Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123e.jpg" align="right" border="0" height="265" width="353">
Overall, the U.S. unemployment rate touched 10.2% during
October, just shy of the 10.8% postwar-record reached in December 1982.
That, however, understates the severity of joblessness. In virtually
all 50 states, since 2007 there has been a doubling of the unemployment
rate. Currently, unemployment rates range from the high of 15.1% in
Michigan to the low of 4.2% in North Dakota. The jobless rate may even
rise further as it did after the last two recessions ended when the
labor force increased faster than employment. Conversely, a
"double-dip" recession this time, as some foresee, would raise
unemployment significantly higher.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123f.jpg" align="right" border="0" height="265" width="353">

Michigan tops the list of states with the highest unemployment
rate. (See table.) With its large exposure to the auto industry,
Michigan saw its unemployment rate more-than-double to 15.1%. Since
early last year, the number of unemployed in Michigan also has doubled
to 733,000.Last month's cash-for-clunkers vehicle sales incentive
program briefly stemmed the increase, but only a sustained rise in
sales will encourage vehicle manufacturers to increase hiring.
Amongst other large states, California has suffered the
enormously. The downturn in the high-tech sector and red-ink in the
state's budget has caused the unemployment rate also to
more-than-double to 12.5% from its low, but that understates the
severity of the situation. With its larger population, the rate
increase represents a 1.4 million gain in the number of unemployed.In
Florida, the severity of the unemployment rate's near-tripling to 11.2%
is due to a depressed tourism industry and reduced construction
activity. The number of unemployed rose by three-quarters of a million
persons. In Ohio, employment also relies heavily on the auto industry
though some stabilization is provided by the food-processing industry
and Wal-Mart's headquarters. Thus, the near-doubling of its
unemployment rate to 10.5% from last year reflects lower motor vehicle
production and an increase of roughly 300,000 in the number unemployed.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123g.jpg" align="right" border="0" height="265" width="353">

Perhaps a more diverse pool of industries has helped those
states with unemployment rates lower than the national average. In
Texas, with 12.1 million in the labor force, the strength in oil prices
and the stability of the food industry have held the unemployment rate
below the national average. Nevertheless, the number of unemployed has
risen by one-half million since its 2007 low and the jobless rate has
nearly doubled to 8.3%. In Massachusetts, with the workforce heavily
exposed to the education &amp; government sectors, the unemployment
rate also has held below the national average at 8.9%. Virginia also
has its disproportionate exposure to the government sector to help
explain a relatively low unemployment rate of 6.6% last month.
Nevertheless, the number of unemployed has doubled by 160,000.
Agriculture is the mainstay of North Dakota's economy which
has enabled its unemployment rate to remain the lowest in the country.
Nevertheless, at 4.2% the rate is up from the 3.0% low as the number of
unemployed rose by one-quarter to 15,100 from last year. In Nebraska,
unemployment also remained low due to a large agriculture sector as
well as large education &amp; health sectors.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123h.jpg" align="right" border="0" height="265" width="353">

