Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091102a.jpg" align="right" border="0" height="265" width="353">
The recession in U.S. factory sector activity is over,
according to the data from the National Association of Purchasing
Management. Their composite index for October rose to 55.7 which was
its highest level since April 2006. (Any reading above the break-even
point of 50 suggests rising activity.) The latest figure exceeded
Consensus expectations for a little-changed reading of 53.0 and was up
from the low of 32.9 reached last December. The ISM data is available
in Haver's USECON database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091102d.jpg" align="right" border="0" height="265" width="353">
While just above the break-even level of 50, the
factory-sector growth suggested by the ISM index is in line with
recoveries accompanying past upturns after severe recessions. To mirror
the strength of those recoveries, however, the index still needs to
rise to a level near or above the level of 60.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091102e.jpg" align="right" border="0" height="265" width="353">
A sharp increase in the production component to a 63.3 led the
latest increase. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures. Also rising was the inventories index to
46.9 which was its highest level since June of last year. Compared to
the low of 32.2 reached earlier this year, the latest figure suggests
that the correction of factory-sector inventory levels is about over.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091102c.jpg" align="right" border="0" height="265" width="353">
Also to the upside, the employment index improved to 53.1 and
indicated growth in factory-sector payrolls for the first month since
July of last year. During the last ten years there has been a 90%
correlation between the index level and the three-month change in
manufacturing payrolls.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091102b.jpg" align="right" border="0" height="265" width="353">
The new orders index slipped m/m to a still-strong reading of
58.5, though it was shy of its recent high. Also to the downside was
the speed of supplier deliveries index which slipped and erased the
gains of the prior two months. Suggesting moderation in the economic
downturns abroad, the export order index rose to 55.5 which was the
highest level since August of last year. During the last ten years
there has been a 53% correlation between the index and the q/q change
in real exports of goods in the GDP accounts.
The separate index of prices paid continued to indicate
improved factory sector activity with a rise to 65.0. That recovered
the September decline and was up from the December low of 18.0. During
the last twenty years there has been a 79% correlation between the
price index and the three-month change in the PPI for intermediate
goods.
The Yield Curve, October 2009 from the
Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/trends/2009/1109/01monpol.cfm">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/@S2/@S201/@S201.HTM">ISM
Mfg</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">Composite Index</td>
<td>55.7</td>
<td>52.6</td>
<td>52.9</td>
<td>38.7</td>
<td>45.5</td>
<td>51.1</td>
<td>53.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>58.5</td>
<td>60.8</td>
<td>64.9</td>
<td>32.4</td>
<td>42.1</td>
<td>54.3</td>
<td>55.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment Index</td>
<td>53.1</td>
<td>46.2</td>
<td>46.4</td>
<td>34.2</td>
<td>43.2</td>
<td>50.5</td>
<td>51.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>65.0</td>
<td>63.5</td>
<td>65.0</td>
<td>37.0</td>
<td>66.5</td>
<td>64.6</td>
<td>65.0</td>
</tr>
</tbody>
</table>
</body></html>

The recession in U.S. factory sector activity is over, according to the data from the National Association of Purchasing Management. Their composite index for October rose to 55.7 which was its highest level since April 2006. (Any [...]

ISM Factory Index Rises Further Continuing Respectable Rebound

ISM Factory Index Rises FurtherContinuing Respectable Rebound

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030h.jpg" align="right" border="0" height="265" width="353">Employment
compensation picked up slightly last quarter, but high unemployment
dragged down the y/y change to its lowest on record. (The series dates
back to 1980). The total employment cost index for private industry
workers rose 0.5% during 3Q following gains of 0.2% during the prior
two quarters. The latest rise about matched Consensus
expectations.Improved wage and salary growth provided most
of the "oomph" to last quarter's gain with a 0.5% rise. However, here
again, the y/y gain of 1.3% was a new record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030i.jpg" align="right" border="0" height="265" width="353">
In the factory sector
wages rose just 1.2% y/y but in the education &amp; health care
sectors wages rose a still-modest 1.8%. In the goods producing sector
wage growth fell to just 1.2% and in education &amp; health
services they rose 1.8%.Total benefit costs in private sector
increased just 0.3% and the 1.0% y/y gain was a record low. What y/y
strength there was was led by a 2.3% gain in production, transportation
&amp; materials handling industries and a 1.6% rise in services
occupations. The cost of health benefits showed a stable 4.7% rise in
the latest 12 months.&nbsp;· The employment cost index figures are
available in Haver's USECON database.Financial
Intermediaries and Monetary Economics from the Federal
Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr398.pdf">here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI
- Private Industry Workers</a> (%)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">3Q 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">Compensation</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>2.8</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp;
Salaries</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>3.0</td>
<td>3.4</td>
<td>&nbsp;2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.3</td>
<td>0.2</td>
<td>0.2</td>
<td>1.0</td>
<td>2.6</td>
<td>2.4</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Employment compensation picked up slightly last quarter, but high unemployment dragged down the y/y change to its lowest on record. (The series dates back to 1980). The total employment cost index for private industry workers rose [...]

