Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124h.jpg" align="left" border="0" height="265" width="353">
Euro-Area orders are still falling year-over-year. As the
chart shows the Yr/Yr drop is being steadily mitigated. Both
foreign-sourced orders and domestic orders (in-region orders) are
rebounding smartly after their recession-induced drop.
Of the EU&#8217;s big four economies Germany and France are doing
best with orders surging at stunningly strong 3- and 6-month rates of
growth. Italy&#8217;s orders are still falling over both those periods as are
orders in the UK. UK orders, in fact, are dropping at a horrific 31%
annual rate in the three month period ended in Sept. demonstrating a
severe drop off sparked by a 15.1% order drop in the month of August
alone.
Needless to say the Euro-Area, while doing better, remains a
very heterogeneous community. The orders rebound itself, is also not
altogether uniform. The detailed figures revealed September's orders
were driven by heavy transport equipment, such as ships, railway and
aerospace equipment, which tend to be volatile. Excluding heavy
transport equipment, orders dropped 1.2% from August and were 18.2%
weaker than in September last year. Orders for intermediate goods
dropped 2.1% in September from August, but orders for capital goods,
durable consumer goods and nondurable consumer goods all rose.
On balance the orders trends show that the zone is doing
better. As in the US a number of Zone economies did better on the back
of government schemes to boost auto sales coupled with scrappage
requirements; these programs are starting to lapse with some negative
consequences for orders and growth.
For the time being though the Euro-Area is on the mend. The
Markit PMIs showed that both MFG and Services sectors continued to
improve in November. Germany&#8217;s IFO report showed continued improvement
in November as well. The Markit data showed the rate of improvement is
slowing down. The bottom line for now is that improvement continues but
the pace of the recovery remains a keen issue and one on which incoming
reports have not been altogether optimistic or uniform. The
backtracking in the UK orders improvement and the slowdown in the
November Markit indices&#8217; improving trends are two recent pieces of
disappointing data.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup><thead><tr>
<th scope="col" colspan="10">
Euro-Area-13
and UK Industrial Orders</th>
</tr>
<tr>
<th scope="col" class="firstcol">Saar
except m/m
</th>
<th scope="col" colspan="3">Mo/Mo</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Sep &nbsp; 09</th>
<th scope="col">Aug 09</th>
</tr>
<tr>
<td class="firstcol">Ezone
Detail</td>
<td class="firstcol">Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG
Orders</td>
<td>1.5%</td>
<td>0.6%</td>
<td>4.4%</td>
<td>29.0%</td>
<td>35.8%</td>
<td>23.6%</td>
<td>19.1%</td>
<td>-16.5%</td>
<td>-23.2%</td>
</tr>
<tr>
</tr>
<tr>
<td class="firstcol" colspan="10">Memo:MFG</td>
</tr>
<tr class="odd">
<td class="firstcol">Total
Orders</td>
<td>1.5%</td>
<td>0.6%</td>
<td>4.4%</td>
<td>29.0%</td>
<td>35.8%</td>
<td>23.6%</td>
<td>19.1%</td>
<td>-16.5%</td>
<td>-23.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">E-13
Domestic MFG orders</td>
<td>6.5%</td>
<td>-3.2%</td>
<td>5.1%</td>
<td>38.3%</td>
<td>40.3%</td>
<td>22.4%</td>
<td>5.4%</td>
<td>-13.4%</td>
<td>-21.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">E-13
Foreign MFG orders</td>
<td>7.3%</td>
<td>-5.0%</td>
<td>5.0%</td>
<td>31.1%</td>
<td>32.8%</td>
<td>26.3%</td>
<td>13.9%</td>
<td>-17.3%</td>
<td>-24.9%</td>
</tr>
<tr>
<td class="firstcol">Countries:</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany
(MFG):</td>
<td>1.5%</td>
<td>2.5%</td>
<td>2.0%</td>
<td>26.9%</td>
<td>40.6%</td>
<td>29.8%</td>
<td>35.0%</td>
<td>-16.7%</td>
<td>-24.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">France(Ind):</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>42.3%</td>
<td>33.8%</td>
<td>6.0%</td>
<td>-5.6%</td>
<td>-14.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy
(Ind):</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-16.5%</td>
<td>-3.8%</td>
<td>-16.4%</td>
<td>-21.4%</td>
<td>-29.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK
(Engineering Industy):</td>
<td>2.3%</td>
<td>-15.1%</td>
<td>4.7%</td>
<td>-31.7%</td>
<td>-26.0%</td>
<td>-3.0%</td>
<td>-3.5%</td>
<td>-30.9%</td>
<td>-13.1%</td>
</tr>
</thead>
</table>
</body></html>

