Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207b.jpg" align="right" border="0" height="265" width="353">
German
manufacturing new orders in volume terms fell 2.14% in October to 91.4
(2005=100) from 93.4 in September.&nbsp; This was the first drop
since orders began to rise in March of this year.&nbsp; Domestic
orders were down only 0.55% but foreign orders declined 3.48%. The
continued rise in the Euro is taking its toll on German
exports.&nbsp; A decline of 6.74% in foreign demand for investment
goods accounted for the drop in foreign orders. Foreign orders for
consumer goods actually increased by 5.27% in October and foreign
orders for intermediate goods rose slightly--0.30% .&nbsp; Foreign
orders are shown in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207c.jpg" align="right" border="0" height="265" width="353">Domestic
demand for investment
goods also declined in October, but only by 1.18%.&nbsp; In
contrast to the rising foreign trend, orders for domestic consumer
goods fell by 5.84%, reflecting lack luster retail sales.&nbsp;
Domestic demand for intermediate goods increased by 1.20%.&nbsp;
Domestic orders are shown in the second chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207a.jpg" align="right" border="0" height="265" width="353">An
indicator of the
price level of new orders can be computed by dividing the value series
by the volume series.&nbsp; The resulting calculation is shown in
the third chart compared with the Producer Price Index for
manufacturing.&nbsp; The two indexes show the same broad
trends.&nbsp; The PPI has been falling since June 2008 and appears
to be leveling off.&nbsp; The new orders index has been declining
since September 2008 and is yet to level off.&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Oct&nbsp; 08</th>
<th scope="col">M/M % CHG</th>
<th scope="col">Y/Y % CHG</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Manufacturing New Orders</td>
<td>91.4</td>
<td>93.4</td>
<td>99.9</td>
<td>-2.14</td>
<td>-8.51</td>
<td>111.3</td>
<td>119.7</td>
<td>108.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic&nbsp;</td>
<td>91.2</td>
<td>91.7</td>
<td>99.5</td>
<td>-0.55</td>
<td>-8.34</td>
<td>108.3</td>
<td>114.8</td>
<td>106.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign</td>
<td>91.5</td>
<td>94.8</td>
<td>100.2</td>
<td>-3.48</td>
<td>-8.77</td>
<td>113.8</td>
<td>124.0</td>
<td>110.8</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Foreign New Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>99.8</td>
<td>99.5</td>
<td>111.6</td>
<td>0.30</td>
<td>-10.57</td>
<td>115.9</td>
<td>121.7</td>
<td>112.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment Goods</td>
<td>85.8</td>
<td>92.0</td>
<td>93.7</td>
<td>-6.74</td>
<td>-8.43</td>
<td>113.5</td>
<td>126.2</td>
<td>110.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Consumer Goods</td>
<td>101.9</td>
<td>96.8</td>
<td>105.9</td>
<td>5.27</td>
<td>-3.78</td>
<td>107.5</td>
<td>114.8</td>
<td>105.3</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Domestic New Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>101.2</td>
<td>100.0</td>
<td>100.9</td>
<td>1.20</td>
<td>0.50</td>
<td>110.6</td>
<td>116.1</td>
<td>108.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment Goods</td>
<td>83.8</td>
<td>84.8</td>
<td>98.4</td>
<td>-1.18</td>
<td>-14.84</td>
<td>107.2</td>
<td>115.2</td>
<td>106.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>85.5</td>
<td>90.8</td>
<td>100.5</td>
<td>-5.84</td>
<td>14.93</td>
<td>103.6</td>
<td>107.0</td>
<td>103.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices (Value Index/Volume
Index,2005=1)</td>
<td>.995</td>
<td>.999</td>
<td>1.011</td>
<td>-0.44</td>
<td>-4.47</td>
<td>1.038</td>
<td>1.028</td>
<td>1.017</td>
</tr>
</tbody>
</table>

</body></html>

German manufacturing new orders in volume terms fell 2.14% in October to 91.4 (2005=100) from 93.4 in September. This was the first drop since orders began to rise in March of this year. Domestic orders were down only 0.55% but [...]

