Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216a.jpg" align="right" border="0" height="265" width="353">Pricing
power took on a new dimension last month. Despite higher fuel costs,
core prices were unchanged, a result not seen since the depths of the
recent recession. The overall November CPI matched Consensus
expectations and rose 0.4% after an unrevised 0.3% October increase.
Other than energy &amp; food prices, however, consumer prices were
flat. The last time they were unchanged was December of last year when
recessionary forces were gathering steam.

Energy prices
jumped 4.1% m/m and have risen 18.7% so far this year. Gasoline prices
were quite strong posting a 6.4% (23.6% y/y) increase and rising by
more-than-half since December. Fuel oil prices also were firm and rose
7.3% (-7.7% y/y) following a 6.0% gain during October. Finally, prices
for natural gas &amp; electricity rose 1.4% (-5.0% y/y) but are
down 5.1% this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216b.jpg" align="right" border="0" height="265" width="353">Food
&amp; beverage prices posted another
modest 0.1% uptick. So far this year, food prices have fallen an
unprecedented 0.5%. Recent weakness has been led by lower dairy prices
(-9.0% y/y) and lower fruit &amp; vegetable (-4.9% y/y) costs.
Prices for meats, poultry, fish &amp; eggs also fell 4.0% y/y while
cereals &amp; bakery product prices slipped 0.8%.
Consumer prices
less food &amp; energy were unchanged following two months of 0.2%
increase. A 0.1% November uptick had been expected. The 1.7% y/y gain
has been the annual growth rate of core prices all this year. Core
services prices continue to feel the recession's effect and
slipped slightly last month. Their 1.3% y/y gain was a record
low. Weakness in the housing market accounts for much of that
moderation. Last month, shelter prices slipped 0.2% and they've risen a
minimal 0.2% so far in 2009. Owners equivalent rent of primary
residences, a measure not equivalent to other house price measures,
slipped for the fourth month in the last five and have risen 0.7% so
far this year after a 2.5% increase during 2008. Elsewhere in services,
public transportation prices were strong again and posted a 2.6%
increase. Recent gains are, however, just making up for declines during
the recession.&nbsp;Medical care services prices increased 0.4%
(3.5% y/y). Finally, education costs have been firm, up 4.8% y/y after
a 5.8% gain during 2008. The annual gain is, however, down from the
6.9% increase during 2004. Recreation prices have really shown the
recession's effect and are down 0.2% y/y after a 1.6% 2008 gain. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216c.jpg" align="right" border="0" height="265" width="353">Despite
the weak economy, core goods prices have
been relatively firm and last month increased 0.2%. The increase lifted
prices 2.8% since December following no change during the prior two
years. Higher tobacco prices continued to account for much of the
recent strength and rose 1.0% last month (30.3% y/y). New &amp;
used motor vehicles also have firmed considerably. The 0.8% increase
last month lifted prices by 5.2% since December. That compares with
price deflation during the last two years. Working the other way,
apparel prices fell for the third month in the last four (1.0% y/y.
That follows price declines which extend back to 1994. Continuing weak
were prices for household furnishings &amp; operation. They fell
another 0.3%, leaving them down 1.1% so far this year. · The chained
CPI, which adjusts for shifts in consumption patterns, was unchanged
during November and year-to-year prices rose 1.6%. Conversely, chained
prices less food and energy edged 0.2% lower last month. 
The consumer
price data is available in Haver's USECON database
while detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM" style="color: white;">Consumer Price Index</a> 
(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. 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&nbsp;</td>
<td>0.4</td>
<td>0.3</td>
<td>0.2</td>
<td>1.8</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.2</td>
<td>0.4</td>
<td>0.3</td>
<td>2.6</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.1</td>
<td>1.5</td>
<td>0.6</td>
<td>7.7</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.1</td>
<td>-0.5</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: Black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.6</td>
<td>3.3</td>
<td>2.5</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>-0.2</td>
<td>0.3</td>
<td>0.2</td>
<td>1.3</td>
<td>1.9</td>
<td>1.9</td>
<td>2.2</td>
</tr>
</tbody>
</table>

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Pricing power took on a new dimension last month. Despite higher fuel costs, core prices were unchanged, a result not seen since the depths of the recent recession. The overall November CPI matched Consensus expectations and rose 0.4% [...]

CPI's 0.4% Gain Is Fueled By Energy; Core Prices Are Unchanged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216a.jpg" align="right" border="0" height="265" width="353">Pricing
power took on a new dimension last month. Despite higher fuel costs,
core prices were unchanged, a result not seen since the depths of the
recent recession. The overall November CPI matched Consensus
expectations and rose 0.4% after an unrevised 0.3% October increase.
Other than energy &amp; food prices, however, consumer prices were
flat. The last time they were unchanged was December of last year when
recessionary forces were gathering steam.


