Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130a.jpg" align="right" border="0" height="265" width="353">
The
Chicago Purchasing Managers' Association reported that its November
Business Barometer improved to the highest level since August of last
year. The index level of 56.1 was up sharply from the March low of
31.4. The survey covers a sample of over 200 purchasing professionals
in the Chicago area with a monthly response rate of about 50%. During
the last ten years there has been a 72% correlation between the
Business Barometer and the three-month change in factory sector
industrial production. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130b.jpg" align="right" border="0" height="265" width="353">
The Association indicated that gains in the
index of vendor deliveries (slower speed), order backlogs and
employment contributed greatly to the November rise in the overall
index. The new orders index rose modestly m/m but was more than double
the year-ago level. The production component fell and reversed much of
the prior month's increase. Nevertheless, it remained nearly double the
January low. The index of prices paid increased and made up an
October decline. The latest level was more than double its May low.
During the last ten years there has been a 78% correlation between the
Prices Paid Index and the three-month change in the PPI for
intermediate materials. Why Are Banks Failing?
from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/publications/cb/articles/?id=1667">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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Purchasing Mgs.</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '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">&nbsp; Business Barometer</td>
<td>56.1</td>
<td>54.2</td>
<td>46.1</td>
<td>33.6</td>
<td>46.8</td>
<td>54.4</td>
<td>56.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production</td>
<td>57.6</td>
<td>63.9</td>
<td>47.2</td>
<td>34.1</td>
<td>48.1</td>
<td>58.3</td>
<td>60.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
New Orders</td>
<td>62.8</td>
<td>61.4</td>
<td>46.3</td>
<td>29.2</td>
<td>46.7</td>
<td>57.7</td>
<td>59.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment</td>
<td>41.9</td>
<td>38.3</td>
<td>38.8</td>
<td>33.4</td>
<td>41.4</td>
<td>51.5</td>
<td>51.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Prices Paid</td>
<td>52.6</td>
<td>48.6</td>
<td>51.3</td>
<td>54.1</td>
<td>73.5</td>
<td>66.5</td>
<td>72.8</td>
</tr>
</tbody>
</table>

</body></html>

The Chicago Purchasing Managers' Association reported that its November Business Barometer improved to the highest level since August of last year. The index level of 56.1 was up sharply from the March low of 31.4. The survey covers a [...]

Chicago Purchasing Managers Index Improves Steadily

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130a.jpg" align="right" border="0" height="265" width="353">The
Chicago Purchasing Managers' Association reported that its November
Business Barometer improved to the highest level since August of last
year. The index level of 56.1 was up sharply from the March low of
31.4. The survey covers a sample of over 200 purchasing professionals
in the Chicago area with a monthly response rate of about 50%. During
the last ten years there has been a 72% correlation between the
Business Barometer and the three-month change in factory sector
industrial production. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130b.jpg" align="right" border="0" height="265" width="353">The
Association indicated that gains in the
index of vendor deliveries (slower speed), order backlogs and
employment contributed greatly to the November rise in the overall
index. The new orders index rose modestly m/m but was more than double
the year-ago level. The production component fell and reversed much of
the prior month's increase. Nevertheless, it remained nearly double the
January low. 
 The index of prices paid increased and made up an
October decline. The latest level was more than double its May low.
During the last ten years there has been a 78% correlation between the
Prices Paid Index and the three-month change in the PPI for
intermediate materials. 
 Why Are Banks Failing?
from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/publications/cb/articles/?id=1667">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/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Purchasing Mgs.</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">November '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">&nbsp; Business Barometer</td>
<td>56.1</td>
<td>54.2</td>
<td>46.1</td>
<td>33.6</td>
<td>46.8</td>
<td>54.4</td>
<td>56.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production</td>
<td>57.6</td>
<td>63.9</td>
<td>47.2</td>
<td>34.1</td>
<td>48.1</td>
<td>58.3</td>
<td>60.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
New Orders</td>
<td>62.8</td>
<td>61.4</td>
<td>46.3</td>
<td>29.2</td>
<td>46.7</td>
<td>57.7</td>
<td>59.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment</td>
<td>41.9</td>
<td>38.3</td>
<td>38.8</td>
<td>33.4</td>
<td>41.4</td>
<td>51.5</td>
<td>51.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Prices Paid</td>
<td>52.6</td>
<td>48.6</td>
<td>51.3</td>
<td>54.1</td>
<td>73.5</td>
<td>66.5</td>
<td>72.8</td>
</tr>
</tbody>
</table>

