Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091218a.jpg" align="left" border="0" height="265" width="353">
Consumer Confidence in the UK according to GFK has dropped
again in December marking a two-month backtrack in the index. The
current household financial situation is in the bottom 9 percentile of
its range but the major purchase index is in the 71st percentile of its
two year range and 44th percentile of its broader range. 
 

Over the past 12 months the percentile ratings were all below
the 50th percentile and the broad ranges are lower, at or near in the
bottom 25th percentile of their respective ranges. 
 

The outlook components deteriorated across the board in
December except that savings improved and the CPI gauge rose. However,
upper income category survey respondents registered an improved reading
in December as the lower income respondents index fell by a sharp five
points. 
 

Although the GFK index has risen strongly from its very low
recession depths, the new drop is significant and encompasses two
months of backtracking, not just one. It is not the kind of news that
we have been looking for but it fits with the sporadic and conflicted
reports we continue to get out of the UK economy whose readings seem to
run more hot and cold and with more erratic behavior than anywhere
else. Perhaps that is not surprising since the financial crisis has
been severe the UK which was more dependent on its financial sector
than any other country or region. 


GFK Consumer Survey
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>% of 2Yr</td>
<td>% of 10Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Range</td>
<td>Range</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>-19</td>
<td>-17</td>
<td>-13</td>
<td>-16</td>
<td>64.5%</td>
<td>50.0%</td>
</tr>
<tr class="grey4">
<td colspan="7">Current</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>15</td>
<td>15</td>
<td>19</td>
<td>18</td>
<td>9.1%</td>
<td>9.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-16</td>
<td>-19</td>
<td>-12</td>
<td>-15</td>
<td>71.1%</td>
<td>44.3%</td>
</tr>
<tr class="grey4">
<td colspan="7">Last 12 Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>-14</td>
<td>-14</td>
<td>-12</td>
<td>-13</td>
<td>27.3%</td>
<td>25.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-61</td>
<td>-59</td>
<td>-53</td>
<td>-63</td>
<td>40.4%</td>
<td>30.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>58</td>
<td>60</td>
<td>64</td>
<td>67</td>
<td>0.0%</td>
<td>24.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>-8</td>
<td>-10</td>
<td>-6</td>
<td>-5</td>
<td>27.0%</td>
<td>25.4%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">Next 12-Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>5</td>
<td>67.7%</td>
<td>65.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-6</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>82.1%</td>
<td>82.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Unemployment</td>
<td>45</td>
<td>41</td>
<td>46</td>
<td>46</td>
<td>34.0%</td>
<td>49.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-30</td>
<td>-28</td>
<td>-27</td>
<td>-28</td>
<td>45.5%</td>
<td>40.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>4</td>
<td>0</td>
<td>6</td>
<td>0</td>
<td>30.4%</td>
<td>26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>60</td>
<td>56</td>
<td>57</td>
<td>58</td>
<td>39.2%</td>
<td>39.2%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">By Income</td>
</tr>
<tr class="grey2">
<td class="firstcol">Lower</td>
<td>-26</td>
<td>-21</td>
<td>-23</td>
<td>-23</td>
<td>61.3%</td>
<td>44.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Upper</td>
<td>-7</td>
<td>-8</td>
<td>-8</td>
<td>-12</td>
<td>86.2%</td>
<td>65.8%</td>
</tr>
</tbody>
</table>
</body></html>

Consumer Confidence in the UK according to GFK has dropped again in December marking a two-month backtrack in the index. The current household financial situation is in the bottom 9 percentile of its range but the major purchase index [...]