German Manufacturing New Orders Decline In October

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207b.jpg" align="right" border="0" height="265" width="353">German
manufacturing new orders in volume terms fell 2.14% in October to 91.4
(2005=100) from 93.4 in September.&nbsp; This was the first drop
since orders began to rise in March of this year.&nbsp; Domestic
orders were down only 0.55% but foreign orders declined 3.48%. The
continued rise in the Euro is taking its toll on German
exports.&nbsp; A decline of 6.74% in foreign demand for investment
goods accounted for the drop in foreign orders. Foreign orders for
consumer goods actually increased by 5.27% in October and foreign
orders for intermediate goods rose slightly--0.30% .&nbsp; Foreign
orders are shown in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207c.jpg" align="right" border="0" height="265" width="353">Domestic
demand for investment
goods also declined in October, but only by 1.18%.&nbsp; In
contrast to the rising foreign trend, orders for domestic consumer
goods fell by 5.84%, reflecting lack luster retail sales.&nbsp;
Domestic demand for intermediate goods increased by 1.20%.&nbsp;
Domestic orders are shown in the second chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207a.jpg" align="right" border="0" height="265" width="353">An
indicator of the
price level of new orders can be computed by dividing the value series
by the volume series.&nbsp; The resulting calculation is shown in
the third chart compared with the Producer Price Index for
manufacturing.&nbsp; The two indexes show the same broad
trends.&nbsp; The PPI has been falling since June 2008 and appears
to be leveling off.&nbsp; The new orders index has been declining
since September 2008 and is yet to level off.&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Oct&nbsp; 08</th>
<th scope="col">M/M % CHG</th>
<th scope="col">Y/Y % CHG</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Manufacturing New Orders</td>
<td>91.4</td>
<td>93.4</td>
<td>99.9</td>
<td>-2.14</td>
<td>-8.51</td>
<td>111.3</td>
<td>119.7</td>
<td>108.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic&nbsp;</td>
<td>91.2</td>
<td>91.7</td>
<td>99.5</td>
<td>-0.55</td>
<td>-8.34</td>
<td>108.3</td>
<td>114.8</td>
<td>106.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign</td>
<td>91.5</td>
<td>94.8</td>
<td>100.2</td>
<td>-3.48</td>
<td>-8.77</td>
<td>113.8</td>
<td>124.0</td>
<td>110.8</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Foreign
New Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>99.8</td>
<td>99.5</td>
<td>111.6</td>
<td>0.30</td>
<td>-10.57</td>
<td>115.9</td>
<td>121.7</td>
<td>112.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment Goods</td>
<td>85.8</td>
<td>92.0</td>
<td>93.7</td>
<td>-6.74</td>
<td>-8.43</td>
<td>113.5</td>
<td>126.2</td>
<td>110.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Consumer Goods</td>
<td>101.9</td>
<td>96.8</td>
<td>105.9</td>
<td>5.27</td>
<td>-3.78</td>
<td>107.5</td>
<td>114.8</td>
<td>105.3</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Domestic
New Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>101.2</td>
<td>100.0</td>
<td>100.9</td>
<td>1.20</td>
<td>0.50</td>
<td>110.6</td>
<td>116.1</td>
<td>108.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment Goods</td>
<td>83.8</td>
<td>84.8</td>
<td>98.4</td>
<td>-1.18</td>
<td>-14.84</td>
<td>107.2</td>
<td>115.2</td>
<td>106.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>85.5</td>
<td>90.8</td>
<td>100.5</td>
<td>-5.84</td>
<td>14.93</td>
<td>103.6</td>
<td>107.0</td>
<td>103.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices (Value Index/Volume
Index,2005=1)</td>
<td>.995</td>
<td>.999</td>
<td>1.011</td>
<td>-0.44</td>
<td>-4.47</td>
<td>1.038</td>
<td>1.028</td>
<td>1.017</td>
</tr>
</tbody>
</table>

