Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" align="left" border="0" height="265" width="353">
The leaders haven't missed one yet in their sixty year
history. Therefore, the probability is high that economic recovery is
near for the U.S. Released yesterday, the Conference Board's Index of
Leading Economic Indicators rose 0.3% in October. That followed an
unrevised 1.0% September increase and was the seventh gain in a row.
Moreover, the 10.2% (centered) rate of increase during the last six
months was nearly the strongest since early-1983. The leading index is
based on actual reports for eight economic data series. The Conference
Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a
bit last month. Sixty percent of the components rose during October
versus last month's reading of 75%. During the most recent six months,
however, 80% to 90% of the series rose. Prominent in last month's
increase was the steeper interest rate yield curve. The money supply,
stock prices, hours worked, jobless insurance claims and orders for
consumer goods contributed to the index's rise as well. These gains
were offset by lower capital goods orders, lower building permits,
quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy
is slowing were the coincident indicators. They were unchanged during
October after a slight September decline. During the last six months
the 1.4% rate of decline in the coincident series compares with a
shortfall of 8.0% at its worst in January. Prompting the moderation
have been slight increases in industrial production, real personal
income and higher business sales as well as fewer declines in payroll
employment.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" align="left" border="0" height="265" width="353">
In a continued sign that excesses in the U.S. economy are
falling, the lagging index has been down since December of last year.
Leading the decline has been lower commercial &amp; industrial
loans outstanding as well as less consumer credit. The ratio of
coincident-to-lagging indicators (a measure of economic excess) also
continued higher for the seventh straight month to the highest level
since November.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


The Peak Oil Debate from the
Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>-0.1</td>
<td>0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
 Italian and French Industrial
Orders Are Up In September 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 


 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey2">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey5">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey1">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
</body></html>

The leaders haven't missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board's Index of Leading Economic Indicators rose 0.3% [...]

U.S. Leading Indicators Continue To Signal Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. 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 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) 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.

<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">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</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>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</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>4.3</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>

Layoffs from the U.S. workforce held steady last week at the recent low. That's according to the Labor Department which reported that initial claims for unemployment insurance equaled the prior week's upwardly revised level of [...]

U.S. Weekly Initial Claims Unemployment Insurance Hold Steady Near January Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119a.jpg" align="right" border="0" height="265" width="353">
The
Philadelphia Federal Reserve Bank indicated that the November index of
factory sector activity in the region continued to expand this month.
Moreover, the index was unexpectedly strong at 16.7 and positive for
the fourth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter. During the last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1109.pdf">here.</a>·
Amongst the components new orders and shipments each improved to the
highest since 2007. Also showing improvement was the employment index
which rose to nearly break-even compared with a low of -52.0 during
March. During the last ten years there has been a 79% correlation
between the index level and the m/m change in manufacturing sector
payrolls. The inventory component reversed the October decline and
suggests that any turn towards inventory accumulation will be modest.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119b.jpg" align="right" border="0" height="265" width="353">
A decline in the prices paid index reversed all of its October
increase. Nevertheless, the positive figure compares to negative
readings this past winter and spring. During the last ten years there
has been a 74% correlation between the prices paid index and the
three-month growth in the intermediate goods PPI. There has been an 83%
correlation with the change in core intermediate goods prices.
Expected business conditions in six months deteriorated for the fifth
straight month. The November index fell to a still-positive reading of
36.8 but that was well-off the recent high. Most of the index
components, especially orders and shipments, were down sharply. The
figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database. The exchange rate: what's in it for prices?
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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">Philadelphia
Fed (%)</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">General Activity Index</td>
<td>16.7</td>
<td>11.5</td>
<td>14.1</td>
<td>-39.8</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>14.8</td>
<td>6.2</td>
<td>3.3</td>
<td>-29.3</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-14.3</td>
<td>-23.8</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;14.9</td>
<td>&nbsp;-26.6</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body></html>

The Philadelphia Federal Reserve Bank indicated that the November index of factory sector activity in the region continued to expand this month. Moreover, the index was unexpectedly strong at 16.7 and positive for the fourth [...]

