Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014e.jpg" align="left" border="0">
Weakness in the U.S. dollar is pushing up non-oil import prices.
Following the strength in oil prices earlier this year, now non-oil
prices have firmed. U.S. import prices last month ticked up the
expected 0.1% after jumps between 1.0% and 3.0% during three of the
prior four months.
The latest report showed that non-oil import prices rose 0.4%, which
was the strongest monthly increase since July of last year. On a
three-month basis, these prices have risen at a 1.9% annual rate after
declining at a 13.6% rate as of last December. (During the last ten
years, there has been a negative 81% correlation between the nominal
trade-weighted exchange value of the US dollar vs. major currencies and
the y/y change in non-oil import prices.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014f.jpg" align="right" border="0">
Import prices break down as follows: Food prices added 0.4% to a
1.3% August increase (-5.0% y/y). Capital goods prices broke from
weakness with a 0.1% uptick which raised the three-month change to 0.4%
following a 3.4% rate of decline in June. Prices for nonauto consumer
goods also rose 0.1% (-1.0% y/y) and brought the three-month change to
-1.1% from its weakest reading of -2.6% in January. Durable consumer
goods prices were unchanged (-1.4% y/y) after two months of slight
decline. Household goods rose slightly (-1.6% y/y) and furniture prices
jumped 0.9% (-1.0% y/y). Apparel prices were unchanged for the second
month (-1.1% y/y) but the three-month change improved to -0.4% from
-4.3% six months ago.
The recent gain in petroleum prices took a breather last month and
fell 1.1% after sharp increases during six of the prior seven months.
This month, however, crude oil prices have found renewed strength and
were up to $74.15 per barrel yesterday from a September average of
$69.46.
Total export prices reversed some of their earlier strengthening
with a fall of 0.3%. The drop was led by a 2.8% (-16.6% y/y) decline in
agricultural prices. Nonagricultural export prices were unchanged and
down 4.4% y/y.
The import and export price series can be found in Haver's USECON database. Detailed figures are available in the USINT 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/@E8/@E807/@E807.HTM">Import/Export Prices (NSA, %)</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">Import - All Commodities</td>
<td>0.1</td>
<td>1.6</td>
<td>-0.7</td>
<td>-12.0</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-1.1</td>
<td>7.7</td>
<td>-2.5</td>
<td>-32.5</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.4</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.4</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>-0.3</td>
<td>0.7</td>
<td>-0.3</td>
<td>-5.6</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

Weakness in the U.S. dollar is pushing up non-oil import prices. Following the strength in oil prices earlier this year, now non-oil prices have firmed. U.S. import prices last month ticked up the expected 0.1% after jumps between [...]

U.S. Import Prices Tick Higher As Non-Oil Prices Firm

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014d.jpg" align="left" border="0" height="265" width="353">
The DIHK survey, a poling of over 25000 firms by the German
chambers of industry and commerce, is not conducted in Q3. So the
fourth quarter&#8217;s -10 reading compares to the -17 reading from Q2. It is
a net balance of opinion diffusion index. A strong improvement in
existing conditions is indicated, but declines persist. DIHK itself
pointed to the role in temporary government stimulus in boosting the
survey and muted its optimism with expectations for more modest
improvements in the index for the quarter ahead 
 

The index has climbed up from the 14th percentile of its range
in 2009-Q2 to stand in the 25th percentile in Q4. Business expectations
are sharply higher at a raw reading of zero up from -27 in Q2. The
range standing for that reading is up to a respectable 58th percent of
the range from a low 13th percentile in Q2. Export expectations are up
even more strongly to a raw reading of +7 from a Q2 reading of -37,
pushing the percentile standing up to its 55th percentile from 1.3% in
2009 Q2. These sorts of progressions are in line with much of the data
that have been reported that have showed foreign orders to be picking
up, although some recent German export figures were more disappointing;
that slowdown is not corroborated here. 
 