 EMU Prices Rise - Has The Worm
Tuned? 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130c.jpg" align="left" border="0" height="265" width="353">
EMU prices rose in October. Trends are still good but core
inflation is showing a hint of acceleration as three month core prices
are up at a 1.4% annual rate above their six-month and 12-month pace of
increase.
Headline inflation shows a clear acceleration from an annual
pace of -0.1% Yr/Yr to a +1.2% annual rate over six-months and to a
2.3% annualized pace over three- months.
Germany, France, Italy and Spain all show the same
accelerating headline inflation pattern from 12-months to six-months to
three-months. Italy&#8217;s 3-mo inflation rate is up to 3.4% annualized.
Core inflation has much less clear patterns across countries.
Core inflation is not accelerating from 12-months to
six-months to three-months in any of these large EMU countries. It is
accelerating from six-months to three-months in Germany and in Italy.
But that similarity has little breadth. In Italy core inflation is
running at a strong 4.1% pace. In Germany it is at 1.1% only the same
as its Yr/Yr pace but up from its six-month pace. In France the core
rate is still steadily decelerating. Spain&#8217;s core is back down after a
pop-up over six-months.
On balance combined with news that UK consumers are repaying
credit this holiday season and that German firms are having a tough
time getting credit, it hardly seems that inflation is about to take
root. The recent rise in energy prices is the reason for most headline
inflation to be creeping higher. Core inflation is still largely under
wraps. Still it is notable that inflation is starting to show some
traces in the more inflation-prone country of Italy.
We don&#8217;t expect any policy change in EMU but the inflation
worm may be starting its turn. Even so we expect it to be a big slow
turn, even for a worm.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scpoe="col" colspan="8">Trends in
HICP</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="3">% saar</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>1.2%</td>
<td>-0.1%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Core</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>1.0%</td>
<td>1.0%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Goods</td>
<td>0.4%</td>
<td>0.5%</td>
<td>0.4%</td>
<td>5.5%</td>
<td>-0.2%</td>
<td>-1.4%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>-1.7%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">HICP</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>0.7%</td>
<td>2.3%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>1.3%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>3.4%</td>
<td>1.1%</td>
<td>0.2%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>1.9%</td>
<td>-0.6%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Core:xFE&amp;A</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>1.1%</td>
<td>0.9%</td>
<td>1.1%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>0.9%</td>
<td>1.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>4.1%</td>
<td>1.7%</td>
<td>1.4%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>0.2%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
 The Canadian Economy Begins to
Show Growth 
by <a href="/comment/Curley.html">Louise
Curley</a> November 30, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091130d.jpg" align="left" border="0" height="265" width="353">
Canada's Real Gross Domestic Product rose 0.40% on an annual
rate basis in the third quarter, its first increase after three
quarters of decline. The annual rate of rise was smaller than the 2%
the Bank of Canada had predicted a month or so ago and smaller than
more recent consensus estimate of 1.0%. Canada's annual rate of growth
in the third quarter was also below those of the Mexico and the United
States, its NAFTA partners, as can be seen in the first chart.
The annual rates of change of the major components of real GDP
are shown in the table below. Private consumption showed its first
increase in the second quarter and has continued to increase in the
third quarter. Private fixed investment and exports have had their
first increases in the third quarter. Canada's stimulus programs are
reflected in the increases in Government consumption and fixed
investment over the past several quarters.
The dynamics of the change in Canada's third quarter GDP is
best seen by looking at the contribution (the weighted percent changes)
of the various components of GDP to total growth. The quarterly
increase in GDP in the third quarter was 0.088%. Private consumption
contributed .448 points; private fixed investment,.246; inventories,
.229; government spending on goods and services, .265; government fixed
investment, .218 and government inventories .001. Exports contributed
.998. These positive contributions amounted to 2.405 points. They were,
however, offset by the 2.316 point negative contribution of imports.
Part of the rise in imports was due to the increase in private and
government fixed investment. It has been estimated that Canadian
businesses import more than 70% of their spending on plant and
equipment.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
Annual Rates of&nbsp; Change</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1&nbsp; 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3&nbsp;08</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Real Gross Domestic
Product</td>
<td>0.35</td>
<td>-3.05</td>
<td>-6.19</td>
<td>-3.74</td>
<td>0.41</td>
<td>0.33</td>
<td>-0.75</td>
</tr>
<tr>
<td class="firstcol"> Private Consumption</td>
<td>3.08</td>
<td>1.76</td>
<td>-1.41</td>
<td>-3.13</td>
<td>0.57</td>
<td>1.10</td>
<td>2.54</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Fixed
Investment</td>
<td>5.60</td>
<td>-9.03</td>
<td>-27.00</td>
<td>-18.59</td>
<td>0.45</td>
<td>-2.13</td>
<td>-1.73</td>
</tr>
<tr>
<td class="firstcol">Government Consumption</td>
<td>4.99</td>
<td>3.27</td>
<td>2.15</td>
<td>2.48</td>
<td>0.02</td>
<td>4.56</td>
<td>5.67</td>
</tr>
<tr class="odd">
<td class="firstcol"> Government Fixed
Investment</td>
<td>24.66</td>
<td>16.55</td>
<td>8.60</td>
<td>8.72</td>
<td>7.11</td>
<td>11.81</td>
<td>18.89</td>
</tr>
<tr>
<td class="firstcol"> Exports</td>
<td>15.35</td>
<td>-19.54</td>
<td>-29.81</td>
<td>-17.69</td>
<td>-4.15</td>
<td>-4.11</td>
<td>-2.30</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>36.0</td>
<td>-6.91</td>
<td>-39.24</td>
<td>-23.36</td>
<td>-3.44</td>
<td>2.99</td>
<td>-4.68</td>
</tr>
</tbody>
</table>
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Chicago Purchasing Managers IndexImproves Steadily

