Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029e.jpg" align="left" border="0" height="265" width="353">
The EU Commission indices made their eight largest advance
Since October 1988 for the EU region as a whole. This boosted the
overall index for the EU to the 46th percentile of range much closer to
its midpoint but still 14% below its average level for the same period. 
 

Surprisingly in relative terms it is the consumer that is
boosting the region the most. Consumer confidence stands at the 50%
mark of its range. Construction lags the most of all sectors, standing
in the 17th percentile of its range followed by services that languish
in the 31st percentile of their range. Both retailing and the
industrial sector are in their respective 41st percentiles. 
 

As to countries, the large countries are clustered closely
together in their respective range readings. Spain is the weakest in
the 38th percentile of its range. Compared to the UK in the 47th range
percentile; among EMU members Italy is the relative strongest in its
42nd percentile leaving a small gap between the best reading and the
worst among large countries in the e-Zone. 
 

Still if we look at the rankings by queue the results are much
weaker. The range ranking positions the current reading between the
highest and lowest range values. The queue orders the various readings
by component or country depending on its application. It ranks them
presenting the result as a percentage (100 is highest). The queue
percentiles show that while the various indicators have come sharply up
from their lows and some although some are closing in on range
midpoints the ranked readings are still no where near normal. 
 

The overall EU reading that stands in the 46th percentile of
its range also stands in the 11th percentile of its queue &#8211; a terribly
low standing. The real message here is that yes there is a significant
recovery from the lows in gear but the current levels of the indices
are still well below normal. 
 

While the EU and EMU regions are making progress there is
still a very long way to go. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment</th>
</tr>
<tr>
<td class="firstcol">EU</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Percen 
-tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall
Index</td>
<td>86</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>46.0</td>
<td>222</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>99</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-20</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>41.3</td>
<td>225</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>50.0</td>
<td>188</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>25.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>-12</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>41.9</td>
<td>215</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-34</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>17.4</td>
<td>216</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>13.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>31.7</td>
<td>143</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Oct 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>4.1%</td>
<td>2.5%</td>
<td>6.3%</td>
<td>86.2</td>
<td>41.1</td>
<td>222</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>3.9%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>90.8</td>
<td>38.0</td>
<td>201</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>19.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>3.4%</td>
<td>5.9%</td>
<td>2.3%</td>
<td>91.1</td>
<td>40.9</td>
<td>187</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>25.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>90.0</td>
<td>42.7</td>
<td>214</td>
<td>121</td>
<td>67</td>
<td>54</td>
<td>100</td>
<td>14.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>2.4%</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>82.6</td>
<td>31.9</td>
<td>220</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>12.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>3.8%</td>
<td>0.0%</td>
<td>13.1%</td>
<td>86.7</td>
<td>47.1</td>
<td>219</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Since Oct 1988</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>154</td>
<td>-Count</td>
<td colspan="4">&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is
an index, sector
readings are net balance diffusion measures</td>
</tr>
</thead>
</table>
</body></html>

The EU Commission indices made their eight largest advance Since October 1988 for the EU region as a whole. This boosted the overall index for the EU to the 46th percentile of range much closer to its midpoint but still 14% below its [...]