As to investment, the Q2 percentile standing was the worst in
the history of the survey, a history that extends back to Q4 1991. The
improved standing to a still-weak 27th percentile on a raw reading of
-17 nonetheless is sharply up from -30 in Q2. Still we can see that
investment demands are lagging. Hiring intentions occupy a sort of
middle ground at a raw reading of -15; conditions are much improved
from Q2&#8217;s reading at -25. Still more cutting is indicated. The
percentile standing has been boosted to its 38th percentile, but that
is still weak. Clearly much more improvement will bee needed to stoke
job growth and just to keep the prospect of more cuts at bay. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="9">DIHK-Balance of Economic Opinion</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Net Balance Readings</td>
<td colspan="3">Change</td>
<td>Range Q4'91</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Q4-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
<td>Yr Ago</td>
<td>2-Yr</td>
<td>3-Yr</td>
<td>Q4-09</td>
<td>Q2-09</td>
</tr>
<tr>
<td class="firstcol">Economic Conditions</td>
<td>-10</td>
<td>-17</td>
<td>2</td>
<td>-27</td>
<td>-41</td>
<td>-34</td>
<td>25.8</td>
<td>14.5</td>
</tr>
<tr>
<td class="firstcol">Business Expectations</td>
<td>0</td>
<td>-27</td>
<td>-35</td>
<td>7</td>
<td>-15</td>
<td>-10</td>
<td>58.3</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Export Expectations</td>
<td>7</td>
<td>-34</td>
<td>-35</td>
<td>-6</td>
<td>-30</td>
<td>-27</td>
<td>55.3</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Investment Intentions</td>
<td>-17</td>
<td>-30</td>
<td>-23</td>
<td>-15</td>
<td>-31</td>
<td>-23</td>
<td>27.7</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Hiring Intentions</td>
<td>-15</td>
<td>-25</td>
<td>-20</td>
<td>-13</td>
<td>-24</td>
<td>-15</td>
<td>38.3</td>
<td>17.0</td>
</tr>
</tbody>
</table>
</body></html>

The DIHK survey, a poling of over 25000 firms by the German chambers of industry and commerce, is not conducted in Q3. So the fourth quarter’s -10 reading compares to the -17 reading from Q2. It is a net balance of opinion diffusion [...]

DIHK Survey Points to Continued Improvement in German Economy

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013f.jpg" align="right" border="0" height="265" width="353">The German financial
community lowered slightly its expectations for
the economic outlook.&nbsp; The ZEW indicator of economic
expectations declined slightly in October to 56.0% from 57.7% in
September.&nbsp; This is still well above the long term average of
26.7%.&nbsp; Their assessment of current conditions was, however,
slightly less pessimistic in October, -72.2%, than it was in September
-74.0%. The decline in optimism was the second decline this
year.&nbsp; In July, the excess of optimists in regard to the
outlook declined to 39.5% from 44.5% in June, a more substantial
decline than the present one.&nbsp; The indicators of current
conditions and expectations are shown in the first chart. There survey
was conducted between September 28 and October 12.&nbsp; 288
institutional investors and analysts
participated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013e.jpg" align="right" border="0" height="265" width="353">A number
of factors could
account for the caution about the outlook expressed by the participants
in the survey.&nbsp; The economic news from Germany in recent weeks
has been mixed.&nbsp; Industrial Production and New Orders
continued to be positive, but exports declined in August and retail
trade has shown little strength as seen in the second chart. (Exports
have been expressed as an index for comparability.)
The
Press has highlighted the decline in expectations, but ZEW's President,
Wolfgang Franz, down played the decline. According to him,&nbsp;
"The assessment of the financial market experts reflects the prevalent
view.&nbsp; The economy will improve only gradually."&nbsp;
<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 (Percent Balance) </th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Current Conditions</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>91.6</td>
<td>-89.4</td>
</tr>
<tr class="odd">
<td class="firstcol"> Expectations</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports&nbsp;
(2005=100)</td>
<td>--</td>
<td>--</td>
<td>102.9</td>
<td>104.5</td>
<td>102.8</td>
<td>96.6</td>
<td>96.2</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade&nbsp;
(2005=100)&nbsp;</td>
<td>--</td>
<td>--</td>
<td>98.2</td>
<td>100.0</td>
<td>99.3</td>
<td>100.1</td>
<td>101.2</td>
<td>99.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New
Orders&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>91.3</td>
<td>89.7</td>
<td>87.9</td>
<td>84.4</td>
<td>81.3</td>
<td>91.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>64.3</td>
<td>92.7</td>
<td>93.7</td>
<td>92.8</td>
<td>88.7</td>
<td>91.3</td>
</tr>
</tbody>
</table>


