Tom Moeller

d less evident at the end of last year's holiday shopping season. December retail sales slipped 0.3% last month though the November increase was revised up to 1.8% from 1.3% reported last month. The latest figure was weaker than [...]

U.S. Retail Sales Weaken AtYearend But 2009 Improved

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113f.jpg" align="left" border="0" height="265" width="353">
Europe&#8217;s recovery remains on track in November as industrial
production has risen in all the large EMU states. The UK, an EU member,
only saw a very minor set back to MFG IP with output dropping by 0.1%
in November. Of the largest EMU states, the rise in the Italy was
disappointing at just 0.2%. The UK&#8217;s small drop actually out did
expectations.
Year-over-year the IP drops have been trimmed to the range of
-4% to -10% for this group of countries. Despite the set back to UK IP
in November at -5.4% it demonstrates one of the smaller Yr/Yr drops in
IP and exhibits a strong improvement from its result in October (-7.8%,
Yr/Yr). All large countries show an improvement in their Yr/Yr drop in
November compared to October and for most the difference is large.
The chart above shows how strong the recoveries have been.
Despite all that strength over the last 3- and 6-months, 2009 has been
a very bad year for Europe.
German GDP is just reported to have posted an outsized drop of
5% in 2009 as its exports and investment goods sectors were hard hit.
As it was, government programs produced a boost that kept the steep GDP
decline from being even larger. Public consumption rose by 2.7% from
2008 while private consumption edged ahead by just 0.2%.
The recovery in IP is however a good development. Germany&#8217;s
industrial sector depends on exports which fell by 14.7% in 2009.
Exports have begun to get traction again and IP is on the rise as a
result. 2010 promises to be a much better year, but then 2009 put all
of Europe in a very deep hole and the real question is not 'Will 2010
be better?' but, 'How much better will 2010 be?' That is not yet
resolved and is a point of some contention. So far, good strong growth
is in train and seems to have staying power. Perhaps more optimism is
warranted.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">Main
Euro-Area Countries and UK IP in MFG </th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 
Date</td>
</tr>
<tr class="grey1">
<td class="firstcol"> Germany:</td>
<td>0.8%</td>
<td>-1.8%</td>
<td>3.6%</td>
<td>10.6%</td>
<td>16.6%</td>
<td>9.1%</td>
<td>18.6%</td>
<td>-9.1%</td>
<td>-13.7%</td>
<td>8.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France: 
IPxConstruct'n</td>
<td>1.1%</td>
<td>-0.6%</td>
<td>-1.2%</td>
<td>-2.6%</td>
<td>4.2%</td>
<td>6.1%</td>
<td>8.6%</td>
<td>-3.8%</td>
<td>-8.0%</td>
<td>0.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>1.0%</td>
<td>-5.2%</td>
<td>-15.3%</td>
<td>6.4%</td>
<td>7.0%</td>
<td>5.9%</td>
<td>-10.2%</td>
<td>-13.2%</td>
<td>-2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain</td>
<td>1.2%</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-5.5%</td>
<td>-20.2%</td>
<td>17.9%</td>
<td>-0.2%</td>
<td>-3.9%</td>
<td>-13.0%</td>
<td>-14.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK: EU
member</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>6.1%</td>
<td>-1.8%</td>
<td>0.9%</td>
<td>-0.4%</td>
<td>-5.4%</td>
<td>-7.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
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Europe’s recovery remains on track in November as industrial production has risen in all the large EMU states. The UK, an EU member, only saw a very minor set back to MFG IP with output dropping by 0.1% in November. Of the largest EMU [...]

Industrial Output Is Making Continued Gains In Europe

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113c.jpg" style="width: 353px; height: 265px;" align="right">Earlier
improvement in small business' optimism slipped again last month. The
National Federation of Independent Business (NFIB) reported their
December small business optimism index dipped 0.3% to 88.0. This second
consecutive slight decline followed several months of increase after
reaching a March low of 81.0.&nbsp;During the last ten years, there
has been an 85% correlation between the level of the NFIB index and the
two-quarter change in real GDP.
 Credit conditions remained as tight as
they've been since the "credit crunch" recession of 1980. The
percentage of firms reporting that credit was harder to get was stable
m/m at a net 15 but that was roughly triple the percentage from 1994 to
2007. The percent borrowing at least once last quarter was stable at
33% but that was down from the high of 46% during 2006.
The percentage
of small businesses expecting the economy to improve dipped slightly
m/m to 2 after a sharp November decline. The latest was down from the
May high of 12. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113d.jpg" style="width: 353px; height: 265px;" align="right">
The percentage which thought that now was a good time
to expand the business also slipped to 7 though it remained sharply
improved from this winter.
 Hiring intentions have responded negatively
to recent weakness in overall business sentiment. The percentage of
firms planning to raise employment remained in a net-layoff region,
though it has improved from the March low. For now, the percentage of
firms with one or more job openings improved modestly to 10% during
December. During the last ten years there has been a 74% correlation
between the NFIB employment percentage and the six-month change in
nonfarm payrolls. Also stable in the negative region was the percentage
expecting credit conditions to ease.
On the pricing front deflation
continued. The percentage of firms actually raising
prices at -22% (indicating deflation) slipped from the prior several
months and was near the record low. During the last ten years there has
been a 60% correlation between the six-month change in the producer
price index and the level of the NFIB price index<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113e.jpg" style="width: 353px; height: 265px;" align="right">