EU Indices Jump in October

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029a.jpg" align="right" border="0" height="265" width="353">
The U.S. economy grew last quarter at hardly a barn-burning
rate, but at least it was positive for the first time in over a year.
Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7%
decline since late-2007. The rise was fueled by upturns in domestic
demand and inventories but lessened by deterioration in the foreign
trade deficit. Consensus expectations are that economic growth will
continue in coming quarters at roughly a 3.0% rate which, by postwar
standards, would be subpar. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029b.jpg" align="right" border="0" height="265" width="353">
Domestic final demand growth was positive for just the second
quarter since 1Q'08. The upturn owed to a 3.1% gain in consumer
spending (-0.3% y/y) that was led by a 22.8% rise in durables
consumption. The Cash for Clunkers sales incentive program by
auto-makers caused motor vehicle consumption to jump at a 56.4% annual
rate, though it still was up just 1.4% from one-year earlier.
Elsewhere, personal consumption of furniture grew at a 6.4% (-5.9% y/y)
rate following a like downturn during 2Q. Spending on clothing
&amp; shoes fell at a 1.5% (-5.1% y/y) rate while services spending
gained a modest 1.8% (0.4% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029c.jpg" align="right" border="0" height="265" width="353">
In the fixed-investment side of the GDP accounts, residential
spending also grew for the first time since 1Q'06. The 23.3% rise
(-18.1% y/y) followed a 2Q decline of similar magnitude. During the
downturn, which spanned three years, residential investment fell by
more than one-half. Continuing to the downside at a 2.5% (-18.9% y/y)
rate was business investment. The decline was led by a 9.0% (-20.8%
y/y) drop in spending on structures though equipment spending rose a
modest 1.1% (-17.9% y/y). That increase was led by a gain in
transportation equipment spending (-47.2% y/y) and an upturn in
information processing equipment &amp; software (-6.4% y/y).
Government investment rose at a 2.3% rate (1.8% y/y) led by a gain in
defense spending (5.0% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029d.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation made a positive contribution to GDP
growth for just the second time in two years. The modest 0.9% addition
followed subtractions of 1.4 and 2.4 percentage points during the prior
two quarters.
For the first time in a year, deterioration in the foreign
trade deficit lowered GDP growth. The 0.5 percentage point subtraction
was due to a 16.3% (-14.9% y/y) rise in real imports which outpaced the
14.7% (-11.2% y/y) gain in exports.
The GDP price deflator rose a slim 0.8%. Though the PCE price
index gained 2.8% (-0.6% y/y), the rise in the overall domestic final
sales price index was held to just 1.6% (-1.0% y/y) as the fixed
investment price index fell sharply (-2.5% y/y).
<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/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.3</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.5</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.7</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

</body></html>

The U.S. economy grew last quarter at hardly a barn-burning rate, but at least it was positive for the first time in over a year. Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7% decline since late-2007. The [...]

Q3 GDP Posts First Gain After More-Than Year Long Recession

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029a.jpg" align="right" border="0" height="265" width="353">
The U.S. economy grew last quarter at hardly a barn-burning
rate, but at least it was positive for the first time in over a year.
Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7%
decline since late-2007. The rise was fueled by upturns in domestic
demand and inventories but lessened by deterioration in the foreign
trade deficit. Consensus expectations are that economic growth will
continue in coming quarters at roughly a 3.0% rate which, by postwar
standards, would be subpar. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029b.jpg" align="right" border="0" height="265" width="353">
Domestic final demand growth was positive for just the second
quarter since 1Q'08. The upturn owed to a 3.1% gain in consumer
spending (-0.3% y/y) that was led by a 22.8% rise in durables
consumption. The Cash for Clunkers sales incentive program by
auto-makers caused motor vehicle consumption to jump at a 56.4% annual
rate, though it still was up just 1.4% from one-year earlier.
Elsewhere, personal consumption of furniture grew at a 6.4% (-5.9% y/y)
rate following a like downturn during 2Q. Spending on clothing
&amp; shoes fell at a 1.5% (-5.1% y/y) rate while services spending
gained a modest 1.8% (0.4% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029c.jpg" align="right" border="0" height="265" width="353">
In the fixed-investment side of the GDP accounts, residential
spending also grew for the first time since 1Q'06. The 23.3% rise
(-18.1% y/y) followed a 2Q decline of similar magnitude. During the
downturn, which spanned three years, residential investment fell by
more than one-half. Continuing to the downside at a 2.5% (-18.9% y/y)
rate was business investment. The decline was led by a 9.0% (-20.8%
y/y) drop in spending on structures though equipment spending rose a
modest 1.1% (-17.9% y/y). That increase was led by a gain in
transportation equipment spending (-47.2% y/y) and an upturn in
information processing equipment &amp; software (-6.4% y/y).
Government investment rose at a 2.3% rate (1.8% y/y) led by a gain in
defense spending (5.0% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029d.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation made a positive contribution to GDP
growth for just the second time in two years. The modest 0.9% addition
followed subtractions of 1.4 and 2.4 percentage points during the prior
two quarters.
For the first time in a year, deterioration in the foreign
trade deficit lowered GDP growth. The 0.5 percentage point subtraction
was due to a 16.3% (-14.9% y/y) rise in real imports which outpaced the
14.7% (-11.2% y/y) gain in exports.
The GDP price deflator rose a slim 0.8%. Though the PCE price
index gained 2.8% (-0.6% y/y), the rise in the overall domestic final
sales price index was held to just 1.6% (-1.0% y/y) as the fixed
investment price index fell sharply (-2.5% y/y).
<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/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.3</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.5</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.7</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