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127g.jpg" align="right" border="0" height="265" width="353">
Improvement in factory sector activity was apparent in the
latest orders figures. Durable goods orders slipped 0.6% in October
after an upwardly revised 2.0% rise during September. Despite the
monthly setback, however, the deterioration in factory sector activity
has abated. That is consistent with the recent monthly ISM reports on
manufacturing sector activity. Durable goods orders have risen 5.0%
from their March low and the y/y decline is less than half the worst of
this past winter.
Much of the recent improvement has been due to the
transportation equipment sector where orders rose 1.5% last month
(-13.6% y/y) after an upwardly revised, strong September increase.
Higher orders for aircraft &amp; parts account for most of the
recent gains. Excluding the transportation equipment sector altogether,
orders fell 1.3% during October but they have risen 4.3% from their
April low.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127h.jpg" align="right" border="0" height="265" width="353">
Primary metals orders also continued their recovery with a
3.6% October increase (-13.7% y/y) and they have risen one-quarter from
the March low. A 2.7% rise in electrical equipment orders also helped
last month's total. They have risen slightly from the spring low after
falling by one-third from last year's high. Showing tenuous improvement
have been orders for computers &amp; related equipment. While
orders remain off their recession low, the gain stalled during the last
three months. The same is true for machinery orders.
The capital goods sector also has improved as indicated by a
slower year-to-year rate of decline. However, declines in nondefense
capital goods orders less aircraft during three of the last four months
raises uncertainty about the momentum behind the trend.
Shipments of durable goods slipped 0.2% during October
following increases during two of the prior three months. Nevertheless,
the y/y decline eased to 13.6% from 20.2% at its worst this spring. The
improvement has been paced by firm monthly gains in shipments of metals
(-27.9% y/y) but the machinery (-22.9% y/y) and electrical equipment
(-20.3% y/y) sectors continue to lag.
Perhaps the shedding of inventories of durable manufactured
goods is coming to its end after nearly a year of correction.
Inventories were essentially unchanged during October after steep
declines in each of the prior nine months. The shedding of inventory
has been broad-based led by an 18.6% decline this year in the metals
area, a 14.4% drop in computer inventories, a 14.3% drop in motor
vehicles and a 13.6% decline in electrical equipment. The recent
decline in inventories has been successful in lowering the ratio to
shipments to its lowest since November of last year.
The durable goods figures 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/@ED0101.HTM" style="color: rgb(0, 0, 0);">NAICS Classification
</a>(%)</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">Durable Goods Orders</td>
<td>-0.6</td>
<td>2.0</td>
<td>-2.7</td>
<td>-11.9</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.3</td>
<td>1.8</td>
<td>-0.5</td>
<td>-11.3</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>1.2</td>
<td>3.2</td>
<td>-7.8</td>
<td>-14.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.9</td>
<td>2.6</td>
<td>-1.0</td>
<td>-12.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body></html>