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The German financial community lowered slightly its expectations for the economic outlook. The ZEW indicator of economic expectations declined slightly in October to 56.0% from 57.7% in September. This is still well above the long [...]

German Financial Experts A Little Less Optimistic

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" width="353">
The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale gasoline price rose to $1.82 per gallon, up eight cents from the September low. Prices had reached a high in early-August of $2.03. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Running counter to gasoline prices, crude oil prices recently firmed and light sweet crude oil prices (WTI) rose to $70.86 per barrel last week, up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil rose even further to $73.27 per barrel.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" width="353">
The demand for gasoline shot up last week and posted a 3.2% rise versus one year ago. The gain was the strongest since the Fall of 2006. Demand for residual fuel oil eased, however and fell 7.3% y/y while distillate demand fell 11.0% y/y. Finally, oil remains plentiful as evidenced by a 15.0% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline have surged and are up 14.8% versus last year. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices increased again last week, ahead of the Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y) but they remained down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu. Yesterday prices increased further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.pdf"> 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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">10/5/09</th>
<th scope="col">09/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.47</td>
<td>2.50</td>
<td>-29.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
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The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale [...]

Weekly Gasoline Prices Slip While Crude Oil Prices Strengthen

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" width="353">
During September, small business&#39; optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism index rose to 88.8 during September after an August uptick. The index remained improved from the lows of this past winter but were down from last year.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.
The percentage of small businesses expecting the economy to improve slipped back to just 8. However, despite this negativism the percentage which thought that now was a good time to expand the business rose sharply to 9 which was the highest level in twelve months. Moreover, the percent reporting higher net-earnings this quarter versus last year held at -40 m/m, meaning fewer were reporting negative earnings versus last year. It was the highest level since December.
The recent improvement in business&#39; sentiment has done little, if anything, to improve hiring intentions. The percentage of firms planning to raise employment fell back into the net-layoff region. Moreover, the percentage of firms with one or more job openings held at just 8% during September, 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 to the lowest level since May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" width="353">
On the pricing front conditions eased. The percentage of firms actually raising prices slipped to -21 (indicating deflation) and remained near 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.The percentage of firms planning to raise prices also slipped a net 6 though that remained up from the March low of zero. Worker compensation improved modestly.
The largest, single most important problems seen by business were poor sales (32%), taxes (24%, its highest level since 2007), government requirements (11%), insurance cost &amp; availability (8%), competition from large businesses (6%) and inflation (4%).
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&#39;s SURVEYS database.

<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&#39;l Federation of Independent Business</a></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">Small Business Optimism Index (SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
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During September, small business' optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism [...]

U.S. Small Business Optimism Improves Slightly Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" align="left" border="0" height="265" width="353">
During September, small business' optimism inched higher for
the second month as the severe economic weakness of early this year
passed. The National Federation of Independent Business (NFIB)
indicated their small business optimism index rose to 88.8 during
September after an August uptick. The index remained improved from the
lows of this past winter but were down from last year.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.
The percentage of small businesses expecting the economy to
improve slipped back to just 8. However, despite this negativism the
percentage which thought that now was a good time to expand the
business rose sharply to 9 which was the highest level in twelve
months. Moreover, the percent reporting higher net-earnings this
quarter versus last year held at -40 m/m, meaning fewer were reporting
negative earnings versus last year. It was the highest level since
December.
The recent improvement in business' sentiment has done little,
if anything, to improve hiring intentions. The percentage of firms
planning to raise employment fell back into the net-layoff region.
Moreover, the percentage of firms with one or more job openings held at
just 8% during September, 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 to
the lowest level since May.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" align="right" border="0" height="265" width="353">
On the pricing front conditions eased. The percentage of firms
actually raising prices slipped to -21 (indicating
deflation) and remained near 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.The
percentage of firms planning to raise prices also
slipped a net 6 though that remained up from the March low of zero.
Worker compensation improved modestly.
The largest, single most important problems seen by business
were poor sales (32%), taxes (24%, its highest level since 2007),
government requirements (11%), insurance cost &amp; availability
(8%), competition from large businesses (6%) and inflation (4%).
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.