Energy prices
jumped 4.1% m/m and have risen 18.7% so far this year. Gasoline prices
were quite strong posting a 6.4% (23.6% y/y) increase and rising by
more-than-half since December. Fuel oil prices also were firm and rose
7.3% (-7.7% y/y) following a 6.0% gain during October. Finally, prices
for natural gas &amp; electricity rose 1.4% (-5.0% y/y) but are
down 5.1% this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216b.jpg" align="right" border="0" height="265" width="353">Food
&amp; beverage prices posted another
modest 0.1% uptick. So far this year, food prices have fallen an
unprecedented 0.5%. Recent weakness has been led by lower dairy prices
(-9.0% y/y) and lower fruit &amp; vegetable (-4.9% y/y) costs.
Prices for meats, poultry, fish &amp; eggs also fell 4.0% y/y while
cereals &amp; bakery product prices slipped 0.8%.
Consumer prices
less food &amp; energy were unchanged following two months of 0.2%
increase. A 0.1% November uptick had been expected. The 1.7% y/y gain
has been the annual growth rate of core prices all this year. Core
services prices continue to feel the recession's effect and
slipped slightly last month. Their 1.3% y/y gain was a record
low. Weakness in the housing market accounts for much of that
moderation. Last month, shelter prices slipped 0.2% and they've risen a
minimal 0.2% so far in 2009. Owners equivalent rent of primary
residences, a measure not equivalent to other house price measures,
slipped for the fourth month in the last five and have risen 0.7% so
far this year after a 2.5% increase during 2008. Elsewhere in services,
public transportation prices were strong again and posted a 2.6%
increase. Recent gains are, however, just making up for declines during
the recession.&nbsp;Medical care services prices increased 0.4%
(3.5% y/y). Finally, education costs have been firm, up 4.8% y/y after
a 5.8% gain during 2008. The annual gain is, however, down from the
6.9% increase during 2004. Recreation prices have really shown the
recession's effect and are down 0.2% y/y after a 1.6% 2008 gain. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216c.jpg" align="right" border="0" height="265" width="353">Despite
the weak economy, core goods prices have
been relatively firm and last month increased 0.2%. The increase lifted
prices 2.8% since December following no change during the prior two
years. Higher tobacco prices continued to account for much of the
recent strength and rose 1.0% last month (30.3% y/y). New &amp;
used motor vehicles also have firmed considerably. The 0.8% increase
last month lifted prices by 5.2% since December. That compares with
price deflation during the last two years. Working the other way,
apparel prices fell for the third month in the last four (1.0% y/y.
That follows price declines which extend back to 1994. Continuing weak
were prices for household furnishings &amp; operation. They fell
another 0.3%, leaving them down 1.1% so far this year. · The chained
CPI, which adjusts for shifts in consumption patterns, was unchanged
during November and year-to-year prices rose 1.6%. Conversely, chained
prices less food and energy edged 0.2% lower last month. 
The consumer
price data is available in Haver's USECON database
while detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM" style="color: white;">Consumer Price Index</a> 
(%)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. 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&nbsp;</td>
<td>0.4</td>
<td>0.3</td>
<td>0.2</td>
<td>1.8</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.0</td>
<td>0.2</td>
<td>0.2</td>
<td>1.7</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.2</td>
<td>0.4</td>
<td>0.3</td>
<td>2.6</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.1</td>
<td>1.5</td>
<td>0.6</td>
<td>7.7</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.1</td>
<td>-0.5</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM" style="color: Black;">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>1.6</td>
<td>3.3</td>
<td>2.5</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>-0.2</td>
<td>0.3</td>
<td>0.2</td>
<td>1.3</td>
<td>1.9</td>
<td>1.9</td>
<td>2.2</td>
</tr>
</tbody>
</table>

 U.S. Housing Starts Improve
Modestly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 16, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216d.jpg" align="right" border="0" height="265" width="353">The recent
recovery in home building has been hardly ebullient. Housing starts
rose 8.9% last month to 574,000 (AR) units versus 527,000 during
October, which was revised down slightly. These levels were, however,
6.2% below the 3Q average and remain down 12.4% y/y. More sobering is
the startling decline in housing in recent years. Since the peak in
January of 2006, starts have fallen by more than three-quarters.
November's figure fell short of Consensus expectations for 578,000
starts.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216e.jpg" align="right" border="0" height="265" width="353">Last
month, starts of single-family homes recovered
merely 2.1% to 482,000 after October's 7.1% decline. So far this
quarter, starts have fallen 4.2% from the 3Q average. Despite this loss
of forward momentum, single-family starts have recovered
from the February low. During the last ten years, there has been an 84%
correlation between the q/q change in single-family starts and their
contribution to quarterly GDP growth. The increase in
starts of single-family units was contained to the Southern (12.9% y/y)
and the Western (2.1% y/y) regions of the country. Elsewhere, starts in
the Northeast (2.1% y/y) and in the Midwest (-13.6% y/y) fell
month-to-month.
 A bit firmer were starts of multi-family units which
nearly doubled m/m during November from their record low. Starts of
apartments, condominiums &amp; town houses still were down 79.6%
from the January 2006 peak.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216f.jpg" align="right" border="0" height="265" width="353">Perhaps
more strength in starts is coming.
Building permits rose 6.0% during November to their highest level in
twelve months. As with starts, permits to build a single-family home
have been relatively strong versus the total. Moreover, they rose 5.3%
versus 3Q they have risen 38.3% from the January low.
The
housing starts figures can be found in Haver's USECON database.
Housing's
Great Fall: Putting Household Balance Sheets Together Again
from the Federal Reserve Bank of St. Louis is available <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">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">Housing
Starts (000s, SAAR)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. 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>574</td>
<td>527</td>
<td>586</td>
<td>-12.4%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>482</td>
<td>472</td>
<td>508</td>
<td>5.5</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>92</td>
<td>55</td>
<td>78</td>
<td>-53.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>584</td>
<td>551</td>
<td>575</td>
<td>-7.3</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>