Improvement in factory sector activity was apparent in the latest orders figures. Durable goods orders slipped 0.6% in October after an upwardly revised 2.0% rise during September. Despite the monthly setback, however, the [...]

U.S. Durable Goods Orders Slip M/M But Trend Improves

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127d.jpg" align="right" border="0" height="265" width="353">
Consumer sentiment during all of November improved from
mid-month to a reading of 67.4 as measured by the Reuters/University of
Michigan Index of Consumer Sentiment. The figure about matched
Consensus expectations. Despite recent declines, sentiment was up by
nearly one-quarter from the lows of last fall. During the last ten
years there has been a two-thirds correlation between the level of
sentiment and the three-month change real consumer spending.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127e.jpg" align="right" border="0" height="265" width="353">
The November reading on expected economic conditions fell to
66.5 from October's 68.6, although it did improve from mid-month. The
primary weakness came in survey participants' outlook for business
conditions over the next year. This move seems to show that the rise in
September was a temporary blip. The reading of expected personal
finances also fell to the lowest since August as more respondents felt
that their personal finances would worsen .
The reading of current economic conditions fell from October
and from mid-month. People's assessments of their current financial
condition and buying conditions for large household goods both moved
down to their lowest since August.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127f.jpg" align="right" border="0" height="265" width="353">
Expected price inflation during the next year slipped to 3.1%,
down from October's 3.2% but up from the December reading of
1.7%.Respondents' view of government policy, which may eventually
influence economic expectations, improved from October and remained up
significantly from the low of October 2008. Nineteen percent of
respondent thought that a good job was being done by government versus
30% who thought a poor job was being done.
The Reuters/University of Michigan survey data are not
seasonally adjusted. The reading is based on telephone interviews with
about 500 households at month-end. These mid-month results are based on
about 320 interviews. The summary indexes are in Haver's USECON
database with details in the proprietary UMSCA database.
<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/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">November</th>
<th scope="col">Mid-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">Consumer Sentiment</td>
<td>67.4</td>
<td>66.0</td>
<td>70.6</td>
<td>73.5</td>
<td>21.9%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>68.8</td>
<td>69.6</td>
<td>73.7</td>
<td>73.4</td>
<td>19.7</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>66.5</td>
<td>63.7</td>
<td>68.6</td>
<td>73.5</td>
<td>23.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
</body></html>

Consumer sentiment during all of November improved from mid-month to a reading of 67.4 as measured by the Reuters/University of Michigan Index of Consumer Sentiment. The figure about matched Consensus expectations. Despite recent [...]