<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">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">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
 Weekly Gasoline Prices Slip While
Crude Oil Prices Strengthen 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" align="left" border="0" height="265" width="353">
The pump price for regular gasoline fell
again last week to $2.47 per gallon, the lowest level since mid-July.
However, these prices remain up from the December low of $1.61.
Recently, prices reversed the trend and the wholesale gasoline price
rose to $1.82 per gallon, up eight cents from the September low. Prices
had reached a high in early-August of $2.03. The figures are reported
by the U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Running counter to gasoline prices, crude oil
prices recently firmed and light sweet crude oil prices (WTI) rose to
$70.86 per barrel last week, up from the December low of $32.37.
Yesterday, the spot market price for light sweet crude oil rose even
further to $73.27 per barrel.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" align="right" border="0" height="265" width="353">
The demand for gasoline shot up last week and posted a 3.2%
rise versus one year ago. The gain was the strongest since the Fall of
2006. Demand for residual fuel oil eased, however and fell 7.3% y/y
while distillate demand fell 11.0% y/y. Finally, oil remains plentiful
as evidenced by a 15.0% y/y rise in inventories of crude oil &amp;
petroleum products. Inventories of gasoline have surged and are up
14.8% versus last year. The figures on crude oil production and
inventories are available in Haver's OILWKLY database.
Natural gas prices increased again last week, ahead of the
Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y)
but they remained down by three-quarters from the high reached in
early-July of last year of $13.19/mmbtu. Yesterday prices increased
further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups
from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.pdf">
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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">10/5/09</th>
<th scope="col">09/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.47</td>
<td>2.50</td>
<td>-29.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 German Financial Experts A Little
Less Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> October 13, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013f.jpg" align="right" border="0" height="265" width="353">The German financial
community lowered slightly its expectations for
the economic outlook.&nbsp; The ZEW indicator of economic
expectations declined slightly in October to 56.0% from 57.7% in
September.&nbsp; This is still well above the long term average of
26.7%.&nbsp; Their assessment of current conditions was, however,
slightly less pessimistic in October, -72.2%, than it was in September
-74.0%. The decline in optimism was the second decline this
year.&nbsp; In July, the excess of optimists in regard to the
outlook declined to 39.5% from 44.5% in June, a more substantial
decline than the present one.&nbsp; The indicators of current
conditions and expectations are shown in the first chart. There survey
was conducted between September 28 and October 12.&nbsp; 288
institutional investors and analysts
participated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013e.jpg" align="right" border="0" height="265" width="353">A number
of factors could
account for the caution about the outlook expressed by the participants
in the survey.&nbsp; The economic news from Germany in recent weeks
has been mixed.&nbsp; Industrial Production and New Orders
continued to be positive, but exports declined in August and retail
trade has shown little strength as seen in the second chart. (Exports
have been expressed as an index for comparability.)
The
Press has highlighted the decline in expectations, but ZEW's President,
Wolfgang Franz, down played the decline. According to him,&nbsp;
"The assessment of the financial market experts reflects the prevalent
view.&nbsp; The economy will improve only gradually."&nbsp;
<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 (Percent Balance) </th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Current Conditions</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>91.6</td>
<td>-89.4</td>
</tr>
<tr class="odd">
<td class="firstcol"> Expectations</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports&nbsp;
(2005=100)</td>
<td>--</td>
<td>--</td>
<td>102.9</td>
<td>104.5</td>
<td>102.8</td>
<td>96.6</td>
<td>96.2</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade&nbsp;
(2005=100)&nbsp;</td>
<td>--</td>
<td>--</td>
<td>98.2</td>
<td>100.0</td>
<td>99.3</td>
<td>100.1</td>
<td>101.2</td>
<td>99.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New
Orders&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>91.3</td>
<td>89.7</td>
<td>87.9</td>
<td>84.4</td>
<td>81.3</td>
<td>91.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>64.3</td>
<td>92.7</td>
<td>93.7</td>
<td>92.8</td>
<td>88.7</td>
<td>91.3</td>
</tr>
</tbody>
</table>