UK Consumer Confidence Continues Backtrack

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091218a.jpg" width="353">
Consumer Confidence in the UK according to GFK has dropped again in December marking a two-month backtrack in the index. The current household financial situation is in the bottom 9 percentile of its range but the major purchase index is in the 71st percentile of its two year range and 44th percentile of its broader range. 
Over the past 12 months the percentile ratings were all below the 50th percentile and the broad ranges are lower, at or near in the bottom 25th percentile of their respective ranges. 
The outlook components deteriorated across the board in December except that savings improved and the CPI gauge rose. However, upper income category survey respondents registered an improved reading in December as the lower income respondents index fell by a sharp five points. 
Although the GFK index has risen strongly from its very low recession depths, the new drop is significant and encompasses two months of backtracking, not just one. It is not the kind of news that we have been looking for but it fits with the sporadic and conflicted reports we continue to get out of the UK economy whose readings seem to run more hot and cold and with more erratic behavior than anywhere else. Perhaps that is not surprising since the financial crisis has been severe the UK which was more dependent on its financial sector than any other country or region. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
GFK Consumer Survey
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>% of 2Yr</td>
<td>% of 10Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Range</td>
<td>Range</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Confidence</td>
<td>-19</td>
<td>-17</td>
<td>-13</td>
<td>-16</td>
<td>64.5%</td>
<td>50.0%</td>
</tr>
<tr class="grey4">
<td colspan="7">Current</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>15</td>
<td>15</td>
<td>19</td>
<td>18</td>
<td>9.1%</td>
<td>9.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-16</td>
<td>-19</td>
<td>-12</td>
<td>-15</td>
<td>71.1%</td>
<td>44.3%</td>
</tr>
<tr class="grey4">
<td colspan="7">Last 12 Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>-14</td>
<td>-14</td>
<td>-12</td>
<td>-13</td>
<td>27.3%</td>
<td>25.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-61</td>
<td>-59</td>
<td>-53</td>
<td>-63</td>
<td>40.4%</td>
<td>30.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>58</td>
<td>60</td>
<td>64</td>
<td>67</td>
<td>0.0%</td>
<td>24.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>-8</td>
<td>-10</td>
<td>-6</td>
<td>-5</td>
<td>27.0%</td>
<td>25.4%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">Next 12-Months</td>
</tr>
<tr class="grey2">
<td class="firstcol">Household Fin Sit</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>5</td>
<td>67.7%</td>
<td>65.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">General Econ Sit</td>
<td>-6</td>
<td>3</td>
<td>3</td>
<td>4</td>
<td>82.1%</td>
<td>82.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Unemployment</td>
<td>45</td>
<td>41</td>
<td>46</td>
<td>46</td>
<td>34.0%</td>
<td>49.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Major Purchases</td>
<td>-30</td>
<td>-28</td>
<td>-27</td>
<td>-28</td>
<td>45.5%</td>
<td>40.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Savings</td>
<td>4</td>
<td>0</td>
<td>6</td>
<td>0</td>
<td>30.4%</td>
<td>26.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI</td>
<td>60</td>
<td>56</td>
<td>57</td>
<td>58</td>
<td>39.2%</td>
<td>39.2%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey4">
<td colspan="7">By Income</td>
</tr>
<tr class="grey2">
<td class="firstcol">Lower</td>
<td>-26</td>
<td>-21</td>
<td>-23</td>
<td>-23</td>
<td>61.3%</td>
<td>44.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Upper</td>
<td>-7</td>
<td>-8</td>
<td>-8</td>
<td>-12</td>
<td>86.2%</td>
<td>65.8%</td>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217d.jpg" align="left" border="0" height="265" width="353">
UK retail sales volumes fell by 0.3% in November after having
rise in October. Sales volumes have risen twice in the last
three-months and seven times in the last 12-months. 
 

The three-month rate of growth has dipped below the six-month
rate of growth but still exceeds the 12-month growth pace. Clothing and
footwear sales, however, are clearly losing momentum having dropped in
the last three months. Retail ex-auto sales are off from their six
month pace but nearly even with their 12-month pace. 
 

In the new quarter, Sales are growing at a pace of 3% to 3.5%.
That should help to underpin Q4 GDP growth. 
 

In a separate report, the CBI survey of the distributive
trades produced diffusion results saying that November sales were flat
with those in October. That of course is more ambitious that the sales
count from National Statistics (above). The outlook in the CBI
framework was negative, however. 
 

A poll of UK inflation expectations found that expectations
were stuck at 2.4% for the third consecutive quarter. While this is
above the BOE ceiling pace for inflation (of 2%) the Bank has admitted
that there would be some temporary overshoot to which it will not
respond. It is heartening that as inflation has risen in the UK,
inflation expectations have not. BOE credibility seems to be well
intact despite the damage done in the financial crisis. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="8"> UK Real and Nominal Retail Sales</th>
<th>Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</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>YrAGo</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>2.0%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-2.0%</td>
<td>1.5%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>1.4%</td>
<td>-1.7%</td>
<td>0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Retial Ex auto</td>
<td>-0.4%</td>
<td>0.6%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>5.3%</td>
<td>3.1%</td>
<td>0.8%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body></html>

UK retail sales volumes fell by 0.3% in November after having rise in October. Sales volumes have risen twice in the last three-months and seven times in the last 12-months. The three-month rate of growth has dipped below the six- [...]