EU Indices Jump in October 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029e.jpg" align="left" border="0" height="265" width="353">
The EU Commission indices made their eight largest advance
Since October 1988 for the EU region as a whole. This boosted the
overall index for the EU to the 46th percentile of range much closer to
its midpoint but still 14% below its average level for the same period. 
 

Surprisingly in relative terms it is the consumer that is
boosting the region the most. Consumer confidence stands at the 50%
mark of its range. Construction lags the most of all sectors, standing
in the 17th percentile of its range followed by services that languish
in the 31st percentile of their range. Both retailing and the
industrial sector are in their respective 41st percentiles. 
 

As to countries, the large countries are clustered closely
together in their respective range readings. Spain is the weakest in
the 38th percentile of its range. Compared to the UK in the 47th range
percentile; among EMU members Italy is the relative strongest in its
42nd percentile leaving a small gap between the best reading and the
worst among large countries in the e-Zone. 
 

Still if we look at the rankings by queue the results are much
weaker. The range ranking positions the current reading between the
highest and lowest range values. The queue orders the various readings
by component or country depending on its application. It ranks them
presenting the result as a percentage (100 is highest). The queue
percentiles show that while the various indicators have come sharply up
from their lows and some although some are closing in on range
midpoints the ranked readings are still no where near normal. 
 

The overall EU reading that stands in the 46th percentile of
its range also stands in the 11th percentile of its queue &#8211; a terribly
low standing. The real message here is that yes there is a significant
recovery from the lows in gear but the current levels of the indices
are still well below normal. 
 

While the EU and EMU regions are making progress there is
still a very long way to go. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment</th>
</tr>
<tr>
<td class="firstcol">EU</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Percen 
-tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall
Index</td>
<td>86</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>46.0</td>
<td>222</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>99</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-20</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>41.3</td>
<td>225</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>50.0</td>
<td>188</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>25.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>-12</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>41.9</td>
<td>215</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-34</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>17.4</td>
<td>216</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>13.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>31.7</td>
<td>143</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Oct 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>4.1%</td>
<td>2.5%</td>
<td>6.3%</td>
<td>86.2</td>
<td>41.1</td>
<td>222</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>3.9%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>90.8</td>
<td>38.0</td>
<td>201</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>19.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>3.4%</td>
<td>5.9%</td>
<td>2.3%</td>
<td>91.1</td>
<td>40.9</td>
<td>187</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>25.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>90.0</td>
<td>42.7</td>
<td>214</td>
<td>121</td>
<td>67</td>
<td>54</td>
<td>100</td>
<td>14.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>2.4%</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>82.6</td>
<td>31.9</td>
<td>220</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>12.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>3.8%</td>
<td>0.0%</td>
<td>13.1%</td>
<td>86.7</td>
<td>47.1</td>
<td>219</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Since Oct 1988</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>154</td>
<td>-Count</td>
<td colspan="4">&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is
an index, sector
readings are net balance diffusion measures</td>
</tr>
</thead>
</table>
 U.S. Weekly Initial Claims For
Unemployment Insurance Hold Steady 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009