The
percentage of firms planning to raise prices
slipped again to a net 3 though that remained up from the March low of
zero. Finally, the percentage planning to raise worker compensation
fell to 1.
The largest, single most important problems seen by
business were poor sales (34%), taxes (20%, near its highest level
since 2007), government requirements (13%), insurance cost &amp;
availability (7%), competition from large businesses (6%) and inflation
(2%).
About 24 million small businesses exist in the United
States. Small business creates 80% of all new jobs in America and the
NFIB figures can be found in Haver's SURVEYS
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.0</td>
<td>88.3</td>
<td>89.1</td>
<td>3.3%</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>2</td>
<td>3</td>
<td>11</td>
<td>-13</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>10</td>
<td>8</td>
<td>8</td>
<td>14</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>15</td>
<td>15</td>
<td>14</td>
<td>12</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Pric1es (Net)</td>
<td>-22</td>
<td>-17</td>
<td>-17</td>
<td>-6</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>

</body></html>

Earlier improvement in small business' optimism slipped again last month. The National Federation of Independent Business (NFIB) reported their December small business optimism index dipped 0.3% to 88.0. This second consecutive slight [...]

U.S. Small Business Optimism Slips Again As Credit Remains Tight

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113a.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics continued to indicate little improvement in hiring,
but layoffs have diminished. In its Job Openings &amp; Labor
Turnover Survey (JOLTS) job availability during November fell 6.1% from
October and is off 27.1% year-to-year. The series dates back to
December 2000.&nbsp;As a result of the decline the job
openings rate fell to 1.8% and remained off sharply from the
3.1% rate before the current recession began. The job
openings rate is the number of job openings on the last business day of
the month as a percent of total employment plus job openings.
The service sector weakened last month. The number of retail
job
openings fell 15.8% (-49.3% y/y) and the number of professional
&amp; business service jobs fell 9.2% (-13.7% y/y). Leisure
&amp; hospitality jobs also were off, by 7.8% (-21.2% y/y), but
educational &amp; health service jobs rose 4.2% (-21.7% y/y). Even
the number of government sector job openings fell 9.8% (-10.3% y/y).
Countering weakness in service sector hiring was the factory sector
where job openings rose for the fourth consecutive month but they remained off 28.6% y/y. 
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113b.jpg" style="width: 353px; height: 265px;" align="right">
Construction
sector job openings were firm for the third of the last four months and
posted an 11.6% (+1.3% y/y) increase.
 The hires rate
picked up slightly m/m to 3.2% and was improved from the series' low of
3.0% last spring.&nbsp;The hires rate is the number of
hires during the month divided by employment.&nbsp;The
actual number of hires also rose 3.2% m/m but was down 1.2%
year-to-year. Professional &amp; business service sector hires rose
14.1% (7.2% y/y) while leisure &amp; hospitality hires rose 8.4%
(4.0% y/y). Factory sector hiring slipped 0.8% and was off a diminished
5.4% y/y while construction sector hiring also dipped m/m (-10.0%
y/y).
 The job separations rate increased
modestly
from the series' low to 3.3% with the actual number of separations off
10.8% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements. The
layoff rate alone held steady at 1.6% for the third consecutive month.
That was down sharply from the rate's high of 1.9% last winter.
 The
JOLTS survey dates only to December 2000 but has followed the movement
in nonfarm payrolls, though the actual correlation between the two
series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM" style="color: white;">JOLTS (Job Openings &amp; Labor
&nbsp;Turnover Survey)</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8" class="firstcol">Job Openings, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.9</td>
<td>1.9</td>
<td>2.4</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,415</td>
<td>2,571</td>
<td>2,586</td>
<td>3,311</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Hires, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.2</td>
<td>3.1</td>
<td>3.1</td>
<td>3.1</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,176</td>
<td>4,045</td>
<td>4,061</td>
<td>4,226</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Layoffs &amp;
Discharges, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.6</td>
<td>1.6</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,054</td>
<td>2,128</td>
<td>2,128</td>
<td>2,253</td>
<td>24,362</td>
<td>22,613</td>
<td>21,546</td>
</tr>
</tbody>
</table>

</body></html>

The Bureau of Labor Statistics continued to indicate little improvement in hiring, but layoffs have diminished. In its Job Openings & Labor Turnover Survey (JOLTS) job availability during November fell 6.1% from October and is off [...]