 Japan's Service Sector Shows
Improvement 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216g.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s service sector as gauged by its tertiary sector index
advanced in October after registering a drop in September. The index is
down by 4.3 percent over 12-months compared to MFG and mining where the
index is down by 14% over 12-months. These drops compare to March and
February lows in the two indices, respectively. In March the tertiary
index was down by 8.6% Yr/Yr. In February the mining and MFG index
scored its largest 12-month drop at -36.9%.
Cleary Japan has been improving sharply from its recession
lows. But while the mining and MFG sector has eight straight months of
improvement in its mo/mo readings, services has only improved for one
month in a row. Services also has improved in five of the past six
months. Still, the tertiary sector is only up by 2.5% from its cycle
low point whereas MFG and mining is up by 23.8% from its cycle low
reading. MFG and mining currently stands by 21.8% below its cycle peak
whereas the services sector is off by just 6.4% from its cycle peak.
Two sectors are experiencing very different recession and recovery
forces.
The service sector stands in the 53rd percentile of its range
while Mining and MFG stands in the 40th percentile of its range, well
below its mid-way mark.
Still, the failure of services to post consistent gains or
strong gains while MFG is improving sharply is a sign that Japan is
still struggling. We know it is having some renewed problems with
deflation. In this environment because the service sector employs so
many, it is easy to see why confidence does not easily come back and
why Japan remains vulnerable to deflation even in face of some export
recovery and a strong MFG rebound. The rising yen has pre-empted the
possibility of compensation for service sector weakness with strong
export-led growth. While Japan&#8217;s exports are recovering they are also
hindered by the continuing strength of the yen. Japan&#8217;s recovery
continues to face a dilemma

&nbsp;Japan Industry Survey
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;</td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes; Range</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-2009</td>
<td>Sep-2009</td>
<td>Aug-2009</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mining and MFG</td>
<td>86.1</td>
<td>85.7</td>
<td>83.9</td>
<td>85.2</td>
<td>83.1</td>
<td>80.7</td>
<td>110.1</td>
<td>69.5</td>
<td>40.9%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>96.8</td>
<td>96.3</td>
<td>96.9</td>
<td>96.7</td>
<td>96.4</td>
<td>97.0</td>
<td>103.5</td>
<td>89.1</td>
<td>53.5%</td>
</tr>
<tr class="odd">
<td colspan="10" class="firstcol">Ranges,
Max, Min since 1993</td>
</tr>
</tbody>
</table>
 FOMC Notes Economic &amp; Job
Market Improvement But Leaves Rates Unchanged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 16, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216h.jpg" align="right" border="0" height="265" width="353">In an
anticipated and unanimous vote, the Federal Open Market Committee today
left the Federal funds rate in a "range from 0 to 1/4 percent." The
discount rate also was left unchanged at 0.5%. The action was as
expected and left the Fed funds rate at its lowest level ever.
"Information received since the Federal Open Market Committee
met in
November suggests that economic activity has continued to pick up and
that the deterioration in the labor market is abating." Thus reads the
opening statement from today's FOMC meeting press release. The
statement then cites improvement in each of the economy's sectors;
however, it notes that activity "is likely to remain weak for a time
..."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216i.jpg" align="right" border="0" height="265" width="353">The
statement goes on to suggest that economic strengthening will
result from monetary &amp; fiscal stimulus. 
The Fed mentioned
price inflation twice, indicating that "higher levels of resource
utilization would occur in the context of price stability" and that
"inflation will remain subdued for some time" as resource utilization
remained low.
Again the Fed indicated that moderate economic growth
and slack capacity utilization would allow rates to say low for an
extended period of time. Also, "To provide support to mortgage lending
and housing markets and to improve overall conditions in private credit
markets, the Federal Reserve is in the process of purchasing $1.25
trillion of agency mortgage-backed securities and about $175 billion of
agency debt. In order to promote a smooth transition in markets, the
Committee is gradually slowing the pace of these purchases, and it
anticipates that these transactions will be executed by the end of the
first quarter of 2010."
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091216j.jpg" align="right" border="0" height="265" width="353">A complete
text of the Fed's latest press
release can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20091216a.htm">here</a>.
The Haver databases USECON, WEEKLY and DAILY
contain the figures from the Federal Reserve Board.
 Supply
and Demand Shocks in Residential Mortgages from the Federal
Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/trends/2009/1209/01banfin.cfm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>