<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>

Q3 GDP Posts First Gain AfterMore-Than Year Long Recession

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028e.jpg" width="353">
The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly revised August level of 417,000 and it fell well short of Consensus expectations for a rise to 440,000 sales. Nevertheless, sales have risen by nearly one-quarter from the January low.
Home prices firmed last month, but the recovery this year has been tepid. The median price of a new single-family home rose to $204,800 from an upwardly revised August level. Nevertheless the latest figure, which was down 9.1% y/y, remained near the lowest level since October of 2003. The average price of a new home was less weak and off 1.6% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028f.jpg" width="353">
Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. A September decline dropped them by more than one-third versus last year to the lowest level since 1982 (no typo). In the West the number of homes for sale fell by nearly one-half to a record low while inventories elsewhere in the country fell by roughly one-third.
The months&#39; supply of unsold homes held steady last month at 7.5 months and was down from the high of 12.4 months in January. The figure was the lowest since January 2007.
The Global Financial Crisis and Offshore Dollar Markets from the Federal Reserve Bank of New York can be found here <a href="http://www.newyorkfed.org/newsevents/news/research/2009/rp091027.html"> 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">US New Homes</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>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>402</td>
<td>417</td>
<td>413</td>
<td>-7.8%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>42</td>
<td>42</td>
<td>41</td>
<td>&nbsp;68.0</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>53</td>
<td>56</td>
<td>12.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>188</td>
<td>209</td>
<td>215</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>101</td>
<td>113</td>
<td>101</td>
<td>-1.0</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>204,800</td>
<td>199,900</td>
<td>215,600</td>
<td>&nbsp;-9.1</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
</html>

The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly [...]

U.S. New Home Sales Decline Though Prices Increase

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028d.jpg" align="left" border="0" height="265" width="353">
Last month Italian consumers felt great and Italian businesses
felt worse. In October, Italian consumers felt decidedly worse while
business sentiment advanced nicely to a 13 month high. 

Still the overall biz indicator stands only in the 37th
percentile of its long term range that is well below the mid point and
not near enough to a normal, let alone recovery, reading yet. Orders
score a -51 raw reading a figure that stand in the bottom 20th
percentile of its range. Domestic orders are relatively better off than
foreign orders as domestic orders stand in their 25th range percentile
while foreign orders stand in their 17th percentile. 

In Italy investment goods stand in lower range percentiles
than do consumer goods. Italy&#8217;s revival seems to be more on the back of
the consumer that Germany&#8217;s which seems to be relatively more on the
aback of foreign demand. Since the consumer is lagging and troubled
that is something to keep a close eye on. Foreign orders to Italian
exporters have been showing signs of weakening. For that to happen as
Italian domestic demand form consumers fades is an ominous sign.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy ISAE
Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Oct 1996</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>77.1</td>
<td>74.3</td>
<td>74.7</td>
<td>72.5</td>
<td>37.7</td>
<td>136</td>
</tr>
<tr>
<td colspan="7" class="firstcol">TOTAL INDUSTRY</td>
</tr>
<tr>
<td colspan="7" class="firstcol">&nbsp;Order books
&amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-51</td>
<td>-52</td>
<td>-51</td>
<td>-58</td>
<td>20.0</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-49</td>
<td>-49</td>
<td>-48</td>
<td>-53</td>
<td>25.9</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-55</td>
<td>-56</td>
<td>-51</td>
<td>-61</td>
<td>17.5</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>37.5</td>
<td>122</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-49</td>
<td>-47</td>
<td>-47</td>
<td>-52</td>
<td>15.5</td>
<td>141</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INTERMEDIATE</td>
</tr>
<tr>
<td colspan="7" class="firstcol"> Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-57</td>
<td>-55</td>
<td>-54</td>
<td>-60</td>
<td>21.6</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-57</td>
<td>-54</td>
<td>-53</td>
<td>-60</td>
<td>23.2</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-56</td>
<td>-59</td>
<td>-57</td>
<td>-63</td>
<td>24.5</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-7</td>
<td>-1</td>
<td>-6</td>
<td>0</td>
<td>27.6</td>
<td>126</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-52</td>
<td>-51</td>
<td>-55</td>
<td>-58</td>
<td>21.0</td>
<td>139</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INVESTMENT GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-62</td>
<td>-61</td>
<td>-63</td>
<td>-69</td>
<td>10.5</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-54</td>
<td>-55</td>
<td>-56</td>
<td>-63</td>
<td>21.0</td>
<td>137</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-66</td>
<td>-61</td>
<td>-59</td>
<td>-72</td>
<td>6.3</td>
<td>142</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>-1</td>
<td>4</td>
<td>8</td>
<td>43.2</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-61</td>
<td>-58</td>
<td>-56</td>
<td>-67</td>
<td>5.9</td>
<td>143</td>
</tr>
<tr>
<td colspan="7" class="firstcol">CONSUMER GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-36</td>
<td>-38</td>
<td>-37</td>
<td>-37</td>
<td>26.1</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-36</td>
<td>-39</td>
<td>-35</td>
<td>-37</td>
<td>29.0</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-41</td>
<td>-42</td>
<td>-36</td>
<td>-39</td>
<td>22.9</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>1</td>
<td>3</td>
<td>-1</td>
<td>38.5</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-37</td>
<td>-33</td>
<td>-31</td>
<td>-35</td>
<td>15.8</td>
<td>143</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Total number of months:</td>
<td colspan="3">148</td>
</tr>
</tbody>
</table>
</body></html>