Euro-Area orders are still falling year-over-year. As the chart shows the Yr/Yr drop is being steadily mitigated. Both foreign-sourced orders and domestic orders (in-region orders) are rebounding smartly after their recession-induced [...]

Euro-Area Orders Continue To Claw Their Way Back

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124g.jpg" width="353">
As they have since June, gasoline prices moved sideways last week. The pump price for regular gasoline of $2.64 per gallon was near $2.63 averaged during June. Nevertheless, prices remain up from the December low of $1.61. This week, wholesale gasoline prices fell from last week. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Notwithstanding the stability of gasoline prices, crude oil prices have moved higher and light sweet crude (WTI) rose to an average $78.36 per barrel last week from $74.89 averaged last month and from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil fell to $76.56 per barrel.
Behind the stabilization in gasoline prices is a leveling of past gains in gasoline demand. Last week, it posted a 1.1% decline versus one year ago versus a 3.9% increase as of last month. Demand for residual fuel oil increased 23.0% y/y while distillate demand fell 10.6% y/y.
Natural gas prices have declined during the last four weeks to an average $3.35 per mmbtu (-49.9% y/y). They remained down by two-thirds from the high reached in early-July of last year of $13.19/mmbtu.

<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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/23/09</th>
<th scope="col">11/16/09</th>
<th scope="col">11/09/09</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>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.64</td>
<td>2.63</td>
<td>2.67</td>
<td>39.5%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>78.36</td>
<td>78.21</td>
<td>79.04</td>
<td>49.7%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

As they have since June, gasoline prices moved sideways last week. The pump price for regular gasoline of $2.64 per gallon was near $2.63 averaged during June. Nevertheless, prices remain up from the December low of $1.61. This week, [...]

Weekly Gasoline Prices Meander Sideways

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124e.jpg" align="right" border="0" height="265" width="353">
Consumers
were distressed this past winter. Malaise is the best word to describe
consumer confidence since then. The Conference Board indicated that
consumer confidence during November rose just 1.6% from October
following sharp declines during the prior five months. Though the level
of confidence is up sharply from this winter's low, it has moved
sideways since the spring. The Conference Board data can be found in
Haver's CBDB database.During the last ten years
there has been an 86% correlation between the level of consumer
confidence and the y/y change in real consumer spending.Consumers'
assessment of the current economic conditions slipped this month and
was near the historic low. It remained off by almost two-thirds from
one-year earlier. Jobs were seen as hard to get by 49.8% of respondents
and jobs were seen as plentiful by only 3.2% which was near the series'
historic low. Business conditions were seen as good by just 8.1% and
that also was near the series' low. Consumers who thought business
conditions were bad rose slightly to 45.7%. While off somewhat from its
high, the reading was still nearly the highest since 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124f.jpg" align="right" border="0" height="265" width="353">
The expectations component of confidence recovered a piece of its large
October decline and the index remained near the highest level since
late-2007. Fewer expected business conditions &amp; employment to
improve but a large deterioration from here also was not expected.
Expectations for the inflation rate in twelve months held stable at
5.3%, the lowest level since 2007 and down from last year's high of
7.7%. Interest rates in twelve months were expected to be higher by
51.3% of respondents, while a reduced 12.9% expected rates to fall. A
greatly increased 36.3% of respondents expected stock prices to rise.
Consumers continued to manage their spending plans
cautiously. A reduced 2.0% plan to buy a home during the next six
months while just 23.2% plan to buy a major appliance. That's versus
30.9% back in 2007. Only 4.4% plan to buy an automobile versus 6.0% in
2007. Just 2.1% plan to buy a new one.b&gt;Housing's
Great Fall: Putting Household Balance Sheets Back Together Again
from the Federal Reserve Bank of St. Louis is available <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board&nbsp;(SA, 1985=100) </th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>49.5</td>
<td>48.7</td>
<td>53.4</td>
<td>10.7</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>21.0</td>
<td>21.1</td>
<td>23.0</td>
<td>-50.4</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>68.5</td>
<td>67.0</td>
<td>73.7</td>
<td>48.3</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