Philadelphia Fed Index Improves To Highest Since 2007

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119a.jpg" align="right" border="0" height="265" width="353">The
Philadelphia Federal Reserve Bank indicated that the November index of
factory sector activity in the region continued to expand this month.
Moreover, the index was unexpectedly strong at 16.7 and positive for
the fourth consecutive month. The latest level compared to figures near
-40.0 this past fall and winter.

 During the last ten years there has
been a 77% correlation between the level of the Philadelphia Fed
Business Conditions Index and the three-month growth in factory sector
industrial production. There has been a 70% correlation with q/q growth
in real GDP. The latest survey from the Philadelphia Federal Reserve
Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos1109.pdf">here.</a>·
Amongst the components new orders and shipments each improved to the
highest since 2007. Also showing improvement was the employment index
which rose to nearly break-even compared with a low of -52.0 during
March. During the last ten years there has been a 79% correlation
between the index level and the m/m change in manufacturing sector
payrolls. The inventory component reversed the October decline and
suggests that any turn towards inventory accumulation will be modest.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119b.jpg" align="right" border="0" height="265" width="353">A decline
in the prices paid index reversed all of its October
increase. Nevertheless, the positive figure compares to negative
readings this past winter and spring. During the last ten years there
has been a 74% correlation between the prices paid index and the
three-month growth in the intermediate goods PPI. There has been an 83%
correlation with the change in core intermediate goods prices.

Expected business conditions in six months deteriorated for
the fifth
straight month. The November index fell to a still-positive reading of
36.8 but that was well-off the recent high. Most of the index
components, especially orders and shipments, were down sharply.

 The
figures from the Philadelphia Federal Reserve can be found in Haver's SURVEYS
database.

 The exchange rate: what's in it for prices?
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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">Philadelphia
Fed (%)</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">General Activity Index</td>
<td>16.7</td>
<td>11.5</td>
<td>14.1</td>
<td>-39.8</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>14.8</td>
<td>6.2</td>
<td>3.3</td>
<td>-29.3</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-0.5</td>
<td>-6.8</td>
<td>-14.3</td>
<td>-23.8</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index</td>
<td>14.9</td>
<td>21.3</td>
<td>&nbsp;14.9</td>
<td>&nbsp;-26.6</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>

 U.S. Weekly Initial Claims
Unemployment Insurance Hold Steady Near January Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 19, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. 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 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) 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.

<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">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</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>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</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>4.3</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>

Philadelphia Fed Index Improves ToHighest Since 2007

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118g.jpg" align="right" border="0" height="265" width="353">Since
the spring recovery, housing activity has been roughly flat according
to The National Association of Home Builders. They reported that its
November Composite Housing Market Index held stable with a downwardly
revised October reading. Though the index remained double the low of 8
this past January there's been little, if any, improvement during the
last several months. The index is compiled from survey questions asking
builders to rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very
high&#8221; to &#8220;very low&#8221;. The figure is a
diffusion index, therefore, numerical results over 50 indicate a
predominance of &#8220;good&#8221; readings. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118h.jpg" align="right" border="0" height="265" width="353">
The present sales
index held stable at 17 which equaled the 3Q average. In the West the
index rose slightly and was sharply higher than one year ago. In the
South the index also held stable m/m (+41.7% y/y). In the Northeast the
index fell m/m but remained three-quarters higher than the year-ago
level.&nbsp;In the Midwest the index also fell m/m but remained
double last year. The sub-index of sales during the next six months
rose slightly m/m and offset most of the October decline.
·&nbsp;The Home Builders' Association also reported that traffic of
prospective buyers held stable with October at the lowest level since
July.&lt;/p&gt;&lt;p&gt;The Home Builders' Housing
Opportunity Index,
which is the share of homes sold that could be considered affordable to
a family earning the median income, fell slightly in the second
quarter. It had jumped earlier to a record high of 72.5% buoyed by
lower home prices, lower interest rates and higher income. (There is a
break in the series from 2002 to 2003.)
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118i.jpg" align="right" border="0" height="265" width="353">The NAHB
has compiled the Housing Market Index since 1985. The weights assigned
to the individual index components are .5920 for single family detached
sales, present time; .1358 for single family detached sales, next six
months; and .2722 for traffic of prospective buyers. The results, along
with other housing and remodeling indexes from NAHB Economics, are
included in Haver&#8217;s SURVEYS 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/SURVEYS/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">&nbsp;November '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good = 100)</td>
<td>17</td>
<td>17</td>
<td>19</td>
<td>9</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>17</td>
<td>18</td>
<td>9</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>28</td>
<td>26</td>
<td>29</td>
<td>18</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>13</td>
<td>13</td>
<td>17</td>
<td>7</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</thead>
</table>

