Tom Moeller

Though private sector payrolls fell again last month, the 84,000 worker decline was the least since March 2008. The latest report from the payroll processor ADP, in their National Employment Report, indicated that the December decline [...]

ADP Report:U.S. December PayrollEmployment Decline Is Smallest Since March 2008

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<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105l.jpg" width="353"></p>
The Holiday spirit, or perhaps after-Christmas discounts, prompted a surge in spending late in 2009. During the latest week, chain store sales jumped 1.5% from the prior week to lift sales to the highest level since August 2008. The late-year surge raised y/y sales growth to 2.5% which was just below the firmest since the middle of 2008. <span>
<p><span style="COLOR: black">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.</span> 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.<span> The weekly figures are available in Haver&#39;s <b>SURVEYW </b>database.</span></p>
<p>Perhaps heralding the sales improvement was the leading indicator of chain store sales. It slipped marginally early in December but its level was near the highest since January of last year.</p>
<p>This composite leading economic indicator is compiled from four series: (1) the MBA&#39;s volume index of mortgage applications<br> for home purchase (2) the ABC News/Money magazine&#39;s survey of consumer buying conditions (3) new filings for jobless benefits and (4) the 30-year government bond yield.</p>
<p><span class="heading1"><b>The Current State of the Economy and a Look to the Future (With Reference to William &#145;Sidestroke&#146; Miles, W. Somerset Maugham, Don Ameche and Kenneth Arrow)</b> is the title of yesterday&#39;s speech by Dallas Fed Governor Richard W. Fisher and it can be found <a href="http://dallasfed.org/news/speeches/fisher/2009/fs091110.cfm">here</a>.</span></p>
</span>
<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/surveyw/@S2/@S2.HTM" style="COLOR: #000000"><span>ICSC-UBS (SA, 1977=100)</span></a></b></th>
<th scope="col"><b>01/01/10</b></th>
<th scope="col"><b>12/25/09</b></th>
<th scope="col"><b>12/18/09</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">Total Weekly Chain Store Sales</td>
<td>497.6</td>
<td>490.1</td>
<td>488.1</td>
<td>2.5 %</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>


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The Holiday spirit, or perhaps after-Christmas discounts, prompted a surge in spending late in 2009. During the latest week, chain store sales jumped 1.5% from the prior week to lift sales to the highest level since August 2008. The [...]

Weekly Chain Store Sales Improve Sharply

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<p></p>
<p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105d.jpg" align="right" border="0" height="265" width="353">
Home sales
suffered during November due to the (since-extended) expiration of an
$8,000 first-time home buyers tax credit. The National Association of
Realtors (NAR) reported that November pending home sales fell 16.0%
from October after nine consecutive months of firm gain. Despite the
m/m decline, sales remained up 19.4% from their January low. The
monthly decline exceeded Consensus expectations for a 3.1% m/m decline.
</p><p> <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105e.jpg" align="right" border="0" height="265" width="353">
Sales in the Northeast fell a sharp 25.7% m/m following a 19.9%
October increase. Sales in the Midwest also fell 25.7% but that
followed a lesser 12.3% October gain. Sales in the South fell 15.0%
after the 5.1% October increase while sales in the West fell 2.7% after
a 10.9% October decline.</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.</p><p><b>Why
Are Banks Holding So Many Excess Reserves?</b> from the Federal
Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci15-8.pdf">here
</a>.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><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>November</b></th>
<th scope="col"><b>October</b></th>
<th scope="col"><b>September</b></th>
<th scope="col"><b>Y/Y</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">Total</td>
<td>96.0</td>
<td>114.3</td>
<td>110.0</td>
<td>&nbsp;&nbsp;15.5%</td>
<td>86.8</td>
<td>95.8</td>
<td>112.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>74.4</td>
<td>100.2</td>
<td>83.6</td>
<td>14.8</td>
<td>73.1</td>
<td>85.9</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>82.0</td>
<td>110.3</td>
<td>98.2</td>
<td>9.2</td>
<td>80.6</td>
<td>89.5</td>
<td>101.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>97.8</td>
<td>115.1</td>
<td>109.5</td>
<td>14.8</td>
<td>89.6</td>
<td>107.3</td>
<td>127.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>124.6</td>
<td>128.1</td>
<td>143.8</td>
<td>21.4</td>
<td>99.5</td>
<td>92.3</td>
<td>109.6</td>
</tr>
</tbody>
</table>
</span></body></html>

Home sales suffered during November due to the (since-extended) expiration of an $8,000 first-time home buyers tax credit. The National Association of Realtors (NAR) reported that November pending home sales fell 16.0% from October [...]