Consumers were distressed this past winter. Malaise is the best word to describe consumer confidence since then. The Conference Board indicated that consumer confidence during November rose just 1.6% from October following sharp [...]

U.S. Consumer Confidence Gains M/M

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124c.jpg" align="right" border="0" height="265" width="353">The rise in
home prices slowed with the recent plateau in home sales. The September
S&amp;P/Case-Shiller Home Price Composite
Index of twenty metro-markets edged up 0.3% after an average 1.0% rise
during each of the prior three months. The latest increase lessened the
y/y decline to 9.4% from its worst of -19.0% in January. Consensus
expectations had been for a y/y decline of 9.1% for March. In addition,
prices were down by nearly one-third since the peak in May 2006. Not
seasonally adjusted prices rose 0.3% during September after a 1.2%
August increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124d.jpg" align="right" border="0" height="265" width="353">The
Case-Shiller composite index of home prices in 10
metropolitan areas, which has a longer history and dates back to 1987,
also firmed last month by 1.0% (-10.7% y/y). This measure also is down
by nearly one-third since the 2006 peak.
 The Case-Shiller index of 20
U.S. cities and their surrounding areas is value-weighted. A greater
index weight is assigned to more expensive homes and the series dates
back only to 2001. The S&amp;P/Case-Shiller home price series can
be found in Haver's USECON database and the city
data highlighted below is in the REGIONAL database.
The latest press release is available <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_102706.pdf">here</a>
. An overview of the S&amp;P/Case-Shiller home price series can be
found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.·&nbsp;Home
prices in some areas of the country have firmed lately though they
remain down year-to-year.
Prices in
Chicago were quite firm for the third straight month and rose 1.1%
(-10.7% y/y) and in San Francisco prices have been strong for five
months (-7.9% y/y). In San Diego prices also were up solidly for the
fourth month (-5.7% y/y) and prices in Minneapolis were quite strong
for the last four months. However, they remain off 11.3% from one year
ago. In Phoenix prices rose for the fourth straight month (-21.9% y/y).
In Los Angeles home prices also were stronger and rose for the fourth
month (-9.0% y/y).
The monthly S&amp;P Case Shiller Home Price
data can be found in Haver's USECON database and
the regional data is available in the REGIONAL database.
Do Macroeconomic Announcements Move Inflation
Forecasts?
from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/09/09/part2/Amstad.pdf">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">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">September m/m</th>
<th scope="col">August m/m</th>
<th scope="col">July m/m</th>
<th scope="col">Sept. 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">20 City Composite Index</td>
<td>0.3%</td>
<td>1.1%</td>
<td>1.1%</td>
<td>-9.4%</td>
<td>-15.7%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">&nbsp; Regional
Indicators</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Atlanta</td>
<td>0.5</td>
<td>0.7</td>
<td>1.6</td>
<td>-9.4</td>
<td>-8.5</td>
<td>0.7</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Boston</td>
<td>-0.2</td>
<td>1.0</td>
<td>0.5</td>
<td>-3.4</td>
<td>-5.7</td>
<td>-4.0</td>
<td>-1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Chicago</td>
<td>1.1</td>
<td>1.3</td>
<td>2.0</td>
<td>-10.7</td>
<td>-10.0</td>
<td>-1.0</td>
<td>6.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Dallas</td>
<td>-0.3</td>
<td>0.0</td>
<td>0.8</td>
<td>-1.2</td>
<td>-3.3</td>
<td>0.5</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Denver</td>
<td>0.2</td>
<td>0.6</td>
<td>0.6</td>
<td>-1.2</td>
<td>-4.9</td>
<td>-1.7</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Los Angeles</td>
<td>0.7</td>
<td>1.2</td>
<td>1.2</td>
<td>-9.0</td>
<td>-24.2</td>
<td>-5.2</td>
<td>11.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
New York</td>
<td>-0.2</td>
<td>0.3</td>
<td>0.9</td>
<td>-9.0</td>
<td>-7.4</td>
<td>-2.8</td>
<td>7.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco</td>
<td>1.7</td>
<td>2.5</td>
<td>3.0</td>
<td>-7.9</td>
<td>-24.3</td>
<td>-4.5</td>
<td>4.5</td>
</tr>
</tbody>
</table>