</body></html>

U.S. Small Business OptimismImproves Slightly Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012d.jpg" align="right" border="0" height="265" width="353">
The 8% decline in the broad trade-weighted dollar since
February of this year is having Central Bankers outside the United
States rethink the currency composition of their international reserve
holdings. A major reallocation of currencies could have serious
consequences for the U.S. Actually, this latest decline in the dollar
is from an unexpected high that resulted from the pursuits of safe
havens on the part of foreigners in the midst of the financial crisis.
As can be seen in the first chart, the long-term trend of the dollar on
a broad trade-weighted basis has been declining for the last seven or
eight years. During this time, there has been a steady shift in the
composition of total international reserves from dollars to Euros, as
can be seen in the second chart. Dollars now account for 62.8% of the
reserves of the countries reporting currency composition, compared with
72.7% in the second quarter of 2001. Meanwhile the share of euros has
gone from 17.6% to 27.5%.
Data reported by the International Monetary Fund and found in
the Haver IFS Data Base can help in monitoring this
situation, particularly, Currency Composition of Official
Foreign Exchange Reserves, which is in dollars with a
quarterly frequency and Share of National
Currencies in Total Identified Official Holding of Foreign Economies, which
is in SDRs with an annual frequency. Reserves are also found in the
individual country source data.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012e.jpg" align="right" border="0" height="265" width="353">

After declining in the third and fourth quarters of 2008 and
the first quarter of 2009, total international reserves increased by
$312 billion in the second quarter of this year to reach $6.80
trillion. Indications are that the rise has continued. Data for the
third quarter of this year are not yet available for China, but data
for some of the other large holders of reserves, namely, Japan, Russia,
India, Taiwan and Korea are available and all have been increasing. Not
all countries report the currency composition of their reserves.
Unfortunately, among those not reporting is China, the holder of the
largest reserves at $2.1 trillion. As a result, the amount of reserves
for which the currency composition is known is much smaller--$4.3
trillion at the end of June 2009. It is this smaller universe that the
data in the second chart are based.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp; Foreign
Exchange Reserves ( Billion $)</td>
<td>6801.0</td>
<td>6489.4</td>
<td>6645.1</td>
<td>6846.6</td>
<td>6901.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Allocated</td>
<td>4269.6</td>
<td>4057.9</td>
<td>4210.7</td>
<td>4360.6</td>
<td>438.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Emerging and Developing
Countries Total</td>
<td>4236.3</td>
<td>4076.3</td>
<td>4194.1</td>
<td>4440.6</td>
<td>4491.2</td>
</tr>
<tr>
<td class="firstcol">Allocated</td>
<td>2024.5</td>
<td>1946.7</td>
<td>2053.1</td>
<td>2238.1</td>
<td>2254.2</td>
</tr>
</tbody>
</table>
</body></html>

The 8% decline in the broad trade-weighted dollar since February of this year is having Central Bankers outside the United States rethink the currency composition of their international reserve holdings. A major reallocation of [...]

The U.S. Dollar and International Reserves

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012a.jpg" align="right" border="0" height="265" width="353">For
August, the Bureau of Labor Statistics reported in its Job Openings
&amp; Labor Turnover Survey (JOLTS) that job availability fell to a
new series' low in August. The 0.9% downtick in the number of
job openings followed a 4.2% July decline and openings were
off by 35.9% from last August. The series dates back to December
2000.