Last month Italian consumers felt great and Italian businesses felt worse. In October, Italian consumers felt decidedly worse while business sentiment advanced nicely to a 13 month high. Still the overall biz indicator stands only in [...]

Italy's Business Sentiment Bounces Back Highest Reading Since Sept 2008

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028a.jpg" width="353">
The manufacturing sector&#39;s recovery appears intact. Durable goods orders recovered an expected 1.0% last month following declines during two of the prior three months. Moreover, the three-month rate of increase held at a firm 12.6% (AR). That increase followed a 51% rate of decline through last December. Since January orders have risen 4.1%.
Transportation equipment orders rose 1.1% last month, held back by a 0.1% (-24.1% y/y) downtick in motor vehicle &amp; parts orders and a 2.1% (-51.3% y/y) decline in nondefense aircraft orders. Excluding the volatile transportation equipment sector orders show clear improvement. With a 0.9% rise last month, orders have risen 3.3% from their January low and have increased at a 5.9% rate during the last three months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028b.jpg" width="353">
Higher orders for primary metals have led the improvement in durables bookings. The 0.3% increase last month followed strong gains during the prior three months and the three-month rate of increase rose to 24.5%. Orders for fabricated metals also have been quite strong. Following this strength is the electrical equipment sector. Though orders fell during the last two months, the three-month rate of increase held at a firm 6.5%. Also showing improvement has been orders for computers &amp; related equipment. The weak 0.4% rise last month failed to make up large declines during the prior two months, but since their April low, orders have risen 9.6%.
The capital goods sector also has improved. New orders for nondefense capital goods rose 2.5% and they rose 2.0% excluding aircraft &amp; parts. These latest increases build on strength developed this summer and orders have risen 8.1% from the April low.
Shipments of durable goods are now reflecting the improvement in orders. With a 0.8% rise last month, the three-month rate of increase improved to 6.6% and shipments are now 2.4% higher than the May low. The improvement has been paced by gains in shipments of metals but the machinery and electrical equipment sectors continue to lag.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028c.jpg" width="353">
Inventories of durable manufactured goods continued lower and posted a 1.0% decline which was the ninth consecutive monthly drop totaling 11.2%. The shedding of inventory has been broad-based led by a 21.0% decline this year in the metals area, a 20.5% drop in computer inventories, a 16.2% drop in motor vehicles and an 11.9% in electrical equipment.
The durable goods figures are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM" style="COLOR: #000000">NAICS Classification </a>(%)</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>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>1.0</td>
<td>-2.6</td>
<td>4.8</td>
<td>-19.6</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.9</td>
<td>-0.4</td>
<td>0.9</td>
<td>-16.9</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>2.5</td>
<td>-7.7</td>
<td>7.0</td>
<td>-21.0</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.0</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-16.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The manufacturing sector's recovery appears intact. Durable goods orders recovered an expected 1.0% last month following declines during two of the prior three months. Moreover, the three-month rate of increase held at a firm 12.6% [...]