</body></html>

CPI's 0.4% Gain Is Fueled ByEnergy; Core Prices Are Unchanged

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<body>
 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215g.jpg" align="right" border="0" height="265" width="353">
Industrial
production resumed the increase that began this past July. The November
0.8% gain followed an unrevised unchanged reading for October and it
exceeded Consensus expectations for a 0.6% rise. The improvement from
October was across-the-board but it was greatest in the construction
supplies and in the materials areas. Output of consumer goods rose a
moderate 0.3% and that was led by a 2.9% (-13.5% y/y) increase in
furniture production and a 1.9% (-6.9% y/y) increase in motor vehicle
output. Output of machinery also rose (-19.7% y/y) as did computers
&amp; electronics (-4.0% y/y) production. Less the motor vehicle
&amp; high-tech sectors output increased 0.8%&nbsp;(-5.1% y/y)
last month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215h.jpg" align="right" border="0" height="265" width="353">During
November, production increases amongst
industries sagged somewhat to 52.9% of the total from the high of 60.6%
during August. The breadth of increase from last July also dipped to a
still-firm 59.9%, near the strongest since early-2007.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215i.jpg" align="right" border="0" height="265" width="353">Capacity
utilization rose further to 71.3%, its
highest level since December. In the factory sector alone utilization
rose to 68.4%. Utilization in the primary metals area has risen sharply
to 59.1% with the rebound in output. There's also been a slight rise in
utilization in the machinery area but it's down most elsewhere. The
overall increase was caused by another estimated 0.1% (-0.9% y/y)
decline in industry capacity.The industrial production 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">Industrial
Production (SA,%)</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 Output</td>
<td>0.8</td>
<td>0.0</td>
<td>0.5</td>
<td>-5.2</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>1.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>-4.8</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.3</td>
<td>0.1</td>
<td>1.0</td>
<td>-1.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.5</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-8.1</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>1.6</td>
<td>-1.6</td>
<td>-1.2</td>
<td>-12.5</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>1.2</td>
<td>0.1</td>
<td>0.7</td>
<td>-4.8</td>
<td>-1.9</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>-1.8</td>
<td>1.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>71.3</td>
<td>70.6</td>
<td>70.0</td>
<td>74.4 (Nov. '08)</td>
<td>77.5</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>

</body></html>

Industrial production resumed the increase that began this past July. The November 0.8% gain followed an unrevised unchanged reading for October and it exceeded Consensus expectations for a 0.6% rise. The improvement from October was [...]

Factory Production Resumes Increase

Louise Curley

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background-color:#b8b8b8; German Investors A Little Less Optimistic
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215d.jpg" align="right" border="0" height="265" width="353">
The ZEW
indicator of investors sentiment in Germany declined for the third
month in December.&nbsp; The percent balance of opinion on macro
expectations six months ahead is now at 50.4%, down 7.3 percentage
points from the peak of 57.7% in September.&nbsp; The
current&nbsp; level, however, is well above the long term average
of 27.0%.&nbsp; Although the balance between those respondents who
view current conditions negatively over those who view them positively
is still high at 60.6%, it declined five percentage points in December
and is well below the peak, 92.8%, reached in May of this year when it
was hard to find any optimists.&nbsp; The first chart shows the
percent balances for current conditions and the macro expectations over
the next six months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215e.jpg" align="right" border="0" height="265" width="353">
The survey is based on the opinions of 277
investors and analysts and took place from November 30 through December
14.&nbsp; During that period, data on new orders, industrial
production and retail sales for October were announced.&nbsp;
Industrial Production was down 1.86%, new orders for manufacturing were
down 2.57%, motor vehicle sales were down 1.37% and retail sales,
excluding motor vehicle sales, were flat.&nbsp; These data
suggested that the economic expansion might be somewhat slower than
earlier expectations and may have dampened some of the optimism of the
participants.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215f.jpg" align="right" border="0" height="265" width="353">
In spite of the decline in the overall outlook,
participants in the survey are still relatively optimistic regarding
the profit outlook.&nbsp; There are only four industries out of the
thirteen industries surveyed where the current balance of opinion is
for lower profits.&nbsp; These are: banking, construction,
utilities and services.&nbsp; They are shown in the second
chart.&nbsp;&nbsp; Of the remaining industries--insurance,
chemicals/pharmaceuticals, steel/metal, electronics, machinery,
telecommunications, information technology--the balance of opinion is
for higher profits; and for vehicles/automotive and consumption/trade,
the balance of opinion is for smaller losses.&nbsp; The balance of
opinion for higher profits has risen significantly for the information
technology, machinery, steel/metal and chemicals/pharmaceuticals
industries, as can be seen in the third chart.&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">&nbsp;</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct&nbsp; 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
<th scope="col">April 09</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current Conditions</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>-91.6</td>
</tr>
<tr>
<td class="firstcol">Macro Expectations (6 Months
Ahead)&nbsp;</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
</tr>
</tbody>
</table>
</body></html>

The ZEW indicator of investors sentiment in Germany declined for the third month in December. The percent balance of opinion on macro expectations six months ahead is now at 50.4%, down 7.3 percentage points from the peak of 57.7% in [...]