Michigan Consumer Sentiment Improves From Mid-Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127b.jpg" align="right" border="0" height="265" width="353">
Though sales of new homes rose 6.2% to 430,000 last month, the
gain followed two months of decline. In all, new home sales have risen
nearly one-third from the January trough and the October figure
exceeded Consensus expectations for 405,000 sales.
Home prices firmed during October for the second consecutive
month. The median price of a new single-family home rose to $212,200
from an upwardly revised September level. The monthly increase pared
the y/y decline to 0.5% from its worst of -14.5% this past February.
The average new home price of $261,100 was off 4.7% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127c.jpg" align="right" border="0" height="265" width="353">

Price discounts, higher sales and much lower housing starts
have combined to lower the overhang of unsold homes. It fell by more
than one-third versus last year to the lowest level since the early
1970s (again, no typo). The months' supply of unsold homes fell further
last month to 6.7 months and was down from the high of 12.4 months in
January. The figure was the lowest since December 2006.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</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">Total Sales
(SAAR, 000s)</td>
<td>430</td>
<td>405</td>
<td>415</td>
<td>5.1%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>37</td>
<td>39</td>
<td>38</td>
<td>&nbsp;5.7</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>56</td>
<td>70</td>
<td>55</td>
<td>-11.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>244</td>
<td>198</td>
<td>212</td>
<td>8.4</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93</td>
<td>98</td>
<td>110</td>
<td>8.1</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>212,200</td>
<td>210,700</td>
<td>206,300</td>
<td>&nbsp;-0.5</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>


</body></html>

Though sales of new homes rose 6.2% to 430,000 last month, the gain followed two months of decline. In all, new home sales have risen nearly one-third from the January trough and the October figure exceeded Consensus expectations for [...]

U.S. New Home Sales Struggle Higher

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127b.jpg" align="right" border="0" height="265" width="353">
Though sales of new homes rose 6.2% to 430,000 last month, the
gain followed two months of decline. In all, new home sales have risen
nearly one-third from the January trough and the October figure
exceeded Consensus expectations for 405,000 sales.
Home prices firmed during October for the second consecutive
month. The median price of a new single-family home rose to $212,200
from an upwardly revised September level. The monthly increase pared
the y/y decline to 0.5% from its worst of -14.5% this past February.
The average new home price of $261,100 was off 4.7% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127c.jpg" align="right" border="0" height="265" width="353">

Price discounts, higher sales and much lower housing starts
have combined to lower the overhang of unsold homes. It fell by more
than one-third versus last year to the lowest level since the early
1970s (again, no typo). The months' supply of unsold homes fell further
last month to 6.7 months and was down from the high of 12.4 months in
January. The figure was the lowest since December 2006.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</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">Total Sales
(SAAR, 000s)</td>
<td>430</td>
<td>405</td>
<td>415</td>
<td>5.1%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>37</td>
<td>39</td>
<td>38</td>
<td>&nbsp;5.7</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>56</td>
<td>70</td>
<td>55</td>
<td>-11.1</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>244</td>
<td>198</td>
<td>212</td>
<td>8.4</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>93</td>
<td>98</td>
<td>110</td>
<td>8.1</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>212,200</td>
<td>210,700</td>
<td>206,300</td>
<td>&nbsp;-0.5</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>


 Michigan Consumer Sentiment
Improves From Mid-Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 27, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127d.jpg" align="right" border="0" height="265" width="353">
Consumer sentiment during all of November improved from
mid-month to a reading of 67.4 as measured by the Reuters/University of
Michigan Index of Consumer Sentiment. The figure about matched
Consensus expectations. Despite recent declines, sentiment was up by
nearly one-quarter from the lows of last fall. During the last ten
years there has been a two-thirds correlation between the level of
sentiment and the three-month change real consumer spending.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127e.jpg" align="right" border="0" height="265" width="353">
The November reading on expected economic conditions fell to
66.5 from October's 68.6, although it did improve from mid-month. The
primary weakness came in survey participants' outlook for business
conditions over the next year. This move seems to show that the rise in
September was a temporary blip. The reading of expected personal
finances also fell to the lowest since August as more respondents felt
that their personal finances would worsen .
The reading of current economic conditions fell from October
and from mid-month. People's assessments of their current financial
condition and buying conditions for large household goods both moved
down to their lowest since August.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127f.jpg" align="right" border="0" height="265" width="353">
Expected price inflation during the next year slipped to 3.1%,
down from October's 3.2% but up from the December reading of
1.7%.Respondents' view of government policy, which may eventually
influence economic expectations, improved from October and remained up
significantly from the low of October 2008. Nineteen percent of
respondent thought that a good job was being done by government versus
30% who thought a poor job was being done.
The Reuters/University of Michigan survey data are not
seasonally adjusted. The reading is based on telephone interviews with
about 500 households at month-end. These mid-month results are based on
about 320 interviews. The summary indexes are in Haver's USECON
database with details in the proprietary UMSCA database.
<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/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">November</th>
<th scope="col">Mid-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">Consumer Sentiment</td>
<td>67.4</td>
<td>66.0</td>
<td>70.6</td>
<td>73.5</td>
<td>21.9%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>68.8</td>
<td>69.6</td>
<td>73.7</td>
<td>73.4</td>
<td>19.7</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>66.5</td>
<td>63.7</td>
<td>68.6</td>
<td>73.5</td>
<td>23.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>


