Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215g.jpg" align="right" border="0" height="265" width="353">
Industrial
production resumed the increase that began this past July. The November
0.8% gain followed an unrevised unchanged reading for October and it
exceeded Consensus expectations for a 0.6% rise. The improvement from
October was across-the-board but it was greatest in the construction
supplies and in the materials areas. Output of consumer goods rose a
moderate 0.3% and that was led by a 2.9% (-13.5% y/y) increase in
furniture production and a 1.9% (-6.9% y/y) increase in motor vehicle
output. Output of machinery also rose (-19.7% y/y) as did computers
&amp; electronics (-4.0% y/y) production. Less the motor vehicle
&amp; high-tech sectors output increased 0.8%&nbsp;(-5.1% y/y)
last month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215h.jpg" align="right" border="0" height="265" width="353">During
November, production increases amongst
industries sagged somewhat to 52.9% of the total from the high of 60.6%
during August. The breadth of increase from last July also dipped to a
still-firm 59.9%, near the strongest since early-2007.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215i.jpg" align="right" border="0" height="265" width="353">Capacity
utilization rose further to 71.3%, its
highest level since December. In the factory sector alone utilization
rose to 68.4%. Utilization in the primary metals area has risen sharply
to 59.1% with the rebound in output. There's also been a slight rise in
utilization in the machinery area but it's down most elsewhere. The
overall increase was caused by another estimated 0.1% (-0.9% y/y)
decline in industry capacity.The industrial production data
are available in Haver's USECON database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (SA,%)</th>
<th scope="col">November</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">Total Output</td>
<td>0.8</td>
<td>0.0</td>
<td>0.5</td>
<td>-5.2</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>1.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>-4.8</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.3</td>
<td>0.1</td>
<td>1.0</td>
<td>-1.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.5</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-8.1</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>1.6</td>
<td>-1.6</td>
<td>-1.2</td>
<td>-12.5</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>1.2</td>
<td>0.1</td>
<td>0.7</td>
<td>-4.8</td>
<td>-1.9</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>-1.8</td>
<td>1.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>71.3</td>
<td>70.6</td>
<td>70.0</td>
<td>74.4 (Nov. '08)</td>
<td>77.5</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>

</body></html>

Industrial production resumed the increase that began this past July. The November 0.8% gain followed an unrevised unchanged reading for October and it exceeded Consensus expectations for a 0.6% rise. The improvement from October was [...]

Factory Production Resumes Increase

Louise Curley

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background-color:#b8b8b8; German Investors A Little Less Optimistic
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215d.jpg" align="right" border="0" height="265" width="353">
The ZEW
indicator of investors sentiment in Germany declined for the third
month in December.&nbsp; The percent balance of opinion on macro
expectations six months ahead is now at 50.4%, down 7.3 percentage
points from the peak of 57.7% in September.&nbsp; The
current&nbsp; level, however, is well above the long term average
of 27.0%.&nbsp; Although the balance between those respondents who
view current conditions negatively over those who view them positively
is still high at 60.6%, it declined five percentage points in December
and is well below the peak, 92.8%, reached in May of this year when it
was hard to find any optimists.&nbsp; The first chart shows the
percent balances for current conditions and the macro expectations over
the next six months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215e.jpg" align="right" border="0" height="265" width="353">
The survey is based on the opinions of 277
investors and analysts and took place from November 30 through December
14.&nbsp; During that period, data on new orders, industrial
production and retail sales for October were announced.&nbsp;
Industrial Production was down 1.86%, new orders for manufacturing were
down 2.57%, motor vehicle sales were down 1.37% and retail sales,
excluding motor vehicle sales, were flat.&nbsp; These data
suggested that the economic expansion might be somewhat slower than
earlier expectations and may have dampened some of the optimism of the
participants.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215f.jpg" align="right" border="0" height="265" width="353">
In spite of the decline in the overall outlook,
participants in the survey are still relatively optimistic regarding
the profit outlook.&nbsp; There are only four industries out of the
thirteen industries surveyed where the current balance of opinion is
for lower profits.&nbsp; These are: banking, construction,
utilities and services.&nbsp; They are shown in the second
chart.&nbsp;&nbsp; Of the remaining industries--insurance,
chemicals/pharmaceuticals, steel/metal, electronics, machinery,
telecommunications, information technology--the balance of opinion is
for higher profits; and for vehicles/automotive and consumption/trade,
the balance of opinion is for smaller losses.&nbsp; The balance of
opinion for higher profits has risen significantly for the information
technology, machinery, steel/metal and chemicals/pharmaceuticals
industries, as can be seen in the third chart.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct&nbsp; 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
<th scope="col">April 09</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current Conditions</td>
<td>-60.6</td>
<td>-65.6</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>
</tr>
<tr>
<td class="firstcol">Macro Expectations (6 Months
Ahead)&nbsp;</td>
<td>50.4</td>
<td>51.1</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>
</tr>
</tbody>
</table>
</body></html>