UK Retail Sales Take A Sett Back In November But Cling To Trend Rise

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217g.jpg" align="right" border="0" height="265" width="353">The
Philadelphia Federal Reserve Bank indicated that its index of regional
factory sector activity rose this month to its highest level since
early-2005. At 20.5, the index was unexpectedly strong and positive for
the fifth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217h.jpg" align="right" border="0" height="265" width="353">During the
last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1209.pdf">here.</a>·
Amongst the components, the employment index was notably strong as it
rose to well above break-even and to the highest level since late-2007.
During the last ten years there has been a 91% correlation between the
index level and the three-month change in manufacturing sector
payrolls. Remaining strong were shipments, the workweek, unfilled
orders and the delivery times components. The inventory component also
improved significantly from its March low.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217i.jpg" align="left" border="0" height="265" width="353">The prices paid index rose
sharply to its highest level since August of last year and compares to
negative readings this past winter and spring. During the last ten
years there has been a 71% correlation between the prices paid index
and the three-month growth in the intermediate goods PPI. There has
been an 82% correlation with the change in core intermediate goods
prices.
Expected business conditions in six months deteriorated for
the sixth straight month. The December index fell to a still-positive
reading of 24.4&nbsp; but that was well-off the recent high. Many
of the index components, especially orders and shipments, were down
sharply.· The figures from the Philadelphia Federal Reserve 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">Philadelphia
Fed (%)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">December '08</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">General Activity Index</td>
<td>20.4</td>
<td>16.7</td>
<td>11.5</td>
<td>-35.1</td>
<td>-7.5</td>
<td>-21.3</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>6.5</td>
<td>14.8</td>
<td>6.2</td>
<td>-29.3</td>
<td>-9.6</td>
<td>-14.7</td>
<td>6.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>6.3</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-23.8</td>
<td>-23.7</td>
<td>-8.7</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>33.8</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;-26.6</td>
<td>-4.0</td>
<td>36.4</td>
<td>26.3</td>
</tr>
</tbody>
</table>

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The Philadelphia Federal Reserve Bank indicated that its index of regional factory sector activity rose this month to its highest level since early-2005. At 20.5, the index was unexpectedly strong and positive for the fifth [...]

Philadelphia Fed Index Gains With Strength in Employment

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217e.jpg" width="353">
The Conference Board&#39;s Index of Leading Economic Indicators continued its uptrend last month giving a strong signal that the recent recession has ended. The 0.9% rise during November was the eighth consecutive monthly increase. Moreover, the 10.2% (centered) rate of increase during the last six months was nearly the strongest since early-1983. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged again last month. Sixty-five percent of the components rose during November versus last month&#39;s reading of 70% that increased. During the most recent six months, however, 80% of the series rose. Prominent in last month&#39;s increase was a longer workweek, fewer jobless insurance claims, more building permits, and the steeper interest rate yield curve. These gains were offset by easier vendor performance, lower consumer expectations and a downtick in capital goods orders.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217f.jpg" width="353">
Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators which rose for the first month in the last three. The 0.2% gain followed an unrevised no-change during October. During the last six months the 1.4% rate of decline in the coincident series compares with a shortfall of 8.0% at its worst in January. Moderation of earlier declines has been due to higher industrial production, higher real personal income and higher business sales as well as easier declines in payroll employment.
In a continued sign that excesses in the U.S. economy are falling, the lagging index has been falling since January. Leading the decline has been lower commercial &amp; industrial loans outstanding as well as slower growth in labor costs and less consumer credit. The ratio of coincident-to-lagging indicators (another leading indicator) also continued higher for the eighth straight month to the highest level since November.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August 6-Month % (AR)</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">Leading</td>
<td>0.9</td>
<td>0.3</td>
<td>1.2</td>
<td>10.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2</td>
<td>0.0</td>
<td>-0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.4</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The Conference Board's Index of Leading Economic Indicators continued its uptrend last month giving a strong signal that the recent recession has ended. The 0.9% rise during November was the eighth consecutive monthly increase. [...]