 Temp Hiring Bolsters Jobs
&amp; Portends Labor Market Improvement 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 07, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207d.jpg" align="right" border="0" height="265" width="353">The
November employment report indicated that the number of temporary help
jobs grew by 52,400, the fourth consecutive month of increase. Since
July temp employment grew by 116,900 (6.7%), a gain which outstripped
the 95,500 (0.7%) four-month increase in health care employment, the
48,800 (1.9%) rise in social assistance payrolls, the 40,000 (0.8%)
gain in state gov't jobs as well as the few others. 
Not only has the
growth in temp jobs been impressive, but as a leading indicator of
full-time employment it bodes well for the job market. During the last
two economic cycles temporary employment began growing a year or two
before the recoveries in total employment, which both lagged the
official end of the recessions.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207e.jpg" align="right" border="0" height="265" width="353">The ratio
of temp employment-to-total
payroll jobs also has value as a cyclical indicator. During the last
ten years there has been an 85% correlation between the ratio and real
GDP growth. Five years ago, a higher ratio near 2.0% was consistent
with 3.0% growth in real GDP. Temporary help jobs increased due to
workers' hours-worked flexibility and, for the most part, lower benefit
costs. Then, as economic growth eased, the ratio fell to its current
1.4%, the lowest level since 1994.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091207f.jpg" align="right" border="0" height="265" width="353">Overall,
economic
recovery will bolster not only full-time employment, as usual, but temp
jobs as well. If the Consensus 3.0% growth forecast through the end of
next year is on the mark, temp employment should rise along with its
share of the total; indicating a greater number of workers re-entering
the workforce. That would turn-around the decline in the labor force
participation rate which recently has plumbed a 25-year low of 65.0%.
However, the "quality" of those new jobs likely will differ greatly
from the benefits of full-time employment.
Why do
firms use temporary workers? from the
Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflmarch2009_260.pdf">here</a>.
Today's speech titled by Frequently Asked Questions
Fed Chairman Ben S. Bernanke is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20091207a.htm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a style="color: rgb(0, 0, 0);">Nonfarm Payrolls</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Temporary Help (000s)</td>
<td>1,862.1</td>
<td>1,809.7</td>
<td>1,765.6</td>
<td>2,128</td>
<td>2,346.4</td>
<td>2,599.4</td>
<td>2,641.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Share of Total Jobs
(%)</td>
<td>1.42</td>
<td>1.38</td>
<td>1.35</td>
<td>1.57</td>
<td>1.71</td>
<td>1.89</td>
<td>1.94</td>
</tr>
</tbody>
</table>

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German Manufacturing New OrdersDecline In October

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204e.jpg" width="353">
Factory inventories rose in October, by 0.4%, their first increase in 14 months. September&#39;s decline was revised from 1.0% to 1.3%, although this revision can actually be interpreted positively. Shipments in September were stronger than initially reported, gaining 1.3% instead of the 0.8% indicated a month ago. Thus, inventories decreased more then for the right reason: sales increased. Shipments continued upward in October by 0.8%. The resulting inventory/shipments ratio, which reached a 13-year high last winter of 1.46, continued to decline most recently, edging down from 1.35 in September to 1.34 in October.
As our graph at left depicts, the uptick in October inventories was accounted for by the petroleum industry, as industries excluding that one had virtually flat stocks from September. This remains an obvious improvement, though, as the graph illustrates. Industries with increases in October include aircraft, various defense-related sectors and food; the petroleum sector saw a 6.1% rise in stocks, which we presume was heavily price-driven.
New orders continued to improve as well. Durable goods orders were down 0.6%, as Tom Moeller reported here a week ago. But revisions to September data were themselves increased in this latest report, so that total durable goods are now shown to have increased 2.2% compared to 2.0% a week ago, with the segment excluding transportation equipment up 2.1%, compared with 1.8%. Also, nondurable goods industries saw a 1.6% expansion in October, and their September results were revised notably higher, from 0.6% to 1.1%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204f.jpg" width="353">
So the manufacturing sector is regaining its footing after a long contraction. These gains in orders, shipments and inventories, though still uneven among individual industries, suggest a broadening of an emerging economic recovery.
The Manufacturers&#39; Shipments, Inventories and Orders (MSIO) data are available in Haver&#39;s USECON database.