 U.S. Durable Goods Orders Slip M/M
But Trend Improves 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 27, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127g.jpg" align="right" border="0" height="265" width="353">
Improvement in factory sector activity was apparent in the
latest orders figures. Durable goods orders slipped 0.6% in October
after an upwardly revised 2.0% rise during September. Despite the
monthly setback, however, the deterioration in factory sector activity
has abated. That is consistent with the recent monthly ISM reports on
manufacturing sector activity. Durable goods orders have risen 5.0%
from their March low and the y/y decline is less than half the worst of
this past winter.
Much of the recent improvement has been due to the
transportation equipment sector where orders rose 1.5% last month
(-13.6% y/y) after an upwardly revised, strong September increase.
Higher orders for aircraft &amp; parts account for most of the
recent gains. Excluding the transportation equipment sector altogether,
orders fell 1.3% during October but they have risen 4.3% from their
April low.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127h.jpg" align="right" border="0" height="265" width="353">
Primary metals orders also continued their recovery with a
3.6% October increase (-13.7% y/y) and they have risen one-quarter from
the March low. A 2.7% rise in electrical equipment orders also helped
last month's total. They have risen slightly from the spring low after
falling by one-third from last year's high. Showing tenuous improvement
have been orders for computers &amp; related equipment. While
orders remain off their recession low, the gain stalled during the last
three months. The same is true for machinery orders.
The capital goods sector also has improved as indicated by a
slower year-to-year rate of decline. However, declines in nondefense
capital goods orders less aircraft during three of the last four months
raises uncertainty about the momentum behind the trend.
Shipments of durable goods slipped 0.2% during October
following increases during two of the prior three months. Nevertheless,
the y/y decline eased to 13.6% from 20.2% at its worst this spring. The
improvement has been paced by firm monthly gains in shipments of metals
(-27.9% y/y) but the machinery (-22.9% y/y) and electrical equipment
(-20.3% y/y) sectors continue to lag.
Perhaps the shedding of inventories of durable manufactured
goods is coming to its end after nearly a year of correction.
Inventories were essentially unchanged during October after steep
declines in each of the prior nine months. The shedding of inventory
has been broad-based led by an 18.6% decline this year in the metals
area, a 14.4% drop in computer inventories, a 14.3% drop in motor
vehicles and a 13.6% decline in electrical equipment. The recent
decline in inventories has been successful in lowering the ratio to
shipments to its lowest since November of last year.
The durable goods figures 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/@ED0101.HTM" style="color: rgb(0, 0, 0);">NAICS Classification
</a>(%)</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">Durable Goods Orders</td>
<td>-0.6</td>
<td>2.0</td>
<td>-2.7</td>
<td>-11.9</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-1.3</td>
<td>1.8</td>
<td>-0.5</td>
<td>-11.3</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>1.2</td>
<td>3.2</td>
<td>-7.8</td>
<td>-14.1</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.9</td>
<td>2.6</td>
<td>-1.0</td>
<td>-12.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125d.jpg" align="right" border="0" height="265" width="353">The job
market continued to improve last week. The Labor Department reported
that initial claims for unemployment insurance fell to 466,000 from a
downwardly revised 501,000 during the prior week. The latest level was
the lowest since early-September of last year and are down&nbsp;
sharply from the peak reached in March of 674,000 claims. The four-week
moving average of claims fell to 497,000 and the latest weekly figure
was lower than Consensus expectations for 500,000 claims.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125e.jpg" align="right" border="0" height="265" width="353">
Continuing
claims for unemployment insurance during the latest week fell 109,000
to their lowest level since late February. The decline reflects the
improved job market but may also be a function of the exhaustion of
benefits. Continuing claims provide an indication of workers' ability
to find employment. The four-week average of continuing claims fell
modestly to 5,614,750. This series dates back to
1966.Extended benefits for unemployment insurance
rose fell modestly w/w and averaged 539,531 in early-November versus
550,343 during October.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125f.jpg" align="right" border="0" height="265" width="353">
The insured rate of unemployment fell to 4.1%
and matched its lowest since late-March. The rate reached a high of
5.2% during late-June. During the last ten years, there has been a 93%
correlation between the level of the insured unemployment rate and the
overall rate of unemployment published by the Bureau of Labor
Statistics.he highest insured unemployment rates in the
week ending November 7 were in Puerto Rico (6.2%), Oregon (5.5), Nevada
(5.1), Alaska (5.1), Wisconsin (4.9), Pennsylvania (4.9), California
(4.7), Michigan (4.6), and South Carolina (4.4). The lowest insured
unemployment rates were in North Dakota (1.1%), Virginia (1.9), Texas
(2.5), Maine (2.7), Wyoming (2.8), Ohio (3.2), Maryland (2.8), New York
(3.5), Mississippi (3.5) and Florida (3.7).The unemployment insurance
claims data is available in Haver's WEEKLY database
and the state data is in the REGIONW database.The
minutes to the latest FOMC meeting can be found
<a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20091104.pdf">here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/21/09</th>
<th scope="col">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>466</td>
<td>501</td>
<td>505</td>
<td>-10.4%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">ContinuingClaims</td>
<td>--</td>
<td>5,423</td>
<td>5,613</td>
<td>34.9%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.1</td>
<td>4.3</td>
<td>3.1(11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The job market continued to improve last week. The Labor Department reported that initial claims for unemployment insurance fell to 466,000 from a downwardly revised 501,000 during the prior week. The latest level was the lowest since [...]