U.S. Leading Economic Indicators Rise Again Signaling Positive Growth

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217a.jpg" align="right" border="0" height="265" width="353">Recent
steadying in the job market stalled last week. The Labor Department
indicated that initial claims for unemployment insurance rose to
480,000 from a little-revised 473,000 during the prior week. As a
result, claims reached the highest level in four weeks but remained
down from the recession peak of 674,000 hit in March. The four-week
moving average of claims slipped to 467,500 and the latest weekly
figure was higher than Consensus expectations for a decline to 465,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217b.jpg" align="right" border="0" height="265" width="353">Initial
claims during the latest week cover the survey period
for November nonfarm payrolls. Claims fell 21,000 (4.2%) from the same
week in October. During the last ten years there has been a negative
84% correlation between the level of claims and the m/m change in
nonfarm payrolls.· Continuing claims for unemployment insurance during
the latest week ticked up 5,000 after a little-revised 289,000 decline
during the week prior. Continuing claims were at the lowest level since
late-February. The overall decline is a function of the improved job
market but also reflects the exhaustion of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to
5,318,250. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance retraced much of the prior week's
decline with a rise to 503,100 during the fourth week of November. The
latest compares to 550,343 during all of October.
The insured rate of
unemployment remained stable at 3.9%, the lowest level since February.
The rate reached a high of 5.2% during late-June. During the last ten
years, there has been a 93% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.&nbsp;· The highest
insured unemployment rates in the week ending November 28 were in
Wisconsin (6.4), Oregon (6.3), Alaska (6.2), Nevada (5.5),&nbsp;
Puerto Rico (5.5%), Pennsylvania (5.3), Michigan (5.3), California
(4.9) and South Carolina (4.8). The lowest insured unemployment rates
were in North Dakota (1.6%), Virginia (2.2), Texas (2.6), Maine (3.1),
Wyoming (3.2), Maryland (3.2),&nbsp; Mississippi (3.7), New York
(3.8), Florida (3.8) and Ohio (3.9). The data are not seasonally
adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">11/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>480</td>
<td>473</td>
<td>454</td>
<td>-13.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,186</td>
<td>5,181</td>
<td>19.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


</body></html>

Recent steadying in the job market stalled last week. The Labor Department indicated that initial claims for unemployment insurance rose to 480,000 from a little-revised 473,000 during the prior week. As a result, claims reached the [...]

U.S. Initial Jobless Insurance Claims Unexpectedly Rise To Highest In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217a.jpg" align="right" border="0" height="265" width="353">Recent
steadying in the job market stalled last week. The Labor Department
indicated that initial claims for unemployment insurance rose to
480,000 from a little-revised 473,000 during the prior week. As a
result, claims reached the highest level in four weeks but remained
down from the recession peak of 674,000 hit in March. The four-week
moving average of claims slipped to 467,500 and the latest weekly
figure was higher than Consensus expectations for a decline to 465,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217b.jpg" align="right" border="0" height="265" width="353">Initial
claims during the latest week cover the survey period
for November nonfarm payrolls. Claims fell 21,000 (4.2%) from the same
week in October. During the last ten years there has been a negative
84% correlation between the level of claims and the m/m change in
nonfarm payrolls.· Continuing claims for unemployment insurance during
the latest week ticked up 5,000 after a little-revised 289,000 decline
during the week prior. Continuing claims were at the lowest level since
late-February. The overall decline is a function of the improved job
market but also reflects the exhaustion of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to
5,318,250. This series dates back to 1966.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217c.jpg" align="right" border="0" height="265" width="353">Extended
benefits for unemployment insurance retraced much of the prior week's
decline with a rise to 503,100 during the fourth week of November. The
latest compares to 550,343 during all of October.
The insured rate of
unemployment remained stable at 3.9%, the lowest level since February.
The rate reached a high of 5.2% during late-June. During the last ten
years, there has been a 93% correlation between the level of the
insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.&nbsp;· The highest
insured unemployment rates in the week ending November 28 were in
Wisconsin (6.4), Oregon (6.3), Alaska (6.2), Nevada (5.5),&nbsp;
Puerto Rico (5.5%), Pennsylvania (5.3), Michigan (5.3), California
(4.9) and South Carolina (4.8). The lowest insured unemployment rates
were in North Dakota (1.6%), Virginia (2.2), Texas (2.6), Maine (3.1),
Wyoming (3.2), Maryland (3.2),&nbsp; Mississippi (3.7), New York
(3.8), Florida (3.8) and Ohio (3.9). The data are not seasonally
adjusted but the overall insured unemployment rate is.· The
unemployment insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a></th>
<th scope="col">12/12/09</th>
<th scope="col">12/05/09</th>
<th scope="col">11/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>480</td>
<td>473</td>
<td>454</td>
<td>-13.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,186</td>
<td>5,181</td>
<td>19.1%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.9</td>
<td>3.9</td>
<td>3.3 (12/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


