Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.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">Employment:
000s</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">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

The October employment report from the Bureau of Labor Statistics contained no good news on labor market conditions. That especially was true of the unemployment rate. It rose to 10.2%, the highest since early-1983 just following the [...]

U.S. Jobless Rate Exceeds 10% While Payrolls Decline

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.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">Employment:
000s</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">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 Everybody Is Turning Higher Say
OECD LEIs 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> November 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106e.jpg" align="left" border="0" height="265" width="353">
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas. 
 

OECD leading indicators ... &#8220;point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added. 
 

The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September. 
 

Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany&#8217;s domestic orders
are not along for the ride. 
 

The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism. 
 

The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That&#8217;s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let&#8217;s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It&#8217;s a tall
order that we are falling short on despite the growth path endorsed by
the OECD. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth
progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>15.8%</td>
<td>14.9%</td>
<td>1.5%</td>
<td>-6.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>16.8%</td>
<td>15.3%</td>
<td>0.5%</td>
<td>-6.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Ezone</td>
<td>16.9%</td>
<td>16.6%</td>
<td>4.0%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>13.1%</td>
<td>10.9%</td>
<td>-4.7%</td>
<td>-4.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>16.8%</td>
<td>15.0%</td>
<td>-0.6%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Six
month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>14.9%</td>
<td>-10.3%</td>
<td>-10.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>15.3%</td>
<td>-12.3%</td>
<td>-10.7%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Eur</td>
<td>16.6%</td>
<td>-7.3%</td>
<td>-12.3%</td>
<td>-3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>10.9%</td>
<td>-18.1%</td>
<td>-9.2%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>15.0%</td>
<td>-14.2%</td>
<td>-9.8%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD
RED</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Jobless Rate Exceeds 10%While Payrolls Decline

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105g.jpg" align="left" border="0" height="265" width="353">
Retail sales fell again in September in the e-Zone. Retail
sales and vehicle registrations are on nearly opposite paths. Sales are
still falling while vehicle registrations bolstered by an assortment of
government programs have been spurred higher. All this stirs the pot of
controversy since in the EU Commission indices that describe the
various EMU sectors, consumer confidence and retailing tend to show the
highest relative scores. Based on the EU surveys it would seem that
consumer attitudes and retailing are leading EMU ahead, yet in terms of
the hard data on spending that matter most that does not seem to be
true. 
 

Partly this divergence is a question of looking at levels of
Vs changes. The levels of satisfaction assessed for the consumer and
retailing sector surveys by the EU Commission are high relative to
other sectors (though still low in absolute terms). For MFG and even
services the relative levels of the indices compared to normal times
are extremely low, but theses sectors had fallen hard in recession and
are now rising, or rising strongly as is the case with MFG and despite
their low ratings they are boosting growth the most. 
 

So far European recovery seems to have come on the back of the
industrial sector with rising output and orders but from an extremely
low level. But with the euro currency also rising in value Vs other
currencies, much of this demand seems to have been foreign-sourced thus
questioning how far Europe can go without participation from its own
consumers. The string of declines in retail sales raises that question
again. It may be that the auto incentive schemes have diverted some
spending from retail sales. But the European recovery cannot be based
simply on selling autos and exporting. We continue to look for life in
retailing to give optimism to the view of a sustained euro-recovery. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone Total Value</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-3.0%</td>
<td>-3.3%</td>
<td>-4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food,Beverages,Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Registrations:</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicle
Registration</td>
<td>6.7%</td>
<td>-6.8%</td>
<td>0.2%</td>
<td>-1.5%</td>
<td>33.3%</td>
<td>9.7%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Nonfood Country detail:
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany Value</td>
<td>-0.5%</td>
<td>-1.8%</td>
<td>1.5%</td>
<td>-3.4%</td>
<td>-3.9%</td>
<td>-4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU) Volume</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.3%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The
EA 13 countries
are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia.</td>
</tr>
</tbody>
</table>
</body></html>

Retail sales fell again in September in the e-Zone. Retail sales and vehicle registrations are on nearly opposite paths. Sales are still falling while vehicle registrations bolstered by an assortment of government programs have been [...]