U.S. Weekly Initial Claims Insurance For Jobless Insurance Fall To New Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125a.jpg" align="right" border="0" height="265" width="353">Negative job
growth continued to minimize personal income growth last month. Personal
income gained 0.2% during October after an upwardly revised
like increase in September. The latest figure matched Consensus
expectations. While the gains have been small, they are improved from
early this year due to easier declines in employment which have been
accompanied by higher gov't transfer payments. Wages &amp;
salaries were unchanged last month after a revised 0.1% September
increase. Year-to-year wages fell 3.6% following a 2.1% increase during
2008. Wages in the factory sector fell 0.5% (-11.2% y/y) after a
minimal September decline. In the service sector wages rose just 0.1%
(-2.6% y/y), but continuing to offset some of this weakness has been
the government sector where wages rose 2.7% y/y.Growth in
unemployment insurance payments has slowed recently. They increased
just 0.1% last month after a 10.4% 3Q increase and a 27.4% 2Q gain.
Interest income rose 0.5% (-5.6% y/y) as the decline in rates found a
bottom while dividend income fell by 0.2% (-21.2% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125b.jpg" align="right" border="0" height="265" width="353">
 Disposable
personal income rose an improved 0.4% due to lower tax
payments. Adjusted for inflation real disposable income rose 0.2% after
a 0.4% 3Q decline. The saving rate slipped modestly to 4.6% from an
upwardly revised 4.6% during September. The rate remained up from last
year and more than double the 2007 level due to reduced spending.Personal
spending gained 0.3% as durables spending increased 0.2%
(0.1% y/y). Spending on motor vehicles recovered 8.6% (3.5% y/y) after
the September drop. That increase was offset by a 0.6% (-4.0% y/y)
decline in spending on furniture &amp; appliances. Spending on
nondurables increased 0.4% (-1.4% y/y) as outlays on apparel rose for
the fourth straight month (0.5% y/y)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091125c.jpg" align="right" border="0" height="265" width="353">
. Outlays on gasoline rose 0.7%
with higher prices but were down 17.9% from one year ago. Outlays on
services increased 0.5% (1.8% y/y) as spending on health care continued
quite strong posting a 5.6% gain versus last year. The PCE
chain price index increased 0.3% during October lifted by a
firm 2.1% increase in gasoline costs. Less food-and-energy, "core"
prices were again soft and posted just a 0.2% increase. Prices for
durable goods rose just 0.1% as home furnishing prices fell (-1.9% y/y)
while prices for services gained a steady 1.2% y/y.The personal
income &amp; consumption figures are available in Haver's USECON
and USNA databases.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.2</td>
<td>0.2</td>
<td>0.3</td>
<td>-1.0</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; &nbsp;Disposable
Personal Income</td>
<td>0.4</td>
<td>0.2</td>
<td>0.3</td>
<td>2.4</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>0.7</td>
<td>-0.6</td>
<td>1.3</td>
<td>0.9</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>4.4</td>
<td>4.6</td>
<td>3.9</td>
<td>2.9 (Oct. '08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3</td>
<td>0.1</td>
<td>0.3</td>
<td>0.2</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Less food &amp; energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.1</td>
<td>1.4</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