U.S. Durable Goods Orders Rise, Continuing Firm Uptrend

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028a.jpg" align="left" border="0" height="265" width="353">
The manufacturing sector's recovery appears intact. Durable
goods orders recovered an expected 1.0% last month following declines
during two of the prior three months. Moreover, the three-month rate of
increase held at a firm 12.6% (AR). That increase followed a 51% rate
of decline through last December. Since January orders have risen 4.1%.
Transportation equipment orders rose 1.1% last month, held
back by a 0.1% (-24.1% y/y) downtick in motor vehicle &amp; parts
orders and a 2.1% (-51.3% y/y) decline in nondefense aircraft orders.
Excluding the volatile transportation equipment sector orders show
clear improvement. With a 0.9% rise last month, orders have risen 3.3%
from their January low and have increased at a 5.9% rate during the
last three months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028b.jpg" align="right" border="0" height="265" width="353">
Higher orders for primary metals have led the improvement in
durables bookings. The 0.3% increase last month followed strong gains
during the prior three months and the three-month rate of increase rose
to 24.5%. Orders for fabricated metals also have been quite strong.
Following this strength is the electrical equipment sector. Though
orders fell during the last two months, the three-month rate of
increase held at a firm 6.5%. Also showing improvement has been orders
for computers &amp; related equipment. The weak 0.4% rise last
month failed to make up large declines during the prior two months, but
since their April low, orders have risen 9.6%.
The capital goods sector also has improved. New orders for
nondefense capital goods rose 2.5% and they rose 2.0% excluding
aircraft &amp; parts. These latest increases build on strength
developed this summer and orders have risen 8.1% from the April low.
Shipments of durable goods are now reflecting the improvement
in orders. With a 0.8% rise last month, the three-month rate of
increase improved to 6.6% and shipments are now 2.4% higher than the
May low. The improvement has been paced by gains in shipments of metals
but the machinery and electrical equipment sectors continue to lag.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028c.jpg" align="left" border="0" height="265" width="353">
Inventories of durable manufactured goods continued lower and
posted a 1.0% decline which was the ninth consecutive monthly drop
totaling 11.2%. The shedding of inventory has been broad-based led by a
21.0% decline this year in the metals area, a 20.5% drop in computer
inventories, a 16.2% drop in motor vehicles and an 11.9% in electrical
equipment.
The durable goods figures are available in Haver's USECON
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM" style="color: rgb(0, 0, 0);">NAICS Classification
</a>(%)</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>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>1.0</td>
<td>-2.6</td>
<td>4.8</td>
<td>-19.6</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>0.9</td>
<td>-0.4</td>
<td>0.9</td>
<td>-16.9</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>2.5</td>
<td>-7.7</td>
<td>7.0</td>
<td>-21.0</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.0</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-16.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
Italy's Business Sentiment Bounces
Back Highest
Reading Since Sept 2008 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 28, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028d.jpg" align="left" border="0" height="265" width="353">
Last month Italian consumers felt great and Italian businesses
felt worse. In October, Italian consumers felt decidedly worse while
business sentiment advanced nicely to a 13 month high. 

Still the overall biz indicator stands only in the 37th
percentile of its long term range that is well below the mid point and
not near enough to a normal, let alone recovery, reading yet. Orders
score a -51 raw reading a figure that stand in the bottom 20th
percentile of its range. Domestic orders are relatively better off than
foreign orders as domestic orders stand in their 25th range percentile
while foreign orders stand in their 17th percentile. 