<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" style="COLOR: #ffffff">Factory Survey</a> (NAICS, %)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</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>0.4</td>
<td>-1.3</td>
<td>-0.9</td>
<td>-11.2</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>0.2</td>
<td>-1.0</td>
<td>-0.4</td>
<td>-13.2</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>1.6</td>
<td>-0.8</td>
<td>-10.6</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.5</td>
<td>1.5</td>
<td>0.3</td>
<td>-10.2</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.8</td>
<td>1.3</td>
<td>-0.2</td>
<td>-11.5</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>1.5</td>
<td>0.6</td>
<td>-0.1</td>
<td>-11.8</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-0.4</td>
<td>-0.4</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>0.6</td>
<td>-0.1</td>
<td>-12.6</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories rose in October, by 0.4%, their first increase in 14 months. September's decline was revised from 1.0% to 1.3%, although this revision can actually be interpreted positively. Shipments in September were stronger [...]

U.S. Factory Inventories Turn Up in October; Sizable Across-the-Board Revisions to September Factory Data

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204a.jpg" align="right" border="0" height="265" width="353">
The labor market improved last month. Moreover, accompanying
data showed that earlier labor market deterioration was not as large as
reported initially. The Bureau of Labor Statistics reported that
nonfarm payrolls fell 11,000 in November following smaller, revised
declines of 111,000 and 139,000. Last month's payroll employment
decline was the shallowest since the recession began in December 2007.
Consensus expectations were for a 106,000 worker decline in employment
but the range of estimates was an uncommonly wide -50,000 to -170,000.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204b.jpg" align="right" border="0" height="265" width="353">
The payroll employment decline was accompanied by a drop in
the unemployment rate to 10.0% from 10.2%. Perhaps more notable was the
impetus for the decline. Household sector employment increased 227,000
(-3.9% y/y) which was the first monthly gain since April and the
largest since April 2008. The labor force shrank by 98,000 (-0.5% y/y)
as the trend toward dropping out continued. The number of individuals
not in the labor force rose to 82,866,000 (3.3% y/y) with 6,011,000
(11.4% y/y) who want a job now.
Another signal of an improved labor market was shrinkage in
the number of job losers on temporary layoff, off 189,000 or about the
same as in October. The number on permanent layoff fell by 272,000 but
the level remained nearly double last year. Overall, the total of
unemployment plus those part-time for economic reasons fell, but just
modestly to 17.2%. Also compromising the picture of labor market
improvement was the rise in the median duration of unemployment to a
record-high 20.1 weeks. The percent of those unemployed for more than
27 weeks rose to 38.3%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204c.jpg" align="right" border="0" height="265" width="353">
The smaller decline in November payroll employment owed to an
increase in service sector hiring of 58,000. That followed a 2,000
October increase, revised from a 61,000 worker decline reported last
month. The services increase was led by an 86,000 (-4.1% y/y) worker
rise in professional &amp; business services accompanied by a
40,000 (+2.0% y/y) gain in education &amp; health services. Factory
sector employment fell again and the 41,000 worker decline continued a
trend which began in the late-1970s. Construction employment fell but
the 27,000 decline was nearly the smallest since the recession began.
Government sector employment rose just 7,000 (-0.2% y/y). Temporary
help services employment, which may presage future employment growth,
rose 52,400, the fourth consecutive monthly increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204d.jpg" align="right" border="0" height="265" width="353">
The length of the average workweek, often a harbinger of
future employment, rose to 33.2 weeks, its highest level since
February. The workweek in the factory sector jumped to 40.4 weeks and
the figure has been rising since a May low.
Average hourly earnings increased a minimal 0.1% in November
and the gain lowered the y/y increase to 2.2% which was its weakest
since mid-2004, off from 4.2% growth reached during 2007. Earnings in
the factory sector reversed a revised October decline with a 0.4%
increase (+2.5% y/y). The durable sector's earnings rose 3.4% y/y while
earnings in the private service sector rose an increased 2.7% y/y.
Construction sector earnings rose 2.2% y/y.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</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">Payroll Employment</td>
<td>-11</td>
<td>-111</td>
<td>-139</td>
<td>-3.5%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-190</td>
<td>-219</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-41</td>
<td>-51</td>
<td>-41</td>
<td>-11.0</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-27</td>
<td>-56</td>
<td>-53</td>
<td>-14.1</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>58</td>
<td>2</td>
<td>-44</td>
<td>-2.0%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.0</td>
<td>33.1</td>
<td>33.4 (Nov. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.0</td>
<td>10.2%</td>
<td>9.8%</td>
<td>6.8% (Nov. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

The labor market improved last month. Moreover, accompanying data showed that earlier labor market deterioration was not as large as reported initially. The Bureau of Labor Statistics reported that nonfarm payrolls fell 11,000 in [...]