</body></html>

Since the spring recovery, housing activity has been roughly flat according to The National Association of Home Builders. They reported that its November Composite Housing Market Index held stable with a downwardly revised October [...]

U.S. Home Builders’ Index Recovery Stuttering Again This Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118e.jpg" align="right" border="0" height="265" width="353">Housing
sector activity continued to moderate after increases this past spring.
Housing starts fell last month to 529,000 (AR) units versus 592,000
during September which was revised up slightly. The latest level was
the lowest since April and down nearly one-third y/y. More sobering was
that since the peak in January of 2006 starts have fallen by more than
three-quarters. In addition, October's figure fell well short of
Consensus expectations for 600,000 starts.
Loss of forward
momentum was evident in the decline in starts of single-family homes.
They fell 3.9% last month to 476,000 units (AR), reversed
all of the prior month's increase and were at the lowest level since
May. Despite these disappointments, however, single-family starts were
one-third higher than 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.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118f.jpg" align="right" border="0" height="265" width="353">A further
loss of momentum was evident in the multi-family sector where
starts starts fell by one-third m/m during October to the record low.
Starts of apartments, condominiums &amp; town houses were down
88.2% from the January 2006 peak.
Starts of single-family
units fell throughout the country last month. Single-family starts in
the Northeast fell 9.6% (-17.5% y/y) while starts in the South fell
7.3% (-4.9% y/y). In the Midwest starts declined 4.8% (-16.8% y/y) and
starts in the West fell 5.9% (-16.5% y/y) to their lowest level since
May. Building permits dropped 4.0%, the third decline in four months,
but remained 10.8% above their record low reached in April. As with
starts, permits to build a single-family home have been relatively
strong. They fell just 0.2% last month and were down 4.0%
y/y.
The housing starts figures can be found in
Haver's USECON database.
How
Rigid Are Producer Prices? from the Federal Reserve Bank of
New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr407.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">Housing
Starts (000s, SAAR)</th>
<th scope="col">October</th>
<th scope="col">Oct. Y/Y</th>
<th scope="col">September</th>
<th scope="col">August</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>529</td>
<td>-30.7%</td>
<td>592</td>
<td>581</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>476</td>
<td>-10.9</td>
<td>511</td>
<td>481</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>53</td>
<td>-76.9</td>
<td>81</td>
<td>100</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>552</td>
<td>-24.3</td>
<td>575</td>
<td>580</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>

</body></html>

Housing sector activity continued to moderate after increases this past spring. Housing starts fell last month to 529,000 (AR) units versus 592,000 during September which was revised up slightly. The latest level was the lowest since [...]

