>
<td>-2.6%</td>
<td>6.1%</td>
<td>-3.8%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer
Dur</td>
<td>1.2%</td>
<td>-1.5%</td>
<td>-3.1%</td>
<td>-12.9%</td>
<td>-9.1%</td>
<td>-11.7%</td>
<td>-7.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer
Ndur</td>
<td>0.4%</td>
<td>-0.6%</td>
<td>1.9%</td>
<td>7.1%</td>
<td>3.1%</td>
<td>-2.2%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Capital</td>
<td>2.4%</td>
<td>-0.8%</td>
<td>-3.1%</td>
<td>-6.0%</td>
<td>12.4%</td>
<td>-0.7%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Intermed</td>
<td>2.1%</td>
<td>0.1%</td>
<td>-1.6%</td>
<td>2.4%</td>
<td>13.9%</td>
<td>-3.7%</td>
<td>6.3%</td>
</tr>
<tr class="grey2">
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Auto</td>
<td>11.1%</td>
<td>-5.7%</td>
<td>-17.0%</td>
<td>-42.9%</td>
<td>75.5%</td>
<td>18.6%</td>
<td>-18.6%</td>
</tr>
</tbody>
</table>
</body></html>

French IP is on the mend. Yr/Yr its decline has been reduced to under a 5% drop, at -3.8%. Over six months IP is expanding at a growth rate of 6.1%. Output of consumer durable goods is holding back the recovery although output of [...]

French Industrial Output Recovers Lead By A Rebound In Investment Goods

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100111d.jpg" align="left" border="0" height="265" width="353">
Recession continues in Ireland as Industrial production,
announced today, declined 8.0% from 106.2 (2005=100) in Octoberto 97.7%
in November. Ireland makes a distinction between its traditional
industries and those of relatively recent origin. The "Modern" sector
includes the following NACE industries reproduction of recorded music
(182), manufacture of chemicals and chemical products (20), manufacture
of basic pharmaceutical products and pharmaceutical preparations (21),
manufacture of computers, electronic and optical products (26),
manufacture of electric equipment (27) and medical and dental
instruments and supplies (325). All the rest of the industries make up
the traditional sector.
Month to month production in the Modern Sector has been
volatile but has shown little trend. For instance production in the
Modern sector declined 10.5% in November, but was down only 3.8% from a
year ago. Production in the Traditional sector, on the contrary, has
shown a definite downward trend. Although production in the Traditional
sector was down only 2.2% in November, it was 17.7% below the year ago
level. The attached chart shows total Industrial Production for Ireland
and production in the Modern and Traditional sectors. The relative
stability of production in the Modern Sector and the sharp decline of
production in the Traditional Sector are apparent.

<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;IRELAND</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov&nbsp; 08</th>
<th scope="col">M/M % Chg</th>
<th scope="col">Y/Y/% Chg</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial
Production (2005=100)</td>
<td>97.7</td>
<td>106.2</td>
<td>108.0</td>
<td>-8.00</td>
<td>-9.54</td>
<td>106.5</td>
<td>108.3</td>
<td>103.0</td>
</tr>
<tr>
<td class="firstcol">Traditional Sector</td>
<td>84.4</td>
<td>86.3</td>
<td>102.5</td>
<td>-2.20</td>
<td>-17.66</td>
<td>100.3</td>
<td>104.7</td>
<td>101.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Modern Sector</td>
<td>108.2</td>
<td>121.0</td>
<td>112.6</td>
<td>-10.50</td>
<td>-3.82</td>
<td>111.2</td>
<td>111.0</td>
<td>104.0</td>
</tr>
</tbody>
</table>
</body></html>

Recession continues in Ireland as Industrial production, announced today, declined 8.0% from 106.2 (2005=100) in Octoberto 97.7% in November. Ireland makes a distinction between its traditional industries and those of relatively [...]

Irish Industrial Production: Modern Vs Traditional Sectors

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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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.


260108Z1.jpg

**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.

260108Z2.jpg

**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.

260108Z3.jpg

**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.

260108Z4.jpg

**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.

260108Z5.jpg

**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.

260108Z6.jpg

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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Charts of the Week: Cooling Inflation, Diverging Growth

Sandy Batten

260108N1.jpg

260108O1.jpg

Nonfarm business labor productivity (output per hour) exhibited further robust growth in Q3, increasing 4.9% q/q SAAR following an upwardly revised 4.1% quarterly increase in Q2 (previously +3.3%). A quarterly gain of 4.1% was expected by the Action Economics Forecast Survey. Compared to a year ago, productivity rose 1.9% in Q3 versus 1.5% in Q2. Since productivity growth began to accelerate at the beginning of 2023, it has grown at a well above trend 2.7% annual rate. Strong productivity is a key factor for boosting real incomes and restraining inflation pressures going forward.

