Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110a.jpg" align="right" border="0" height="265" width="353">Small
business' optimism recently recovered from its recession low, but the
latest readings indicate further, modest upside movement. The National
Federation of Independent Business (NFIB) indicated that their small
business optimism index rose to 89.1 during October, the third
consecutive monthly gain. The latest level was the highest since
September '08.&nbsp;During the last ten years, there has been an
85% correlation between the level of the NFIB index and the two-quarter
change in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110b.jpg" align="right" border="0" height="265" width="353">
The percentage of small businesses expecting the
economy to improve bounced back after earlier weakness to 11, the
highest since May. The percentage which thought that now was a good
time to expand the business slipped m/m to a still-improved 7, near the
highest level this year. Moreover, the percent reporting higher
net-earnings this quarter versus last year held at -40 m/m for the
third month, meaning fewer were reporting negative earnings versus last
year. It was the highest level since November. Tight credit conditions
continued as 14% of firms indicated that it was harder to get credit.
That was near the 1981 high of 15%. Perhaps because of these tight
conditions, the recent improvement in business' sentiment has done
little, if anything, to improve hiring intentions. The percentage of
firms planning to raise employment remained in the net-layoff region
and the percentage of firms with one or more job openings held at just
8% during October, the lowest level since 1982. During the last ten
years there has been a 74% correlation between the NFIB employment
percentage and the six-month change in nonfarm payrolls. Also to the
downside, the percentage expecting credit conditions to ease slipped
back to the February low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110c.jpg" align="right" border="0" height="265" width="353">
Pricing conditions eased. The percentage of
firms actually raising prices improved to -17
(indicating deflation) and remained just above the record low. During
the last ten years there has been a 69% correlation between the
six-month change in the producer price index and the level of the NFIB
price index.&nbsp;The percentage of firms planning
to raise prices gave back the prior two months' improvement and fell to
a net 6, though that remained up from the March low of zero. Worker
compensation fell back to near its recent series' low.· The largest,
single most important problems seen by business were poor sales (33%),
taxes (22%, near the highest level since 2007), government requirements
(11%), insurance cost &amp; availability (8%), competition from
large businesses (6%) and inflation (2%).About 24 million
small businesses exist in the United States. Small business creates 80%
of all new jobs in America and the NFIB figures can be found in Haver's
SURVEYS database.Financial
Regulation: Past and Future is the title of yesterday's
speech by Fed Governor Daniel K. Tarullo and it can be found here <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20091109a.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/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>89.1</td>
<td>88.8</td>
<td>1.8%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
Expecting Economic Improvement</td>
<td>11</td>
<td>8</td>
<td>-4</td>
<td>-10</td>
<td>-4</td>
<td>-1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>14</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-17</td>
<td>-21</td>
<td>15</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
</body></html>

Small business' optimism recently recovered from its recession low, but the latest readings indicate further, modest upside movement. The National Federation of Independent Business (NFIB) indicated that their small business optimism [...]

U.S. Small Business Optimism Improves But Credit Remains Tight With Hiring Cautious

