Tom Moeller

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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>
</body></html>

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<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

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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>

 U.S. Weekly Initial Claims
Insurance For Jobless Insurance Fall To New Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 25, 2009



<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>

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U.S. Personal Income GainsMinimally As Spending Recovers

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124i.jpg" align="right" border="0" height="265" width="353">Overall
business confidence in Germany and in France improved slightly in
November. Confidence in both countries, however, is still
subdued. In Germany, confidence is measured in two
ways: (1) as a percent difference between the optimists and the
pessimists regarding a particular question and (2) as an index based on
the percent differences with the year 2000=100.&nbsp; Although the
excess of pessimists over optimists regarding the current situation
continued to decline in November, there was still a significant excess,
25.1%.&nbsp; Germans have been much less pessimistic regarding the
outlook six months ahead and in November there was actually a small,
0.2%, excess of optimists over pessimists on the outlook.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124j.jpg" align="right" border="0" height="265" width="353">
&nbsp; The
overall climate indicator, which is a combination of present conditions
and future expectations, improved but still showed an excess of
pessimists over optimists, 12.9%.&nbsp; (The percent balances
between the optimists and pessimists for the three indicators are shown
in the first chart.) In France, the measures of confidence
are so constructed by INSEE (Institute National de la Statistiques et
des Etudes Economiques) that the long term averages are equal to
100.&nbsp; In November, all the indexes: overall confidence at 87,
confidence in the construction industry at 93, industry at 89 and
services at 86 are still below their long term averages. (The French
business confidence indicators are shown in the second
chart.)&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124k.jpg" align="right" border="0" height="265" width="353">
INSEE also publishes turning point indicators that
attempt to detect at the earliest possible moment turning points of the
business cycle.&nbsp; The series tracks the difference between the
probability that the economy is growing versus the probability that it
is contracting and&nbsp; is evaluated between +1 and -1.&nbsp;
A value of +1 indicates that the economy is growing strongly, and one
of -1 indicates that the economy is contracting sharply.&nbsp; A
value close to zero indicates an economy near to its long term average
and is neither growing nor contracting significantly.&nbsp;
(Turning points for the Composite and the Industry Survey Indicators
are shown in the third chart.)&nbsp; The Composite turning point
indicator has been at +1 now for five months, indicating continuing
recovery. The turning point indicator for the Industry Survey, however,
has been falling and in November was negative, suggesting at least some
deceleration of activity in this sector.&nbsp; The November Climate
indicator for Industry was 89, unchanged from October, after a run of
seven increases since March of this year.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
GERMANY&nbsp; IFO % Balance </th>
<th scope="col">Nov 09&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug&nbsp; 09</th>
<th scope="col">Jul 08</th>
<th scope="col">Jun 09&nbsp;</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>-25.1</td>
<td>-28.6</td>
<td>-29.1</td>
<td>-30.8</td>
<td>-34.3</td>
<td>-38.1</td>
<td>-34.9</td>
<td>-36.0</td>
<td>-37.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>0.2</td>
<td>-3.9</td>
<td>-6.0</td>
<td>-7.5</td>
<td>-16.6</td>
<td>-18.4</td>
<td>-25.5</td>
<td>-29.7</td>
<td>-34.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall Climate</td>
<td>-12.7</td>
<td>-16.7</td>
<td>-17.9</td>
<td>-19.5</td>
<td>-25.7</td>
<td>-28.5</td>
<td>-31.8</td>
<td>-32.9</td>
<td>-36.1</td>
</tr>
<tr>
<td colspan="10">FRANCE Business Confidence
(LT Avg =100)</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>86</td>
<td>85</td>
<td>79</td>
<td>75</td>
<td>70</td>
<td>68</td>
<td>64</td>
<td>60</td>
<td>60</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>93</td>
<td>93</td>
<td>93</td>
<td>92</td>
<td>91</td>
<td>92</td>
<td>92</td>
<td>92</td>
<td>95</td>
</tr>
<tr class="odd">
<td class="firstcol">Industry</td>
<td>89</td>
<td>89</td>
<td>86</td>
<td>82</td>
<td>79</td>
<td>77</td>
<td>74</td>
<td>71</td>
<td>69</td>
</tr>
<tr class="odd">
<td class="firstcol">Composite</td>
<td>87</td>
<td>86</td>
<td>83</td>
<td>79</td>
<td>76</td>
<td>74</td>
<td>71</td>
<td>69</td>
<td>68</td>
</tr>
<tr>
<td colspan="10">FRANCE Turning Points</td>
</tr>
<tr class="odd">
<td class="firstcol">Industry</td>
<td>-0.3</td>
<td>0.6</td>
<td>0.5</td>
<td>0.8</td>
<td>0.8</td>
<td>0.9</td>
<td>0.6</td>
<td>0.4</td>
<td>-1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Composite</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>1.0</td>
<td>0.1</td>
<td>-0.6</td>
<td>-0.7</td>
<td>-0.9</td>
</tr>
</tbody>
</table>
</body></html>

Overall business confidence in Germany and in France improved slightly in November. Confidence in both countries, however, is still subdued. In Germany, confidence is measured in two ways: (1) as a percent difference between the [...]

Business Confidence In Germany And France

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

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

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

260205Z2.jpg

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

260205Z3.jpg

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

260205Z4.jpg

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

260205Z5.jpg

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

260205Z6.jpg

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

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

Robert Brusca

260206E.jpg

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

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

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

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

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

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

260206.jpg

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

260205D15.jpg

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

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

Sandy Batten

260205A2.jpg

260205B2.jpg

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

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

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

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

260205C2.jpg

260205D2.jpg

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

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

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

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

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

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

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

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

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

Economy in Brief

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

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U.S. New Home Sales Struggle Higher

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U.S. Personal Income Gains Minimally As Spending Recovers

U.S. Personal Income GainsMinimally As Spending Recovers

Business Confidence In Germany And France