Currently, the National Association of Business Economists
forecasts 3.0% growth in the economy for 2010. That would result in
little, if any, reduction in the unemployment rate since 3.0% barely
exceeds the economy's growth potential. Some near-term boost to GDP
growth could always occur due to a rebound in inventories, which have
been depressed, or from heightened government spending, a sure bet.
However, the more potent source for a quicker recovery would be
consumer spending, but two factors suggest that a sustained boost is
unlikely. For one, too much debt accumulation caused the savings rate
to crater from 1980 through 2008. It only recently has edged higher.
Secondly, the aging of the big-spending, baby-boom generation as a
percent of the total has been underway for more than ten years and will
continue. That means less force behind purchases of homes and consumer
durables. Thus, relatively high unemployment rates seem likely for the
foreseeable future.
The data used in this report can be found in Haver's EMPLR
and USECON databases.
The long and large decline in state employment growth
volatility from the Federal Reserve Bank
of Philadelphia can be found <a href="http://www.phil.frb.org/research-and-data/publications/working-papers/2009/wp09-9.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
(%)</a>&nbsp;</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Oct. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8" class="firstcol">&nbsp; Selected Highest
States</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Michigan</td>
<td>15.1</td>
<td>15.3</td>
<td>15.2</td>
<td>9.1</td>
<td>8.4</td>
<td>7.1</td>
<td>6.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Nevada</td>
<td>13.0</td>
<td>13.3</td>
<td>13.2</td>
<td>7.7</td>
<td>6.7</td>
<td>4.7</td>
<td>4.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;California</td>
<td>12.5</td>
<td>12.3</td>
<td>12.3</td>
<td>8.0</td>
<td>7.2</td>
<td>5.4</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;South
Carolina</td>
<td>12.1</td>
<td>11.7</td>
<td>11.4</td>
<td>7.8</td>
<td>6.9</td>
<td>5.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Florida</td>
<td>11.2</td>
<td>11.1</td>
<td>10.8</td>
<td>6.9</td>
<td>6.2</td>
<td>4.1</td>
<td>3.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Ohio</td>
<td>10.5</td>
<td>10.1</td>
<td>10.8</td>
<td>6.9</td>
<td>6.5</td>
<td>5.6</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">U.S. Average</td>
<td>10.2</td>
<td>9.8</td>
<td>9.7</td>
<td>6.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">&nbsp;Selected Lowest
States</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Indiana</td>
<td>9.8</td>
<td>9.7</td>
<td>9.9</td>
<td>6.4</td>
<td>5.9</td>
<td>4.6</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Massachusetts</td>
<td>8.9</td>
<td>9.3</td>
<td>9.1</td>
<td>5.8</td>
<td>5.3</td>
<td>4.5</td>
<td>4.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Texas&nbsp;</td>
<td>8.3</td>
<td>8.2</td>
<td>8.0</td>
<td>5.3</td>
<td>4.9</td>
<td>4.4</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Maryland</td>
<td>7.3</td>
<td>7.2</td>
<td>7.1</td>
<td>4.8</td>
<td>4.4</td>
<td>3.5</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Virginia</td>
<td>6.6</td>
<td>6.6</td>
<td>6.6</td>
<td>4.3</td>
<td>4.0</td>
<td>3.0</td>
<td>3.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;Nebraska</td>
<td>4.9</td>
<td>4.9</td>
<td>5.0</td>
<td>3.6</td>
<td>3.3</td>
<td>3.0</td>
<td>3.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;North
Dakota</td>
<td>4.2</td>
<td>4.1</td>
<td>4.3</td>
<td>3.2</td>
<td>3.1</td>
<td>3.1</td>
<td>3.2</td>
</tr>
</tbody>
</table>
</body></html>

Overall, the U.S. unemployment rate touched 10.2% during October, just shy of the 10.8% postwar-record reached in December 1982. That, however, understates the severity of joblessness. In virtually all 50 states, since 2007 there has [...]

Although Stresses Vary, All States Endure Doubling Of Unemployment

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123c.jpg" align="right" border="0" height="265" width="353">
The upward momentum in the U.S. economy sagged during the last
few months. That's the message from lower readings of the Chicago Fed
National Activity Index (CFNAI) from the Federal Reserve Bank of
Chicago. The index slipped again m/m after having improved sharply from
the January low. The October reading of -1.08 was off slightly from
-1.01 during September. Nevertheless, both figures are greatly improved
from the series' low of -4.13 reached this past January. Since 1970
there has been a 74% correlation between the level of the index and the
q/q change in real GDP but during the last ten years that correlation
has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index also slipped m/m but remained near
its highest level since February of 2008.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_november2009.pdf">here</a>.
The Chicago Fed indicated in its data release that the level
of the CFNAI "indicates low inflationary pressure from economic
activity over the coming year."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123d.jpg" align="right" border="0" height="265" width="353">