JOLTS: U.S. Job Openings Remain At Series' Low

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113a.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics continued to indicate little improvement in hiring,
but layoffs have diminished. In its Job Openings &amp; Labor
Turnover Survey (JOLTS) job availability during November fell 6.1% from
October and is off 27.1% year-to-year. The series dates back to
December 2000.&nbsp;As a result of the decline the job
openings rate fell to 1.8% and remained off sharply from the
3.1% rate before the current recession began. The job
openings rate is the number of job openings on the last business day of
the month as a percent of total employment plus job openings.
The service sector weakened last month. The number of retail
job
openings fell 15.8% (-49.3% y/y) and the number of professional
&amp; business service jobs fell 9.2% (-13.7% y/y). Leisure
&amp; hospitality jobs also were off, by 7.8% (-21.2% y/y), but
educational &amp; health service jobs rose 4.2% (-21.7% y/y). Even
the number of government sector job openings fell 9.8% (-10.3% y/y).
Countering weakness in service sector hiring was the factory sector
where job openings rose for the fourth consecutive month but they remained off 28.6% y/y. 
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113b.jpg" style="width: 353px; height: 265px;" align="right">Construction
sector job openings were firm for the third of the last four months and
posted an 11.6% (+1.3% y/y) increase.
 The hires rate
picked up slightly m/m to 3.2% and was improved from the series' low of
3.0% last spring.&nbsp;The hires rate is the number of
hires during the month divided by employment.&nbsp;The
actual number of hires also rose 3.2% m/m but was down 1.2%
year-to-year. Professional &amp; business service sector hires rose
14.1% (7.2% y/y) while leisure &amp; hospitality hires rose 8.4%
(4.0% y/y). Factory sector hiring slipped 0.8% and was off a diminished
5.4% y/y while construction sector hiring also dipped m/m (-10.0%
y/y).
 The job separations rate increased
modestly
from the series' low to 3.3% with the actual number of separations off
10.8% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements. The
layoff rate alone held steady at 1.6% for the third consecutive month.
That was down sharply from the rate's high of 1.9% last winter.
 The
JOLTS survey dates only to December 2000 but has followed the movement
in nonfarm payrolls, though the actual correlation between the two
series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM" style="color: white;">JOLTS (Job Openings &amp; Labor
&nbsp;Turnover Survey)</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Nov. '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8" class="firstcol">Job
Openings, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.9</td>
<td>1.9</td>
<td>2.4</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,415</td>
<td>2,571</td>
<td>2,586</td>
<td>3,311</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Hires,
Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.2</td>
<td>3.1</td>
<td>3.1</td>
<td>3.1</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,176</td>
<td>4,045</td>
<td>4,061</td>
<td>4,226</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Layoffs
&amp;
Discharges, Total</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.6</td>
<td>1.6</td>
<td>1.6</td>
<td>1.7</td>
<td>1.5</td>
<td>1.4</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,054</td>
<td>2,128</td>
<td>2,128</td>
<td>2,253</td>
<td>24,362</td>
<td>22,613</td>
<td>21,546</td>
</tr>
</tbody>
</table>

U.S. Small Business Optimism Slips
Again As Credit Remains Tight 
by <a href="/comment/Moeller.html">Tom
Moeller</a> January 13, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113c.jpg" style="width: 353px; height: 265px;" align="right">Earlier
improvement in small business' optimism slipped again last month. The
National Federation of Independent Business (NFIB) reported their
December small business optimism index dipped 0.3% to 88.0. This second
consecutive slight decline followed several months of increase after
reaching a March low of 81.0.&nbsp;During the last ten years, there
has been an 85% correlation between the level of the NFIB index and the
two-quarter change in real GDP.
 Credit conditions remained as tight as
they've been since the "credit crunch" recession of 1980. The
percentage of firms reporting that credit was harder to get was stable
m/m at a net 15 but that was roughly triple the percentage from 1994 to
2007. The percent borrowing at least once last quarter was stable at
33% but that was down from the high of 46% during 2006.
The percentage
of small businesses expecting the economy to improve dipped slightly
m/m to 2 after a sharp November decline. The latest was down from the
May high of 12. <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113d.jpg" style="width: 353px; height: 265px;" align="right">
The percentage which thought that now was a good time
to expand the business also slipped to 7 though it remained sharply
improved from this winter.
 Hiring intentions have responded negatively
to recent weakness in overall business sentiment. The percentage of
firms planning to raise employment remained in a net-layoff region,
though it has improved from the March low. For now, the percentage of
firms with one or more job openings improved modestly to 10% during
December. During the last ten years there has been a 74% correlation
between the NFIB employment percentage and the six-month change in
nonfarm payrolls. Also stable in the negative region was the percentage
expecting credit conditions to ease.
On the pricing front deflation
continued. The percentage of firms actually raising
prices at -22% (indicating deflation) slipped from the prior several
months and was near the record low. During the last ten years there has
been a 60% correlation between the six-month change in the producer
price index and the level of the NFIB price index<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113e.jpg" style="width: 353px; height: 265px;" align="right">

The
percentage of firms planning to raise prices
slipped again to a net 3 though that remained up from the March low of
zero. Finally, the percentage planning to raise worker compensation
fell to 1.
The largest, single most important problems seen by
business were poor sales (34%), taxes (20%, near its highest level
since 2007), government requirements (13%), insurance cost &amp;
availability (7%), competition from large businesses (6%) and inflation
(2%).
About 24 million small businesses exist in the United
States. Small business creates 80% of all new jobs in America and the
NFIB figures can be found in Haver's SURVEYS
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.0</td>
<td>88.3</td>
<td>89.1</td>
<td>3.3%</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>2</td>
<td>3</td>
<td>11</td>
<td>-13</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>10</td>
<td>8</td>
<td>8</td>
<td>14</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>15</td>
<td>15</td>
<td>14</td>
<td>12</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Pric1es (Net)</td>
<td>-22</td>
<td>-17</td>
<td>-17</td>
<td>-6</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>

Industrial Output Is Making
Continued Gains In Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> January 13, 2010