Rising Exports Fuel Rise in Japanese Industrial Production

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215a.jpg" align="right" border="0" height="265" width="353">There
was a
broadening of inflationary pressure last month as measured by the
producer price index. The PPI for finished goods jumped 1.8% after the
tame 0.3% October increase. The rise was by far the largest increase in
months and it lifted the y/y gain to 2.7%, its fastest since October of
last year. In addition, the November increase was more-than-double the
Consensus expectation.

 Higher energy costs led the strength in the
PPI last month. The 6.9% increase lifted the y/y increase to 10.6%, its
strongest since September 2008. Gasoline prices increased 8.2% (35.9%
y/y). Elsewhere, the gain in energy prices was more moderate. Fuel oil
prices increased 10.8% but they remained down 7.1% from last year.
Natural gas prices also increased a lesser 3.9% and they were down
15.6% from the year ago level. Food prices increased a moderate 0.5%
but the increase left prices 1.6% lower than last year. Beef &amp;
veal prices were off 8.4% y/y, dairy product prices fell 7.3% and
vegetable prices slumped 3.2% y/y.


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215b.jpg" align="right" border="0" height="265" width="353">Excluding
food
&amp; energy prices rose 0.5% and reversed the October decline. The
m/m increase in the core PPI contrasted with expectations for a modest
0.2% increase. The PPI for finished consumer goods less food &amp;
energy rose 0.5% (1.2% y/y) and also reversed the October
decline.&nbsp; Finished durables prices increased 0.6% (0.8% y/y)
while core finished consumer nondurable goods prices rose a modest 0.4%
(2.3% y/y). Capital equipment prices increased for the first time in
three months. The 0.4% increase nevertheless left prices up just 0.4%
y/y, nearly the weakest increase since 2003.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215c.jpg" align="right" border="0" height="265" width="353">
Prices for intermediate
goods jumped 1.4%, reflecting the strength in energy prices. Core
prices also firmed and the 0.3% increase reversed the October decline.
The y/y gain in prices amounted to 0.3% which was a reversal from the
2.4% price deflation at the end of last year. Chemical, lumber and
metals prices have firmed. The crude materials PPI again reflected the
strength in energy prices and rose 5.7%. Core prices gave back the
October gain but y/y were up 20.4% due to the improved economy.
The
producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.· Bank Relationships
and the Depth of the Current Economic Crisis from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-38.html">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM" style="color: rgb(255, 255, 255);">Producer Price Index</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">Finished Goods</td>
<td>1.8</td>
<td>0.3</td>
<td>-0.6</td>
<td>2.7</td>
<td>6.4</td>
<td>3.9</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5</td>
<td>-0.6</td>
<td>-0.1</td>
<td>1.2</td>
<td>3.4</td>
<td>2.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4</td>
<td>0.3</td>
<td>0.2</td>
<td>-1.5</td>
<td>10.5</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.9</td>
<td>-3.0</td>
<td>7.4</td>
<td>2.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>5.7</td>
<td>5.4</td>
<td>-2.1</td>
<td>4.8</td>
<td>21.4</td>
<td>11.9</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.8</td>
<td>0.5</td>
<td>3.6</td>
<td>&nbsp;20.4</td>
<td>14.8</td>
<td>15.6</td>
<td>20.8</td>
</tr>
</tbody>
</table>

</body></html>

There was a broadening of inflationary pressure last month as measured by the producer price index. The PPI for finished goods jumped 1.8% after the tame 0.3% October increase. The rise was by far the largest increase in months and it [...]

U.S. PPI Jumps As Fuel Costs Surge; Core Prices Remain Strong

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<body>
 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215a.jpg" align="right" border="0" height="265" width="353">There
was a
broadening of inflationary pressure last month as measured by the
producer price index. The PPI for finished goods jumped 1.8% after the
tame 0.3% October increase. The rise was by far the largest increase in
months and it lifted the y/y gain to 2.7%, its fastest since October of
last year. In addition, the November increase was more-than-double the
Consensus expectation.


 Higher energy costs led the strength in the
PPI last month. The 6.9% increase lifted the y/y increase to 10.6%, its
strongest since September 2008. Gasoline prices increased 8.2% (35.9%
y/y). Elsewhere, the gain in energy prices was more moderate. Fuel oil
prices increased 10.8% but they remained down 7.1% from last year.
Natural gas prices also increased a lesser 3.9% and they were down
15.6% from the year ago level. Food prices increased a moderate 0.5%
but the increase left prices 1.6% lower than last year. Beef &amp;
veal prices were off 8.4% y/y, dairy product prices fell 7.3% and
vegetable prices slumped 3.2% y/y.