Negative job growth continued to minimize personal income growth last month. Personal income gained 0.2% during October after an upwardly revised like increase in September. The latest figure matched Consensus expectations. While the [...]

U.S. Personal Income Gains Minimally As Spending Recovers

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

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Michael J. Moran

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

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

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

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

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

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

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

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

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

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

Robert Brusca

260109E.jpg

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

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

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

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

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

260109.jpg

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

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

Germany

German Industrial Production Perks Up-Surprise!

Andrew Cates

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


260108Z1.jpg

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

260108Z2.jpg

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

260108Z3.jpg

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

260108Z4.jpg

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

260108Z5.jpg

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

260108Z6.jpg

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

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

Charts of the Week: Cooling Inflation, Diverging Growth

Sandy Batten

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Nonfarm business labor productivity (output per hour) exhibited further robust growth in Q3, increasing 4.9% q/q SAAR following an upwardly revised 4.1% quarterly increase in Q2 (previously +3.3%). A quarterly gain of 4.1% was expected by the Action Economics Forecast Survey. Compared to a year ago, productivity rose 1.9% in Q3 versus 1.5% in Q2. Since productivity growth began to accelerate at the beginning of 2023, it has grown at a well above trend 2.7% annual rate. Strong productivity is a key factor for boosting real incomes and restraining inflation pressures going forward.

Nonfarm business output increased 5.4% q/q in Q3 on top of a 5.2% quarterly rise in Q2 while hours worked edged up just 0.5% q/q, down from 1.0% in Q2. Compensation growth picked up to 2.9% q/q in Q3 from a downwardly revised 1.1% q/q in Q2 (previously +4.3%) although compensation growth from a year ago slowed to 3.2% in Q3 from 3.5%. As a result, unit labor costs declined 1.9% q/q in Q3 following a downwardly revised 2.9% quarterly decline in Q2 (previously +1.0%). On a y/y basis, unit labor costs advanced only 1.2% y/y in Q2, the smallest annual gain since Q3 2023.

Growth of factory output slowed to 2.6% q/q in Q3 from 2.9% in Q2. However, hours worked fell 0.7% in Q3 after having been unchanged in Q2. Consequently, factory productivity growth accelerated to 3.3% from 2.9% in Q2. Factory compensation growth picked up to 4.8% q/q in Q3 from 4.0% in Q2, resulting in a pickup in unit labor cost growth to 1.5% from 1.1% in Q2.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Nonfarm business output per hour rose 4.9% q/q SAAR in Q3 on top of an upward revision to Q2.
- Compensation increased 2.9% in Q3 resulting in a 1.9% quarterly decline in unit labor costs.

Economy in Brief

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