Tom Moeller

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<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.
 <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. 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 PREALTOR database.Why
Are Banks Holding So Many Excess Reserves? from the Federal
Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci15-8.pdf">here
</a>.
<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" style="color: white;">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">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>
</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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<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 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 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 WEEKLY
&amp; DAILY databases.
 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. Inflation May Be
the Next Dragon to Slay 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>.

<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.
 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 $13.19/mmbtu.
 The weekly energy
price data can be found in Haver's WEEKLY database
while the daily figures are in DAILY. The gasoline
demand figures are in OILWKLY.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">01/04/10</th>
<th scope="col">12/28/09</th>
<th scope="col">12/21/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.67</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>

</body></html>

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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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100105h.jpg" align="left" border="0" height="265" width="353">
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.
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.
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.
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.
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
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.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">INSEE
Household Monthly Survey </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 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Sep 
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">Financial
Situation</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">Number
of observations in
the period &nbsp; 240</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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<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.
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).
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.
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. 
The Manufacturers' Shipments,
Inventories and Orders (MSIO) data are available in Haver's USECON
database.
The Economic Outlook 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;
<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"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a>
(NAICS, %)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">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>

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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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<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.
<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.
 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;
<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>

</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?

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104h.jpg" align="right" border="0" height="265" width="353">While
Indonesia has had extensive damage from earthquakes, it has so far
escaped a recession.&nbsp; The closest it has come was the fourth
quarter of 2008 when real gross domestic product increased at an annual
rate of only 0.80%.&nbsp; Subsequent increases have been 3.58% in
the first quarter of 2009, 5.49% in the second and 6.64 in the third
quarter. The annual rates of increase in real GDP over the past six
years are shown in the first chart.
Today, the consumer price
index for December was released.&nbsp;Inflation continues to be
well behaved although there has been a slight increase in the last two
months.&nbsp; The rate of inflation as measured by the year to year
increase in the seasonally unadjusted consumer price index was 2.78%
down from 11.06% in December of 2008.&nbsp; The course of inflation
in Indonesia is shown in the second chart.
Also released
today were Indonesia's exports, imports and balance of trade.&nbsp;
There has been a rising trend in the balance of trade from the 640
million USD deficit in October,2008.&nbsp; Exports at 11,562
million USD are below the peak level of 12,499 million USD reached in
June of 2008 and imports at 9,563 million USD are well below the peak
of 12,142 million USD reached&nbsp; in July 2008.&nbsp; The
third chart shows exports, imports and the balance of trade over the
past six years.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104i.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104j.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col">INDONESIA</th>
<th scope="col">Q4 09</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
<th scope="col">&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="10" class="firstcol"> Real Gross Domestic
Product</td>
</tr>
<tr class="odd">
<td class="firstcol">Q/Q Annual Rate of Change in
Real GDP&nbsp; (%)</td>
<td>--</td>
<td>6.64</td>
<td>5.49</td>
<td>3.58</td>
<td>0.80</td>
<td>6.08</td>
<td>7.50</td>
<td>6.75</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Dec 09</td>
<td>Nov 09</td>
<td>Oct 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">CPI Y/Y % Change (%)</td>
<td>2.78</td>
<td>2.41</td>
<td>2.57</td>
<td>2.83</td>
<td>2.75</td>
<td>2.71</td>
<td>3.65</td>
<td>6.04</td>
<td>7.31</td>
</tr>
<tr>
<td class="firstcol">Trade</td>
<td>Dec 09</td>
<td>Nov 09</td>
<td>Oct 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">Exports&nbsp; (Millions US
$)</td>
<td>--</td>
<td>11562</td>
<td>12108</td>
<td>9588</td>
<td>10257</td>
<td>9260</td>
<td>9135</td>
<td>8756</td>
<td>8872</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports (Millions US $)</td>
<td>--</td>
<td>9563</td>
<td>9903</td>
<td>8288</td>
<td>8963</td>
<td>8161</td>
<td>7645</td>
<td>7165</td>
<td>6512</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (Millions US $)</td>
<td>--</td>
<td>1999</td>
<td>2205</td>
<td>1308</td>
<td>1294</td>
<td>1099</td>
<td>1490</td>
<td>1591</td>
<td>2362</td>
</tr>
</tbody>
</table>

</body></html>

While Indonesia has had extensive damage from earthquakes, it has so far escaped a recession. The closest it has come was the fourth quarter of 2008 when real gross domestic product increased at an annual rate of only 0.80%. [...]

Indonesia Avoids Recession

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104e.jpg" align="right" border="0" height="265" width="353">Though its
rate of decline has moderated, construction spending has continued to
move lower. During November construction outlays fell 0.6% after a
little-revised 0.5% October shortfall. The latest decline left the y/y
change at -13.2% which was improved just modestly from the weakest
-15.8% September comparison. The latest decline about matched Consensus
estimates. Residential building activity renewed its decline with a
1.6% fall following a 4.8% October gain. The decline owed to a 4.1%
(-44.4% y/y) drop in multi-family building and a 3.9% (-2.8% y/y)
shortfall in spending on improvements. Single-family construction rose
1.3% (-25.2% y/y) for the sixth consecutive monthly increase. 
Nonresidential building activity was roughly unchanged after a steep
4.8% October decline. Since the 2008 peak, activity has fallen by
22.5%. Spending in the food &amp; beverage industry declined 44.1%
y/y while expenditures in the lodging were off by nearly one-half.
Commercial building overall fell 40.5% y/y while office building
dropped by more than one-third. Relatively moderate were the declines
in the education (-18.8% y/y), religious (-18.3% y/y) and health care
(-16.1% y/y) sectors.&nbsp;Factory sector spending (-7.0% y/y) was
buoyed by gains in the chemical and in the
computer/electronic/electrical sectors.In the public sector,
construction overall fell a modest 0.4% during November but y/y
expenditures rose despite lower tax revenues. Building activity on
highways &amp; streets fell 2.9% m/m but rose 5.7% y/y due to the
focus on infrastructure rebuilding. Public spending on health care
facilities increased a strong 12.2% y/y but building in the education
sector was off 2.6% y/y. The construction put-in-place figures are
available in Haver's USECON database.&nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104f.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100104g.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">Construction
(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.6</td>
<td>-0.5</td>
<td>-1.6</td>
<td>-13.2</td>
<td>-6.9</td>
<td>-1.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.7</td>
<td>-0.8</td>
<td>-2.4</td>
<td>-20.0</td>
<td>-11.1</td>
<td>-5.7</td>
<td>5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.6</td>
<td>4.8</td>
<td>-0.6</td>
<td>-19.2</td>
<td>-29.1</td>
<td>-19.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.0</td>
<td>-4.8</td>
<td>-3.7</td>
<td>-20.6</td>
<td>13.2</td>
<td>23.1</td>
<td>16.2</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-0.4</td>
<td>0.0</td>
<td>-0.1</td>
<td>2.7</td>
<td>5.6</td>
<td>13.1</td>
<td>9.3</td>
</tr>
</tbody>
</table>
</body></html>

Though its rate of decline has moderated, construction spending has continued to move lower. During November construction outlays fell 0.6% after a little-revised 0.5% October shortfall. The latest decline left the y/y change at [...]

U.S. Factory Inventories &Shipments Increase Again

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

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

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

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

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief

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