U.S. Employment Cost Index Rose Slightly Q/Q But Reaches A New Low Y/Y

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030f.jpg" width="353">
Consumer sentiment for all of October fell from September but the trend during the month improved. The University of Michigan indicated that its October reading of consumer sentiment of 70.6 was improved from the mid-month reading of 69.4 but both figures were down from a September figure of 73.5. Despite the latest decline, sentiment remained up by roughly one-quarter from the low last fall. Consensus expectations had been for a full-month figure of 70. During the last ten years, there has been a 69% correlation between the level of sentiment and the growth in real consumer spending during the next five months.
The October reading of expected economic conditions fell a sharp 6.7% m/m. It was shallower-than reported at mid-month but still erased much of September&#39;s gain. The latest decline was led by a 16.5% drop in expected business conditions during the next five years which reversed much of the improvement since July. Expected conditions during the next year fell just modestly and the index remained more-than-double the February low. Conversely, the expected change in personal finances improved slightly with the index rising nearly one-quarter from the low during 2008 with the higher stock market.
The reading of current economic conditions increased moderately. The readings of personal finances and of buying conditions for large household goods held steady m/m, but the latter was up by one-third from the November trough due to low prices.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030g.jpg" width="353">
Expected price inflation during the next year amounted to 3.2%, up slightly from September but down from a high of 7.0% during May of last year. A low of 0.3% inflation was expected by 25% of respondents but 5.0% inflation was expected by another quarter. Inflation of 3.2% during the next 5-10 years was the mean expectation.
The opinion of government policy, which may eventually influence economic expectations, fell from September and remained near the lowest level since February. Thirty-two percent of respondents thought that a poor job was being done by government. A reduced 18% thought that a good job was being done, down from 30% in April.
The University of Michigan survey data is not seasonally adjusted. The reading is based on telephone interviews with about 500 households at month-end. These results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database with details in the proprietary UMSCA database.
Optimism Amid Uncertainty from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/update-us/index.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">October (Final)</th>
<th scope="col">Mid-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">Consumer Sentiment</td>
<td>70.6</td>
<td>69.4</td>
<td>73.5</td>
<td>65.7</td>
<td>22.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>73.7</td>
<td>72.1</td>
<td>73.4</td>
<td>66.6</td>
<td>26.2</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.6</td>
<td>67.6</td>
<td>73.5</td>
<td>65.0</td>
<td>20.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer sentiment for all of October fell from September but the trend during the month improved. The University of Michigan indicated that its October reading of consumer sentiment of 70.6 was improved from the mid-month reading of [...]

Michigan Consumer Sentiment Improves From Mid-Month

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030e.jpg" align="left" border="0" height="265" width="353">
German retail sales fell for the second month in a row. For Q3
sales are now falling at a 4.3% annual rate. Real ex auto sales are
dropping in the quarter at a pace of -3.2%. All three month growth
rates for key retail categories are declining as are six month growth
rates. For most categories the decline in sales is at a steeper annual
rate over three months than for six months. With euro Area unemployment
at a 10 ½ year high and German firms cutting back on working hours,
consumption in Germany has pulled back. This an important issue since
the consumer confidence index has been one of the strongest sector
indices in the EMU. There is no telling how much the Europe recovery
could be set back by a pessimistic consumer.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="8">German Real and Nominal Retail Sales</th>
<th scope="col">QTR</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Nominal</td>
<td> Sep-09</td>
<td> Aug-09</td>
<td> Jul-09</td>
<td> 3-MO</td>
<td> 6-MO</td>
<td> 12-MO</td>
<td> YrAgo</td>
<td> Saar</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.2%</td>
<td>0.7%</td>
<td> -4.0%</td>
<td> -3.2%</td>
<td> -4.8%</td>
<td>3.1%</td>
<td> -4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; MV and Parts</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td> -3.0%</td>
<td>3.1%</td>
<td> -0.7%</td>
<td> -2.8%</td>
<td> -1.6%</td>
<td> -3.8%</td>
<td>2.4%</td>
<td> -3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>2.4%</td>
<td> -7.0%</td>
<td>3.6%</td>
<td> -5.3%</td>
<td> -3.1%</td>
<td> -5.1%</td>
<td>1.4%</td>
<td> -5.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Car registrations
(units)</td>
<td>-2.7%</td>
<td> -9.5%</td>
<td>-5.8%</td>
<td> -52.7%</td>
<td>-7.9%</td>
<td>20.9%</td>
<td>-1.7%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9"> Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
</tbody>
</table>
</body></html>

German retail sales fell for the second month in a row. For Q3 sales are now falling at a 4.3% annual rate. Real ex auto sales are dropping in the quarter at a pace of -3.2%. All three month growth rates for key retail categories are [...]