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215b.jpg" align="right" border="0" height="265" width="353">Excluding
food
&amp; energy prices rose 0.5% and reversed the October decline. The
m/m increase in the core PPI contrasted with expectations for a modest
0.2% increase. The PPI for finished consumer goods less food &amp;
energy rose 0.5% (1.2% y/y) and also reversed the October
decline.&nbsp; Finished durables prices increased 0.6% (0.8% y/y)
while core finished consumer nondurable goods prices rose a modest 0.4%
(2.3% y/y). Capital equipment prices increased for the first time in
three months. The 0.4% increase nevertheless left prices up just 0.4%
y/y, nearly the weakest increase since 2003.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215c.jpg" align="right" border="0" height="265" width="353">
Prices for intermediate
goods jumped 1.4%, reflecting the strength in energy prices. Core
prices also firmed and the 0.3% increase reversed the October decline.
The y/y gain in prices amounted to 0.3% which was a reversal from the
2.4% price deflation at the end of last year. Chemical, lumber and
metals prices have firmed. The crude materials PPI again reflected the
strength in energy prices and rose 5.7%. Core prices gave back the
October gain but y/y were up 20.4% due to the improved economy.
The
producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.· Bank Relationships
and the Depth of the Current Economic Crisis from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-38.html">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM" style="color: rgb(255, 255, 255);">Producer Price Index</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">Finished Goods</td>
<td>1.8</td>
<td>0.3</td>
<td>-0.6</td>
<td>2.7</td>
<td>6.4</td>
<td>3.9</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5</td>
<td>-0.6</td>
<td>-0.1</td>
<td>1.2</td>
<td>3.4</td>
<td>2.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4</td>
<td>0.3</td>
<td>0.2</td>
<td>-1.5</td>
<td>10.5</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.9</td>
<td>-3.0</td>
<td>7.4</td>
<td>2.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>5.7</td>
<td>5.4</td>
<td>-2.1</td>
<td>4.8</td>
<td>21.4</td>
<td>11.9</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.8</td>
<td>0.5</td>
<td>3.6</td>
<td>&nbsp;20.4</td>
<td>14.8</td>
<td>15.6</td>
<td>20.8</td>
</tr>
</tbody>
</table>

 Rising Exports Fuel Rise in
Japanese Industrial Production 
by <a href="/comment/Curley.html">Louise
Curley</a> December 15, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215d.jpg" align="right" border="0" height="265" width="353">The ZEW
indicator of investors sentiment in Germany declined for the third
month in December.&nbsp; The percent balance of opinion on macro
expectations six months ahead is now at 50.4%, down 7.3 percentage
points from the peak of 57.7% in September.&nbsp; The
current&nbsp; level, however, is well above the long term average
of 27.0%.&nbsp; Although the balance between those respondents who
view current conditions negatively over those who view them positively
is still high at 60.6%, it declined five percentage points in December
and is well below the peak, 92.8%, reached in May of this year when it
was hard to find any optimists.&nbsp; The first chart shows the
percent balances for current conditions and the macro expectations over
the next six months.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215e.jpg" align="right" border="0" height="265" width="353">The survey
is based on the opinions of 277
investors and analysts and took place from November 30 through December
14.&nbsp; During that period, data on new orders, industrial
production and retail sales for October were announced.&nbsp;
Industrial Production was down 1.86%, new orders for manufacturing were
down 2.57%, motor vehicle sales were down 1.37% and retail sales,
excluding motor vehicle sales, were flat.&nbsp; These data
suggested that the economic expansion might be somewhat slower than
earlier expectations and may have dampened some of the optimism of the
participants.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215f.jpg" align="right" border="0" height="265" width="353">In spite
of the decline in the overall outlook,
participants in the survey are still relatively optimistic regarding
the profit outlook.&nbsp; There are only four industries out of the
thirteen industries surveyed where the current balance of opinion is
for lower profits.&nbsp; These are: banking, construction,
utilities and services.&nbsp; They are shown in the second
chart.&nbsp;&nbsp; Of the remaining industries--insurance,
chemicals/pharmaceuticals, steel/metal, electronics, machinery,
telecommunications, information technology--the balance of opinion is
for higher profits; and for vehicles/automotive and consumption/trade,
the balance of opinion is for smaller losses.&nbsp; The balance of
opinion for higher profits has risen significantly for the information
technology, machinery, steel/metal and chemicals/pharmaceuticals
industries, as can be seen in the third chart.&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">&nbsp;</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct&nbsp; 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
<th scope="col">April 09</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current Conditions</td>
<td>-60.6</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>-91.6</td>
</tr>
<tr>
<td class="firstcol">Macro Expectations (6 Months
Ahead)&nbsp;</td>
<td>50.4</td>
<td>51.1</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
</tr>
</tbody>
</table>