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100113f.jpg" align="left" border="0" height="265" width="353">
Europe&#8217;s recovery remains on track in November as industrial
production has risen in all the large EMU states. The UK, an EU member,
only saw a very minor set back to MFG IP with output dropping by 0.1%
in November. Of the largest EMU states, the rise in the Italy was
disappointing at just 0.2%. The UK&#8217;s small drop actually out did
expectations.
Year-over-year the IP drops have been trimmed to the range of
-4% to -10% for this group of countries. Despite the set back to UK IP
in November at -5.4% it demonstrates one of the smaller Yr/Yr drops in
IP and exhibits a strong improvement from its result in October (-7.8%,
Yr/Yr). All large countries show an improvement in their Yr/Yr drop in
November compared to October and for most the difference is large.
The chart above shows how strong the recoveries have been.
Despite all that strength over the last 3- and 6-months, 2009 has been
a very bad year for Europe.
German GDP is just reported to have posted an outsized drop of
5% in 2009 as its exports and investment goods sectors were hard hit.
As it was, government programs produced a boost that kept the steep GDP
decline from being even larger. Public consumption rose by 2.7% from
2008 while private consumption edged ahead by just 0.2%.
The recovery in IP is however a good development. Germany&#8217;s
industrial sector depends on exports which fell by 14.7% in 2009.
Exports have begun to get traction again and IP is on the rise as a
result. 2010 promises to be a much better year, but then 2009 put all
of Europe in a very deep hole and the real question is not 'Will 2010
be better?' but, 'How much better will 2010 be?' That is not yet
resolved and is a point of some contention. So far, good strong growth
is in train and seems to have staying power. Perhaps more optimism is
warranted.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">Main
Euro-Area Countries and UK IP in MFG </th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Nov 
09</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q:4 
Date</td>
</tr>
<tr class="grey1">
<td class="firstcol"> Germany:</td>
<td>0.8%</td>
<td>-1.8%</td>
<td>3.6%</td>
<td>10.6%</td>
<td>16.6%</td>
<td>9.1%</td>
<td>18.6%</td>
<td>-9.1%</td>
<td>-13.7%</td>
<td>8.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France: 
IPxConstruct'n</td>
<td>1.1%</td>
<td>-0.6%</td>
<td>-1.2%</td>
<td>-2.6%</td>
<td>4.2%</td>
<td>6.1%</td>
<td>8.6%</td>
<td>-3.8%</td>
<td>-8.0%</td>
<td>0.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>1.0%</td>
<td>-5.2%</td>
<td>-15.3%</td>
<td>6.4%</td>
<td>7.0%</td>
<td>5.9%</td>
<td>-10.2%</td>
<td>-13.2%</td>
<td>-2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain</td>
<td>1.2%</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-5.5%</td>
<td>-20.2%</td>
<td>17.9%</td>
<td>-0.2%</td>
<td>-3.9%</td>
<td>-13.0%</td>
<td>-14.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK: EU
member</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>6.1%</td>
<td>-1.8%</td>
<td>0.9%</td>
<td>-0.4%</td>
<td>-5.4%</td>
<td>-7.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
</body></html>

JOLTS: U.S. Job Openings Remain AtSeries' Low

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112i.jpg" style="width: 353px; height: 265px;" align="right">Industrial
production in India increased 3.0% from 298.8 (FY 1993=100) in October
to 307.8 in November and was 11.7% greater than November
2008.&nbsp; This follows October's year over year increase of
10.4%.&nbsp; The production of electricity was down 1.7% for the
month but was 3.3% above the year ago level.&nbsp; Mining
production increased less than a third of a percent in November but was
almost 10 above the year ago level.&nbsp; Production in the
manufacturing sector was strong, increasing 4.2% in the month and 12.7%
over a year ago.&nbsp; The trends in total production and its major
components over the past six years are shown in the first
chart.&nbsp; The rising trend in production halted in 2008 and
early 2009, but never actually reversed into a decline.
Industrial
production for India is also reported for Market Groups, some of which
are shown in the second chart.&nbsp; (Recent levels and percentage
changes for those market groups not shown in the chart are shown in the
table below.) Production of consumer durables was a standout in
November with production up 14.0%.&nbsp; A steadily increasing rate
of production has brought the production of consumer durable goods
37.4% above that of November 2008&nbsp;&nbsp; Although capital
goods production increased only 0.39% in the month of November it was
11.6% greater than in November 2008.&nbsp; There was a similar
pattern in the production of Intermediate Goods, which increased 1.5%
in November but was 19.4% above the year ago
level.
 Rising industrial production in the first
two months of the fourth quarter bodes well for growth in the total
economy in the fourth quarter.&nbsp; Industrial production has
accounted for between 18% and 20% of GDP over the past six years as
shown in the third chart.&nbsp;&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112k.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (FY1993=100)</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov 08</th>
<th scope="col">M/M % Chg</th>
<th scope="col">Y/Y % Chg</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total</td>
<td>307.8</td>
<td>298.8</td>
<td>275.5</td>
<td>3.01</td>
<td>11.72</td>
<td>275.0</td>
<td>263.3</td>
<td>239.6</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>194.0</td>
<td>193.4</td>
<td>176.6</td>
<td>0.31</td>
<td>9.85</td>
<td>175.5</td>
<td>169.2</td>
<td>159.9</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>333.0</td>
<td>319.7</td>
<td>295.5</td>
<td>4.16</td>
<td>12.69</td>
<td>294.9</td>
<td>282.0</td>
<td>255.0</td>
</tr>
<tr>
<td class="firstcol">Electricity</td>
<td>232.2</td>
<td>236.7</td>
<td>224.7</td>
<td>-1.69</td>
<td>3.34</td>
<td>222.1</td>
<td>214.1</td>
<td>201.5</td>
</tr>
<tr>
<td class="firstcol">Basic Goods</td>
<td>243.3</td>
<td>241.7</td>
<td>229.5</td>
<td>0.66</td>
<td>6.01</td>
<td>229.5</td>
<td>221.2</td>
<td>203.5</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>440.1</td>
<td>438.4</td>
<td>394.5</td>
<td>0.39</td>
<td>11.56</td>
<td>392.7</td>
<td>359.6</td>
<td>300.5</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>305.7</td>
<td>291.7</td>
<td>256.0</td>
<td>1.46</td>
<td>19.41</td>
<td>260.8</td>
<td>259.7</td>
<td>234.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>335.4</td>
<td>329.2</td>
<td>302.2</td>
<td>1.88</td>
<td>10.99</td>
<td>306.4</td>
<td>288.3</td>
<td>269.6</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Durable&nbsp;</td>
<td>516.9</td>
<td>453.3</td>
<td>376.1</td>
<td>14.03</td>
<td>37.44</td>
<td>389.7</td>
<td>377.9</td>
<td>378.5</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp;
Nondurable</td>
<td>294.4</td>
<td>298.0</td>
<td>286.0</td>
<td>-1.21</td>
<td>2.94</td>
<td>287.3</td>
<td>267.7</td>
<td>244.4</td>
</tr>
</tbody>
</table>