U.S. Housing Starts Fall To Their Lowest Level Since April

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118d.jpg" align="left" border="0" height="265" width="353">The Confederation of British
Industry survey shows
industrial trends continue to make progress and cut their declining
trends. Still the declining trends remain large and the degree of
progress is slow although this month&#8217;s gain in orders is one of the
sharpest. 
Total orders revived to -45 from -51 a still steep negative
reading but a substantial month-to-month gain in November. Export
orders, following the pattern of other EU countries, have made even
grater progress this month improving to -37 from -46.
Overall orders bottomed in the cycle at -59 in July and the
series has only clawed back to -45 by November. This month&#8217;s six point
gain month to month gain is twice the pace of the rise from the cycle
low (approx 3.5 per month). The surge in export orders this month is
even more impressive on that score since those orders had only been
rising by 3 points per month from their cycle low compared to this
month&#8217;s jump of nine points.
The outlook for the volume of output has improved rapidly from
its cycle low of -48 in March of this year. Its rapid increases came in
April, May and in August. In October the outlook index for volume
switched to a positive reading and this month it holds that same
reading of +4. Although the month to month improvement in the volume
outlook index has stagnated this month, the level of the reading
staying in positive territory still marks it as a good result.
The survey evidence is that British industry sees itself
improving and expects that to continue. Overall orders are showing
strong improving profiles and are being spurred substantially by export
orders. While orders have a long way to go to become a truly positive
reading, the outlook of the British industry survey respondents says
they expect it to get there. On balance the survey is a good result.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" colspan="11">UK
Industrial volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Nov 09</td>
<td>Oct 09</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Jul 09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-45</td>
<td>-51</td>
<td>-48</td>
<td>-54</td>
<td>-59</td>
<td>-51</td>
<td>21%</td>
<td>9</td>
<td>-59</td>
<td>68</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-37</td>
<td>-46</td>
<td>-46</td>
<td>-48</td>
<td>-45</td>
<td>-43</td>
<td>27%</td>
<td>3</td>
<td>-52</td>
<td>55</td>
</tr>
<tr>
<td class="firstcol">Stocks:FinGds</td>
<td>20</td>
<td>10</td>
<td>13</td>
<td>13</td>
<td>20</td>
<td>23</td>
<td>67%</td>
<td>31</td>
<td>-2</td>
<td>33</td>
</tr>
<tr class="odd">
<td colspan="11" class="firstcol">Looking
ahead</td>
</tr>
<tr>
<td class="firstcol">Output Volume:Nxt 3M</td>
<td>4</td>
<td>4</td>
<td>-2</td>
<td>-5</td>
<td>-14</td>
<td>-28</td>
<td>68%</td>
<td>28</td>
<td>-48</td>
<td>76</td>
</tr>
<tr>
<td class="firstcol">Avg Prices 4 Nxt 3m</td>
<td>-5</td>
<td>-4</td>
<td>-10</td>
<td>-17</td>
<td>-6</td>
<td>-10</td>
<td>28%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
</tbody>
</table>
</body></html>

The Confederation of British Industry survey shows industrial trends continue to make progress and cut their declining trends. Still the declining trends remain large and the degree of progress is slow although this month’s gain in [...]