U.S. Pending Home Sales Decline

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<p></p>
<p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105f.jpg" align="right" border="0" height="265" width="353">
Evidence of
a U.S. economic recovery has given life to energy prices. The <b>pump
price for regular gasoline </b>rose to $2.67 per gallon last
week, the highest level since early-November. Gasoline prices remain up
from the December '08 low of $1.61. Further strength in prices was
evident yesterday when the spot market price for a gallon of regular
gasoline jumped to $2.10 per gallon from $2.01 the prior week and from
$1.85 at the beginning of December. 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> Strength also was evident in the
price for a barrel of light sweet crude (WTI) oil. Yesterday, the
nearby futures price jumped to $81.51 from $79.07 averaged last week
and from $71.53 averaged in early-December. Moreover, prices were up
sharply from the December '08 low of $32.37. <b>Inflation May Be
the Next Dragon to Slay</b> from the Federal Reserve Bank of St.
Louis can be found <a href="http://www.stlouisfed.org/publications/re/articles/?id=1865">here&nbsp;</a>.
</p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105g.jpg" align="right" border="0" height="265" width="353">Demand for
gasoline leveled off last week and posted a 0.2% 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 28.6% y/y while distillate
demand fell 8.8% y/y, a decline more moderate than the 21.6% y/y
shortfall at the beginning of last July.</p>
<p> Natural gas prices also
strengthened significantly with the winter heating season. Last week
prices averaged $5.87 per mmbtu (3.9% y/y), up from the November low of
$3.35. Nevertheless, prices remained down by more than half from the
high reached in early-July of 2008 of $13.19/mmbtu.</p>
<p> The weekly energy
price data can be found in Haver's <b>WEEKLY </b>database
while the daily figures are in <b>DAILY</b>. The gasoline
demand figures are in <b>OILWKLY</b>.&nbsp;</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly
Prices</b></a></th>
<th scope="col"><b>01/04/10</b></th>
<th scope="col"><b>12/28/09</b></th>
<th scope="col"><b>12/21/09</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
<th scope="col"><b>2006</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.67</td>
<td>2.61</td>
<td>2.59</td>
<td>58.3%</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>79.14</td>
<td>75.09</td>
<td>71.77</td>
<td>86.2%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</span>
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Evidence of a U.S. economic recovery has given life to energy prices. The pump price for regular gasoline rose to $2.67 per gallon last week, the highest level since early-November. Gasoline prices remain up from the December '08 low [...]