German Retail Sales Sink For Second Month In A Row

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030a.jpg" align="right" border="0" height="265" width="353">
The weak job market continued last month to exact its toll on
labor income growth. Personal income slipped
marginally during September after two months of just 0.1% increase. The
August gain was revised down from 0.2% and the latest figure about
matched Consensus forecasts. These weak increases wholly reflect the
current recession. The good news, however, was that the worst
performance of early this year is over. On a three-month basis income
grew 0.2% during 3Q after a 0.4% 2Q gain. These figures compare to 2.6%
and 0.9% declines during 1Q and 4Q'08, respectively.
Job loss continued to account for recent weakness in income
growth, but here again the recent numbers are "less bad." Wages
&amp; salaries fell 0.2% last month and reversed a 0.2% August
increase. Year-to-year wages fell 5.2% after a 2.1% 2008 increase.
Downward momentum, however, has eased. During the last three months,
wages were roughly unchanged with the lessened rate of job loss
reported in the monthly reports on payroll employment. Wages in the
factory sector fell 0.2% following the 0.6% August drop. Yet, the
three-month change fell to -0.1% from -2.7% and -6.9% during 2Q and 1Q.
In the service sector wages slipped 0.1% last month but posted a modest
increase during 3Q after declines during the prior three quarters.
Offsetting this improvement has been a weaker government sector where
wages ticked up just 0.4% during the last three months after 1.1% and
1.6% increases during the prior twp three-month periods.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030b.jpg" align="right" border="0" height="265" width="353">
Even the growth in unemployment insurance payments slowed
recently. A 2.7% September decline was part of a 3Q slowing to 0.9%
growth from gains between 20%29 and 65% during each of the prior four
quarters. Interest income continued to show the effects of lower rates
and fell for the third straight month while dividend income fell by
one-quarter versus last year as corporate profits evaporated.
Disposable personal income fell slightly
and reversed the August uptick. Adjusted for inflation, real disposable
income fell for the fourth straight month after having been lifted this
spring by tax cuts. The saving rate increased modestly m/m to 3.3% but
remained down from the May peak of 5.9%. The rate remained up slightly
from last year and double the 2007 level.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030c.jpg" align="right" border="0" height="265" width="353">
Personal spending fell 0.5% after having
been lifted during August by the "cash for clunkers" program for new
motor vehicle purchases. Durables spending more-than reversed the
August rise with a 7.0% decline (-4.2% y/y). Spending on motor vehicles
fell 19.5% (-5.9% y/y) and reversed all of the August gain. Spending on
furniture rose a modest 0.4% (-4.7% y/y) and has risen slightly during
the last three months. Spending on nondurables rose 0.7% (-3.7% y/y) as
outlays on apparel rose for the third straight month (-1.7% y/y).
Outlays on services increased 0.2% (1.5% y/y) as spending on health
care continued quite strong and posted a 5.6% gain versus last year.
Spending in restaurants and on recreation remained negative.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030d.jpg" align="left" border="0" height="265" width="353">
Prices increased 0.1% during September reflecting an easier
1.2% rise (-29.8% y/y) rise in gasoline costs and another rise is in
store for October. Nevertheless, the PCE chain price index
still was down by 0.5% versus last year. Less food-and-energy, "core"
prices were again soft and posted their fifth consecutive 0.1%
increase. Goods prices rose 0.2% (-1.7% y/y) after two months of
decline while prices for services gained a steady 1.0% y/y.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
Regulatory reform is the title of
yesterday's speech by Fed Governor Daniel K. Tarullo and it can be
found <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.8</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.5</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>-0.5</td>
<td>1.4</td>
<td>0.2</td>
<td>-0.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.3</td>
<td>2.8</td>
<td>4.0</td>
<td>2.2 (Sept. '08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body></html>

The weak job market continued last month to exact its toll on labor income growth. Personal income slipped marginally during September after two months of just 0.1% increase. The August gain was revised down from 0.2% and the latest [...]