</body></html>

Industrial production in India increased 3.0% from 298.8 (FY 1993=100) in October to 307.8 in November and was 11.7% greater than November 2008. This follows October's year over year increase of 10.4%. The production of electricity [...]

Industrial Production In India Continues To Advance

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112g.jpg" style="width: 353px; height: 265px;" align="right">The holiday
spirit faded last week. That was reflected in a 3.0% w/w decline in
chain store sales which left purchases at the lowest level since March
of last year. Nevertheless, sales rose 1.7% y/y. Most likely the latest
weakness as much reflects post-holiday price discounts as a decline in
sales' volume.The
ICSC-Goldman Sachs retail chain-store sales index is constructed using
the same-store sales (stores open for one year) reported by 78 stores
of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.During the last ten years
there has been a 69% correlation between the year-to-year growth in
chain store sales and the growth in general merchandise retail sales.<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112h.jpg" style="width: 353px; height: 265px;" align="right">

The weekly figures are available in Haver's SURVEYW database.
Also suffering from post-Holiday blues was the leading indicator of
chain store sales. It slipped marginally early in January but its level
was near the highest since January of last year. This composite leading
economic indicator is compiled from four series: (1) the MBA's volume
index of mortgage applications for home purchase (2) the ABC News/Money
magazine's survey of consumer buying conditions (3) new filings for
jobless benefits and (4) the 30-year government bond yield
<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/surveyw/@S2/@S2.HTM" style="color: rgb(0, 0, 0);">ICSC-UBS (SA,
1977=100)</a></th>
<th scope="col">01/09/10</th>
<th scope="col">01/02/10</th>
<th scope="col">12/26/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>482.6</td>
<td>497.6</td>
<td>490.1</td>
<td>1.7%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</body></html>

The holiday spirit faded last week. That was reflected in a 3.0% w/w decline in chain store sales which left purchases at the lowest level since March of last year. Nevertheless, sales rose 1.7% y/y. Most likely the latest weakness as [...]

Weekly Chain Store Sales Likely Suffered From Price Discounting

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112d.jpg" style="width: 353px; height: 265px;" align="right">Energy
prices are responding to evidence of economic recovery. Last week the pump
price for regular gasoline rose to $2.75 per gallon, the
highest level since October 2008 and up 71% from the December 2008 low
of $1.61. Yesterday, strength in gasoline prices eased somewhat. The
spot market price for a gallon of regular gasoline held at $2.12 per
gallon, the same as last week's level. The figures are reported by the
U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Earlier gains in the price for a
barrel of light sweet crude (WTI) oil also stabilized. Yesterday, the
spot price of $82.52 was roughly unchanged from the prior week.
Nevertheless, prices have risen from $71.53 averaged in early-December.
Moreover, prices were up sharply from the December 2008 low of $32.37.

Demand for gasoline last week posted a 0.9% decline versus one
year
ago. That decline compared to a 3.9% increase at the beginning of
October. Breaking away from earlier y/y strength, the demand for
residual fuel oil fell a sharp 50.4% y/y while distillate demand fell
10.9% y/y, a decline more moderate than the 21.6% y/y shortfall at the
beginning of last July. Inventories of crude oil and petroleum products
fell in early-January by 6.2% from the July high and were up a
diminished 3.1% from one year ago. 
 Reflecting the cold temperatures
throughout the U.S. natural gas prices also strengthened significantly.
Last week prices averaged $6.50 per mmbtu (11.1% y/y), up from $3.35 in
November and triple the September low. Nevertheless, prices remained
down by half from the high reached in early-July of 2008 of
$13.19/mmbtu.
The energy price data can be found in Haver's WEEKLY
database while the daily figures are in DAILY.
The gasoline demand figures are in OILWKLY.
 The
Case for "Inflation First" Monetary Policy from the Federal
Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0947.pdf">here</a>&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100112e.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">01/11/10</th>
<th scope="col">01/04/10</th>
<th scope="col">12/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.75</td>
<td>2.67</td>
<td>2.61</td>
<td>54.2%</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>82.59</td>
<td>79.14</td>
<td>75.09</td>
<td>85.6%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

</body></html>

Energy prices are responding to evidence of economic recovery. Last week the pump price for regular gasoline rose to $2.75 per gallon, the highest level since October 2008 and up 71% from the December 2008 low of $1.61. Yesterday, [...]