The actual number of job openings in the construction
sector has been rising of late and is roughly double the series' low
reached in February (-26.2% y/y) while factory sector job openings also
have been rising modestly
(-58.35 Y/Y). The level of professional &amp; business services job
openings reached a new series' low (-42.1% y/y as did education
&amp; health sectors jobs (-27.3% y/y). Openings in retail trade
have risen slightly from their April low (-28.5% y/y) while government
sector job openings reflected reduced tax revenues and fell to a new
low (-27.1% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012b.jpg" align="right" border="0" height="265" width="353">The job
openings rate remained
stable at the July series' low of 1.8%. These rates were down from more
than a 3% rate in 2007. The job openings rate is the number
of job openings on the last business day of the month as a percent of
total employment plus job openings.
The hires rate
at 3.1% has improved slightly from its May-June lows but still was near
the lowest in the series' short eight year history.&nbsp;The
hires rate is the number of hires during the month divided by
employment.&nbsp;The actual number of hires also was off
its low but was still down by 13.4% year-to-year. Leisure &amp;
hospitality industry jobs were down by 16.5% but declines have
stabilized since March. Factory sector (-12.6%) job declines also have
stabilized as they may have in the retail sector (-18.4%). In the
professional &amp; business services dustry, the hires rate also
has picked up recently -12.6% y/y while education &amp; health
services jobs are well up from their low (-2.3% y/y). The decline in
hires in the construction sector also have may have stabilized but
remain off 27.8% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012c.jpg" align="right" border="0" height="265" width="353">The job
separations rate reached
a new series' low of 3.3% with the actual number of separations off
12.7% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements.

The JOLTS survey dates only to December 2000 but has followed the
movement in nonfarm payrolls, though the actual correlation between the
two series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.
Financial market utilities and the
challenge of just-in-time liquidity from the Federal Reserve
Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflnovember2009_268a.pdf">here.</a>&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.8</td>
<td>2.8</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,387</td>
<td>2,408</td>
<td>3,722</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.7</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,029</td>
<td>4,228</td>
<td>4,654</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>

</body></html>

For August, the Bureau of Labor Statistics reported in its Job Openings & Labor Turnover Survey (JOLTS) that job availability fell to a new series' low in August. The 0.9% downtick in the number of job openings followed a 4.2% July [...]

JOLTS: U.S. Job Openings Fell To New Low, Off One-Third From Last Year

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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260114A1.jpg

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Mortgage applications jumped 28.5% w/w (55.1% y/y) in the week ending January 9 after rising 0.3% w/w (+60.8% y/y) in the week of January 2, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 15.9% w/w (14.0% y/y) in the week ending January 9 after falling 6.2% w/w (+24.7% y/y) in the week ending January 2 and following five consecutive weekly declines. Applications for loan refinancing surged 40.1% w/w (128.1% y/y) in the latest week, after a rise of 7.4% w/w (133.6% y/y) in the January 2 week.

The effective interest rate on a 30-year fixed-rate loan fell 7bps to 6.35% in the week ending January 9 from 6.42% in the week ending January 2. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.75% in the latest week from 5.80% in the prior week. The 30-year Jumbo rate rose 9bps to 6.54% in the January 9 week from 6.45% in the January 2 week. The rate on a 5-year ARM dropped 38bps to 5.60% in the latest week after jumping 28bps to 5.98% in the January 2 week.

The share of applications for refinancing an existing loan rose to 60.2% of total applications in the January 9 week from 56.6% in the week ending January 2. The adjustable-rate mortgage (ARM) share of activity rose to 7.0% in the week ending January 9 from 6.3% in the week ending January 2.