U.S. Personal Income Slips Marginally And Spending Declines

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030a.jpg" align="right" border="0" height="265" width="353">
The weak job market continued last month to exact its toll on
labor income growth. Personal income slipped
marginally during September after two months of just 0.1% increase. The
August gain was revised down from 0.2% and the latest figure about
matched Consensus forecasts. These weak increases wholly reflect the
current recession. The good news, however, was that the worst
performance of early this year is over. On a three-month basis income
grew 0.2% during 3Q after a 0.4% 2Q gain. These figures compare to 2.6%
and 0.9% declines during 1Q and 4Q'08, respectively.
Job loss continued to account for recent weakness in income
growth, but here again the recent numbers are "less bad." Wages
&amp; salaries fell 0.2% last month and reversed a 0.2% August
increase. Year-to-year wages fell 5.2% after a 2.1% 2008 increase.
Downward momentum, however, has eased. During the last three months,
wages were roughly unchanged with the lessened rate of job loss
reported in the monthly reports on payroll employment. Wages in the
factory sector fell 0.2% following the 0.6% August drop. Yet, the
three-month change fell to -0.1% from -2.7% and -6.9% during 2Q and 1Q.
In the service sector wages slipped 0.1% last month but posted a modest
increase during 3Q after declines during the prior three quarters.
Offsetting this improvement has been a weaker government sector where
wages ticked up just 0.4% during the last three months after 1.1% and
1.6% increases during the prior twp three-month periods.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030b.jpg" align="right" border="0" height="265" width="353">
Even the growth in unemployment insurance payments slowed
recently. A 2.7% September decline was part of a 3Q slowing to 0.9%
growth from gains between 20%29 and 65% during each of the prior four
quarters. Interest income continued to show the effects of lower rates
and fell for the third straight month while dividend income fell by
one-quarter versus last year as corporate profits evaporated.
Disposable personal income fell slightly
and reversed the August uptick. Adjusted for inflation, real disposable
income fell for the fourth straight month after having been lifted this
spring by tax cuts. The saving rate increased modestly m/m to 3.3% but
remained down from the May peak of 5.9%. The rate remained up slightly
from last year and double the 2007 level.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030c.jpg" align="right" border="0" height="265" width="353">
Personal spending fell 0.5% after having
been lifted during August by the "cash for clunkers" program for new
motor vehicle purchases. Durables spending more-than reversed the
August rise with a 7.0% decline (-4.2% y/y). Spending on motor vehicles
fell 19.5% (-5.9% y/y) and reversed all of the August gain. Spending on
furniture rose a modest 0.4% (-4.7% y/y) and has risen slightly during
the last three months. Spending on nondurables rose 0.7% (-3.7% y/y) as
outlays on apparel rose for the third straight month (-1.7% y/y).
Outlays on services increased 0.2% (1.5% y/y) as spending on health
care continued quite strong and posted a 5.6% gain versus last year.
Spending in restaurants and on recreation remained negative.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030d.jpg" align="left" border="0" height="265" width="353">
Prices increased 0.1% during September reflecting an easier
1.2% rise (-29.8% y/y) rise in gasoline costs and another rise is in
store for October. Nevertheless, the PCE chain price index
still was down by 0.5% versus last year. Less food-and-energy, "core"
prices were again soft and posted their fifth consecutive 0.1%
increase. Goods prices rose 0.2% (-1.7% y/y) after two months of
decline while prices for services gained a steady 1.0% y/y.
The personal income &amp; consumption figures are
available in Haver's USECON and USNA
databases.
Regulatory reform is the title of
yesterday's speech by Fed Governor Daniel K. Tarullo and it can be
found <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20091029a.htm">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)&nbsp;</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>0.1</td>
<td>-2.8</td>
<td>2.9</td>
<td>5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-0.0</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.5</td>
<td>3.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption
Expenditures</td>
<td>-0.5</td>
<td>1.4</td>
<td>0.2</td>
<td>-0.3</td>
<td>3.1</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>3.3</td>
<td>2.8</td>
<td>4.0</td>
<td>2.2 (Sept. '08)</td>
<td>2.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1</td>
<td>0.3</td>
<td>0.0</td>
<td>-0.5</td>
<td>3.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.1</td>
<td>0.1</td>
<td>0.1</td>
<td>1.3</td>
<td>2.4</td>
<td>2.4</td>
</tr>
</tbody>
</table>
German Retail Sales Sink For
Second Month In A Row 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030e.jpg" align="left" border="0" height="265" width="353">
German retail sales fell for the second month in a row. For Q3
sales are now falling at a 4.3% annual rate. Real ex auto sales are
dropping in the quarter at a pace of -3.2%. All three month growth
rates for key retail categories are declining as are six month growth
rates. For most categories the decline in sales is at a steeper annual
rate over three months than for six months. With euro Area unemployment
at a 10 ½ year high and German firms cutting back on working hours,
consumption in Germany has pulled back. This an important issue since
the consumer confidence index has been one of the strongest sector
indices in the EMU. There is no telling how much the Europe recovery
could be set back by a pessimistic consumer.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="8">German
Real and Nominal Retail Sales</th>
<th scope="col">QTR</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Nominal</td>
<td> Sep-09</td>
<td> Aug-09</td>
<td> Jul-09</td>
<td> 3-MO</td>
<td> 6-MO</td>
<td> 12-MO</td>
<td> YrAgo</td>
<td> Saar</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.2%</td>
<td>0.7%</td>
<td> -4.0%</td>
<td> -3.2%</td>
<td> -4.8%</td>
<td>3.1%</td>
<td> -4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; MV and Parts</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td> -3.0%</td>
<td>3.1%</td>
<td> -0.7%</td>
<td> -2.8%</td>
<td> -1.6%</td>
<td> -3.8%</td>
<td>2.4%</td>
<td> -3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>2.4%</td>
<td> -7.0%</td>
<td>3.6%</td>
<td> -5.3%</td>
<td> -3.1%</td>
<td> -5.1%</td>
<td>1.4%</td>
<td> -5.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Car registrations
(units)</td>
<td>-2.7%</td>
<td> -9.5%</td>
<td>-5.8%</td>
<td> -52.7%</td>
<td>-7.9%</td>
<td>20.9%</td>
<td>-1.7%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">
Real</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td> -0.5%</td>
<td> -1.8%</td>
<td>1.5%</td>
<td> -3.4%</td>
<td> -3.9%</td>
<td> -4.0%</td>
<td> -0.2%</td>
<td> -3.2%</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment
Improves From Mid-Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 30, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030f.jpg" align="left" border="0" height="265" width="353">
Consumer sentiment for all of October fell from September but
the trend during the month improved. The University of Michigan
indicated that its October reading of consumer sentiment of 70.6 was
improved from the mid-month reading of 69.4 but both figures were down
from a September figure of 73.5. Despite the latest decline, sentiment
remained up by roughly one-quarter from the low last fall. Consensus
expectations had been for a full-month figure of 70. During the last
ten years, there has been a 69% correlation between the level of
sentiment and the growth in real consumer spending during the next five
months.
The October reading of expected economic conditions fell a
sharp 6.7% m/m. It was shallower-than reported at mid-month but still
erased much of September's gain. The latest decline was led by a 16.5%
drop in expected business conditions during the next five years which
reversed much of the improvement since July. Expected conditions during
the next year fell just modestly and the index remained
more-than-double the February low. Conversely, the expected change in
personal finances improved slightly with the index rising nearly
one-quarter from the low during 2008 with the higher stock market.
The reading of current economic conditions increased
moderately. The readings of personal finances and of buying conditions
for large household goods held steady m/m, but the latter was up by
one-third from the November trough due to low prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030g.jpg" align="right" border="0" height="265" width="353">
Expected price inflation during the next year amounted to
3.2%, up slightly from September but down from a high of 7.0% during
May of last year. A low of 0.3% inflation was expected by 25% of
respondents but 5.0% inflation was expected by another quarter.
Inflation of 3.2% during the next 5-10 years was the mean expectation.
The opinion of government policy, which may eventually
influence economic expectations, fell from September and remained near
the lowest level since February. Thirty-two percent of respondents
thought that a poor job was being done by government. A reduced 18%
thought that a good job was being done, down from 30% in April.
The University of Michigan survey data is not seasonally
adjusted. The reading is based on telephone interviews with about 500
households at month-end. These results are based on about 300
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.
Optimism Amid Uncertainty from the Federal
Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/update-us/index.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">October (Final)</th>
<th scope="col">Mid-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">Consumer Sentiment</td>
<td>70.6</td>
<td>69.4</td>
<td>73.5</td>
<td>65.7</td>
<td>22.6%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>73.7</td>
<td>72.1</td>
<td>73.4</td>
<td>66.6</td>
<td>26.2</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.6</td>
<td>67.6</td>
<td>73.5</td>
<td>65.0</td>
<td>20.4</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
 U.S. Employment Cost Index Rose
Slightly Q/Q But Reaches A New Low Y/Y 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 30, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030h.jpg" align="right" border="0" height="265" width="353">Employment
compensation picked up slightly last quarter, but high unemployment
dragged down the y/y change to its lowest on record. (The series dates
back to 1980). The total employment cost index for private industry
workers rose 0.5% during 3Q following gains of 0.2% during the prior
two quarters. The latest rise about matched Consensus
expectations.
Improved wage and salary growth provided most
of the "oomph" to last quarter's gain with a 0.5% rise. However, here
again, the y/y gain of 1.3% was a new record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091030i.jpg" align="right" border="0" height="265" width="353">
In the factory sector
wages rose just 1.2% y/y but in the education &amp; health care
sectors wages rose a still-modest 1.8%. In the goods producing sector
wage growth fell to just 1.2% and in education &amp; health
services they rose 1.8%.
Total benefit costs in private sector
increased just 0.3% and the 1.0% y/y gain was a record low. What y/y
strength there was was led by a 2.3% gain in production, transportation
&amp; materials handling industries and a 1.6% rise in services
occupations. The cost of health benefits showed a stable 4.7% rise in
the latest 12 months.&nbsp;· The employment cost index figures are
available in Haver's USECON database.
Financial
Intermediaries and Monetary Economics from the Federal
Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr398.pdf">here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI
- Private Industry Workers</a> (%)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">3Q 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">Compensation</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>2.8</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp;
Salaries</td>
<td>0.5</td>
<td>0.2</td>
<td>0.2</td>
<td>1.3</td>
<td>3.0</td>
<td>3.4</td>
<td>&nbsp;2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.3</td>
<td>0.2</td>
<td>0.2</td>
<td>1.0</td>
<td>2.6</td>
<td>2.4</td>
<td>2.9</td>
</tr>
</tbody>
</table>