U.S. Leading Economic Indicators
Rise Again Signaling Positive Growth 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217e.jpg" align="left" border="0" height="265" width="353">
The Conference Board's Index of Leading Economic Indicators
continued its uptrend last month giving a strong signal that the recent
recession has ended. The 0.9% rise during November was the eighth
consecutive monthly increase. Moreover, the 10.2% (centered) rate of
increase during the last six months was nearly the strongest since
early-1983. The leading index is based on actual reports for eight
economic data series. The Conference Board initially estimates two
series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged
again last month. Sixty-five percent of the components rose during
November versus last month's reading of 70% that increased. During the
most recent six months, however, 80% of the series rose. Prominent in
last month's increase was a longer workweek, fewer jobless insurance
claims, more building permits, and the steeper interest rate yield
curve. These gains were offset by easier vendor performance, lower
consumer expectations and a downtick in capital goods orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217f.jpg" align="right" border="0" height="265" width="353">
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators which rose for the first
month in the last three. The 0.2% gain followed an unrevised no-change
during October. During the last six months the 1.4% rate of decline in
the coincident series compares with a shortfall of 8.0% at its worst in
January. Moderation of earlier declines has been due to higher
industrial production, higher real personal income and higher business
sales as well as easier declines in payroll employment.
In a continued sign that excesses in the U.S. economy are
falling, the lagging index has been falling since January. Leading the
decline has been lower commercial &amp; industrial loans
outstanding as well as slower growth in labor costs and less consumer
credit. The ratio of coincident-to-lagging indicators (another leading
indicator) also continued higher for the eighth straight month to the
highest level since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August 6-Month % (AR)</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">Leading</td>
<td>0.9</td>
<td>0.3</td>
<td>1.2</td>
<td>10.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2</td>
<td>0.0</td>
<td>-0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.4</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
 Philadelphia Fed Index Gains With
Strength in Employment 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 17, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217g.jpg" align="right" border="0" height="265" width="353">The
Philadelphia Federal Reserve Bank indicated that its index of regional
factory sector activity rose this month to its highest level since
early-2005. At 20.5, the index was unexpectedly strong and positive for
the fifth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217h.jpg" align="right" border="0" height="265" width="353">During the
last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1209.pdf">here.</a>·
Amongst the components, the employment index was notably strong as it
rose to well above break-even and to the highest level since late-2007.
During the last ten years there has been a 91% correlation between the
index level and the three-month change in manufacturing sector
payrolls. Remaining strong were shipments, the workweek, unfilled
orders and the delivery times components. The inventory component also
improved significantly from its March low.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217i.jpg" align="left" border="0" height="265" width="353">The prices paid index rose
sharply to its highest level since August of last year and compares to
negative readings this past winter and spring. During the last ten
years there has been a 71% correlation between the prices paid index
and the three-month growth in the intermediate goods PPI. There has
been an 82% correlation with the change in core intermediate goods
prices.
Expected business conditions in six months deteriorated for
the sixth straight month. The December index fell to a still-positive
reading of 24.4&nbsp; but that was well-off the recent high. Many
of the index components, especially orders and shipments, were down
sharply.· The figures from the Philadelphia Federal Reserve 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">Philadelphia
Fed (%)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">December '08</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">General Activity Index</td>
<td>20.4</td>
<td>16.7</td>
<td>11.5</td>
<td>-35.1</td>
<td>-7.5</td>
<td>-21.3</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>6.5</td>
<td>14.8</td>
<td>6.2</td>
<td>-29.3</td>
<td>-9.6</td>
<td>-14.7</td>
<td>6.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>6.3</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-23.8</td>
<td>-23.7</td>
<td>-8.7</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>33.8</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;-26.6</td>
<td>-4.0</td>
<td>36.4</td>
<td>26.3</td>
</tr>
</tbody>
</table>

 UK Retail Sales Take A Sett Back
In November But Cling To Trend Rise 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091217d.jpg" align="left" border="0" height="265" width="353">
UK retail sales volumes fell by 0.3% in November after having
rise in October. Sales volumes have risen twice in the last
three-months and seven times in the last 12-months. 
 