In Italy investment goods stand in lower range percentiles
than do consumer goods. Italy&#8217;s revival seems to be more on the back of
the consumer that Germany&#8217;s which seems to be relatively more on the
aback of foreign demand. Since the consumer is lagging and troubled
that is something to keep a close eye on. Foreign orders to Italian
exporters have been showing signs of weakening. For that to happen as
Italian domestic demand form consumers fades is an ominous sign.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy ISAE
Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Oct 1996</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>77.1</td>
<td>74.3</td>
<td>74.7</td>
<td>72.5</td>
<td>37.7</td>
<td>136</td>
</tr>
<tr>
<td colspan="7" class="firstcol">TOTAL
INDUSTRY</td>
</tr>
<tr>
<td colspan="7" class="firstcol">&nbsp;Order
books
&amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-51</td>
<td>-52</td>
<td>-51</td>
<td>-58</td>
<td>20.0</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-49</td>
<td>-49</td>
<td>-48</td>
<td>-53</td>
<td>25.9</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-55</td>
<td>-56</td>
<td>-51</td>
<td>-61</td>
<td>17.5</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>37.5</td>
<td>122</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-49</td>
<td>-47</td>
<td>-47</td>
<td>-52</td>
<td>15.5</td>
<td>141</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INTERMEDIATE</td>
</tr>
<tr>
<td colspan="7" class="firstcol">
Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-57</td>
<td>-55</td>
<td>-54</td>
<td>-60</td>
<td>21.6</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-57</td>
<td>-54</td>
<td>-53</td>
<td>-60</td>
<td>23.2</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-56</td>
<td>-59</td>
<td>-57</td>
<td>-63</td>
<td>24.5</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-7</td>
<td>-1</td>
<td>-6</td>
<td>0</td>
<td>27.6</td>
<td>126</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-52</td>
<td>-51</td>
<td>-55</td>
<td>-58</td>
<td>21.0</td>
<td>139</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INVESTMENT
GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order
books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-62</td>
<td>-61</td>
<td>-63</td>
<td>-69</td>
<td>10.5</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-54</td>
<td>-55</td>
<td>-56</td>
<td>-63</td>
<td>21.0</td>
<td>137</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-66</td>
<td>-61</td>
<td>-59</td>
<td>-72</td>
<td>6.3</td>
<td>142</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>-1</td>
<td>4</td>
<td>8</td>
<td>43.2</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-61</td>
<td>-58</td>
<td>-56</td>
<td>-67</td>
<td>5.9</td>
<td>143</td>
</tr>
<tr>
<td colspan="7" class="firstcol">CONSUMER
GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order
books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-36</td>
<td>-38</td>
<td>-37</td>
<td>-37</td>
<td>26.1</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-36</td>
<td>-39</td>
<td>-35</td>
<td>-37</td>
<td>29.0</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-41</td>
<td>-42</td>
<td>-36</td>
<td>-39</td>
<td>22.9</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>1</td>
<td>3</td>
<td>-1</td>
<td>38.5</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-37</td>
<td>-33</td>
<td>-31</td>
<td>-35</td>
<td>15.8</td>
<td>143</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Total
number of months:</td>
<td colspan="3">148</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Decline Though
Prices Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 28, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028e.jpg" align="left" border="0" height="265" width="353">
The recovery in the housing market stuttered last month. Sales
of new single-family homes fell during September following five
consecutive months of increase. The seasonally adjusted annual sales
rate of 402,000 followed a downwardly revised August level of 417,000
and it fell well short of Consensus expectations for a rise to 440,000
sales. Nevertheless, sales have risen by nearly one-quarter from the
January low.
Home prices firmed last month, but the recovery this year has
been tepid. The median price of a new single-family home rose to
$204,800 from an upwardly revised August level. Nevertheless the latest
figure, which was down 9.1% y/y, remained near the lowest level since
October of 2003. The average price of a new home was less weak and off
1.6% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028f.jpg" align="right" border="0" height="265" width="353">
Price discounts, higher sales and much lower housing starts
have combined to lower the overhang of unsold homes. A September
decline dropped them by more than one-third versus last year to the
lowest level since 1982 (no typo). In the West the number of homes for
sale fell by nearly one-half to a record low while inventories
elsewhere in the country fell by roughly one-third.
The months' supply of unsold homes held steady last month at
7.5 months and was down from the high of 12.4 months in January. The
figure was the lowest since January 2007.
The Global Financial Crisis and Offshore Dollar
Markets from the Federal Reserve Bank of New York can be
found here <a href="http://www.newyorkfed.org/newsevents/news/research/2009/rp091027.html">
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">US
New Homes</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>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales
(SAAR, 000s)</td>
<td>402</td>
<td>417</td>
<td>413</td>
<td>-7.8%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>42</td>
<td>42</td>
<td>41</td>
<td>&nbsp;68.0</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>53</td>
<td>56</td>
<td>12.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>188</td>
<td>209</td>
<td>215</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>101</td>
<td>113</td>
<td>101</td>
<td>-1.0</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>204,800</td>
<td>199,900</td>
<td>215,600</td>
<td>&nbsp;-9.1</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders Rise,Continuing Firm Uptrend