</body></html>

U.S. Personal Income SlipsMarginally And Spending Declines

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029f.jpg" align="right" border="0" height="265" width="353">The trend
toward improvement in the job market continued this month. The Labor
Department indicated that initial claims for unemployment insurance
held roughly steady w/w at 530,000. The figures are down moderately
from an average of 549,000 claims during September and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 526,250 while the latest weekly figure was
slightly higher than Consensus expectations for 521,000 claims.The
largest increases in initial claims during the week ending October 17
were in California (+5,774, +12.6% y/y), Puerto Rico (+685, +52.9%
y/y), Minnesota (+614, +38.8% y/y), Nevada (+366, 8.7% y/y ), and
Nebraska (+239, -1.6% y/y), while the largest decreases were in
Wisconsin (-5,681, +29.5%), New York (-4,711, +15.5% y/y), Pennsylvania
(-4,033, +28.2% y/y), Illinois (-3,870, +44.9% y/y), and Oregon
(-2,706, -16.6% y/y). Continuing claims for unemployment insurance
during the latest week fell 148,000 to their lowest level since
late-March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029g.jpg" align="right" border="0" height="265" width="353">
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 5,960,750 and have fallen
12.0% from their peak. This series dates back to
1966.Extended benefits for unemployment insurance
fell slightly for the first decline in seven weeks. The prior week's
level was revised up. Through early-October extended benefits averaged
551,381.The insured rate of unemployment slipped again to 4.4%, from
an unrevised 4.5%, 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/091029h.jpg" align="right" border="0" height="265" width="353">
The lowest insured unemployment
rates during the week ending October 9 were in North Dakota (1.1%),
South Dakota (1.1), Virginia (2.0), Wyoming (2.4), Maine (2.4), Texas
(2.6), Colorado (2.9), Minnesota (3.0), Maryland (3.1), Mississippi
(3.5), New York (3.5), Florida (3.7), and Georgia (3.8). The highest
insured unemployment rates were in Puerto Rico (6.3), Oregon (5.3),
Nevada (5.3), Pennsylvania (5.0), California (4.6), Michigan (4.6),
Wisconsin (4.8), North Carolina (4.5), South Carolina (4.5), and
Washington (4.3).The unemployment insurance claims data is available
in Haver's WEEKLY database and the state data is in
the REGIONW database.Birth date,
business cycles, and lifetime income from the U.S. Office of
Management and Budget is available <a href="http://www.whitehouse.gov/omb/blog/09/10/22/Birth-date-business-cycles-and-lifetime-income/">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</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>530</td>
<td>531</td>
<td>520</td>
<td>9.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,797</td>
<td>5,945</td>
<td>53.6%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.4</td>
<td>4.5</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The trend toward improvement in the job market continued this month. The Labor Department indicated that initial claims for unemployment insurance held roughly steady w/w at 530,000. The figures are down moderately from an average of [...]

U.S. Weekly Initial Claims For Unemployment Insurance Hold Steady

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

260112E.jpg

Swiss consumer confidence at end-2025 (in Q4) fell to -34.5 from -32.7 in 2025-Q3. The average level for the confidence reading on data back to 1982 is -16.7 and the current queue standing is 13.9%. The Q4 reading is clearly weak- well below its own average and weaker than this month, less than 15% of the time.