U.S. Payrolls Decline Minimally and Unemployment Rate Falls Unexpectedly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204a.jpg" align="right" border="0" height="265" width="353">
The labor market improved last month. Moreover, accompanying
data showed that earlier labor market deterioration was not as large as
reported initially. The Bureau of Labor Statistics reported that
nonfarm payrolls fell 11,000 in November following smaller, revised
declines of 111,000 and 139,000. Last month's payroll employment
decline was the shallowest since the recession began in December 2007.
Consensus expectations were for a 106,000 worker decline in employment
but the range of estimates was an uncommonly wide -50,000 to -170,000.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204b.jpg" align="right" border="0" height="265" width="353">
The payroll employment decline was accompanied by a drop in
the unemployment rate to 10.0% from 10.2%. Perhaps more notable was the
impetus for the decline. Household sector employment increased 227,000
(-3.9% y/y) which was the first monthly gain since April and the
largest since April 2008. The labor force shrank by 98,000 (-0.5% y/y)
as the trend toward dropping out continued. The number of individuals
not in the labor force rose to 82,866,000 (3.3% y/y) with 6,011,000
(11.4% y/y) who want a job now.
Another signal of an improved labor market was shrinkage in
the number of job losers on temporary layoff, off 189,000 or about the
same as in October. The number on permanent layoff fell by 272,000 but
the level remained nearly double last year. Overall, the total of
unemployment plus those part-time for economic reasons fell, but just
modestly to 17.2%. Also compromising the picture of labor market
improvement was the rise in the median duration of unemployment to a
record-high 20.1 weeks. The percent of those unemployed for more than
27 weeks rose to 38.3%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204c.jpg" align="right" border="0" height="265" width="353">
The smaller decline in November payroll employment owed to an
increase in service sector hiring of 58,000. That followed a 2,000
October increase, revised from a 61,000 worker decline reported last
month. The services increase was led by an 86,000 (-4.1% y/y) worker
rise in professional &amp; business services accompanied by a
40,000 (+2.0% y/y) gain in education &amp; health services. Factory
sector employment fell again and the 41,000 worker decline continued a
trend which began in the late-1970s. Construction employment fell but
the 27,000 decline was nearly the smallest since the recession began.
Government sector employment rose just 7,000 (-0.2% y/y). Temporary
help services employment, which may presage future employment growth,
rose 52,400, the fourth consecutive monthly increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204d.jpg" align="right" border="0" height="265" width="353">
The length of the average workweek, often a harbinger of
future employment, rose to 33.2 weeks, its highest level since
February. The workweek in the factory sector jumped to 40.4 weeks and
the figure has been rising since a May low.
Average hourly earnings increased a minimal 0.1% in November
and the gain lowered the y/y increase to 2.2% which was its weakest
since mid-2004, off from 4.2% growth reached during 2007. Earnings in
the factory sector reversed a revised October decline with a 0.4%
increase (+2.5% y/y). The durable sector's earnings rose 3.4% y/y while
earnings in the private service sector rose an increased 2.7% y/y.
Construction sector earnings rose 2.2% y/y.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</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">Payroll Employment</td>
<td>-11</td>
<td>-111</td>
<td>-139</td>
<td>-3.5%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-190</td>
<td>-219</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-41</td>
<td>-51</td>
<td>-41</td>
<td>-11.0</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-27</td>
<td>-56</td>
<td>-53</td>
<td>-14.1</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>58</td>
<td>2</td>
<td>-44</td>
<td>-2.0%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.0</td>
<td>33.1</td>
<td>33.4 (Nov. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.0</td>
<td>10.2%</td>
<td>9.8%</td>
<td>6.8% (Nov. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 U.S. Factory Inventories Turn Up
in October; Sizable Across-the-Board Revisions to September Factory Data 
by <a href="/comment/Stone.html">Carol
Stone</a> December 04, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204e.jpg" align="left" border="0" height="265" width="353">
Factory inventories rose in October, by 0.4%, their first
increase in 14 months. September's decline was revised from 1.0% to
1.3%, although this revision can actually be interpreted positively.
Shipments in September were stronger than initially reported, gaining
1.3% instead of the 0.8% indicated a month ago. Thus, inventories
decreased more then for the right reason: sales increased. Shipments
continued upward in October by 0.8%. The resulting inventory/shipments
ratio, which reached a 13-year high last winter of 1.46, continued to
decline most recently, edging down from 1.35 in September to 1.34 in
October.
As our graph at left depicts, the uptick in October
inventories was accounted for by the petroleum industry, as industries
excluding that one had virtually flat stocks from September. This
remains an obvious improvement, though, as the graph illustrates.
Industries with increases in October include aircraft, various
defense-related sectors and food; the petroleum sector saw a 6.1% rise
in stocks, which we presume was heavily price-driven.
New orders continued to improve as well. Durable goods orders
were down 0.6%, as Tom Moeller reported here a week ago. But revisions
to September data were themselves increased in this latest report, so
that total durable goods are now shown to have increased 2.2% compared
to 2.0% a week ago, with the segment excluding transportation equipment
up 2.1%, compared with 1.8%. Also, nondurable goods industries saw a
1.6% expansion in October, and their September results were revised
notably higher, from 0.6% to 1.1%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091204f.jpg" align="right" border="0" height="265" width="353">
So the manufacturing sector is regaining its footing after a
long contraction. These gains in orders, shipments and inventories,
though still uneven among individual industries, suggest a broadening
of an emerging economic recovery.
The Manufacturers' Shipments, Inventories and Orders (MSIO)
data are available in Haver's USECON database.