The Chicago Fed indicated that 32 of the series' individual
indicators made positive contributions to the October index while 53
made negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders.
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index improved during September after an upwardly
revised August reading. As a result, a discernable uptrend in the index
now is evident versus the June low. Indicators for the auto, steel, and
resource sectors improved while the reading for the machinery sector
hit a new low. The Chicago Federal Reserve figures are available in
Haver's SURVEYS database.
Rescuing asset-backed securities markets from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfljanuary2010_270.pdf">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">October '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CFNAI</td>
<td>-1.08</td>
<td>-1.01</td>
<td>-0.63</td>
<td>-1.48</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Moving
Average</td>
<td>-0.91</td>
<td>-0.67</td>
<td>-0.94</td>
<td>-2.31</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Personal Consumption &amp; Housing&nbsp;</td>
<td>-0.52</td>
<td>-0.61</td>
<td>-0.38</td>
<td>-0.46</td>
<td>-0.33</td>
<td>-0.10</td>
<td>0.06</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Employment Unemployment &amp; Hours</td>
<td>-0.46</td>
<td>-0.60</td>
<td>-0.53</td>
<td>-0.77</td>
<td>-0.62</td>
<td>-0.15</td>
<td>0.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Production &amp; Income</td>
<td>-0.07</td>
<td>0.23</td>
<td>0.53</td>
<td>0.07</td>
<td>-0.55</td>
<td>-0.05</td>
<td>-0.01</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Sales, Inventories &amp; Orders</td>
<td>-0.02</td>
<td>-0.04</td>
<td>-0.25</td>
<td>-0.31</td>
<td>-0.24</td>
<td>-0.06</td>
<td>-0.01</td>
</tr>
</tbody>
</table>

</body></html>

The upward momentum in the U.S. economy sagged during the last few months. That's the message from lower readings of the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago. The index slipped again m/m [...]

Chicago Fed Index Eases Again Pointing Towards Softer GDP Growth

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 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123a.jpg" align="right" border="0" height="265" width="353">
Improved affordability is a great help when buying a home. The
National Association of Realtors reported that October sales of
existing homes rose sharply to the highest level since July
2007. The 10.1% m/m increase to 6.100M units (SAAR) followed an 8.8%
rise during September and it raised sales to the highest level since
February 2007. Moreover, sales were up by more than one-third from the
January low. The gain in October home sales outpaced Consensus
expectations for a rise to 5.70M. Total sales include sales of condos
and co-ops.
Sales of existing single-family homes alone increased a sharp
9.7% to 5.330M (21.4% y/y) last month and were up 20.7% from the
January low. (These data have a longer history than the total sales
series). Sales of condos and co-ops rose 13.2% and were up by nearly
one-half from last October.
Sales have been helped by a recently extended tax credit for
first-time home buyers. The credit of up to $8,000 runs though early
next year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091123b.jpg" align="right" border="0" height="265" width="353">

The median price of all existing homes fell for the fourth
straight month, to $173,100. Though prices were still lower than the
year-ago level, they have risen 5.0% from the January low. The median
price for a single-family home alone fell to $173,100 (-6.8% y/y).
These price declines have sharply raised home affordability. During
September the composite index of home affordability rose again and was
up 18.2% from the year ago level.
The number of unsold homes (condos &amp; single-family)
for sale fell 3.7% (-14.9% y/y) during October fell to the lowest level
since January 2007. At the current sales rate there was a 7.0 months'
supply of homes on the market which was nearly the lowest since
early-2007. The latest figure was down from a high of 11.3 months early
last year. For single-family homes, the inventory fell 3.2% m/m (-14.3%
y/y). At the current sales rate there was a 6.8 month's supply of
single-family homes on the market, the lowest since early-2007.
The data on existing home sales, prices and affordability can
be found in Haver's USECON database. The regional
price, affordability and inventory data is available in the REALTOR
database.
Preventing a Repeat of the Money Market Meltdown of
the Early-1930s from the Federal Reserve Bank of Dallas can
be found <a href="http://dallasfed.org/research/papers/2009/wp0904.pdf">here</a><a href="http://dallasfed.org/research/papers/2009/wp0904.pdf">.
</a><table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Oct. Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>6,100</td>
<td>5,540</td>
<td>5,090</td>
<td>23.5%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>1,060</td>
<td>950</td>
<td>910</td>
<td>27.7</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,430</td>
<td>1,250</td>
<td>1,140</td>
<td>28.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,300</td>
<td>2,040</td>
<td>1,890</td>
<td>25.7</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,310</td>
<td>1,290</td>
<td>1,150</td>
<td>12.0</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>5,330</td>
<td>4,860</td>
<td>4,470</td>
<td>21.4</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>173,100</td>
<td>176,000</td>
<td>177,300</td>
<td>-7.1</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
</body></html>