Outlook confidence in Q4 fell to -44.9 from -38.0 in Q3, registering a 15.6 percentile standing. The past confidence reading at -61.2 at end-2025 is down from -43.5 at the end of the third quarter. The standing for this reading is in its 19th percentile. All of these are extremely weak readings.

People provide a job security response in Q4 that eases to -50.1, still well above its historic average of -58.2 for a queue ranking at its 57th percentile.

Personal financial readings are moderate to weak across the board. However, current financial conditions rose to 38.4 in Q4 from 35.2 at the end of Q3 and a queue standing above its median at its 56th percentile. But the outlook for financial conditions is much weaker and also weakened quarter-to-quarter to -31.4 in Q4 from a level of -28.6 in Q3 to a queue ranking in its 8.7 percentile. The evaluation of past financial conditions improved by a very small margin, rising to -38.3 in Q4 from -38.7 in Q3, and to a queue standing at the 11.6 percentile.

The spending environment in Switzerland improved slightly but remained weak, rising to -23.3 in Q4 from -25.5 in Q3 to a standing at their 23.1 percentile standing.

The best part of the report is that the perception of job security is above average, and the current financial situation is above its median. After that, all the individual assessment metrics are weak including overall confidence – everything except assessments for inflation.

On the inflation front, the price outlook is high, rising to a reading of 97.7 in Q4 from 95.8 in Q3 but is still below the second quarter reading at 113.1. The price outlook has a moderately high standing at its 70.5 percentile. This standing is slightly below the standing for prices past which is at 76.3%. The past metric was still rising in the fourth quarter but was weaker than its reading in both Q1 and Q2 of 2025.

260112.jpg

**Summing up**
Inflation fears appear to still linger, but they are not as intense as they once were. Confidence overall is weak, but the most important aspects of job security and assessment of financial conditions have the strongest readings; yet, the environment for major purchases is still at a weak position. In Switzerland, people do not feel threatened or financially unstable, but they are not positive enough to spend freely either. And inflation fears are creeping up again all key trends to watch.

Switzerland

Swiss Confidence Sags at End-2025

Tian Yong Woon

This week, we highlight several pertinent developments that have shaped the start of the year and may carry longer-lasting implications. To begin with, the recent capture of former Venezuelan President Maduro by the US authorities and the subsequent crude oil trade deal could have far-reaching effects—potentially altering China’s imports of Venezuelan crude and broader bilateral trade dynamics (chart 1), as well as global energy supply considerations (chart 2).

In Japan, Prime Minister Takaichi’s reported consideration of early snap elections, if enacted, would likely inject near-term political uncertainty (chart 3). However, should her gambit succeed, it could reduce  policy uncertainty and pave the way for more fiscal policy activism. Against this backdrop, it is unsurprising that investors remain divided over the timing of the Bank of Japan’s next policy tightening, although the upcoming Spring wage negotiations (chart 4) ought to provide clearer signals for the monetary policy outlook.

Turning to investor expectations from the latest Blue Chip survey, India is once again seen as the growth leader among major Asian economies, while also poised to record the highest inflation (chart 5). China, by contrast, is expected to deliver sub-5% growth this year alongside muted inflation. Lastly, in Southeast Asia, pockets of geopolitical tension persist—notably between Thailand and Cambodia (chart 6)—as Thailand prepares for snap elections next month.

**The US, Venezuela, and China**
2026 got off to a turbulent start following a recent US military operation in Venezuela that resulted in the capture of former President Maduro and his transfer to the US to face drug-related charges. In the aftermath, Venezuela’s former vice president (Delcy Rodriguez) was sworn in as interim leader, while US and Venezuelan authorities have reportedly already reached a new crude oil deal. Under the agreement, Venezuela would sell 30–50 million barrels of crude to the US at market prices, with the proceeds controlled by the US. These developments have several potential implications. First, some Venezuelan crude initially destined for China would likely be diverted to the US. China has been the main buyer of Venezuelan oil in recent years, although this is likely underreported in official data (chart 1), which would tighten conditions for the crude-import-dependent country. Second, an eventual increase in Venezuelan crude supply—previously constrained by heavy US sanctions—would likely exert downward pressure on global oil prices, all else equal, although significant challenges remain, as discussed below.

260112T1.jpg

To illustrate the potential significance of Venezuela’s crude oil industry, chart 2 shows that the country holds nearly a fifth of the world’s proved crude oil reserves. However, output remains disproportionately low relative to reserves, possibly reflecting years of US sanctions as well as mismanagement and chronic underinvestment. Given the current state of the industry, substantial investment will likely be required for Venezuela to restore production to historically high levels and to more fully tap its deep proved reserves. As a result, any meaningful surge in Venezuelan crude output is likely to take time, which may help explain the muted market response to recent US–Venezuelan developments. Also of note, China has been a major lender to Venezuela, including through “oil-for-loan” arrangements in which repayments are made in crude oil. It remains to be seen how these existing and future agreements may be affected by recent developments.

260112T2.jpg

**Japan**
Setting aside the interplay between the US, Venezuela, and China, another economy worth watching early this year is Japan. Developments continue to unfold following renewed China–Japan tensions after Prime Minister Takaichi assumed office. With her approval ratings having remained consistently high since taking the helm, Takaichi is reportedly considering snap elections as early as next month to strengthen her ruling coalition’s parliamentary position. While a stronger mandate could reduce policy uncertainty, near-term political uncertainty would be the likely case. This interim uncertainty may be weighing on the yen. It is being compounded by expectations of upcoming pro-growth measures, including the $118 million supplementary budget passed last December and the prospect of additional fiscal stimulus next fiscal year, contingent on an electoral win (chart 3).