<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" style="color: rgb(255, 255, 255);">Factory Survey</a>
(NAICS, %)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</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>0.4</td>
<td>-1.3</td>
<td>-0.9</td>
<td>-11.2</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>0.2</td>
<td>-1.0</td>
<td>-0.4</td>
<td>-13.2</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>1.6</td>
<td>-0.8</td>
<td>-10.6</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.5</td>
<td>1.5</td>
<td>0.3</td>
<td>-10.2</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.8</td>
<td>1.3</td>
<td>-0.2</td>
<td>-11.5</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.5</td>
<td>0.6</td>
<td>-0.1</td>
<td>-11.8</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-0.4</td>
<td>-0.4</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>0.6</td>
<td>-0.1</td>
<td>-12.6</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Payrolls Decline Minimallyand Unemployment Rate Falls Unexpectedly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203g.jpg" align="right" border="0" height="265" width="353">
Last quarter's strength in productivity growth was revised
lower with the reduced reading on GDP. Nevertheless, the revised 8.1%
jump remained the strongest since 3Q '03 and fell just short of
Consensus expectations for an 8.5% increase."&gt;
The revision reflected a downwardly revised 2.9% (-3.7% y/y)
increase in output. Hours-worked (employment times hours) was
little-revised at down 4.8% (-7.4% y/y) which followed a 7.5% 2Q
drop.Compensation costs, however, were revised up significantly to a
5.4% quarterly rate of growth and by 2.5% y/y.
The downward revision of productivity and the upward revision
to compensation lessened the previously reported decline in unit labor
costs. Nevertheless, the 2.5% decline remained the third consecutive
quarterly fall but it eased the y/y change to -1.4%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203h.jpg" align="right" border="0" height="265" width="353">

The surge in 3Q worker productivity growth in the factory
sector was revised little at a 13.4% (AR) increase. That was a record
and it lifted y/y growth to 3.0%, the highest since early-last year.
The increase came as output rose at an 8.4% rate (-10.7% y/y) and hours
worked fell at a 4.4% rate (-13.3% y/y). Compensation rose at an
upwardly revised 6.5% rate (6.1% y/y), therefore unit labor costs in
the factory sector fell at a lessened 6.1% annual rate (+3.0% y/y).
The productivity &amp; cost figures are available in
Haver's USECON database.
Fed Chairman Ben S. Bernanke's Senate
testimony today can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091203a.htm">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">
</a>(SAAR,%)</th>
<th scope="col">3Q '09 (Revised)</th>
<th scope="col">3Q '09 (Prelim.)</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</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">&nbsp; Output per Hour</td>
<td>8.1</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.0</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>5.4</td>
<td>3.8</td>
<td>6.9</td>
<td>-4.7</td>
<td>2.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-2.5</td>
<td>-5.2</td>
<td>-0.0</td>
<td>-5.0</td>
<td>-1.4</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sector</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Output per Hour</td>
<td>13.4</td>
<td>13.6</td>
<td>6.8</td>
<td>-2.5</td>
<td>3.0</td>
<td>0.8</td>
<td>3.2</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Compensation per Hour</td>
<td>6.5</td>
<td>5.5</td>
<td>6.5</td>
<td>-0.4</td>
<td>6.1</td>
<td>3.0</td>
<td>4.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unit Labor Costs</td>
<td>-6.1</td>
<td>-7.1</td>
<td>-0.3</td>
<td>2.2</td>
<td>3.0</td>
<td>2.2</td>
<td>1.1</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body></html>