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110a.jpg" align="right" border="0" height="265" width="353">Small
business' optimism recently recovered from its recession low, but the
latest readings indicate further, modest upside movement. The National
Federation of Independent Business (NFIB) indicated that their small
business optimism index rose to 89.1 during October, the third
consecutive monthly gain. The latest level was the highest since
September '08.&nbsp;During the last ten years, there has been an
85% correlation between the level of the NFIB index and the two-quarter
change in real GDP.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110b.jpg" align="right" border="0" height="265" width="353">The
percentage of small businesses expecting the
economy to improve bounced back after earlier weakness to 11, the
highest since May. The percentage which thought that now was a good
time to expand the business slipped m/m to a still-improved 7, near the
highest level this year. Moreover, the percent reporting higher
net-earnings this quarter versus last year held at -40 m/m for the
third month, meaning fewer were reporting negative earnings versus last
year. It was the highest level since November.
 Tight credit conditions
continued as 14% of firms indicated that it was harder to get credit.
That was near the 1981 high of 15%. Perhaps because of these tight
conditions, the recent improvement in business' sentiment has done
little, if anything, to improve hiring intentions. The percentage of
firms planning to raise employment remained in the net-layoff region
and the percentage of firms with one or more job openings held at just
8% during October, the lowest level since 1982. During the last ten
years there has been a 74% correlation between the NFIB employment
percentage and the six-month change in nonfarm payrolls. Also to the
downside, the percentage expecting credit conditions to ease slipped
back to the February low. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110c.jpg" align="right" border="0" height="265" width="353">Pricing
conditions eased. The percentage of
firms actually raising prices improved to -17
(indicating deflation) and remained just above the record low. During
the last ten years there has been a 69% correlation between the
six-month change in the producer price index and the level of the NFIB
price index.&nbsp;The percentage of firms planning
to raise prices gave back the prior two months' improvement and fell to
a net 6, though that remained up from the March low of zero. Worker
compensation fell back to near its recent series' low.· The largest,
single most important problems seen by business were poor sales (33%),
taxes (22%, near the highest level since 2007), government requirements
(11%), insurance cost &amp; availability (8%), competition from
large businesses (6%) and inflation (2%).
About 24 million
small businesses exist in the United States. Small business creates 80%
of all new jobs in America and the NFIB figures can be found in Haver's
SURVEYS database.
Financial
Regulation: Past and Future is the title of yesterday's
speech by Fed Governor Daniel K. Tarullo and it can be found here <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20091109a.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/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>89.1</td>
<td>88.8</td>
<td>1.8%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
Expecting Economic Improvement</td>
<td>11</td>
<td>8</td>
<td>-4</td>
<td>-10</td>
<td>-4</td>
<td>-1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>14</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-17</td>
<td>-21</td>
<td>15</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>

 Inflationary
Signals Abound;Gold&amp; Oil Prices Strengthen While Dollar Weakens
 
by <a href="/comment/Curley.html">Louise
Curley</a> November 10, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110d.jpg" align="right" border="0" height="265" width="353">The
ZEW measure of confidence among German institutional investors and
analysts in the macroeconomic outlook six months ahead declined in
November to 51.1 from 56.0 in October.&nbsp; While the extent of
the decline was greater than expected, the optimists on the outlook
still outweigh the pessimists by 51.1%.&nbsp; A year ago the
pessimists outweighed the optimists by 53.5%.&nbsp; Moreover, the
current reading is well above the long term average of
26.9%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110e.jpg" align="right" border="0" height="265" width="353">Although
there has been some improvement in the
appraisal of current conditions, the majority of investors and analysts
still view current conditions negatively.&nbsp; The excess of
pessimists over optimists among the respondents declined to 65.6% in
November from 72.2% in October.&nbsp; The first chart shows the two
indicators:&nbsp; the macroeconomic outlook and current
conditions.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110f.jpg" align="right" border="0" height="265" width="353">Some of
the reasons why the respondents have
become more cautious about the outlook&nbsp; may be found in their
appraisal of the profit prospects in the thirteen industries regularly
canvassed.&nbsp; In November, the respondents expected declines in
profits in seven of the industries and increases in six.&nbsp;
Declines in profits are expected in Banking, Insurance, Steel and
Metal, Consumption/Trade, Utilities, Telecommunication and Information
Technology.&nbsp; Increases in profits are expected in
Vehicles/Automotive, Chemicals/Pharmaceuticals, Electronics, Machinery,
Construction and Services.&nbsp; Selected industries where profits
are expected to decline are shown in the second chart and selected
industries where profits are expected to increase are shown in the
third chart.&nbsp; Profit expectations in the Banking and Insurance
industries have been declining since August and appear to have had the
biggest negative reappraisal.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS (% Bal.)</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct 09</th>
<th scope="col">Nov 08</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y Chg</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Macroeconomic Expectations 6
Months Ahead</td>
<td>51.1</td>
<td>56.0</td>
<td>-53.5</td>
<td>-4.9</td>
<td>104.6</td>
<td>-47.5</td>
<td>-3.0</td>
<td>22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>-65.6</td>
<td>-72.2</td>
<td>-50.5</td>
<td>6.6</td>
<td>-15.2</td>
<td>7.3</td>
<td>75.9</td>
<td>18.3</td>
</tr>
<tr>
<td colspan="9">PROFIT EXPECTATIONS</td>
</tr>
<tr class="odd">
<td class="firstcol">Banking</td>
<td>24.7</td>
<td>31.1</td>
<td>-64.9</td>
<td>-9.4</td>
<td>89.6</td>
<td>-59.5</td>
<td>-3.5</td>
<td>47.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Insurance</td>
<td>16.4</td>
<td>19.8</td>
<td>-70.1</td>
<td>-3.4</td>
<td>86.5</td>
<td>-45.4</td>
<td>9.7</td>
<td>46.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Chemicals/Pharmaceuticals</td>
<td>34.8</td>
<td>31.6</td>
<td>-41.6</td>
<td>3.2</td>
<td>76.4</td>
<td>-8.6</td>
<td>35.3</td>
<td>48.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Vehicles/Automotive</td>
<td>-33.9</td>
<td>-40.9</td>
<td>-94.2</td>
<td>7.0</td>
<td>60.7</td>
<td>-55.6</td>
<td>8.6</td>
<td>16.9</td>
</tr>
</tbody>
</table>