Nonfarm business output increased 5.4% q/q in Q3 on top of a 5.2% quarterly rise in Q2 while hours worked edged up just 0.5% q/q, down from 1.0% in Q2. Compensation growth picked up to 2.9% q/q in Q3 from a downwardly revised 1.1% q/q in Q2 (previously +4.3%) although compensation growth from a year ago slowed to 3.2% in Q3 from 3.5%. As a result, unit labor costs declined 1.9% q/q in Q3 following a downwardly revised 2.9% quarterly decline in Q2 (previously +1.0%). On a y/y basis, unit labor costs advanced only 1.2% y/y in Q2, the smallest annual gain since Q3 2023.

Growth of factory output slowed to 2.6% q/q in Q3 from 2.9% in Q2. However, hours worked fell 0.7% in Q3 after having been unchanged in Q2. Consequently, factory productivity growth accelerated to 3.3% from 2.9% in Q2. Factory compensation growth picked up to 4.8% q/q in Q3 from 4.0% in Q2, resulting in a pickup in unit labor cost growth to 1.5% from 1.1% in Q2.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

260108P1.jpg

260108Q1.jpg

- Nonfarm business output per hour rose 4.9% q/q SAAR in Q3 on top of an upward revision to Q2.
- Compensation increased 2.9% in Q3 resulting in a 1.9% quarterly decline in unit labor costs.

U.S. Productivity Jumped in Q3; Unit Labor Costs Fell

Kathleen Stephansen, CBE

260108A2.jpg

260108B2.jpg

Initial claims for unemployment insurance increased by 8,000 to 208,000 in the week ending January 3, from 200,000 in the week ending December 27, revised from 199,000. The four-week moving average of initial claims was 211,750 in the January 3 week, a decline of 7,250 from 219,000, revised from 218,750 in the December 27 week. The January 3 week four-week average was the lowest level since April 27, 2024.

Federal government employees initially filed 479 (NSA) jobless insurance claims in the week ended December 27, after filing 812 claims in the week ended December 20.

Continuing claims for unemployment insurance rose 56,000 to 1.914 million in the week ending December 27, from 1.858 million in the prior week, revised from 1.866 million. The four-week moving average was 1.893 million in the week ending December 27, from 1.872 million in the December 20 week, revised from 1.873 million. The insured unemployment rate stood at 1.2% in the week of December 27, unchanged from previous week of December 20.

Federal government employees’ continuing benefits claims were 12,161 (NSA) in the week of December 20, down from 13,390 (NSA) in the week ended December 13. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 20, the highest unemployment rates were in Washington (2.48%), New Jersey (2.38%), Massachusetts (2.27%), and Minnesota and Rhode Island (both 2.22%). The lowest rates were in Florida (0.26%), North Carolina (0.38%), Alabama and Louisiana (both 0.43%), Virgin Islands (0.46%), Virginia (0.47%), and Georgia (0.49%). Rates in other notable states include New York (1.83%), Illinois (1.81%), Pennsylvania (1.72%), and Texas (1.00%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- Initial claims rose moderately from the prior week.
- Continuing claims increased from the prior week.
- The insured unemployment rate was unchanged.

U.S. Initial Claims for Unemployment Insurance Rose in Latest Week

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The EU indexes for December 2025 showed slight slippage as the overall index fell to 96.7 from 97.1 in November for the whole of the European Monetary Union. Sectors showed slippage in consumer confidence and retailing; confidence slipped to -13.1 in December from -12.8 in November as the retail rating slipped to -7 in December from -6 in November. The services sector and the industrial sector were each unchanged on the month, with the industrial reading at a net standing of -9 and the services reading at +6. Improving month-to-month was construction where the index rose to a -1 in December from -2 in November.

**Queue standings of sectors**
The queue (or rank) standings for the overall reading as well as the sector readings largely cluster around the lower one-third of the range of values on data back to 1985, where applicable. Retailing and construction are exceptions, with retailing at an above-median standing at a 51.3 percentile and construction at a solid and strong 81.6 percentile standing in December. The weakest reading is for consumer confidence at the 23.1 percentile standing followed by the industrial sector at a 30.5 percentile standing; services check in at a 37.9 percentile standing. The rank standing for the overall monetary union is at 34.4%, just slightly above the bottom one-third mark for all ranked observations over the period.