Weekly Chain Store Sales LikelySuffered From Price Discounting

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

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

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Sandy Batten

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Housing starts and permits data were released for both February and March today. Release of these data has been delayed by the federal government shutdown in October 2025. Total starts fell 3.0% m/m in February to 1.356 million units from a downwardly revised 1.398 million in January (previously 1.487 million) but then rebounded to 1.502 million (+10.8% m/m) in March. The March level was the highest since December 2024 and 10.8% higher than a year earlier. The Action Economics Forecast Survey expected a 5.9% decline in March from January to a level of 1.4 million units. The 7.2% q/q increase in starts in Q1 is the first quarterly increase since Q1 2025. Residential investment has been a drag on overall GDP growth over the past year. The sharp Q1 increase raises hope that residential investment could make a small contribution to Q1 GDP growth in tomorrow’s report.

Single-family starts rose 4.8% m/m in February and 9.7% m/m in March to be 8.9% higher than a year ago. Multi-family starts plunged 17.0% m/m in February following an 18.2% monthly surge in January. They rebounded in March, rising 13.2% m/m to be up 15.5% y/y. The strong performance of starts in March following weakness earlier this year most likely reflects some catch-up as building conditions improved in March after having been very challenging in January and February.

Across the four major geographic regions, starts in the Northeast increased 24.8% m/m in March but fell 21.2% m/m in February. They were up 18.9% y/y. In the Midwest, starts increased 12.2% m/m in Mach on top of a 20.9% monthly gain in February. The March figure was down 0.9% from a year ago. In the South, starts rose 9.1% m/m in March but fell 3.6% m/m in February. In March they were up 14.1% from a year ago. In the West, starts rose 7.2% m/m in March after monthly declines of 7.7% in January and 3.7% in February. Compared with a year ago, they were up 8.0%.

The performance of building permits in February and March mirrored that of starts. Total permits rose 11.0% m/m in February but fell 10.8% m/m in March to be down 7.4% from a year ago. Single-family permits rose 6.2% m/m in February and then fell 3.8% m/m in March. They were 7.9% lower than a year ago. Multi-family permits rebounded 19.2% m/m in February after an 11.1% m/m fall in January. In March, they plunged 21.5% m/m and were down 6.3% from a year earlier.

In March, permits fell in each of the four major regions. In the Northeast, permits plunged 29.0% m/m in March following a 5.9% monthly gain in February. In the Midwest, permits declined 3.1% m/m in February and another 2.3% m/m in March. In the South, permits slumped 7.7% m/m in March but this following a 11.8% monthly jump in February. The March decline was the third in the past four months. In the West, permits fell 14.2% m/m in March following a 21.8% monthly surge in February and a 13.8% m/m slump in January.

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

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- Data for both February and March were included in today’s report to catch up from delays due to the federal government shutdown last October.
- Starts fell 3.0% m/m in February but rebounded 10.8% m/m in March.
- The 7.2% q/q increase in Q1 was the largest quarterly gain since the economy reopened after the pandemic shutdown in 2020.
- In contrast, permits jumped 11.0% m/m in February but fell 10.8% m/m in March and were up only 1.0% q/q in Q1.

U.S. Housing Starts Fell in February but Rebounded in March

Winnie Tapasanun

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New orders for durable goods rose a stronger-than-expected 0.8% m/m in March, the first monthly rise since November, after declines of 1.2% in February (-1.4% initially) and 0.4% in January (-0.5% previously), according to today’s advance report by the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.5% m/m March increase. The year-on-year rate decelerated to 0.8% in March, the lowest since December 2024 (-4.5%), from 7.6% in February, though remaining positive since January 2025. Durable goods orders excluding the transportation sector rose 0.9% (7.6% y/y) in March, the 11th consecutive m/m rise, after a 1.2% gain in February. Durable goods orders excluding defense, however, fell 0.3% (-1.8% y/y), the third m/m fall in four months, following a 1.2% February drop.

The m/m rise in March durable goods orders was driven by a 16.9% m/m jump in orders for defense aircraft & parts, the fourth gain in five months, following a 0.5% increase in February and a 26.9% slump in January. Orders for nondefense aircraft & parts dropped 21.1%, adding to a 33.3% February plunge and a 1.7% January decline. Orders excluding aircraft climbed 1.9% (9.2% y/y), the fourth straight m/m rise and the eighth in nine months, after a 1.8% February gain.

Durable goods orders for transportation rebounded 0.8% (-10.4% y/y) in March, the first m/m increase in four months, following a 5.6% drop in February. In addition to March’s m/m jump in defense aircraft orders and drop in nondefense aircraft orders, motor vehicles & parts orders rose 1.2% (7.9% y/y), the fourth successive m/m rise, after a 3.7% February gain. Orders for computers & electronic products jumped 3.7% (15.0% y/y), the largest of seven consecutive m/m increases, following a 1.3% February rise. Machinery orders grew 0.8% (10.4% y/y), the 11th straight m/m gain, on top of a 2.3% February advance. Orders for electrical equipment, appliances & components rose 0.7% (6.5% y/y), the first m/m rise in three months, reversing a 0.7% February decline. Orders for primary metals grew 0.4% (10.2% y/y), the fourth consecutive m/m increase, after a 2.4% February gain. Orders for all other durable goods rose 0.3% (1.2% y/y), up for the seventh straight month, after a 0.5% February rise. Orders for fabricated metal products rose 0.2% (7.2% y/y), the eighth m/m increase in nine months, following a 1.1% February gain.