The three-month rate of growth has dipped below the six-month
rate of growth but still exceeds the 12-month growth pace. Clothing and
footwear sales, however, are clearly losing momentum having dropped in
the last three months. Retail ex-auto sales are off from their six
month pace but nearly even with their 12-month pace. 
 

In the new quarter, Sales are growing at a pace of 3% to 3.5%.
That should help to underpin Q4 GDP growth. 
 

In a separate report, the CBI survey of the distributive
trades produced diffusion results saying that November sales were flat
with those in October. That of course is more ambitious that the sales
count from National Statistics (above). The outlook in the CBI
framework was negative, however. 
 

A poll of UK inflation expectations found that expectations
were stuck at 2.4% for the third consecutive quarter. While this is
above the BOE ceiling pace for inflation (of 2%) the Bank has admitted
that there would be some temporary overshoot to which it will not
respond. It is heartening that as inflation has risen in the UK,
inflation expectations have not. BOE credibility seems to be well
intact despite the damage done in the financial crisis. 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="8"> UK Real
and Nominal Retail Sales</th>
<th>Quarter</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</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>YrAGo</td>
<td>2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>2.0%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp;
Tobacco</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-2.0%</td>
<td>1.5%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>1.5%</td>
<td>1.4%</td>
<td>-1.7%</td>
<td>0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Retial Ex auto</td>
<td>-0.4%</td>
<td>0.6%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>5.3%</td>
<td>3.1%</td>
<td>0.8%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
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U.S. Initial JoblessInsurance Claims Unexpectedly Rise To Highest In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216h.jpg" align="right" border="0" height="265" width="353">In an
anticipated and unanimous vote, the Federal Open Market Committee today
left the Federal funds rate in a "range from 0 to 1/4 percent." The
discount rate also was left unchanged at 0.5%. The action was as
expected and left the Fed funds rate at its lowest level ever.
"Information received since the Federal Open Market Committee
met in
November suggests that economic activity has continued to pick up and
that the deterioration in the labor market is abating." Thus reads the
opening statement from today's FOMC meeting press release. The
statement then cites improvement in each of the economy's sectors;
however, it notes that activity "is likely to remain weak for a time
..."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216i.jpg" align="right" border="0" height="265" width="353">The
statement goes on to suggest that economic strengthening will
result from monetary &amp; fiscal stimulus. 
The Fed mentioned
price inflation twice, indicating that "higher levels of resource
utilization would occur in the context of price stability" and that
"inflation will remain subdued for some time" as resource utilization
remained low.
Again the Fed indicated that moderate economic growth
and slack capacity utilization would allow rates to say low for an
extended period of time. Also, "To provide support to mortgage lending
and housing markets and to improve overall conditions in private credit
markets, the Federal Reserve is in the process of purchasing $1.25
trillion of agency mortgage-backed securities and about $175 billion of
agency debt. In order to promote a smooth transition in markets, the
Committee is gradually slowing the pace of these purchases, and it
anticipates that these transactions will be executed by the end of the
first quarter of 2010."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216j.jpg" align="right" border="0" height="265" width="353">A complete
text of the Fed's latest press
release can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20091216a.htm">here</a>.
The Haver databases USECON, WEEKLY and DAILY
contain the figures from the Federal Reserve Board.
 Supply
and Demand Shocks in Residential Mortgages from the Federal
Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/trends/2009/1209/01banfin.cfm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>

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In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent." The discount rate also was left unchanged at 0.5%. The action was as expected and left the [...]

FOMC Notes Economic & Job Market Improvement But Leaves Rates Unchanged

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

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

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

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

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

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

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

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

A Soft Tone in the Labor Market

Winnie Tapasanun

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

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

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

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

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

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

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

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.

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

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

Germany

German Industrial Production Perks Up-Surprise!

Andrew Cates

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


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

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

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

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

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

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

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/1jXNsSMGpl60LzAx0fmibN?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

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

Jump to:

UK Consumer Confidence Continues Backtrack

UK Consumer Confidence Continues Backtrack

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Philadelphia Fed Index Gains With Strength in Employment

U.S. Leading Economic Indicators Rise Again Signaling Positive Growth

U.S. Initial Jobless Insurance Claims Unexpectedly Rise To Highest In One Month

U.S. Initial JoblessInsurance Claims Unexpectedly Rise To Highest In One Month

FOMC Notes Economic & Job Market Improvement But Leaves Rates Unchanged