Retail Sales Continue to Sag as Auto Registrations See Stimulus

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105d.jpg" align="right" border="0" height="265" width="353">
The Labor
Department indicated that initial claims for unemployment insurance
fell moderately to 512,000 last week from a little-revised 532,000. The
latest figure represented material labor market improvement since it
was the lowest since the first week of January. Moreover, claims have
fallen sharply from the peak reached in March of 674,000 claims. The
four-week moving average of claims fell to 523,750 and the latest
weekly figure was lower than Consensus expectations for 520,000
claims.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105e.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance during the latest
week fell 68,000 to their lowest level since late-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 5,886,250 and have fallen 13.0% from
their peak. This series dates back to
1966.Extended benefits for unemployment insurance
rose moderately and reversed half of the prior week's decline. Through
early-October extended benefits averaged 551,355.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105f.jpg" align="right" border="0" height="265" width="353">
The insured rate of
unemployment held steady at 4.4% 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.The highest
insured unemployment rates in the week ending October 17 were in Puerto
Rico (6.4%), Nevada (5.4), Oregon (5.4), California (4.9), Pennsylvania
(4.9), Arkansas (4.8), Wisconsin (4.8), Michigan (4.7), Alaska (4.6),
North Carolina (4.6), and South Carolina (4.6). The lowest insured
unemployment rates were in North Dakota (1.0%), South Dakota (1.1),
Virginia (2.0), Wyoming (2.8), Maine (2.5), Texas (2.5), Colorado
(3.0), Maryland (3.0), Mississippi (3.6), New York (3.5), Florida
(3.7), and Georgia (3.8).The unemployment insurance claims data is
available in Haver's WEEKLY database and the state
data is in the REGIONW database.Asia
Recovering Rapidly, but Faces Challenges, says IMF from the
International Monetary Fund can be found <a href="http://www.imf.org/external/index.htm"> here</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/30/09</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</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>512</td>
<td>532</td>
<td>531</td>
<td>4.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,749</td>
<td>5,817</td>
<td>49.0%</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>4.4</td>
<td>4.4</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The Labor Department indicated that initial claims for unemployment insurance fell moderately to 512,000 last week from a little-revised 532,000. The latest figure represented material labor market improvement since it was the lowest [...]

U.S. Weekly Initial Claims For Unemployment Insurance Lowest Since January

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105a.jpg" align="right" border="0" height="265" width="353">
The U.S. labor market is clearly signaling that the recession
is over. The magnitude of the 9.5% jump in nonfarm worker productivity
during 3Q'09 wasn't unprecedented for this early in a recovery. Its
size is noteworthy because the rise in output was moderate. The 3Q gain
in productivity followed a similarly firm 6.9% 2Q rise which was
little-revised. It was the strongest since 3Q'03 and outpaced Consensus
expectations for a 6.4% increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105b.jpg" align="right" border="0" height="265" width="353">
The gain in productivity occurred as output posted its first
increase in over a year. The moderate 4.0% rise was accompanied by a
continuation of the sharp decline in hours-worked (employment times
hours), which has been so much a part of this recession. The 5.0%
(-7.5% y/y) decline in hours-worked followed a 7.5% 2Q drop.
Compensation costs, however, improved with the gain in output
per hour. The 3.8% quarterly increase was the first gain in a year
though it left costs up just 0.5% y/y. That gain was nearly the weakest
since 1949.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105c.jpg" align="right" border="0" height="265" width="353">
The surge in productivity combined with a moderate increase in
compensation combined to further drop unit labor costs. The 5.2% q/q
decline was the third consecutive quarterly fall and it lowered the y/y
change to -3.6%, the sharpest since early-1950.
Surging worker productivity growth in the factory sector led
the overall gain in output-per-hour. The 13.6% (AR) quarterly increase
was a record and it lifted y/y growth to 3.1%, the highest since early
last year. The increase came as output rose at a 7.7% rate (-10.8% y/y)
and hours worked fell at a 5.2% rate (-13.5% y/y). Compensation rose
5.5% (5.5% y/y), therefore unit labor costs in the factory sector fell
at a 7.1% annual rate (+2.3% y/y).
The productivity &amp; cost 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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.3</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>3.8</td>
<td>0.3</td>
<td>-4.7</td>
<td>0.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.2</td>
<td>-6.1</td>
<td>-5.0</td>
<td>-3.6</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. labor market is clearly signaling that the recession is over. The magnitude of the 9.5% jump in nonfarm worker productivity during 3Q'09 wasn't unprecedented for this early in a recovery. Its size is noteworthy because the [...]