 Inflationary Signals Abound;Gold
&amp; Oil Prices Strengthen While Dollar Weakens 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 10, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110g.jpg" align="right" border="0" height="265" width="353">
There's
little to suggest that current inflation is a problem for the U.S.
economy as consumer &amp; producer prices remain weak.
Nevertheless, market signals suggest a future problem may be
developing. Higher gold prices are one of the more visible indicators
of pending inflationary power with its rise yesterday to an all-time
high of $1,107 per ounce. That strength has been accompanied by a drop
in the trade-weighted value of the U.S. dollar to its lowest level
since the summer of last year.
U.S. monetary &amp; fiscal
stimulus has done much to generate this inflationary scenario. Low
interest rates and the propping up of the banking system have combined
to generate an excessive 60% y/y rise in the monetary base and 12% y/y
growth in the money supply (M1). Fiscal stimulus is more-than-evident
in the budget deficit which ballooned last year to $680 billion and is
projected by OMB to be around $1 trillion for the next ten years. Of
course, monetization of this deficit is the
worry.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110h.jpg" align="right" border="0" height="265" width="353">The end of
the U.S. recession
and of the recessions abroad have given rise to energy prices which
potentially could fuel higher inflation. Though they are down slightly
from the early-October high, crude oil prices at
an average $79.43 per barrel yesterday were up sharply from the
December low of $32.37. For all of last week the spot market price for
light sweet crude oil averaged $79.04 per barrel.
Consumers have seen
this pricing strength, and worries abound. The pump price for
regular gasoline slipped last week to $2.67 per gallon which
was slightly below the June high. However, prices remain up from the
December low of $1.61 and this week the wholesale gasoline price
remained firm at $1.97. Though gas prices were down slightly from the
October high of $2.10, worries abound about the future for pricing
power. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091110i.jpg" align="right" border="0" height="265" width="353">
The expected rate of inflation for the next year has risen to
3.2%, roughly double the December low according to the University of
Michigan's survey. Finally, higher gasoline prices have prompted a
cutback in driving. Following earlier strength, the demand for motor
gasoline fell slightly last week from one year earlier. The energy
price figures are reported by the U.S. Department of Energy and can be
found in Haver's WEEKLY &amp; DAILY databases.
The gasoline demand figures are in OILWKLY.
Natural gas prices also have strengthened ahead of the winter
heating
season. They slipped last week to an average of $4.27 per mmbtu (-36.6%
y/y). Though they remained down by two-thirds from the high of
$13.19/mmbtu reached in early-July of last year, they are more than
double the low reached early last month.&nbsp; A bit of good news
for the pricing outlook occurred yesterday. Prices natural gas slipped
further to $3.87/mmbtu. 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM" style="color: black;">Weekly Prices</a></th>
<th scope="col">11/09/09</th>
<th scope="col">10/19/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.67</td>
<td>2.69</td>
<td>19.9%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>79.04</td>
<td>78.51</td>
<td>22.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