The average size of a mortgage loan rose 6.3% w/w (9.9% y/y) to $403,600 in the week ending January 9 after declining 4.5% w/w (+5.6% y/y) to $379,800 in the week ending January 2. The average size of a purchase loan rose 7.7% w/w (4.9% y/y) to $440,300 in the latest week after dropping 4.2% w/w (-1.4% y/y) to $408,700 in the prior week. The average size of a loan to refinance a mortgage rose 6.0% w/w (27.8% y/y) to $379,200 in the week ending January 9 after retrenching 4.1% w/w (+27.8% y/y) to $357,700 in the January 2 week.

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

- Purchase and refinancing loan applications jumped in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.35%.
- Average loan size rose.

U.S. Mortgage Applications Surged in the Week of January 9

Winnie Tapasanun

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New single-family home sales dipped 0.1% m/m (+18.7% y/y) to a seasonally adjusted annual rate of 737,000 units in October following rises of 3.8% to 738,000 in September and 11.3% to 711,000 in August (+20.5%, 800,000 previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected sales of 710,000 for October. The October figure was the first m/m decline since July, though sales remained 42.0% up from the July 2022 low of 519,000. The sales dip occurred alongside a drop in the average 30-year fixed mortgage rate to 6.25% in October, the lowest since September 2024, after declining to 6.35% in September; it had subsequently continued trending downward, according to Freddie Mac.

By region, October new home sales fell m/m in all major regions except the South. Sales in the West plunged 36.3% (-24.8% y/y) to 109,000 in October, the lowest level since July 2022, after a 9.6% increase in September. Sales in the Northeast dropped 14.3% (-40.0% y/y) to 24,000 after registering at 28,000 in September and August. Sales in the Midwest fell 9.0% (+21.3% y/y) to 91,000 following a strong 25.0% September gain. For these three regions, October marked the first m/m decline since July. In contrast, sales in the South surged 16.9% (42.1% y/y) to 513,000, the highest level since March 2021, after a 1.8% September decline. The South remained the dominant region, accounting for 69.6% of total U.S. new home sales.

The median sales price of a new home fell 3.3% (-8.0% y/y) to $392,300 in October on top of a 3.4% decline to $405,800 in September, marking the fourth m/m fall in five months and the lowest level since July 2021. The median sales price had fallen 14.8% since its record high of $460,300 in October 2022. Meanwhile, the average sales price of a new home rose 3.0% (-4.6% y/y) to $498,000 in October after an 8.1% drop to $483,500 in September. The average price was 8.0% below a high of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market held steady at 488,000 (+1.7% y/y) in October after four straight m/m declines. The latest figure was 14.6% above a low of 426,000 in July 2023. The seasonally adjusted months' supply of new homes for sale remained at 7.9 months in October and September—the lowest reading since September 2024—after falling to 8.3 months in August. The latest reading, while above a low of 6.9 months in May 2023, remained below a high of 10.6 months in July 2022.

The median number of months a new home stayed on the market rose to 2.7 months in October, the highest since March 2025, after registering at 2.4 months in September and August. The latest number was above its record low of 1.5 months in both September and October of 2022 but well below a peak of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

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- October sales -0.1% (+18.7% y/y) to 737,000; still 42.0% above the July ’22 low.
- Sales fall m/m in all major regions except the South (+16.9%).
- Median sales price down to $392,300, lowest since July ’21; avg. price up to $498,000.
- Months' supply of new homes for sale holds steady at 7.9 mths., lowest since Sept. '24.

U.S. New Home Sales Ease in October After Two Straight M/M Increases

Michael J. Moran

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The consumer price index rose 0.3% in December, while the core index (prices excluding food and energy) rose 0.2%. Both measures were faster than the averages of 0.1 percent in the prior two months. (The Bureau of Labor Statistics did not publish a CPI for October because of the government shutdown. Both the headline and core indexes showed increases of 0.2% for the two-month period from September to November.)

The December results were not pronounced enough to suggest that the restraint in October and November reflected distortions triggered by the government shutdown. At the same time, they were not soft enough to suggest that October and November were signaling faster deceleration in inflation. The past three months seemed to be showing the same degree of random volatility seen in the prior two years, with the underlying trends showing a slight degree of deceleration. The year-over-year increase in headline CPI totaled 2.7%, only slightly slower than 3.0% in mid-2024. The Core has eased a bit more: 2.6% in December versus 3.3% in mid 2024.