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027i.jpg" align="left" border="0" height="265" width="353">
Entrepreneurs in France and the Netherlands continue to shed
some of their pessimism concerning economic prospects, but they are by
no means optimistic. From the low point in February, 2009, when
pessimists in the Netherlands outweighed the optimists by 22.9%,
pessimists still outweigh the optimists by 7.8%. In France, the
indicator of business confidence is so created that its long term
average is 100 with a standard deviation of 10. The low point at 68 in
March 2009 was more than three standard deviations below the long term
average. While the indicator has moved up to 86 in October, it is still
more than one standard deviation below average. The first chart shows
the measures of business confidence in the Netherlands and in France.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027j.jpg" align="right" border="0" height="265" width="353">
Consumers in France and in Italy had become disenchanted
earlier than the business community. Confidence among consumers in both
countries reached lows in July, 2008. Since then confidence among
Italian consumers has improved sharply, if erratically. October was
another decline in the upward but erratic path of Italian consumer
confidence. The index fell to 111.7 (1980=100) from 113.6 in September.
It is, however, almost 17% above the low point. The increase in
confidence from the low point among French households has been less
dramatic than that in Italy, as can be seen in the second chart. The
excess of pessimists over optimists has declined from 47% to 35% in
October, an improvement of 12 basis points. In spite of the rise in
confidence, pessimism among consumers in France and Italy still
outweighs optimism concerning the economic outlook.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug&nbsp; 09</th>
<th scope="col">Jul 08</th>
<th scope="col">Low&nbsp;</th>
<th scope="col">Date&nbsp;</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="10">Business Confidence</td>
</tr>
<tr>
<td class="firstcol">Netherlands (% Balance)</td>
<td>-7.8</td>
<td>-9.8</td>
<td>-9.3</td>
<td>-14.8</td>
<td>-22.9</td>
<td>2/09</td>
<td>0.4</td>
<td>7.8</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">France(Synthetic Index: Avg
=100, St Dev =10)</td>
<td>86</td>
<td>83</td>
<td>79</td>
<td>76</td>
<td>68</td>
<td>3/09</td>
<td>96</td>
<td>110</td>
<td>107</td>
</tr>
<tr class="odd">
<td colspan="10">Consumer Confidence</td>
</tr>
<tr>
<td class="firstcol">Italy (1980=100)</td>
<td>111.7</td>
<td>113.6</td>
<td>111.8</td>
<td>107.5</td>
<td>95.8</td>
<td>7/08</td>
<td>100.6</td>
<td>108.5</td>
<td>108.7</td>
</tr>
<tr>
<td class="firstcol">France (% Balance)</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>-38</td>
<td>-47</td>
<td>7.08</td>
<td>-42</td>
<td>-21</td>
<td>-25</td>
</tr>
</tbody>
</table>
</body></html>

Entrepreneurs in France and the Netherlands continue to shed some of their pessimism concerning economic prospects, but they are by no means optimistic. From the low point in February, 2009, when pessimists in the Netherlands [...]

Signs of Improvement in European Business and Consumer Confidence But No Euphoria

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

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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.

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**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.

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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

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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

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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.