The ZEW indicator of investors sentiment in Germany declined for the third month in December. The percent balance of opinion on macro expectations six months ahead is now at 50.4%, down 7.3 percentage points from the peak of 57.7% in [...]

Rising Exports Fuel Rise in Japanese Industrial Production

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215a.jpg" align="right" border="0" height="265" width="353">There
was a
broadening of inflationary pressure last month as measured by the
producer price index. The PPI for finished goods jumped 1.8% after the
tame 0.3% October increase. The rise was by far the largest increase in
months and it lifted the y/y gain to 2.7%, its fastest since October of
last year. In addition, the November increase was more-than-double the
Consensus expectation.

 Higher energy costs led the strength in the
PPI last month. The 6.9% increase lifted the y/y increase to 10.6%, its
strongest since September 2008. Gasoline prices increased 8.2% (35.9%
y/y). Elsewhere, the gain in energy prices was more moderate. Fuel oil
prices increased 10.8% but they remained down 7.1% from last year.
Natural gas prices also increased a lesser 3.9% and they were down
15.6% from the year ago level. Food prices increased a moderate 0.5%
but the increase left prices 1.6% lower than last year. Beef &amp;
veal prices were off 8.4% y/y, dairy product prices fell 7.3% and
vegetable prices slumped 3.2% y/y.


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215b.jpg" align="right" border="0" height="265" width="353">Excluding
food
&amp; energy prices rose 0.5% and reversed the October decline. The
m/m increase in the core PPI contrasted with expectations for a modest
0.2% increase. The PPI for finished consumer goods less food &amp;
energy rose 0.5% (1.2% y/y) and also reversed the October
decline.&nbsp; Finished durables prices increased 0.6% (0.8% y/y)
while core finished consumer nondurable goods prices rose a modest 0.4%
(2.3% y/y). Capital equipment prices increased for the first time in
three months. The 0.4% increase nevertheless left prices up just 0.4%
y/y, nearly the weakest increase since 2003.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215c.jpg" align="right" border="0" height="265" width="353">
Prices for intermediate
goods jumped 1.4%, reflecting the strength in energy prices. Core
prices also firmed and the 0.3% increase reversed the October decline.
The y/y gain in prices amounted to 0.3% which was a reversal from the
2.4% price deflation at the end of last year. Chemical, lumber and
metals prices have firmed. The crude materials PPI again reflected the
strength in energy prices and rose 5.7%. Core prices gave back the
October gain but y/y were up 20.4% due to the improved economy.
The
producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.· Bank Relationships
and the Depth of the Current Economic Crisis from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-38.html">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM" style="color: rgb(255, 255, 255);">Producer Price Index</a>(%)</th>
<th scope="col">November</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">Finished Goods</td>
<td>1.8</td>
<td>0.3</td>
<td>-0.6</td>
<td>2.7</td>
<td>6.4</td>
<td>3.9</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5</td>
<td>-0.6</td>
<td>-0.1</td>
<td>1.2</td>
<td>3.4</td>
<td>2.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4</td>
<td>0.3</td>
<td>0.2</td>
<td>-1.5</td>
<td>10.5</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.9</td>
<td>-3.0</td>
<td>7.4</td>
<td>2.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>5.7</td>
<td>5.4</td>
<td>-2.1</td>
<td>4.8</td>
<td>21.4</td>
<td>11.9</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.8</td>
<td>0.5</td>
<td>3.6</td>
<td>&nbsp;20.4</td>
<td>14.8</td>
<td>15.6</td>
<td>20.8</td>
</tr>
</tbody>
</table>

</body></html>

There was a broadening of inflationary pressure last month as measured by the producer price index. The PPI for finished goods jumped 1.8% after the tame 0.3% October increase. The rise was by far the largest increase in months and it [...]