</body></html>

The rise in home prices slowed with the recent plateau in home sales. The September S&P/Case-Shiller Home Price Composite Index of twenty metro-markets edged up 0.3% after an average 1.0% rise during each of the prior three months. [...]

Case-Shiller Home Price Gains Slow After Three Months Of Strength

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124a.jpg" align="right" border="0" height="265" width="353">
The second
estimate of 3Q U.S. economic growth was lowered from the advance report
due to slower growth in domestic demand and greater deterioration in
the foreign trade deficit. The revision to 2.4% from 3.5% was greater
than expectations for a lessening to 2.9%. Nevertheless, growth last
quarter was the first positive figure since 4Q 2007.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091124b.jpg" align="right" border="0" height="265" width="353">
Accompanying
the GDP figure was the first estimate of 3Q corporate profits. The
10.6% rise versus 2Q was the third consecutive quarterly increase and
diminished the y/y decline to 6.7% from -25.1% at its worst in 4Q' 08.
Lower market interest rates lifted earnings in the financial sector by
more than one-third (25.4% y/y) and they tripled from year-end '08.
Earnings from the rest of the world increased 6.7% (-19.1% y/y) while
the end of the recession raised domestic nonfinancial profits by 2.0%
(-12.5% y/y) for the second quarterly increase.Deterioration
in the foreign trade deficit subtracted a greater 0.8 percentage points
from 3Q GDP growth after an initially estimated 0.5% subtraction.
Import growth was increased to 20.8% (-14.1% y/y) yet the gain in
exports also was revised up to 17.0% (-10.8% y/y).Domestic final demand growth also was revised down to
2.7% from 3.0%. Real PCE growth was revised down to 2.9% (-0.1% y/y)
from 3.1% as the Cash for Clunkers sales program gave slightly less
lift to vehicle sales as estimated earlier. Elsewhere, personal
consumption of furniture grew at an unrevised&nbsp; 6.3% (-5.9%
y/y) rate but the decline in spending on clothing &amp; shoes was
halved to 0.7% (-5.0% y/y). Services spending gained a slightly reduced
1.0% (0.4% y/y).On the fixed-investment side of
the GDP accounts, the quarterly rise in residential spending was
slightly reduced to 19.5% (-18.8% y/y). Business investment also fell
at a slightly increased 4.1% (-19.3% y/y) rate. Government investment
rose at an increased 3.1% rate (2.0% y/y) led by an 8.9% gain in
defense spending (5.2% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091127a.jpg" align="right" border="0" height="265" width="353">
The addition to 3Q
growth in GDP from inventories was unchanged at 0.9 percentage points.
The addition followed subtractions of 1.4 and 2.4 percentage points
during the prior two quarters, and was just the second positive
contribution to GDP growth in two years.The gain
in the GDP price deflator was lowered slightly to 0.5%. The PCE price
index was ticked lower to 2.7% (-0.7% y/y) and the rise in the overall
domestic final sales price index was brought down to 1.5% (-1.0% y/y).·
The U.S. National Income &amp; Product Account data are available
in Haver's USECON and the USNA
databases. Can the Term Spread Predict Output Growth and
Recessions? A Survey of the Literature from the Federal
Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Wheelock.pdf">here</a>.
<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/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09 Preliminary</th>
<th scope="col">3Q '09 Advance</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q 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">GDP</td>
<td>2.4</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.5</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Inventory
Effect</td>
<td>0.9</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>1.9</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.6</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Foreign
Trade Effect</td>
<td>-0.8</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.8</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>2.7</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.6</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>
</body></html>