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Prices of core goods and services have been following different paths in the past few years, and they carried different signals in December. Prices of core goods showed no month-to-month change in December, which kept the year-over-year trajectory moving sideways. The flat pattern is encouraging in that it suggests that core goods inflation is perhaps steadying after trending upward since mid-2024. Core service prices rose 0.3 percent in December, in line with the recent average. Core service inflation showed little easing in the early part of 2025, but hints of slowing emerged from September to November. December results, though, raised questions about faster deceleration in service inflation.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

- Not by enough to suggest that restraint in October and November reflected distortions from the government shutdown
- But by enough to suggest that October and November reflected normal volatility rather than the beginning of a slower trend.

December CPI: Price Increases Quickened After Two Slow Months

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Japan’s economy watchers index at year-end weakened slightly, but the future index strengthened slightly to counterbalance the drop-off. The December current index is weaker than it was in October as well, as is the headline for the future index. But the queue, or rank, standings of these indexes show the current index at a 60th percentile standing and a queue standing for the future index at its 70th percentile. Despite the end of year give back, the index headline readings are still, for the most part, firm-to-solid.

**The Current Index**
That is an assessment about the rankings of the December data compared to their respective histories back to end 2004- a twenty-year period. However, in terms of the diffusion values of the index per se, the current index has only two readings above the 50 mark indicating actual expansion. Expansion is the rule in current services industries and in nonmanufacturing, a broader sector dominated by services. Employment and readings for corporations overall both show readings close to neutral with diffusion at 49.2 or better, but still short of 50. Current retail at 46.5 is the weakest sector and shows the second weakest diffusion reading.  

The current index standings on employment has a reading below 50%- and that is despite having a diffusion reading near 50 -nearly  unchanged employment month-to-month. That diffusion reading for December is a low relative to its own history. The strongest two sectors on rankings are services and eating & drinking places with standings in the 70-percentile range. Apart from the weak employment standing, the weakest rankings are in the range of the lower sixty percentiles with only retailing lower, in its 56.5 percentile, manufacturing at its 61.7 percentile. 

**The Future Index**
The Future index has a slightly higher queue standing than the current index as noted above, but it is not vastly different. No future components rankings are below their 50%, but again, employment is weakest with a ranking in its 50th-percentile and with housing in its 53rd percentile. Nonmanufacturing and services have the highest queue standings.

In terms of diffusion readings as opposed to standings, the future index headline is above 50 unlike for the current headline. Six of nine observations in December have future readings in their respective 50.6 percentiles. The weakest future reading, housing, with a 46.2 reading, is followed by retailing and eating & drinking places, each at 49.6. But the above-50 readings ae not strong per-se either. The strongest is the services sector at 52.4, then nonmanufacturing at 51.7, followed by employment at 51.4 (and it has the weakest queue standing among future readings). Corporations have a diffusion reading at 50.9, households at 50.3, and manufacturers at 50.2. And that 50.2 reading for manufacturers has a 70.4 percentile standing.

Always remember that diffusion and the rank standings are different things and very different concepts even though they are both measured as percentages; they can be quite different. Various series have different histories and tendencies. Not too surprisingly the current and future diffusion readings are highly correlated (0.96) while the standings are not so well correlated in December between the current and future (0.37). The correlation I speak about above between diffusion and standing is at 0.20 for the current readings in December but is higher at 0.53 for the December future components.

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**Summing up**
The differences in the diffusion values tell us that retailing, households and employment are expected to pick up over the next six months. But housing is expected to weaken.

Japan is still in a fragile state with a relatively new PM still getting adjusted (but rumored to be considering an early snap-election). And with the economy generating excess inflation even with a shrinking population, addressing inflation in Japan is trickier since the Bank of Japan does not want to slay inflation at the cost of bringing back deflation. So, policy is Japan walks on eggshells.

Japan

Japan’s Economy Watchers Survey in December 2025

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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.