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U.S. Small Business OptimismImproves But Credit Remains Tight With Hiring Cautious

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109d.jpg" align="right" border="0" height="265" width="353">In the news
today are reports of French business sentiment and industrial
production in Germany, Romania, Slovakia and Turkey.
 French business
sentiment continues to improve.&nbsp;&nbsp; From the low point
of 66.96 reached in December of last year, the Bank of France's
Business Sentiment Indicator has risen in each subsequent month and in
October was up to 94.80, just 5.20 points below 100, its long term
average.&nbsp; An important factor in the improvement in sentiment
has been the increase in new orders--the total and foreign.&nbsp;
The first chart shows the percent balances between those experiencing
an increase in total and foreign new orders over those experiencing a
decline.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109e.jpg" align="right" border="0" height="265" width="353">
In October, the excess of those experiencing an
increase in foreign new orders over those experiencing a decline was
4.85%, while the excess for total orders was 10.9% as shown in the
first chart.
The most
important report on industrial production
released today is that for Germany and it is encouraging.&nbsp;
Industrial production in Germany is up for the second month. While
developments in Germany, as the largest economy in Europe, overshadow
those in the smaller and less developed economies of Eastern Europe and
the Middle East, it is encouraging to see that the representatives of
the latter groups in today's news are making strong percentage gains in
industrial production.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109f.jpg" align="right" border="0" height="265" width="353">
The month to month changes in
production in the emerging countries tend to be volatile even on a
seasonally adjusted basis.&nbsp; The&nbsp; picture becomes
clearer when we aggregate the date on a quarterly basis as can be seen
in a comparison of the second and third
charts.
<table border="0" cellspacing="0" width="100%">
<colgroup><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">Oct 08</th>
<th scope="col">M/M CHG</th>
<th scope="col">Y/Y CHG</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">French Business Sentiment
Indicator&nbsp; (LTA=100)</td>
<td>94.8</td>
<td>90.2</td>
<td>78.0</td>
<td>2.1</td>
<td>26.6</td>
<td>90.6</td>
<td>107</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total New Orders % balance</td>
<td>10.90</td>
<td>-1.54</td>
<td>-35.51</td>
<td>12.44</td>
<td>46.41</td>
<td>-9.18</td>
<td>10.84</td>
<td>12.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign New Order % balance</td>
<td>4.78</td>
<td>1.21</td>
<td>-33.48</td>
<td>3.57</td>
<td>38.26</td>
<td>-10.04</td>
<td>11.15</td>
<td>12.59</td>
</tr>
<tr>
<td class="firstcol">Industrial Production (2005=100)</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Sep 08</td>
<td>M/M CHG</td>
<td>Y/Y CHG</td>
<td>2008&nbsp;</td>
<td>2007 </td>
<td> 2006 </td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>97.0</td>
<td>-4.6</td>
<td>111.5</td>
<td>2.75</td>
<td>-12.83</td>
<td>111.5</td>
<td>111.6</td>
<td>105.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Romania</td>
<td>118.4</td>
<td>116.8</td>
<td>123.3</td>
<td>1.37</td>
<td>-3.97</td>
<td>123.5</td>
<td>120.6</td>
<td>109.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia</td>
<td>127.7</td>
<td>121.1</td>
<td>135.3</td>
<td>5.15</td>
<td>-5.62</td>
<td>134.1</td>
<td>130.4</td>
<td>112.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>101.2</td>
<td>106.3</td>
<td>110.3</td>
<td>-4.80</td>
<td>-8.25</td>
<td>114.3</td>
<td>115.3</td>
<td>107.8</td>
</tr>
</tbody>
</table>

</body></html>

In the news today are reports of French business sentiment and industrial production in Germany, Romania, Slovakia and Turkey. French business sentiment continues to improve. From the low point of 66.96 reached in December of last [...]