U.S. Weekly Gasoline Prices Move Higher

Robert Brusca

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<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105h.jpg" align="left" border="0" height="265" width="353"></p>
<p>From its low point in mid 2008 France&#8217;s Consumer confidence is
still making a long slow recovery. Its drop of one point in December
does not signal an end to the climb which, although substantial, has
only brought the index to the 28th percentile of the range of values it
has occupied Since January 1990. By rank the index is in the 15th
percentile meaning that 85% of the 240 observations over this period
lie above it.</p>
<p>Despite some significant improvement in consumer confidence
the indicator remains at a very low point historically. This underlines
how severely impacted confidence was as its lows. Since April of 1991
this has been the third strongest string of increases in the index over
any sixteen month period, yet the overall measure of confidence remains
mired in a low range- reading.</p>
<p>The prospect of unemployment is in the 75th percentile of its
range or the 81st by rank implying that French workers infrequently
have felt as threatened by unemployment as they are now.</p>
<p>However French respondents mark their current financial
situation as improved and as much better than it was over the last
12-months putting it in the top third of its range and the top 11
percent by rank.</p>
<p>French workers put living standards in the bottom 14
percentile of their range over the last 12-months but boost that
standing to the 29th percentile (still pretty low) over the next 12
months, in their outlook</p>
<p>On balance the story of the French consumer is still unfolding
underpinned by positive trends. The main problem is that conditions had
deteriorated so badly and there is a long way to go to get back to
normal. This month brought a one-point set back but that hardly seems
indicative of a new, more adverse, trend. Progress still appears to be
made.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"><b>INSEE
Household Monthly Survey</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec<br>
09</td>
<td>Nov<br>
09</td>
<td>Oct<br>
09</td>
<td>Sep<br>
09</td>
<td>Percentile</td>
<td>Rank %</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Household Confidence</td>
<td>-31</td>
<td>-30</td>
<td>-34</td>
<td>-35</td>
<td>28.1</td>
<td>15.0</td>
<td>10</td>
<td>-47</td>
<td>57</td>
<td>-19</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="11" class="firstcol">Living
Standards</td>
</tr>
<tr>
<td class="firstcol">&nbsp;past 12 Mos</td>
<td>-66</td>
<td>-66</td>
<td>-70</td>
<td>-72</td>
<td>14.3</td>
<td>13.3</td>
<td>18</td>
<td>-80</td>
<td>98</td>
<td>-40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Next 12-Mos</td>
<td>-37</td>
<td>-36</td>
<td>-40</td>
<td>-41</td>
<td>29.3</td>
<td>18.8</td>
<td>16</td>
<td>-59</td>
<td>75</td>
<td>-21</td>
</tr>
<tr>
<td class="firstcol">Unemployment: Next 12</td>
<td>61</td>
<td>62</td>
<td>65</td>
<td>76</td>
<td>75.4</td>
<td>81.7</td>
<td>93</td>
<td>-37</td>
<td>130</td>
<td>32</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="11" class="firstcol">Price
Developments</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Past 12Mo</td>
<td>-26</td>
<td>-27</td>
<td>-28</td>
<td>-34</td>
<td>25.6</td>
<td>47.9</td>
<td>64</td>
<td>-57</td>
<td>121</td>
<td>-16</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Next 12-Mos</td>
<td>-43</td>
<td>-46</td>
<td>-46</td>
<td>-50</td>
<td>18.3</td>
<td>31.3</td>
<td>33</td>
<td>-60</td>
<td>93</td>
<td>-35</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="11" class="firstcol">Savings</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Favorable to save</td>
<td>11</td>
<td>14</td>
<td>7</td>
<td>4</td>
<td>37.8</td>
<td>15.8</td>
<td>39</td>
<td>-6</td>
<td>45</td>
<td>22</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ability to save Next
12</td>
<td>-6</td>
<td>-8</td>
<td>-11</td>
<td>-14</td>
<td>58.6</td>
<td>72.5</td>
<td>6</td>
<td>-23</td>
<td>29</td>
<td>-9</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="11" class="firstcol">Spending</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Favorable for major
purchase</td>
<td>-20</td>
<td>-19</td>
<td>-24</td>
<td>-27</td>
<td>37.9</td>
<td>37.1</td>
<td>16</td>
<td>-42</td>
<td>58</td>
<td>-14</td>
</tr>
<tr class="odd">
<td colspan="11" class="firstcol"><span style="font-weight: bold;">Financial
Situation</span></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current</td>
<td>17</td>
<td>18</td>
<td>13</td>
<td>13</td>
<td>66.7</td>
<td>89.6</td>
<td>24</td>
<td>3</td>
<td>21</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Past 12 MOs</td>
<td>-20</td>
<td>-22</td>
<td>-24</td>
<td>-25</td>
<td>53.1</td>
<td>31.3</td>
<td>-5</td>
<td>-37</td>
<td>32</td>
<td>-17</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Next 12-Mos</td>
<td>-10</td>
<td>-8</td>
<td>-12</td>
<td>-11</td>
<td>40.0</td>
<td>15.0</td>
<td>11</td>
<td>-24</td>
<td>35</td>
<td>-2</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol"><b>Number
of observations in
the period &nbsp; 240</b></td>
</tr>
</tbody>
</table>
</body></html>

From its low point in mid 2008 France’s Consumer confidence is still making a long slow recovery. Its drop of one point in December does not signal an end to the climb which, although substantial, has only brought the index to the [...]