EMU Trade Balance Improves

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118a.jpg" align="right" border="0" height="265" width="353">
Pricing
pressure continued under control last month. The overall October CPI
roughly matched Consensus expectations and rose 0.3%, despite energy
prices which rose m/m. Stripping out both energy &amp; food prices,
consumer prices increased 0.2% as they did during September. However,
the y/y increase in "core" prices picked up modestly to 1.7% from its
weakest since early-2004. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118b.jpg" align="right" border="0" height="265" width="353">
Energy prices continued their
recovery with a 1.5% m/m increase, bringing the three-month annual rate
of growth to 30.1%. Fuel oil prices surged 6.0% (-23.5% y/y) after
smaller gains during the prior two months while gasoline prices
increased another 1.6% (-17.9% y/y) following a 1.0% gain during
September. Finally, prices for natural gas &amp; electricity rose
0.9% (-7.2% y/y) after little change during the prior two months.Food
&amp; beverage prices continued weak last month with a 0.1% uptick.
So far this year, food prices have fallen an unprecedented 0.6%. Recent
weakness has been led by lower dairy prices (-8.2% y/y) and lower fruit
&amp; vegetable (-5.6% y/y) costs. Prices for meats, poultry, fish
&amp; eggs also fell 4.8% y/y while cereals &amp; bakery
product prices were off 0.6%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091118c.jpg" align="right" border="0" height="265" width="353">
Inflation in the CPI less food &amp;
energy also remained moderate but, like the previous month, the 0.2%
October increase was slightly firmer than expected. Price gains
accelerated to a 2.0% annual rate since December of last year. That's
only slightly below the 2.3% rates of increase during the last two
years.Despite the weak economy, the acceleration in core price
inflation this year owes to faster increases in core goods
prices. Their 0.4% increase last month lifted the annualized
rate so far in 2009 to 3.2% from no change during the prior two years.
Higher tobacco prices continued to account for much of that
acceleration. In addition, there has been a firming of prices
elsewhere. Prices for new &amp; used motor vehicles have firmed
despite an aggressive marketing campaign, up 1.7% last month and at a
5.2% rate since December. They rose 0.3% last month and at a 35.0%
annual rate since December. That compares with price deflation during
the last two years. Though apparel prices ticked 0.4% lower last month
they've risen at an accelerated 2.3% rate this year. That follows price
declines which extends back to 1994. Continuing weak were prices for
household furnishings &amp; operation. They fell another 0.5%
leaving them down at a 1.0% rate so far this year. The U.S. recession
continued to hold back growth in core services prices.
Again, they ticked up just 0.1% last month and have risen at a 1.5%
annual rate so far this year, half that in 2008 and nearly the weakest
since 1983. Weakness in the housing market accounts for much of that
moderation. Last month, shelter prices were unchanged and they've risen
at a just a 0.6% annual rate so far in 2009. Owners equivalent rent of
primary residences, a measure not equivalent to other house price
measures, again slipped m/m and have risen at a 1.0% rate so far this
year versus a 2.5% 2008 increase. Elsewhere in services, public
transportation prices again were strong and rose 0.9% (-4.5%
y/y).&nbsp;Medical care services prices ticked up 0.2% but at a
3.4% rate this year. That compares to a 4.2% increase last year.
Finally, education costs have been firm and they're up at a 4.9% annual
rate this year after a 5.8% gain during 2008. However, recreation
prices are roughly unchanged this year after a 1.6% 2008 gain. The
chained CPI, which adjusts for shifts in consumption patterns, rose
0.1% during October while year-to-year prices fell 0.5%. Conversely,
chained prices less food and energy firmed last month by 0.3%, only the
second material gain in five months. The consumer price data is
available in Haver's USECON database while detailed
figures can be found in the CPIDATA 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/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">Oct. Y/Y&nbsp;</th>
<th scope="col">September</th>
<th scope="col">August</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>0.3</td>
<td>-0.2</td>
<td>0.2</td>
<td>0.4</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>0.2</td>
<td>1.7</td>
<td>0.2</td>
<td>0.1</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>0.4</td>
<td>2.3</td>
<td>0.3</td>
<td>-0.3</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>0.1</td>
<td>1.5</td>
<td>0.1</td>
<td>0.2</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>1.5</td>
<td>-14.1</td>
<td>0.6</td>
<td>4.6</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>-0.3</td>
<td>-0.1</td>
<td>0.1</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">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.1</td>
<td>-0.5</td>
<td>0.1</td>
<td>0.2</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>0.3</td>
<td>1.3</td>
<td>0.2</td>
<td>0.1</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
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Pricing pressure continued under control last month. The overall October CPI roughly matched Consensus expectations and rose 0.3%, despite energy prices which rose m/m. Stripping out both energy & food prices, consumer prices [...]

CPI Increases Remain Moderate

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

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Michael J. Moran

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

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

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

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

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

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

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

A Soft Tone in the Labor Market

Winnie Tapasanun

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Germany

German Industrial Production Perks Up-Surprise!

Andrew Cates

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


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

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

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

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

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

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

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Charts of the Week: Cooling Inflation, Diverging Growth

Sandy Batten

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

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

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

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

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