Improved Business Sentiment In France,Industrial Production Increases In Germany, Romania And Slovakia Falters In Turkey

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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109a.jpg" align="right" border="0" height="265" width="353">Consumers
continue to deleverage as the prospects for employment remain
uncertain. The Federal Reserve reported late Friday that consumer
credit outstanding fell for the eighth consecutive month during
September. It also was the twelfth monthly decline since summer, 2008.
The $14.9B drop from August followed declines during the prior two
months which were revised shallower, but the y/y change amounted to a
record 4.8% drop.&nbsp; With these declines, consumers have reduced
credit outstanding as a percentage of disposable income to 22.6% from
its 2005 high of 24.4%. This compares to the low near 16% in the
early-1990s.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109b.jpg" align="right" border="0" height="265" width="353">
Usage of non-revolving credit (autos &amp;
other consumer durables), which accounts for nearly two-thirds of the
total, fell $4.9B after a slight August increase. The 2.3% y/y decline
was a record. Consumers continued also to cut back on revolving credit
usage. During September it fell a near-record $9.9B for the twelfth
consecutive monthly drop. Year-to-year the 8.8% decline is by far the
record as consumers continued to shy away from liberal spending.
Finance companies (-12.3% y/y), savings institutions (-9.8% y/y),
nonfinancial businesses (-6.4%) and commercial banks (-1.5% y/y have
seen the largest pullbacks in credit extension while credit unions
continue to see positive growth (1.9% y/y). <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109c.jpg" align="right" border="0" height="265" width="353">
The Federal government and
Sallie Mae also continued to lend during September and raised credit
outstanding by 23.9% y/y which was the strongest growth rate since
early-2001.· These figures are the major input to the Fed's quarterly
Flow of Funds accounts for the household sector. Credit data are
available in Haver's USECON database. The Flow of
Funds data are in Haver's FFUNDS database.Monetary
Policy Stance: The View From Consumption Spending from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0941.pdf">
here</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit Outstanding (m/m Chg, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-14.8B</td>
<td>&nbsp;$-9.9B</td>
<td>-4.8%</td>
<td>1.6%</td>
<td>5.6%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-9.9B</td>
<td>$-10.1B</td>
<td>-8.8%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-4.9B</td>
<td>$0.2B</td>
<td>-2.3%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body></html>

Consumers continue to deleverage as the prospects for employment remain uncertain. The Federal Reserve reported late Friday that consumer credit outstanding fell for the eighth consecutive month during September. It also was the [...]

U.S. Consumer Credit Outstanding Continues To Fall

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109a.jpg" align="right" border="0" height="265" width="353">Consumers
continue to deleverage as the prospects for employment remain
uncertain. The Federal Reserve reported late Friday that consumer
credit outstanding fell for the eighth consecutive month during
September. It also was the twelfth monthly decline since summer, 2008.
The $14.9B drop from August followed declines during the prior two
months which were revised shallower, but the y/y change amounted to a
record 4.8% drop.&nbsp; With these declines, consumers have reduced
credit outstanding as a percentage of disposable income to 22.6% from
its 2005 high of 24.4%. This compares to the low near 16% in the
early-1990s.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109b.jpg" align="right" border="0" height="265" width="353">Usage of
non-revolving credit (autos &amp;
other consumer durables), which accounts for nearly two-thirds of the
total, fell $4.9B after a slight August increase. The 2.3% y/y decline
was a record. Consumers continued also to cut back on revolving credit
usage. During September it fell a near-record $9.9B for the twelfth
consecutive monthly drop. Year-to-year the 8.8% decline is by far the
record as consumers continued to shy away from liberal spending.
Finance companies (-12.3% y/y), savings institutions (-9.8%
y/y),
nonfinancial businesses (-6.4%) and commercial banks (-1.5% y/y have
seen the largest pullbacks in credit extension while credit unions
continue to see positive growth (1.9% y/y). <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109c.jpg" align="right" border="0" height="265" width="353">
The Federal government and
Sallie Mae also continued to lend during September and raised credit
outstanding by 23.9% y/y which was the strongest growth rate since
early-2001.· These figures are the major input to the Fed's quarterly
Flow of Funds accounts for the household sector.
 Credit data are
available in Haver's USECON database. The Flow of
Funds data are in Haver's FFUNDS database.
Monetary
Policy Stance: The View From Consumption Spending from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0941.pdf">
here</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit Outstanding (m/m Chg, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-14.8B</td>
<td>&nbsp;$-9.9B</td>
<td>-4.8%</td>
<td>1.6%</td>
<td>5.6%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-9.9B</td>
<td>$-10.1B</td>
<td>-8.8%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-4.9B</td>
<td>$0.2B</td>
<td>-2.3%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>