French Consumers Take A Step Back After Fourth Months of Improved Confidence

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<p></p>
<p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105i.jpg" align="right" border="0" height="265" width="353"> For the
second straight month factory inventories increased, a turn following
thirteen consecutive months of decline. Moreover, October gains were
revised up slightly. The latest monthly increase owed largely to a 3.8%
jump (-26.5% y/y) in auto inventories which was the second consecutive
month of strong gain. That rise was offset by a 1.9% drop (+6.0% y/y)
in defense aircraft and a 0.3% slip (+2.4% y/y) in nondefense aircraft
inventories. Elsewhere, the inventory turn has been limited to the
metals and petroleum industries along with higher prices.</p>
<p>Apparel inventories (-18.6% y/y) continued their decline of
more than a
year as did machinery inventories (-13.3% y/y), though the latter's
decline has slowed significantly. Electrical equipment inventories
(-18.9% y/y) also continued to fall but, again, the monthly rates of
decline have slowed as they have for computers &amp; electronic
products (-9.9% y/y).</p>
<p>Higher factory shipments are likely to
encourage the holding and/or building of inventories. Shipments rose
1.0% during November for the third straight month of strong increase.
Shipments of electrical equipment shipments (-9.2% y/y) have been
strong for two months as have machinery shipments (-20.3% y/y) for two
of the last three. Primary metals (-16.6% y/y) have shown notable
monthly increases since May and furniture inventories (-14.5% y/y) also
seem to have turned toward accumulation.</p>
<p>Improved factory
new orders are part of the sector's improvement. They rose 1.1% in
November, in part reflecting the strength in petroleum prices. A 0.5%
monthly increase had been expected. Elsewhere, metals orders (-7.3%
y/y) have improved as have orders for machinery (-14.2% y/y) and
computers (-2.4% y/y). New orders for electrical equipment &amp;
appliances have perhaps turned the most, moving to a 0.7% y/y gain from
a 30.5% decline as of June. </p>
<p>The Manufacturers' Shipments,
Inventories and Orders (MSIO) data are available in Haver's <b>USECON</b>
database.</p>
<p><b>The Economic Outlook</b> is yesterday's
speech by Fed Governor Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20100104a.htm">here</a>.&nbsp;</p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105j.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105k.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a>
(NAICS, %)</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>October</b></th>
<th scope="col"><b>September</b></th>
<th scope="col"><b>Y/Y</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">Inventories</td>
<td>0.2</td>
<td>0.6</td>
<td>-1.3</td>
<td>-10.3</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.3</td>
<td>0.5</td>
<td>-1.0</td>
<td>-11.8</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.1</td>
<td>0.8</td>
<td>1.6</td>
<td>-3.2</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.9</td>
<td>1.0</td>
<td>1.5</td>
<td>-2.1</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.0</td>
<td>1.5</td>
<td>1.3</td>
<td>-3.8</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.3</td>
<td>2.2</td>
<td>0.6</td>
<td>-3.6</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-0.7</td>
<td>-0.6</td>
<td>-0.4</td>
<td>-10.9</td>
<td>3.5</td>
<td>17.1</td>
<td>15.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>0.2</td>
<td>-0.4</td>
<td>0.6</td>
<td>-11.3</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
</span>
</body></html>

For the second straight month factory inventories increased, a turn following thirteen consecutive months of decline. Moreover, October gains were revised up slightly. The latest monthly increase owed largely to a 3.8% jump (-26.5% [...]