The second estimate of 3Q U.S. economic growth was lowered from the advance report due to slower growth in domestic demand and greater deterioration in the foreign trade deficit. The revision to 2.4% from 3.5% was greater than [...]

Q3 GDP Growth Revised Down Due To Domestic Demand & Foreign Trade

Q3 GDP Growth Revised Down Due ToDomestic Demand & Foreign Trade

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123j.jpg" align="right" border="0" height="265" width="353">Thailand
continues to recover from recession. On a quarter to quarter basis the
third&nbsp; quarter Real Gross Domestic Product rose 1.35% compared
with 2.27% in the second quarter, as shown in the first
chart.&nbsp; The smaller increase in the third quarter was due in
part to a much greater increase in imports than in exports and an
increase in the pace of inventory liquidation.&nbsp; While exports
increased by 46 billion baht from the second to the third quarter,
imports rose by 48 billion bahts, reducing the favorable balance on
trade in goods and service by 2 billion bahts.&nbsp; The 17 billion
baht decline in inventories in the third quarter was almost double the
9 billion baht decline in the second quarter.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123k.jpg" align="right" border="0" height="265" width="353">
The
other components of GDP showed gains:&nbsp; Private Consumption was
up 1.7%, Government Consumption, 0.9% and Gross Fixed investment,
5.8%.&nbsp; The statistical discrepancy was up almost 25%, but
because of its small size, it has little impact on the rate of
growth.An increase in imports is frequently seen as the
beginning of a recovery or expansion of activity in most economies and
particularly in emerging economies.&nbsp; They need more raw
materials and machinery than they produce domestically to meet growing
domestic and foreign demands.&nbsp; The second chart shows
Thailand's imports of Mineral Fuels and Lubricants, Chemicals and
Machinery as an illustration of this type of
import.Both sets of data are found in Haver's EMERGEPR
database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
THAILAND&nbsp; </th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q/Q Change</th>
<th scope="col">Q/Q %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP (BIL BAHTS)</td>
<td>1067.5</td>
<td>1053.3</td>
<td>14.2</td>
<td>1.35</td>
</tr>
<tr>
<td class="firstcol">Private Consumption</td>
<td>562.6</td>
<td>553.0</td>
<td>9.6</td>
<td>1.74</td>
</tr>
<tr class="odd">
<td class="firstcol">Government Consumption</td>
<td>105.6</td>
<td>104.7</td>
<td>1.0</td>
<td>0.94</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>228.7</td>
<td>216.1</td>
<td>12.6</td>
<td>5.81</td>
</tr>
<tr class="odd">
<td class="firstcol">Change in Inventory</td>
<td>-17.4</td>
<td>-9.2</td>
<td>-8.2</td>
<td>-</td>
</tr>
<tr>
<td class="firstcol">Net Exports of Goods and
Services</td>
<td>180.4</td>
<td>182.7</td>
<td>-2.2</td>
<td>-</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>691.9</td>
<td>645.9</td>
<td>46.0.</td>
<td>4.12</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>511.5</td>
<td>463.2</td>
<td>48.2</td>
<td>-</td>
</tr>
<tr class="odd">
<td class="firstcol">Statistical Discrepancy</td>
<td>7.5</td>
<td>6.0</td>
<td>1.5</td>
<td>24.78</td>
</tr>
</tbody>
</table>
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Thailand continues to recover from recession. On a quarter to quarter basis the third quarter Real Gross Domestic Product rose 1.35% compared with 2.27% in the second quarter, as shown in the first chart. The smaller increase in the [...]