Capital goods orders recovered 1.7% (-6.7% y/y) in March, the first m/m rise since November, after a 6.5% decrease in February. Nondefense capital goods orders slid 1.2% (-15.4% y/y), the sixth m/m slide in seven months, after a 7.9% February drop. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) rose 3.3% (9.4% y/y), the eighth m/m gain in nine months, following a 1.6% February rise. Defense capital goods orders surged 18.0% (80.0% y/y) after a 2.3% February rebound. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 1.2% (7.0% y/y), the sixth m/m rise in seven months, after a 1.3% February increase.

Shipments of all manufactured goods rose 1.4% (5.5% y/y) in March, the fifth m/m rise in six months, after a 1.7% gain in February. Durable goods shipments increased 0.7% (7.6% y/y), up for the sixth time in seven months, after a 1.6% February rise. Nondurable goods shipments advanced 2.1% (3.4% y/y), the strongest of four consecutive m/m increases, after a 1.9% February gain.

Unfilled orders of durable goods edged up 0.1% (9.5% y/y) in March, the eighth straight m/m increase, after a 0.1% uptick in February. Excluding transportation, unfilled orders rose 0.3% (2.5% y/y), also up for the eighth consecutive month, following a 0.3% February rise.

Manufacturing inventories advanced 0.6% (1.3% y/y) in March, the largest of five successive m/m increases, after a 0.1% uptick in February. Durable goods inventories grew 0.2% (1.9% y/y) in March, the sixth consecutive m/m rise, following a 0.1% increase in February, while nondurable goods inventories climbed 1.3% (0.4% y/y) after inching up 0.1%.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- March headline orders +0.8% m/m, first increase in four mths.; +0.8% y/y, lowest since Dec. ’24.
- Defense aircraft & parts +16.9% m/m following February’s +0.5%.
- Transportation orders +0.8%, first m/m rise since Nov.; orders ex transp. +0.9%, 11th straight m/m increase.
- Core capital goods shipments +1.2%, sixth m/m gain in seven mths., pointing to a solid contribution to Q1’26 GDP from business equipt. spending.
- Durable goods shipments +0.7%; unfilled orders +0.1%; inventories +0.2%.

U.S. Durable Goods Orders Rise in March, Led by a Jump in Defense Aircraft Orders

Kathleen Stephansen, CBE

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Mortgage applications fell 1.6% w/w (+33.4% y/y) in the week ending April 24, after rising 7.9% w/w (29.9% y/y) in the week ending April 17, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 1.2% w/w (21.2% y/y) in the April 24 week, following a jump of 10.1% w/w (14.5% y/y) in the April 17 week.  Applications for loan refinancing declined 4.4% w/w (+50.7% y/y) after rising 5.8% w/w (51.9% y/y) in the week of April 17. 

The effective interest rate on a 30-year fixed-rate loan rose 1bps to 6.54% in the week ending April 24 from 6.53% in the week ending April 17. The rate on 15-year fixed-rate mortgages was unchanged at 5.92% in the latest week from the prior week. The 30-year Jumbo rate was also unchanged at 6.56% in the April 24 week from the April 17 week, while the rate on a 5-year ARM jumped 21bps to 6.02% in the latest week from 5.81% in the week ending April 17.

The share of applications for refinancing an existing loan declined to 42.5% of total applications in the week of April 24, from 44.2% in the April 17 week. The adjustable-rate mortgage (ARM) share of activity rose to 8.3% in the week ending April 24 from 8.0% in the week ending April 17.

The average size of a mortgage loan rose 2.0% w/w (6.2% y/y) to $407,900 in the week ending April 24, after rising 1.2% w/w (3.4% y/y) to $399,900 in the week ending April 17. The average size of a purchase loan rose 1.0% w/w (4.6% y/y) to $460,200 in the latest week, after edging down 0.1% w/w (+3.6% y/y) to $455,600 in the April 17 week. The average size of a loan to refinance a mortgage rose 2.3% w/w (16.3% y/y) to $337,100 in the April 24 week, after rising 2.4% w/w (10.7% y/y) to $329,500 in the April 17 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Applications for loans to purchase rose, while applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 1bps to 6.54%. 
- Average loan size edged up.

U.S. Mortgage Applications Edged Down in the April 24 Week

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Globally, money supplies are accelerating. Three- and six-month money growth rates equal or exceed the year-on-year pace everywhere, and the 12-month growth rates accelerate over the recent 12 months compared to the 12-month pace of one year ago—except for the United Kingdom, where data lag by one month. This deviation may amount to the lack of topicality since money, credit, and inflation all are caught in an updraft prompted by rising oil prices. The oil price (Brent) is up at a 468% annual rate over three months, and over 12 months the oil price is up by 31.7%, compared to a 5.5% rise over 12 months one-year ago.

**Rising oil prices do NOT create inflation**
Now we all know that rising oil prices do not create inflation. So, thankfully, the 468% rise in oil prices is not driving up the inflation rate. But unfortunately, it is helping to drive up the price level. So, we are drawing a distinction between the price level and the inflation rate.