U.S. Factory Inventories & Shipments Increase Again

Louise Curley

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<span id="articletext">
<p></p>
<p>
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105a.jpg" align="right" border="0" height="265" width="353">Advanced
estimates indicate that Singapore's Gross Domestic Product declined at
an annual rate of 6.8% in the fourth quarter, after having risen
sharply in the two previous quarters.&nbsp; Such a pattern is not
unusual in Singapore's experience, as can be seen in the first
chart,&nbsp;and it does not necessarily suggest that Singapore is
in for another recession.&nbsp;&nbsp; Preliminary data for the
fourth quarter and all of 2009 will be published in
February.</p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105b.jpg" align="right" border="0" height="265" width="353">The
advanced estimates are based largely
on production data for the first two months of the quarter--October and
November in this case.&nbsp; In addition to a typical industrial
production index, Singapore produces indexes based on clusters of
production in the chemical, electronic, biomedical, precision
engineering and transport engineering
industries.&nbsp;&nbsp;The second chart shows&nbsp; the
trends in the indexes of the production for four of the five industry
clusters.&nbsp; Movements in the index for the fifth cluster,
Precision Engineering, are shown in the table below.
&nbsp;Production in the chemical&nbsp; and in the precision
engineering clusters increased in October and November.&nbsp;
Production&nbsp; in the electronics cluster increased in October
but fell off in November while production in the transport engineering
declined in both October and November.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105c.jpg" align="right" border="0" height="265" width="353">
But the biggest change
was the sharp declines in the production of biomedicals, mainly
pharmaceuticals, in both October and November.&nbsp; Production in
the biomedical cluster has been subject to much wider swings than those
of the other clusters and is responsible, in large part, for the
erratic path of the quarterly changes in Singapore's
GDP.</p>
<p> The year to year changes in real GDP are,
perhaps, a better indicator of the course of Singapore's economy. These
data are shown in the third chart and suggest that Singapore's recovery
from recession is continuing. &nbsp;</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Real Gross
Domestic Product</th>
<th scope="col">Q4 09</th>
<th scope="col">Q3&nbsp; 09</th>
<th scope="col">Q2&nbsp; 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3&nbsp; 08</th>
<th scope="col">Q2&nbsp; 08</th>
<th scope="col">Q1 08</th>
<th scope="col">&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">M/M Annual Rate of Change in
Real GDP&nbsp; (%0</td>
<td>-6.8</td>
<td>14.9</td>
<td>21.6</td>
<td>-11.5</td>
<td>-16.4</td>
<td>-2.1</td>
<td>-7.7</td>
<td>12.2</td>
<td>--&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Y/Y Rate of Change (%)</td>
<td>3.5</td>
<td>0.9</td>
<td>-3.2</td>
<td>-9.4</td>
<td>-4.2</td>
<td>0.0</td>
<td>2.5</td>
<td>6.7</td>
<td>&nbsp;--</td>
</tr>
<tr>
<td class="firstcol">Production by Industry Cluster
(2007=100)</td>
<td>&nbsp;</td>
<td>Nov 09</td>
<td>Oct&nbsp; 09</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Jul 09&nbsp;</td>
<td>Jun 09</td>
<td>May 09</td>
<td>Apr 09</td>
</tr>
<tr class="odd">
<td class="firstcol">Electronics</td>
<td>&nbsp;--</td>
<td>98.1</td>
<td>99.7</td>
<td>90.7</td>
<td>90.3</td>
<td>96.9</td>
<td>81.4</td>
<td>78.8</td>
<td>77.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Chemicals</td>
<td>&nbsp;--</td>
<td>92.6</td>
<td>91.2</td>
<td>92.9</td>
<td>90.2</td>
<td>95.9</td>
<td>89.4</td>
<td>82.9</td>
<td>80.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Biomedical</td>
<td>&nbsp;--</td>
<td>53.6</td>
<td>77.1</td>
<td>90.8</td>
<td>133.5</td>
<td>146.8</td>
<td>106.5</td>
<td>132.7</td>
<td>131.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Precision Engineering</td>
<td>--</td>
<td>85.4</td>
<td>84.7</td>
<td>83.0</td>
<td>78.6</td>
<td>76.8</td>
<td>78.8</td>
<td>93.8</td>
<td>95.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport Engineering</td>
<td>--</td>
<td>89.3</td>
<td>94.0</td>
<td>96.9</td>
<td>98.4</td>
<td>95.9</td>
<td>96.3</td>
<td>101.9</td>
<td>121.8</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Advanced estimates indicate that Singapore's Gross Domestic Product declined at an annual rate of 6.8% in the fourth quarter, after having risen sharply in the two previous quarters. Such a pattern is not unusual in Singapore's [...]

A Double Dip In Singapore's GDP?

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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Michael J. Moran

260109A.jpg

260109B.jpg

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

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

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

260109C.jpg

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

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

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

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

A Soft Tone in the Labor Market

Winnie Tapasanun

260109F17.jpg

260109G17.jpg

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

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

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

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

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

260109H17.jpg

260109I17.jpg

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

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

260109E.jpg

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

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

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

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

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

260109.jpg

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

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

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.


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.

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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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Charts of the Week: Cooling Inflation, Diverging Growth

Sandy Batten

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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.

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- 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.

Economy in Brief

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