3Q U.S. Worker Productivity Surges -- Strongest Since 2003

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105a.jpg" align="right" border="0" height="265" width="353">
The U.S. labor market is clearly signaling that the recession
is over. The magnitude of the 9.5% jump in nonfarm worker productivity
during 3Q'09 wasn't unprecedented for this early in a recovery. Its
size is noteworthy because the rise in output was moderate. The 3Q gain
in productivity followed a similarly firm 6.9% 2Q rise which was
little-revised. It was the strongest since 3Q'03 and outpaced Consensus
expectations for a 6.4% increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105b.jpg" align="right" border="0" height="265" width="353">
The gain in productivity occurred as output posted its first
increase in over a year. The moderate 4.0% rise was accompanied by a
continuation of the sharp decline in hours-worked (employment times
hours), which has been so much a part of this recession. The 5.0%
(-7.5% y/y) decline in hours-worked followed a 7.5% 2Q drop.
Compensation costs, however, improved with the gain in output
per hour. The 3.8% quarterly increase was the first gain in a year
though it left costs up just 0.5% y/y. That gain was nearly the weakest
since 1949.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105c.jpg" align="right" border="0" height="265" width="353">
The surge in productivity combined with a moderate increase in
compensation combined to further drop unit labor costs. The 5.2% q/q
decline was the third consecutive quarterly fall and it lowered the y/y
change to -3.6%, the sharpest since early-1950.
Surging worker productivity growth in the factory sector led
the overall gain in output-per-hour. The 13.6% (AR) quarterly increase
was a record and it lifted y/y growth to 3.1%, the highest since early
last year. The increase came as output rose at a 7.7% rate (-10.8% y/y)
and hours worked fell at a 5.2% rate (-13.5% y/y). Compensation rose
5.5% (5.5% y/y), therefore unit labor costs in the factory sector fell
at a 7.1% annual rate (+2.3% y/y).
The productivity &amp; cost 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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.3</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>3.8</td>
<td>0.3</td>
<td>-4.7</td>
<td>0.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.2</td>
<td>-6.1</td>
<td>-5.0</td>
<td>-3.6</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>
 U.S. Weekly Initial Claims For
Unemployment Insurance Lowest Since January 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105d.jpg" align="right" border="0" height="265" width="353">The Labor
Department indicated that initial claims for unemployment insurance
fell moderately to 512,000 last week from a little-revised 532,000. The
latest figure represented material labor market improvement since it
was the lowest since the first week of January. Moreover, claims have
fallen sharply from the peak reached in March of 674,000 claims. The
four-week moving average of claims fell to 523,750 and the latest
weekly figure was lower than Consensus expectations for 520,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105e.jpg" align="right" border="0" height="265" width="353">Continuing
claims for unemployment insurance during the latest
week fell 68,000 to their lowest level since late-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 5,886,250 and have fallen 13.0% from
their peak. This series dates back to
1966.
Extended benefits for unemployment insurance
rose moderately and reversed half of the prior week's decline. Through
early-October extended benefits averaged 551,355.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105f.jpg" align="right" border="0" height="265" width="353">The
insured rate of
unemployment held steady at 4.4% 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.
The highest
insured unemployment rates in the week ending October 17 were in Puerto
Rico (6.4%), Nevada (5.4), Oregon (5.4), California (4.9), Pennsylvania
(4.9), Arkansas (4.8), Wisconsin (4.8), Michigan (4.7), Alaska (4.6),
North Carolina (4.6), and South Carolina (4.6). The lowest insured
unemployment rates were in North Dakota (1.0%), South Dakota (1.1),
Virginia (2.0), Wyoming (2.8), Maine (2.5), Texas (2.5), Colorado
(3.0), Maryland (3.0), Mississippi (3.6), New York (3.5), Florida
(3.7), and Georgia (3.8).
The unemployment insurance claims data is
available in Haver's WEEKLY database and the state
data is in the REGIONW database.
Asia
Recovering Rapidly, but Faces Challenges, says IMF from the
International Monetary Fund can be found <a href="http://www.imf.org/external/index.htm"> here</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/30/09</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</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>512</td>
<td>532</td>
<td>531</td>
<td>4.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,749</td>
<td>5,817</td>
<td>49.0%</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>4.4</td>
<td>4.4</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