Last quarter's strength in productivity growth was revised lower with the reduced reading on GDP. Nevertheless, the revised 8.1% jump remained the strongest since 3Q '03 and fell just short of Consensus expectations for an 8.5% [...]

3Q U.S. Worker Productivity Strength Revised Lower & Unit Costs Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203e.jpg" width="353">
Unexpectedly, the November Composite Index for the nonmanufacturing sector deteriorated for the second consecutive month. The figure from the Institute for Supply Management (ISM) fell below the break-even level of 50 to 48.7 and fell short of Consensus expectations for a reading of 51.2. Since the series&#39; inception in 1997 there has been a 64% correlation between the level of the composite index in the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
ISM surveys more than 370 purchasing managers in more than 62 industries including law firms, hospitals, government and retailers. The nonmanufacturing survey dates back to July 1997. The figures are available in Haver&#39;s USECON database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203f.jpg" width="353">
Amongst the components, the business activity index for the service sector fell the hardest to 49.6 and just below the break-even level. The new orders series also fell slightly to 55.1 but remained up from November&#39;s low of 35.6. The speed of vendor deliveries increased (lower index level) to its quickest since June. Only the employment index showed slight improvement m/m but it remained well below the September level. Since the series&#39; inception in 1997 there has been an 80% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.
Pricing power increased slightly despite the weakening in business activity. The pricing index rose m/m 57.9 and was up sharply from the December low of 36.1. Since its inception ten years ago, there has been a 73% correlation between the price index and the q/q change in the GDP services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report On Business</cite>&reg;, the composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indices of four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">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/USECON/@EF/@EF03/@EF03.HTM" style="color: rgb(0, 0, 0);">ISM Nonmanufacturing Survey</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. &#39;08</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">Composite Index</td>
<td>48.7</td>
<td>50.6</td>
<td>50.9</td>
<td>37.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business Activity</td>
<td>49.6</td>
<td>55.2</td>
<td>55.1</td>
<td>33.3</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>55.1</td>
<td>55.6</td>
<td>54.2</td>
<td>35.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>41.6</td>
<td>41.1</td>
<td>44.3</td>
<td>31.1</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Supplier Deliveries</td>
<td>48.5</td>
<td>50.5</td>
<td>50.0</td>
<td>49.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Index</td>
<td>57.8</td>
<td>53.0</td>
<td>48.8</td>
<td>37.0</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Unexpectedly, the November Composite Index for the nonmanufacturing sector deteriorated for the second consecutive month. The figure from the Institute for Supply Management (ISM) fell below the break-even level of 50 to 48.7 and fell [...]

U.S. ISM Nonmanufacturing Index Slips Again

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091203d.jpg" align="left" border="0" height="265" width="353">
In November the Services PMI rose to 53.04 from 52.58. The
services PMI stands in the 63rd percentile of its range. As such it is
stronger than the EMU commission index for the sector that is only in
the 47th percentile of its range. 
 
Among EMU nations France&#8217;s index is the relative strongest standing in
the 81st percentile of its range. Ireland is the relative weakest with
the services index standing in the 40th percentile of its range. 
 
Interestingly the service sector has continued to improve with little
or no improvement in consumer confidence (see bottom panel of table
above). 
 