 Improved Business Sentiment In
France,Industrial Production Increases In Germany,
Romania And Slovakia Falters In Turkey
 
by <a href="/comment/Curley.html">Louise
Curley</a> November 09, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109d.jpg" align="right" border="0" height="265" width="353">In the news
today are reports of French business sentiment and industrial
production in Germany, Romania, Slovakia and Turkey.
 French business
sentiment continues to improve.&nbsp;&nbsp; From the low point
of 66.96 reached in December of last year, the Bank of France's
Business Sentiment Indicator has risen in each subsequent month and in
October was up to 94.80, just 5.20 points below 100, its long term
average.&nbsp; An important factor in the improvement in sentiment
has been the increase in new orders--the total and foreign.&nbsp;
The first chart shows the percent balances between those experiencing
an increase in total and foreign new orders over those experiencing a
decline.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109e.jpg" align="right" border="0" height="265" width="353">
In October, the excess of those experiencing an
increase in foreign new orders over those experiencing a decline was
4.85%, while the excess for total orders was 10.9% as shown in the
first chart.
The most
important report on industrial production
released today is that for Germany and it is encouraging.&nbsp;
Industrial production in Germany is up for the second month. While
developments in Germany, as the largest economy in Europe, overshadow
those in the smaller and less developed economies of Eastern Europe and
the Middle East, it is encouraging to see that the representatives of
the latter groups in today's news are making strong percentage gains in
industrial production.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109f.jpg" align="right" border="0" height="265" width="353">
The month to month changes in
production in the emerging countries tend to be volatile even on a
seasonally adjusted basis.&nbsp; The&nbsp; picture becomes
clearer when we aggregate the date on a quarterly basis as can be seen
in a comparison of the second and third
charts.
<table border="0" cellspacing="0" width="100%">
<colgroup><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">Oct 08</th>
<th scope="col">M/M CHG</th>
<th scope="col">Y/Y CHG</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">French Business Sentiment
Indicator&nbsp; (LTA=100)</td>
<td>94.8</td>
<td>90.2</td>
<td>78.0</td>
<td>2.1</td>
<td>26.6</td>
<td>90.6</td>
<td>107</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total New Orders % balance</td>
<td>10.90</td>
<td>-1.54</td>
<td>-35.51</td>
<td>12.44</td>
<td>46.41</td>
<td>-9.18</td>
<td>10.84</td>
<td>12.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign New Order % balance</td>
<td>4.78</td>
<td>1.21</td>
<td>-33.48</td>
<td>3.57</td>
<td>38.26</td>
<td>-10.04</td>
<td>11.15</td>
<td>12.59</td>
</tr>
<tr>
<td class="firstcol">Industrial Production (2005=100)</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Sep 08</td>
<td>M/M CHG</td>
<td>Y/Y CHG</td>
<td>2008&nbsp;</td>
<td>2007 </td>
<td> 2006 </td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>97.0</td>
<td>-4.6</td>
<td>111.5</td>
<td>2.75</td>
<td>-12.83</td>
<td>111.5</td>
<td>111.6</td>
<td>105.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Romania</td>
<td>118.4</td>
<td>116.8</td>
<td>123.3</td>
<td>1.37</td>
<td>-3.97</td>
<td>123.5</td>
<td>120.6</td>
<td>109.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia</td>
<td>127.7</td>
<td>121.1</td>
<td>135.3</td>
<td>5.15</td>
<td>-5.62</td>
<td>134.1</td>
<td>130.4</td>
<td>112.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>101.2</td>
<td>106.3</td>
<td>110.3</td>
<td>-4.80</td>
<td>-8.25</td>
<td>114.3</td>
<td>115.3</td>
<td>107.8</td>
</tr>
</tbody>
</table>