 Retail Sales Continue to Sag as
Auto Registrations See Stimulus 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 5, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105g.jpg" align="left" border="0" height="265" width="353">
Retail sales fell again in September in the e-Zone. Retail
sales and vehicle registrations are on nearly opposite paths. Sales are
still falling while vehicle registrations bolstered by an assortment of
government programs have been spurred higher. All this stirs the pot of
controversy since in the EU Commission indices that describe the
various EMU sectors, consumer confidence and retailing tend to show the
highest relative scores. Based on the EU surveys it would seem that
consumer attitudes and retailing are leading EMU ahead, yet in terms of
the hard data on spending that matter most that does not seem to be
true. 
 

Partly this divergence is a question of looking at levels of
Vs changes. The levels of satisfaction assessed for the consumer and
retailing sector surveys by the EU Commission are high relative to
other sectors (though still low in absolute terms). For MFG and even
services the relative levels of the indices compared to normal times
are extremely low, but theses sectors had fallen hard in recession and
are now rising, or rising strongly as is the case with MFG and despite
their low ratings they are boosting growth the most. 
 

So far European recovery seems to have come on the back of the
industrial sector with rising output and orders but from an extremely
low level. But with the euro currency also rising in value Vs other
currencies, much of this demand seems to have been foreign-sourced thus
questioning how far Europe can go without participation from its own
consumers. The string of declines in retail sales raises that question
again. It may be that the auto incentive schemes have diverted some
spending from retail sales. But the European recovery cannot be based
simply on selling autos and exporting. We continue to look for life in
retailing to give optimism to the view of a sustained euro-recovery. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone Total Value</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-3.0%</td>
<td>-3.3%</td>
<td>-4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food,Beverages,Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Registrations:</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicle
Registration</td>
<td>6.7%</td>
<td>-6.8%</td>
<td>0.2%</td>
<td>-1.5%</td>
<td>33.3%</td>
<td>9.7%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Nonfood
Country detail:
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany Value</td>
<td>-0.5%</td>
<td>-1.8%</td>
<td>1.5%</td>
<td>-3.4%</td>
<td>-3.9%</td>
<td>-4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU) Volume</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.3%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The
EA 13 countries
are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia.</td>
</tr>
</tbody>
</table>
</body></html>

3Q U.S. Worker Productivity Surges-- Strongest Since 2003

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In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a &quot;range from 0 to 1/4 percent.&quot; The discount rate also was left unchanged at 0.5%. The action was as expected and left the Fed funds rate at its lowest level ever.
Citing economic improvement, the Fed stated that &quot;Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091104l.jpg" width="353">
Continued strengthening of economic activity in a &quot;context of price stability&quot; was anticipated.
Regarding inflation the FOMC statement again indicated that &quot;With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.&quot;<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091104m.jpg" width="353">
In its effort to promote economic liquidity, the Fed used similar language as during the last meeting. &quot;... the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
A complete text of the Fed&#39;s latest press release can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20091104a.htm">here</a>.
The Haver databases USECON, WEEKLY and DAILY contain the figures from the Federal Reserve Board.
The Determinants of International Flows of U.S. Currency from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr400.pdf">here</a>.

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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
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In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent." The discount rate also was left unchanged at 0.5%. The action was as expected and left the [...]

FOMC Cites Economic Improvement But Leaves Rates Unchanged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091104j.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements fell further last month to a new current cycle low. Layoffs dropped to 55,679, compared to a high of 241,748 cuts in January of this year.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment. Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Layoffs have moderated sharply in the chemical, consumer goods, financial, health care, media and telecommunication industries. They picked up modestly in the computer and entertainment/leisure industries.
The Challenger figures are available in Haver&#39;s SURVEYS database.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM" style="color:#000000">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
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</thead>
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<td class="firstcol">Announced Job Cuts</td>
<td>55,679</td>
<td>66,404</td>
<td>-50.7%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
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The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements fell further last month to a new current cycle low. Layoffs dropped to 55,679, compared to a high of 241,748 cuts in January of this year. [...]

Challenger Layoffs Moderate Further

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.