The service sector is important since it is where most of the jobs are.
Despite ongoing sector improvement consumers have simply not had their
spirits lifted. In Germany the banks continue to be obstreperous about
lending. In the UK the service sector is backing off. France is doing
well but at the cost of its fiscal progress. To be sure the various
counties of the e-Zone and of EU remain challenged. E-Zone lending has
been slow to revive. But getting the service sector back on track is a
key objective of mending the Euro-economy. That revival should fix a
lot of what is wrong. 
The improved economy pushed initial claims for unemployment insurance
down to a 15-month low. The Labor Department indicated that during the
latest week, which included the Thanksgiving holiday, claims fell to
457,000 from a downwardly revised 462,000 during the prior period. The
figures are down from the recession peak of 674,000 claims reached in
March. The four-week moving average of claims fell to 481,250 and the
latest weekly figure was lower than Consensus expectations for and
increase to 488,000 claims.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th class="scope" colspan="8">Markit
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area</td>
<td>53.04</td>
<td>52.58</td>
<td>50.86</td>
<td>52.16</td>
<td>49.46</td>
<td>45.81</td>
<td>63.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>51.38</td>
<td>50.73</td>
<td>52.06</td>
<td>51.39</td>
<td>50.21</td>
<td>47.13</td>
<td>51.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>60.87</td>
<td>57.71</td>
<td>53.16</td>
<td>57.25</td>
<td>52.29</td>
<td>47.96</td>
<td>81.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>49.84</td>
<td>52.20</td>
<td>48.53</td>
<td>50.19</td>
<td>47.31</td>
<td>43.94</td>
<td>48.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain</td>
<td>46.13</td>
<td>47.74</td>
<td>46.39</td>
<td>46.75</td>
<td>44.60</td>
<td>39.90</td>
<td>54.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ireland</td>
<td>46.80</td>
<td>47.37</td>
<td>45.46</td>
<td>46.54</td>
<td>45.16</td>
<td>39.85</td>
<td>40.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU only</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="grey3">
<td class="firstcol">UK (CIPs)</td>
<td>56.63</td>
<td>56.90</td>
<td>55.30</td>
<td>56.28</td>
<td>54.63</td>
<td>49.96</td>
<td>80.8%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">EU Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol">EU Index</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">EU Services</td>
<td>-9</td>
<td>-11</td>
<td>-11</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-26.00</td>
<td>47.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">EMU</td>
<td>Nov-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-4</td>
<td>-7</td>
<td>-9</td>
<td>-6.67</td>
<td>-11.50</td>
<td>-18.96</td>
<td>36.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Cons Confidence</td>
<td>-17</td>
<td>-18</td>
<td>-19</td>
<td>-18.00</td>
<td>-20.67</td>
<td>-21.31</td>
<td>47.2%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany-Ccon</td>
<td>-19</td>
<td>-16</td>
<td>-19</td>
<td>-18.00</td>
<td>-22.00</td>
<td>-25.92</td>
<td>32.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France-Ccon</td>
<td>-18</td>
<td>-21</td>
<td>-24</td>
<td>-21.00</td>
<td>-25.33</td>
<td>-29.92</td>
<td>47.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Ital-Ccon</td>
<td>-17</td>
<td>-18</td>
<td>-16</td>
<td>-17.00</td>
<td>-17.17</td>
<td>-22.33</td>
<td>42.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK-Ccon</td>
<td>-8</td>
<td>-8</td>
<td>-10</td>
<td>-8.67</td>
<td>-12.67</td>
<td>-20.00</td>
<td>71.1%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">percentile is over range
since May 2000</td>
</tr>
</tbody>
</table>
</body></html>

In November the Services PMI rose to 53.04 from 52.58. The services PMI stands in the 63rd percentile of its range. As such it is stronger than the EMU commission index for the sector that is only in the 47th percentile of its range. [...]

EMU PMI Rises Strongly In November

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

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Michael J. Moran

260109A.jpg

260109B.jpg

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

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

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

260109C.jpg

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

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

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

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

A Soft Tone in the Labor Market

Winnie Tapasanun

260109F17.jpg

260109G17.jpg

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

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

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

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

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

260109H17.jpg

260109I17.jpg

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

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

260109E.jpg

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

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

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

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

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

260109.jpg

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

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

Germany

German Industrial Production Perks Up-Surprise!

Andrew Cates

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


260108Z1.jpg

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

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

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

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

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

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

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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.