 Factory Production Resumes
Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 15, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215g.jpg" align="right" border="0" height="265" width="353">Industrial
production resumed the increase that began this past July. The November
0.8% gain followed an unrevised unchanged reading for October and it
exceeded Consensus expectations for a 0.6% rise. The improvement from
October was across-the-board but it was greatest in the construction
supplies and in the materials areas. Output of consumer goods rose a
moderate 0.3% and that was led by a 2.9% (-13.5% y/y) increase in
furniture production and a 1.9% (-6.9% y/y) increase in motor vehicle
output. Output of machinery also rose (-19.7% y/y) as did computers
&amp; electronics (-4.0% y/y) production. Less the motor vehicle
&amp; high-tech sectors output increased 0.8%&nbsp;(-5.1% y/y)
last month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215h.jpg" align="right" border="0" height="265" width="353">During
November, production increases amongst
industries sagged somewhat to 52.9% of the total from the high of 60.6%
during August. The breadth of increase from last July also dipped to a
still-firm 59.9%, near the strongest since early-2007.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215i.jpg" align="right" border="0" height="265" width="353">Capacity
utilization rose further to 71.3%, its
highest level since December. In the factory sector alone utilization
rose to 68.4%. Utilization in the primary metals area has risen sharply
to 59.1% with the rebound in output. There's also been a slight rise in
utilization in the machinery area but it's down most elsewhere. The
overall increase was caused by another estimated 0.1% (-0.9% y/y)
decline in industry capacity.
The industrial production 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">Industrial
Production (SA,%)</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 Output</td>
<td>0.8</td>
<td>0.0</td>
<td>0.5</td>
<td>-5.2</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>1.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>-4.8</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.3</td>
<td>0.1</td>
<td>1.0</td>
<td>-1.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.5</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-8.1</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>1.6</td>
<td>-1.6</td>
<td>-1.2</td>
<td>-12.5</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>1.2</td>
<td>0.1</td>
<td>0.7</td>
<td>-4.8</td>
<td>-1.9</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>-1.8</td>
<td>1.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>71.3</td>
<td>70.6</td>
<td>70.0</td>
<td>74.4 (Nov. '08)</td>
<td>77.5</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>

</body></html>

U.S. PPI Jumps As Fuel CostsSurge; Core Prices Remain Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214e.jpg" align="left" border="0" height="265" width="353">
After rising for five consecutive months, industrial
production fell 0.6% in the Euro Area in October and 0.7% in the entire
European Union. The attached chart shows the index of Industrial
Production (2005=100) for the Euro Area and the European Union. There
is a spurious correlation between the two series due the fact that the
EU series includes the EA series. As with much of the data on the Euro
Area and the European Union it is not possible to derive a non Euro
Area part of the European Union.
Not all of the countries of the European Union have reported
October data. Euro stat's totals for the Euro Area and the European
Union include their estimates of the missing data and these estimates
are not published. The totals are, therefore, preliminary and
frequently revised.
In the Euro Area, the big three--Germany experienced a 1.8%
decline in industrial production, France, a 0.9% decline and Italy, a
0.5% increase. Declines were recorded in Ireland, 2.8%, Greece, 0.8%,
Portugal, 1.4%. The biggest decline in production in the Euro area,
that of Slovenia, was 3.2%. The largest increase in production in the
Euro Area was in Finland at 2.2%.
Of the published data, among the non Euro Area countries,
industrial production in the UK declined 0.1%, and in Sweden, 0.5%.
Industrial Production in Latvia and Lithuania increased 0.1% and 0.4%
respectively. Production in Bulgaria rose 2.1%, the first increase
since September, 2008.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (2005=100)</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 08&nbsp;</th>
<th scope="col">Apr 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">European Area (m/m % change)</td>
<td>-0.73</td>
<td>0.12</td>
<td>0.68</td>
<td>0.18</td>
<td>0.32</td>
<td>0.53</td>
<td>-0.39</td>
</tr>
<tr>
<td class="firstcol">European Union (m/m % change)</td>
<td>-0.61</td>
<td>0.21</td>
<td>1.13</td>
<td>0.26</td>
<td>0.86</td>
<td>1.06</td>
<td>-0.47</td>
</tr>
<tr class="odd">
<td class="firstcol">Bulgaria</td>
<td>2.1</td>
<td>-3.6</td>
<td>-0.21</td>
<td>-0.5</td>
<td>-0.6</td>
<td>-1.4</td>
<td>-0.1</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>-3.2</td>
<td>0.7</td>
<td>8.0</td>
<td>-0.6</td>
<td>0.3</td>
<td>2.9</td>
<td>-4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>-2.8</td>
<td>11.3</td>
<td>-16.0</td>
<td>7.9</td>
<td>7.3</td>
<td>-3.6</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">Finland</td>
<td>2.2</td>
<td>-1.7</td>
<td>2.4</td>
<td>-1.6</td>
<td>1.5</td>
<td>-0.7</td>
<td>-1.9</td>
</tr>
</tbody>
</table>
</body></html>

After rising for five consecutive months, industrial production fell 0.6% in the Euro Area in October and 0.7% in the entire European Union. The attached chart shows the index of Industrial Production (2005=100) for the Euro Area and [...]