Thailand Adds To The Asian Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123i.jpg" align="left" border="0" height="265" width="353">
The Euro Area FLASH PMIs are on the rise in November. The
flash Services reading is at its highest reading since November 2007.
The MFG index is at its highest since March 2008. It is the second
consecutive MFG reading above 50 and the third consecutive reading
above 50 for services. Readings above 50 indicate expansion. 
 
However, the percentage increase in the Yr/Yr readings for MFG and for
services each have receded for two months running as the pace of the
recovery&#8217;s improvement is slowing. 
 
Since March of 2009 the MFG index has improved by 2.4 points per month
on average. Each monthly increase has been a gain of one point or
better until this month, November 2009, when the improvement was just
0.32 points. 
 
Over this same span the services index averaged a monthly increase of
1.66 per month. However, in June of 2009 the e-Zone Services measure
did decline by 0.17 points interrupting a string of increases. Except
for that drop this month&#8217;s rise of 0.82 is the weakest since March of
2009. 
 
Both services and MFG sectors continue to increase but are doing so at
increasing slower rates. This is despite the fact that they reside only
in the mid to low 60th percentile of their respective ranges, ranges
that extend back to July of 1998 for both of them (the MFG range does
have a bit longer history, however0. 
 
Manufacturing stands at a flash reading of 50.98 compared to an average
reading of 51.09 since July of 1998. For services the current 53.17
reading compares to an average reading of 53.69. Both readings are
slowing their pace of increase while still below their respective cycle
averages. This is not good news if there is any expectation of strong
recovery in Europe. Germany may be contributing to the slow down since
its own program to stimulate car purchases has wound down. Other
nations also had a car sales promotion programs that have wound down.
So maybe some of the slowing can be explained away. But that still
leaves a question about what will speed the pace of recovery back up.
If the answer is &#8216;nothing,&#8217; then the caveat does not amount to much.
For now recovery remain is gear but it is slowing. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="3">FLASH Readings</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3" class="firstcol">Markit
PMIs for the Euro
Area</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr>
<td class="firstcol">Nov-09</td>
<td>50.98</td>
<td>53.17</td>
</tr>
<tr>
<td class="firstcol">Oct-09</td>
<td>50.73</td>
<td>52.58</td>
</tr>
<tr>
<td class="firstcol">Sep-09</td>
<td>49.29</td>
<td>50.86</td>
</tr>
<tr>
<td class="firstcol">Aug-09</td>
<td>48.24</td>
<td>49.92</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">Segment
averages</td>
</tr>
<tr>
<td class="firstcol">3-Mo</td>
<td>49.42</td>
<td>52.04</td>
</tr>
<tr>
<td class="firstcol">6-Mo</td>
<td>46.30</td>
<td>49.29</td>
</tr>
<tr>
<td class="firstcol">12-Mo</td>
<td>40.50</td>
<td>45.59</td>
</tr>
<tr class="odd">
<td colspan="3" class="firstcol">136-Mo
Range</td>
</tr>
<tr>
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr>
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr>
<td class="firstcol">% Range</td>
<td>64.7%</td>
<td>60.3%</td>
</tr>
</tbody>
</table>
</body></html>

The Euro Area FLASH PMIs are on the rise in November. The flash Services reading is at its highest reading since November 2007. The MFG index is at its highest since March 2008. It is the second consecutive MFG reading above 50 and [...]

Euro Area Flash PMIs

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.

260205Z1.jpg

**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

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

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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