260112T3.jpg

Turning back to Japan and the monetary policy outlook, investors remain divided over the timing of the Bank of Japan’s (BoJ) next policy move following its December rate hike. This uncertainty is understandable given the multiple moving parts shaping the BoJ’s path, including the factors discussed above. Looking ahead, the upcoming annual wage negotiations and broader trends in wage growth (chart 4) will be closely watched by the BoJ as key preconditions for further rate hikes. Reflecting this uncertainty, our latest Blue Chip Economic Indicators survey shows investors split between expectations for a hike in March and views that the next move will only come after April.

260112T4.jpg

**Blue Chip Economic Indicators**
Delving into the latest Blue Chip survey results, chart 5 summarizes panellists’ expectations for growth and inflation this year. Focusing on major Asian economies, and as in 2025, India is seen to be leading the pack in terms of both real GDP growth and CPI inflation. That said, the inflation outlook may be subject to further revisions should India’s currently muted inflation—driven by falling food prices—persist for longer. For China, panellists currently expect sub-5% growth this year, implying a likely miss should a 5% growth target again be pursued. Inflation in China is once again expected to remain subdued. Japan, meanwhile, is forecast to post sub-1% real GDP growth, while CPI inflation is expected to hover around the authorities’ preferred 2% level. Looking ahead, attention will also turn to the IMF’s upcoming World Economic Outlook forecasts, due later this month.

260112T5.jpg

**Southeast Asia**
Last but not least, turning to Southeast Asia, promising AI- and tech-related growth continues in economies such as Malaysia and Vietnam. However, pockets of geopolitical tension persist, notably between Thailand and Cambodia, where border clashes have occurred despite previous attempts at peace, including one co-brokered by US President Trump. Against this backdrop, Thailand’s Prime Minister Anutin is preparing for snap elections in early February, amid a reported rise in nationalist sentiment linked to the ongoing clashes. These developments create latent risks for both Thailand and Cambodia (chart 6), while the uncertainty surrounding the elections also clouds the implementation of longer-term policies aimed at addressing Thailand’s deeper structural challenges.

260112T6.jpg

Asia

Economic Letter from Asia: A Bumpy Start

Michael J. Moran

260109A.jpg

260109B.jpg

Nonfarm payrolls rose 50,000 in December, continuing a pattern of modest increases that began in early 2025 and intensified last spring. The December results were constrained by an outright decline in the goods-producing sector, with both construction companies and manufacturers shedding workers. The private service sector was in the plus column, but the gain of 58,000 was not especially impressive. The retail trade sector was notably soft (-25,000), and a drop of 9,000 among firms in the business-service area was disappointing.

Revisions to results in October and November were more notable than the new figures for December, as downward adjustments of 76,000 more than offset the gain in December and left a net decline in the fourth quarter. Several areas contributed to the revisions (retail trade, construction, health care, transportation & warehousing, business services).

Not only were the recent job numbers soft, but the average workweek among those employed eased 0.1 hour to 34.2 hours. The reading was still within the range of observations from the past two years, but it moved to the bottom of the range. A dip of 0.1 hour might seem trivial, but when applied to 160 million workers, it represents a constraint on production. This decline added to the soft tone of the report.

260109C.jpg

Although the payroll numbers were soft, the unemployment rate dipped 0.1 percentage point to 4.4%. The drop reflected a jump of 232,000 in employment as measured by the survey of households. This employment measure is more volatile than the payroll figures from the survey of business establishments, and thus the gain might contain a healthy dose of random volatility. Still, it offered encouragement in that December marked the fifth consecutive gain, perhaps signaling that the bottom was not falling out of the labor market. 

Average hourly earnings also suggested that the labor market still had a pulse. December showed an increase of 0.3% in average hourly earnings, and results in the prior month were firmer than previously estimated (0.2% growth rather than 0.1%). The underlying trend is still cooling, but the year-over-year advance of 3.8% still represents a gain in real earnings.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

- Modest job growth in December, and downward revisions in October & November.
- The unemployment rate, though, inched lower.

A Soft Tone in the Labor Market

Winnie Tapasanun

260109F17.jpg

260109G17.jpg

Total housing starts fell 4.6% m/m in October to a seasonally adjusted annual rate of 1.246 million units—below expectations—following a 1.2% increase to 1.306 million in September and a 9.1% drop to 1.291 million in August (-8.5% m/m, 1.307 million previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected 1.321 million starts for October. The October figure marked the lowest level since May 2020 and represented the second m/m decline in three months after m/m increases in July and June. The year-on-year rate was at -7.8% in October, the steepest y/y drop since November 2024, following -3.8% in September and -1.2% in October 2024. Overall, starts remained 31.5% below the April 2022 peak of 1.820 million.

Single-family starts rebounded 5.4% (-7.8% y/y) to 874,000 in October, the highest level since July, after declines of 4.6% to 829,000 in September and 8.6% to 869,000 in August (890,000 previously). They reached a high of 1.218 million in November 2021 and a high of 1.273 in December 2020. Multi-family starts plunged 22.0% (-7.9% y/y) to 372,000, the lowest level since May, following a 13.0% September gain to 477,000 and a 10.0% August drop to 422,000 (417,000 previously). They reached a high of 629,000 units in November 2022 and a high of 616,000 units in April 2022.