A Pause In Economic Activity In The European Union

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214d.jpg" align="left" border="0" height="265" width="353">
Industrial output in EMU has backtracked. The 0.3% drop in
October flattens out progress in the sector and leaves manufacturing IP
flat in the fourth quarter compared to its level in Q3. Consumer goods
output is off sharply in the new quarter while capital goods output is
strongly higher. Intermediate goods output is up sharply.
Among the five largest EU economics only Spain saw a rise in
IP month-to-month in October. Still three month growth rates are up for
the zone and are strong for the Big Five except for a 1.8% annual rate
drop in the UK and a horrific-looking -20.2% from Spain whose numbers
are notoriously volatile (Spain&#8217;s three month growth rate for IP was UP
by 28% in Sept, just one month ago).
Japan&#8217;s TankanIn Asia Japan has reported
out its Tankan results for December. Its large company index rose by a
solid nine points and exceeded the forecasts of economists. Still at a
raw reading of -24 it clearly says that large corporate respondents are
still more negative than positive in this Tankan diffusion
presentation. Even if they are less negative than they were last
quarter the results are far from satisfying. Firms in Japan are
engaging in deeper spending cuts to stay alive in a still-tough
economy. Japan has slipped back into the grip of deflation something
that tends to make businessmen more defense-minded- that is not the way
to mount a recovery. With the yen still so strong it is hard for Japan
to export itself to prosperity. Paradoxically Japanese firms continue
to engage in outsourcing with Sony making a new announcement to that
effect transferring work to China. While outsourcing may solve the
firm&#8217;s problems it does not help Japan out of its economic difficulties.
The global recoveryOn balance world trade
is making some recovery and that is helping trade-dependent countries
like Japan to do better. But Japan is still beset with problems and
large block of pubic indebtedness that keeps its government from
engaging in too much in the way of pump-priming expenditures. Europe is
having a simple slip but its broader growth rates tell a story of
slowing that transcends one monthly report. When central bankers and
national leaders say that they are still concerned about the economy
and that there is a risk of backsliding and that it is too soon to take
away the special stimulus brought forward in the crisis&#8230; this is the
sort of report that brings those concerns to life.
Treatment of the heroes of the crisisAgainst
this background we have to wonder about the all the flack being
shoveled onto Fed Chairman Ben Bernanke&#8217;s plate. Bernanke&#8217;s efforts
bolstered not just the US, but the world economy. Do the Fed bashers on
the House and Senate banking committees really have any idea what they
are protesting when they go after Gentile Ben? It was the fall in
standards and directions imposed on markets by the law makers who put
political agendas ahead of smart business practices as much as anything
that got us into this mess. Now we can see that despite huge government
and central banker efforts around the world the path to recovery
remains tentative. The US Congress is deeply involved in a witch hunt
for scapegoats. The Fed Chairman is a more convenient a target than he
is to blame. But with an angry electorate in the US and the next
election cycle looming a scapegoat is a prime need for politicians.

<table border="0" cellpadding="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="11" style="padding-left: 0.25em; padding-right: 0.25em;">EURO-AREA
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar
except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area
Detail</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q-4</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.3%</td>
<td>2.5%</td>
<td>1.4%</td>
<td>0.6%</td>
<td>-12.1%</td>
<td>-13.7%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-1.7%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-8.3%</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>0.6%</td>
<td>-5.4%</td>
<td>-3.7%</td>
<td>-10.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Durables</td>
<td>-1.4%</td>
<td>-5.1%</td>
<td>5.1%</td>
<td>-6.3%</td>
<td>1.3%</td>
<td>-12.9%</td>
<td>-9.2%</td>
<td>-18.0%</td>
<td>-18.2%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Non-durables</td>
<td>-1.6%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-8.1%</td>
<td>-0.6%</td>
<td>-2.2%</td>
<td>1.9%</td>
<td>-3.3%</td>
<td>-1.5%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;Intermediate</td>
<td>1.2%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>13.7%</td>
<td>15.4%</td>
<td>15.6%</td>
<td>12.6%</td>
<td>-12.8%</td>
<td>-16.0%</td>
<td>13.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital</td>
<td>0.0%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>12.8%</td>
<td>6.9%</td>
<td>6.2%</td>
<td>3.4%</td>
<td>-16.8%</td>
<td>-18.7%</td>
<td>9.3%</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Main
Euro-Area Countries
and UK IP in MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Only</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q:4-Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany:</td>
<td>-1.6%</td>
<td>3.7%</td>
<td>2.1%</td>
<td>17.6%</td>
<td>20.8%</td>
<td>19.1%</td>
<td>16.1%</td>
<td>-13.5%</td>
<td>-13.9%</td>
<td>9.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France:IPxConstruct'n</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>3.0%</td>
<td>3.7%</td>
<td>9.0%</td>
<td>7.9%</td>
<td>6.6%</td>
<td>-8.4%</td>
<td>-10.6%</td>
<td>-3.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>0.8%</td>
<td>-5.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>4.0%</td>
<td>-13.7%</td>
<td>-16.5%</td>
<td>-5.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-3.0%</td>
<td>-20.2%</td>
<td>28.0%</td>
<td>-0.2%</td>
<td>19.0%</td>
<td>-13.0%</td>
<td>-12.6%</td>
<td>-20.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK: EU member</td>
<td>0.0%</td>
<td>1.6%</td>
<td>-2.0%</td>
<td>-1.8%</td>
<td>0.5%</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>-7.8%</td>
<td>-9.8%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body></html>

Industrial output in EMU has backtracked. The 0.3% drop in October flattens out progress in the sector and leaves manufacturing IP flat in the fourth quarter compared to its level in Q3. Consumer goods output is off sharply in the new [...]

EMU MFG Progress Hits The Skids.... More Questions Arise In Japan Despite Improved Tankan

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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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

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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.

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**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.