Improved affordability is a great help when buying a home. The National Association of Realtors reported that October sales of existing homes rose sharply to the highest level since July 2007. The 10.1% m/m increase to 6.100M units [...]

U.S. Existing Home Sales Surge To Highest Since 2007 As Prices Fall Again

U.S. Existing Home Sales Surge ToHighest Since 2007 As Prices Fall Again

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120c.jpg" align="left" border="0" height="265" width="353">
Orders in Italy and in France were up strongly in September
but on different causes. Both posted an orders rise in excess of five
percent on the month. But Italy&#8217;s orders were boosted by a 7% gain in
foreign orders; in France foreign orders rose by just 0.3%. Over three
months Italian foreign orders are up at a 25% annual rate while
domestic orders have sunk, dropping at an 18% annual rate. French
foreign orders are very weak over the past two months but an order
spurt in July keeps its three-month growth rate for foreign orders
ahead of its domestic order growth for now. Yr/Yr Italian domestic and
foreign orders are at similar rates of growth with both declining by
about 21%. Over the past year France&#8217;s foreign orders are weaker than
total orders as domestic orders have buoyed the economy. 
 
As a result overall French orders are up at an increasing strong pace.
Italian orders are making a slower and less decisive turn higher. 
 
On balance e-Zone countries are showing a turn for the better. Italy is
lagging. But the Zone seems to be making a sustained move to better
growth. France is one of the strongest EMU members and it has a large
rise in its fiscal deficit to show for it. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="7">Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar exept m/m</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.2%</td>
<td>-8.6%</td>
<td>2.4%</td>
<td>-5.8%</td>
<td>-3.8%</td>
<td>-21.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>7.0%</td>
<td>-12.8%</td>
<td>13.3%</td>
<td>25.2%</td>
<td>9.1%</td>
<td>-21.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Domestic</td>
<td>4.2%</td>
<td>-6.2%</td>
<td>-2.8%</td>
<td>-18.5%</td>
<td>-10.1%</td>
<td>-21.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sales</td>
<td>2.3%</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>7.6%</td>
<td>-1.1%</td>
<td>-17.9%</td>
</tr>
<tr class="grey1">
<td colspan="7">French Orders</td>
</tr>
<tr class="grey4">
<td class="firstcol">Saar exept m/mSep-</td>
<td>Sep-09</td>
<td>Aug-09&nbsp;</td>
<td>Jul-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>5.7%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>67.4%</td>
<td>33.8%</td>
<td>-5.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>0.3%</td>
<td>0.1%</td>
<td>14.5%</td>
<td>74.8%</td>
<td>40.8%</td>
<td>-14.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">IP xConstruct</td>
<td>-1.6%</td>
<td>3.0%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>9.2%</td>
<td>-11.0%</td>
</tr>
</tbody>
</table>
</body></html>

Orders in Italy and in France were up strongly in September but on different causes. Both posted an orders rise in excess of five percent on the month. But Italy’s orders were boosted by a 7% gain in foreign orders; in France foreign [...]