**Country results**
18 countries report detail in this survey. Seven of the 18 showed declines in December; this is up substantially from November when five showed declines and compares to October when eight countries showed declines. An unfortunate feature of December is that the headline reading for the monetary union weakens as well as readings for each of the four largest monetary union economies Germany, France, Italy, and Spain.

The two largest monetary union economies, Germany and France, have the weakest rank standings among the BIG4 with Germany at a 15.7 percentile standing and France at a 29.5 percentile standing. Italy and Spain each have standings above the 50% mark placing them above their medians for Italy with a reading of 54.2 percentile, while for Spain it's a 61.2 percentile standing.

**Standings across smaller economics**
Across the remaining monetary union countries, six of the 14 readings are above their 50th percentile, while eight of the 14 are below their 50th percentile. Well, the large countries are experiencing a significant split; the rest of the monetary union appears to be in much the same condition, with approximately half of them performing at above-median conditions and half performing at below-median conditions.

**Country stories**
The chart of the monetary union indexes by sector shows us that there has been little change and little trend in these observations. Across countries Germany has definitely been the weakest country among the BIG4, while Italy has been the strongest. Inflation data have showed inflation beginning to heat up in Spain, and Spain does have the strongest queue standing among the four largest monetary union economies - so that might be something to keep an eye on going forward. Conditions in Germany and France are still quite weak and seem unlikely to force an increase in inflation.

**Smaller economies- some specifics**
And so, the rest of the monetary union economies show tiny Malta, which is hardly a price-maker, has a strong 99.6 percentile standing, followed by 70th percentile standings in Greece and then Lithuania. Portugal and Cyprus have readings in their 60th percentiles. For the most part, these are modest readings but above their medians, of course. Among the weak economies in the rest of the union, the weakest is Belgium with a 16.9 percentile standing, followed by Estonia at a 28.4 percentile standing, Luxembourg at a 32.8 percentile standing, and Austria at a 33-percentile standing. After that, Finland’s standing goes to 37.7 percentile with the Netherlands, Slovakia, and Latvia all with readings in their 40th percentiles indicating moderate undershooting relative to their respective medians.

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**Summing up**
On the whole, the EMU area weakened into 2025 with the large economies turning up weaker numbers than what we'd prefer to see and with sectors split although with the important job creating services sector holding steady for two months after having picked up in November. The recent month-to-month weakness stems from consumer confidence and retailing and we have seen some of that play out in data from Germany where retail sales were unexpectedly weak. Broader concerns about unemployment in the monetary union have not moved excessively. In the consumer survey, unemployment expectations are at 51.9% just slightly above their historic median, a relatively normal reading. The weakest readings on the consumer side are from expectations for the financial situation over the next 12 months and the economic situation over the next 12 months. By country, each of the four largest economies has a consumer confidence percentile standing below its historic median. So the consumer is not poised to lead the monetary union out of the wilderness into growth.

Europe

EU Indexes for EMU Weaken at Year-End

Michael J. Moran

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The November report on Job Openings and Labor Turnover (JOLTs) showed a drop of 4.1% in job openings from a downward revised level in October (revised lower by 2.9%). The combined changes pushed the latest total to the lowest level of the year. Although the latest results were soft, they were not deeply disappointing. Openings in November were still within the range of observations from the past two years, and they were in line with the pre-pandemic averages in 2018 and 2019. The November reading was noticeably firmer than observations before 2018. Scaling by the size of the labor force does not change the picture: November results were in the low end of the recent range, but they were similar to results in 2018-19 and they were firm relative to observations in earlier years.

The easing in job openings in the past few years has led to a drop in the ratio of openings to unemployed individuals. However, recent results for this measure also are respectable relative to historical standards. The current reading of 0.913 trails the average of 1.160 in 2018-19, but the shortfall is moderate, and the results in those years represent a strong standard. This ratio never reached the 1.0 threshold until 2018, and the strongest average before 2018 was 0.878 in 2017. Every year before 2017 showed an even lighter average. 

The still-respectable level of job postings suggests that businesses are seeking workers, but they are being cautious in making offers. The hires rate (the number of new hires relative to employment) fell 0.2 percentage point in November to 3.2%, matching the lowest reading in the current cycle. Moreover, results in the past two years have been noticeably shy of the pre-pandemic norms in 2018-19.

Individuals apparently have noticed the reluctance of businesses to hire, as few are quitting their jobs to seek new opportunities. The quits rate has been range bound since mid-2024 at a level that is well below observations in 2018-19.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings have eased considerably from the elevated levels seen during the post-pandemic recovery, but they are in line with pre-pandemic norms.
- Businesses are not rushing to fill posted positions.