By region, housing starts delivered a mixed performance. Starts in the West slumped 21.9% (-25.9% y/y) to 243,000 in October, the lowest level since July, after a 1.6% increase in September. Starts in the Northeast slid 0.6% (+41.3% y/y) to 154,000, the third m/m slide in four months, after a 58.2% September surge. To the upside, starts in the South rebounded 1.2% (-2.1% y/y) to 650,000 in October after a 3.6% decline in September and starts in the Midwest rose 0.5% (-20.7% y/y) to 199,000 after a 10.4% September decrease; for both regions, October represented the first m/m increase since July. Notably, the South continued to lead all regions with 650,000 starts, accounting for 52.2% of total U.S. housing starts; the region previously peaked at 1.044 million in April 2022.

Building permits fell 0.2% (-1.1% y/y) to 1.412 million in October, the sixth m/m fall in seven months, following a 6.4% rise to 1.415 million in September and a 2.3% decline to 1.330 million in August. They remained well below a high of 1.920 million in January 2022 and a high of 1.855 million in January 2021. Single-family permits fell 0.5% (-9.4% y/y) to 876,000, the second m/m fall in three months, after a 2.6% September increase to 880,000. They reached highs of 1.243 million in both January 2022 and January 2021. In contrast, multi-family permits rose 0.2% (16.3% y/y) to 536,000, the highest level since February 2024, after a 13.3% September gain to 535,000. They reached a peak of 817,000 units in February 2023 and a high of 787,000 units in June 2022. Regionally, permits fell m/m in the South (-3.3%; -3.9% y/y), the Midwest (-2.0%; -0.5% y/y), and the Northeast (-1.4%; +5.8% y/y), but increased m/m in the West (+9.1%; +2.1% y/y).

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

260109H17.jpg

260109I17.jpg

- Housing starts -4.6% (-7.8% y/y) to 1.246 mil. in Oct.; second m/m fall in three months.
- Single-family starts up to a three-month high; multi-family starts down to a five-month low.
- Housing starts m/m down the West and Northeast but up in the South and Midwest.
- Building permits fall for the sixth time in seven months, led by a drop in single-family permits.

U.S. Housing Starts Decline in October; Lowest Level Since May ’20

260109E.jpg

German industrial production advanced by 0.8% month-to-month in November performing better than had been expected. Consumer goods output fell by 0.3% month-to-month, capital goods output soared with a 4.9% gain, while intermediate goods output fell back by 0.8%.  

On the whole, manufacturing output had been expected to be weak. But looking at manufacturing alone, rather than total industrial production, the gain was even stronger at 2.1% month-to-month. Real manufacturing orders in November rose by 5.6%, real sales in manufacturing rose by 2.7%. This is solid performance.

**Survey data have been weak and listless**
However, apart from anecdotal evidence, as monthly data unfold, the kinds of numbers that we have to look at first are various economic surveys that come from diffusion data. The ZEW’s current index was slightly stronger month-to-month at a still very weak -78.7 (net) reading compared to -80 in October although both of those were weaker than the ZEW net September reading of -76.4. IFO manufacturing weakened month-to-month in November at 87.1 compared to 88.1 in October and it was slightly weaker than its September value as well. IFO manufacturing expectations slipped to 94.1 in November from 96.9 in October although expectations were slightly higher than their level in September. The EU Commission index weakened in November to -18.9 from -18.1 in October although there was an improvement from -20.1 in September.

These comparisons show us that the survey data which we had in hand before getting the industrial production reading from Germany had given us a lot of weak readings and a lot of very weak momentum.

**Compare survey data to IP data using ranking technique**
We can compare industrial production data to survey data using two different columns in this table. The first is the queue standing column where we see the industrial production data with rankings mostly in their 50th percentile: intermediate goods have a ranking of 37.7% with construction at 33.4%; they are the weaker exceptions. We rank IP data by sector according to their annual growth rates compared to past growth rates.  However, by comparison the survey data (that we rank on levels) range between 12.1% and 29.8%; all of those are very weak readings. No wonder a focus on survey data leads to a weak upcoming assessment of production data. We can also look at a slightly more up-to-date, but shorter ranking, from January 2021. There we see that the industrial production data average rankings from the mid-60th percentile up to the 81.4 percentile for total industrial production. Surveys generally have rankings in the 20th and 30th percentile with the exception of IFO manufacturing expectations which reaches 67.8%, which is a solid reading.

260109.jpg

**Survey data signals should be downgraded?**
These comparisons show us that while it's hard to compare industrial output directly to the diffusion readings if we take those two metrics over the same timeline and compare the level of the diffusion index to the growth rate of the manufacturing index we get the capability to compare the two on more even footing. When we do that, we see that manufacturing data are doing better than the survey data very broadly speaking. So, while there's some surprise on the strength of manufacturing data, maybe we should place a greater emphasis on it because those data come from a real accounting process rather than from a survey process that is much less closely linked to magnitudes. And, essentially, we are really much more interested in magnitudes than just if something is higher and lower.

**Other Europe doing ‘well’, too**
Not so incidentally the industrial production readings for France, Spain, Portugal, and Norway, all of whom are fairly early reporters of industrial production data, rank well on the queue standing column as well as in the shorter rank standing column from January 2021. In fact, for these countries the difference in ranking between the two periods is not markedly different, certainly not as markedly different as it is for Germany. On the whole, it may be that Europe has been doing better than we thought because we've been spending too much time looking at the more up-to-date survey data on a PMI basis, rather than waiting for the more traditional and lagging industrial production reports that are accounting-based data and more thorough.