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U.S. Consumer Credit OutstandingContinues To Fall

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106e.jpg" align="left" border="0" height="265" width="353">
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas. 
 

OECD leading indicators ... &#8220;point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added. 
 

The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September. 
 

Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany&#8217;s domestic orders
are not along for the ride. 
 

The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism. 
 

The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That&#8217;s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let&#8217;s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It&#8217;s a tall
order that we are falling short on despite the growth path endorsed by
the OECD. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>15.8%</td>
<td>14.9%</td>
<td>1.5%</td>
<td>-6.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>16.8%</td>
<td>15.3%</td>
<td>0.5%</td>
<td>-6.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Ezone</td>
<td>16.9%</td>
<td>16.6%</td>
<td>4.0%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>13.1%</td>
<td>10.9%</td>
<td>-4.7%</td>
<td>-4.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>16.8%</td>
<td>15.0%</td>
<td>-0.6%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Six month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>14.9%</td>
<td>-10.3%</td>
<td>-10.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>15.3%</td>
<td>-12.3%</td>
<td>-10.7%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Eur</td>
<td>16.6%</td>
<td>-7.3%</td>
<td>-12.3%</td>
<td>-3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>10.9%</td>
<td>-18.1%</td>
<td>-9.2%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>15.0%</td>
<td>-14.2%</td>
<td>-9.8%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns indicated by BOLD
RED</td>
</tr>
</tbody>
</table>
</body></html>

In the OECD area everything is coming up roses. Some are more in bloom than others and some have more thorns than others but the OECD gave a very upbeat assessment to activity in the OECD areas. OECD leading indicators ... “point [...]

Everybody Is Turning Higher Say OECD LEIs

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</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">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

The October employment report from the Bureau of Labor Statistics contained no good news on labor market conditions. That especially was true of the unemployment rate. It rose to 10.2%, the highest since early-1983 just following the [...]

U.S. Jobless Rate Exceeds 10% While Payrolls Decline

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</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">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 Everybody Is Turning Higher Say
OECD LEIs 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> November 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106e.jpg" align="left" border="0" height="265" width="353">
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas. 
 

OECD leading indicators ... &#8220;point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added. 
 

The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September. 
 

Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany&#8217;s domestic orders
are not along for the ride. 
 

The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism. 
 

The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That&#8217;s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let&#8217;s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It&#8217;s a tall
order that we are falling short on despite the growth path endorsed by
the OECD. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth
progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>15.8%</td>
<td>14.9%</td>
<td>1.5%</td>
<td>-6.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>16.8%</td>
<td>15.3%</td>
<td>0.5%</td>
<td>-6.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Ezone</td>
<td>16.9%</td>
<td>16.6%</td>
<td>4.0%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>13.1%</td>
<td>10.9%</td>
<td>-4.7%</td>
<td>-4.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>16.8%</td>
<td>15.0%</td>
<td>-0.6%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Six
month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>14.9%</td>
<td>-10.3%</td>
<td>-10.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>15.3%</td>
<td>-12.3%</td>
<td>-10.7%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Eur</td>
<td>16.6%</td>
<td>-7.3%</td>
<td>-12.3%</td>
<td>-3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>10.9%</td>
<td>-18.1%</td>
<td>-9.2%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>15.0%</td>
<td>-14.2%</td>
<td>-9.8%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD
RED</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Jobless Rate Exceeds 10%While Payrolls Decline

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

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**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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