The year-over-year change in a price metric, like the CPI, is just that: the year-on-year gain. We often refer to this as ‘THE’ inflation rate. But that is only if the price level was at—and continued to rise at (about)—that same pace. Inflation is an ongoing rise in the price level. No one in their right mind thinks oil prices are going to rise by 468% year-over-year persistently. But of course, oil is a cost to producers and a price to consumers. It is a price that must be paid and cost that must be borne. The question is how much this bump-up in oil prices will contribute to the prices of the items we track in our various national price indexes in the future. Here I will refer to the CPI as the price index. And then we ask if that one-time rise in the relative price of oil will continue to bump up prices by the same amount month-after-month in the future. If it is, it is creating inflation. If not, it is creating a realignment of relative prices. The rise in relative prices is real. It may be painful to some and remunerative to others. The effects are complex.

But the spike in oil prices is not inflation. Even though we are tracking an unknown price rise that is continuing to waffle, I will speak of it as though we know the ultimate rise and speak of that as a one-time surge.

Expressed in this way, you should be able to see the oil price spurt as painful and as something that may be a temporary boost to inflation. If the price stays high, it will boost the price level based on the pass-through by commodity. After the oil price spurt, prices may be higher, but inflation will go back to ‘where it was.’

But all that happens if and only if monetary policy does not accommodate—does not monetize—the rise in oil prices. Unfortunately, we see money supplies are accelerating. Central banks have stepped up their rate of printing money as oil prices have risen, in order to stabilize interest rates. Printing more money, or increasing the money stock faster, is inflationary.

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**A dilemma**
Everywhere central banks have taken the bait, and to cushion the impact on oil prices, they are letting money supplies accelerate. They do this because of a focus on interest rates, as monetary policy has a ‘rule’ that has been developed that monetary policy should not respond to supply shocks. Should money supply respond and accelerate? Well, the answer to that is clear: no. So, we have a dilemma.

**Supply-demand argument**
Actually, the supply side edict is more complicated. Even those who note the monetary policy can’t solve supply problems realize that if a price spike is large enough or lasts long enough, it might, in the short run, impact prices with enough force to affect inflation expectations. Yet, for now we see no acknowledgement of this dilemma.

The expectations argument is the more sophisticated modern approach. Unfortunately, it refers to concepts we do not readily observe. Money supply growth, on the other hand we can measure. We see that money supply is accelerating, and that should make us worry about inflation. That in turn should, through one of several possible channels, get central banks to reign in money supply growth. To do that, they have to stop all this talk of ‘looking through’ the oil price increase, and they have to at least consider raising rates now. While the ECB and BOE have referred to this as a policy choice, the Federal Reserve in the U.S. has been far more circumspect and has just approved the election of a new chairman who thinks he can cut rates. I wonder whether, once he takes the helm at the Fed, he will continue to hold that view?

Economists are not watching money supply the way they used to. Central bankers need to have their eyes open as to the inflation risk, especially in the post Covid period, after which inflation targets had been consistently muddled by overshooting inflation.

Denial takes on many forms. The lesson learned is about money supply. The lesson is about not accommodating shocks to lessen their impact. But the focus on interest rates has muddied the meaning of that lesson in practice.

Globally, Money Supplies Accelerate... No Problemo?

Michael J. Moran

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The Conference Board’s index of Consumer Confidence inched higher in April from an upwardly revised reading in March. The combined changes left the measure 1.1% higher than the preliminary tally in March. Despite the improvement, the index remained in the low end of the range for the current expansion. The index in April totaled 92.8, down from an average of 96.1 in 2025 and an annual cyclical high of 105.4 in 2023.

The Improvement in April reflected a pickup in the expectations component, which rose 1.7%. The current conditions component inched 0.2% lower. Overall views on current conditions slipped despite more favorable assessments of the labor market. The so-called measure of the jobs gap (share of respondents indicating that jobs are plentiful less the share saying that jobs are hard to get) rose 1.4 percentage points higher to 7.5%. The pickup reflected a drop in the share indicating that jobs are hard to get (down 1.5 percentage points to 19.8%). The share indicating that jobs are plentiful eased 0.1 percentage point to 27.3%.

Although expectations improved in April, from a long-term perspective they could be viewed as the more important factor restraining the headline measure of confidence. As shown in the left chart below, the expectations component of confidence shows considerably less volatility than the current conditions component does. The contrasting patterns suggest that individuals realize that the economy will undergo possibly sharp cyclical swings, but they expect conditions at some point to return to an underlying norm.

The current conditions index in the current cycle has indeed dropped noticeably, but it is still above the long run average (123.8 in April versus the average of approximately 108 from 1990 to 2025). The expectations component, as usual, has eased less than the current conditions component, but its shift has pushed the measure to the low end of its long-run range (72.2 in April versus an average of approximately 88).

Interestingly, concern about the labor market seems to be a factor affecting expectations. While current views on the labor market are favorable (plentiful less hard to get jobs gap of 7.5%), Individual are concerned about the future. The survey asks respondents if they expect more jobs or fewer jobs six months hence. The share indicating fewer jobs has moved well into the upper end of the historical range. Such observations in the past were typically seen only during recession (chart, below right). An unfavorable view on interest rates also seems to be playing a role in depressing the expectations component. More than 60% of respondents to the current survey expect higher interest rates 12 months from now.

The results from the Conference Board survey of consumers differ markedly from those of the University of Michigan Survey Research Center. The Michigan results show consumer sentiment at a record low, while the Conference Board index is only slightly below its long-run average. The difference most likely reflects the nature of the questions in the surveys. The Conference Board focuses on business and employment conditions, while Michigan emphasizes personal finances. The focus on finances, along with questions on inflation, probably picks up concerns about affordability.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Expectations improved slightly in April, but are still subdued relative to norms.
- Moderately favorable view of current conditions.