Italian and French Industrial Orders Are Up In September

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120a.jpg" width="353">
The leaders haven&#39;t missed one yet in their sixty year history. Therefore, the probability is high that economic recovery is near for the U.S. Released yesterday, the Conference Board&#39;s Index of Leading Economic Indicators rose 0.3% in October. That followed an unrevised 1.0% September increase and was the seventh gain in a row. Moreover, the 10.2% (centered) rate of increase during the last six months was nearly the strongest since early-1983. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, consumer and capital goods orders.
The breadth of increase amongst the component series sagged a bit last month. Sixty percent of the components rose during October versus last month&#39;s reading of 75%. During the most recent six months, however, 80% to 90% of the series rose. Prominent in last month&#39;s increase was the steeper interest rate yield curve. The money supply, stock prices, hours worked, jobless insurance claims and orders for consumer goods contributed to the index&#39;s rise as well. These gains were offset by lower capital goods orders, lower building permits, quicker vendor performance, and lower consumer expectations.
Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators. They were unchanged during October after a slight September decline. During the last six months the 1.4% rate of decline in the coincident series compares with a shortfall of 8.0% at its worst in January. Prompting the moderation have been slight increases in industrial production, real personal income and higher business sales as well as fewer declines in payroll employment.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091120b.jpg" width="353">
In a continued sign that excesses in the U.S. economy are falling, the lagging index has been down since December of last year. Leading the decline has been lower commercial &amp; industrial loans outstanding as well as less consumer credit. The ratio of coincident-to-lagging indicators (a measure of economic excess) also continued higher for the seventh straight month to the highest level since November.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
The Peak Oil Debate from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.3</td>
<td>1.0</td>
<td>0.4</td>
<td>10.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>-0.1</td>
<td>0.1</td>
<td>-1.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-6.3</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

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

U.S. Leading Indicators Continue To Signal Economic Recovery

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

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119c.jpg" align="right" border="0" height="265" width="353">
Layoffs from the U.S. workforce held steady last week at the
recent low. That's according to the Labor Department which reported
that initial claims for unemployment insurance equaled the prior week's
upwardly revised level of 505,000. Claims have not been lower since the
first week of January and have fallen sharply from the peak reached in
March of 674,000 claims. The four-week moving average of claims fell to
514,000 and the latest weekly figure about matched Consensus
expectations.
The latest figure covers the survey week for November nonfarm
payrolls and claims fell 26,000 (4.9%) from the October period. During
the last ten years there has been a negative 85% correlation between
level of initial claims for jobless insurance the m/m change in nonfarm
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119d.jpg" align="right" border="0" height="265" width="353">

Continuing claims for unemployment insurance during the latest
week fell 39,000 to their lowest level since mid-March. The decline
reflects the improved job market but may also be a function of the
exhaustion of benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell modestly to 5,711,500 and have fallen 18.7% from
their late-June peak. This series dates back to 1966.
Extended benefits for unemployment insurance rose fell
modestly w/w but averaged 543,645 last month versus 456,982 during
September.
The insured rate of unemployment held steady at 4.3% and
matched its lowest since late-March. The rate reached a high of 5.2%
during late-June. During the last ten years, there has been a 93%
correlation between the level of the insured unemployment rate and the
overall rate of unemployment published by the Bureau of Labor
Statistics.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091119e.jpg" align="left" border="0" height="265" width="353">

The highest insured unemployment rates in the week ending
October 31 were in Puerto Rico (6.1%), Oregon (5.5), Nevada (5.2),
California (5.0), Alaska (5.0), Arkansas (4.9), Wisconsin (4.9),
Pennsylvania (4.8), Michigan (4.8), North Carolina (4.6), and South
Carolina (4.6). The lowest insured unemployment rates were in North
Dakota (1.1%), South Dakota (1.2), Virginia (2.0), Texas (2.5), Maine
(2.6), Wyoming (2.8), Ohio (3.1), Maryland (3.1), New York (3.4),
Mississippi (3.6) and Florida (3.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/14/09</th>
<th scope="col">11/07/09</th>
<th scope="col">10/31/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>505</td>
<td>505</td>
<td>514</td>
<td>-5.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,611</td>
<td>5,650</td>
<td>39.5%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.3</td>
<td>4.3</td>
<td>3.1(11/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

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

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

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.

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**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.

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**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.

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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

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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.

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**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

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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.

Economy in Brief

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