U.S. PPI Jumps As Fuel Costs Surge; Core Prices Remain Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215a.jpg" align="right" border="0" height="265" width="353">There
was a
broadening of inflationary pressure last month as measured by the
producer price index. The PPI for finished goods jumped 1.8% after the
tame 0.3% October increase. The rise was by far the largest increase in
months and it lifted the y/y gain to 2.7%, its fastest since October of
last year. In addition, the November increase was more-than-double the
Consensus expectation.


 Higher energy costs led the strength in the
PPI last month. The 6.9% increase lifted the y/y increase to 10.6%, its
strongest since September 2008. Gasoline prices increased 8.2% (35.9%
y/y). Elsewhere, the gain in energy prices was more moderate. Fuel oil
prices increased 10.8% but they remained down 7.1% from last year.
Natural gas prices also increased a lesser 3.9% and they were down
15.6% from the year ago level. Food prices increased a moderate 0.5%
but the increase left prices 1.6% lower than last year. Beef &amp;
veal prices were off 8.4% y/y, dairy product prices fell 7.3% and
vegetable prices slumped 3.2% y/y.


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215b.jpg" align="right" border="0" height="265" width="353">Excluding
food
&amp; energy prices rose 0.5% and reversed the October decline. The
m/m increase in the core PPI contrasted with expectations for a modest
0.2% increase. The PPI for finished consumer goods less food &amp;
energy rose 0.5% (1.2% y/y) and also reversed the October
decline.&nbsp; Finished durables prices increased 0.6% (0.8% y/y)
while core finished consumer nondurable goods prices rose a modest 0.4%
(2.3% y/y). Capital equipment prices increased for the first time in
three months. The 0.4% increase nevertheless left prices up just 0.4%
y/y, nearly the weakest increase since 2003.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215c.jpg" align="right" border="0" height="265" width="353">
Prices for intermediate
goods jumped 1.4%, reflecting the strength in energy prices. Core
prices also firmed and the 0.3% increase reversed the October decline.
The y/y gain in prices amounted to 0.3% which was a reversal from the
2.4% price deflation at the end of last year. Chemical, lumber and
metals prices have firmed. The crude materials PPI again reflected the
strength in energy prices and rose 5.7%. Core prices gave back the
October gain but y/y were up 20.4% due to the improved economy.
The
producer price data is available in Haver's USECON
database. More detailed data is in the PPI and in
the PPIR databases.· Bank Relationships
and the Depth of the Current Economic Crisis from the
Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-38.html">here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM" style="color: rgb(255, 255, 255);">Producer Price Index</a>(%)</th>
<th scope="col">November</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">Finished Goods</td>
<td>1.8</td>
<td>0.3</td>
<td>-0.6</td>
<td>2.7</td>
<td>6.4</td>
<td>3.9</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5</td>
<td>-0.6</td>
<td>-0.1</td>
<td>1.2</td>
<td>3.4</td>
<td>2.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.4</td>
<td>0.3</td>
<td>0.2</td>
<td>-1.5</td>
<td>10.5</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3</td>
<td>-0.2</td>
<td>0.9</td>
<td>-3.0</td>
<td>7.4</td>
<td>2.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>5.7</td>
<td>5.4</td>
<td>-2.1</td>
<td>4.8</td>
<td>21.4</td>
<td>11.9</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.8</td>
<td>0.5</td>
<td>3.6</td>
<td>&nbsp;20.4</td>
<td>14.8</td>
<td>15.6</td>
<td>20.8</td>
</tr>
</tbody>
</table>

 Rising Exports Fuel Rise in
Japanese Industrial Production 
by <a href="/comment/Curley.html">Louise
Curley</a> December 15, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215d.jpg" align="right" border="0" height="265" width="353">The ZEW
indicator of investors sentiment in Germany declined for the third
month in December.&nbsp; The percent balance of opinion on macro
expectations six months ahead is now at 50.4%, down 7.3 percentage
points from the peak of 57.7% in September.&nbsp; The
current&nbsp; level, however, is well above the long term average
of 27.0%.&nbsp; Although the balance between those respondents who
view current conditions negatively over those who view them positively
is still high at 60.6%, it declined five percentage points in December
and is well below the peak, 92.8%, reached in May of this year when it
was hard to find any optimists.&nbsp; The first chart shows the
percent balances for current conditions and the macro expectations over
the next six months.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215e.jpg" align="right" border="0" height="265" width="353">The survey
is based on the opinions of 277
investors and analysts and took place from November 30 through December
14.&nbsp; During that period, data on new orders, industrial
production and retail sales for October were announced.&nbsp;
Industrial Production was down 1.86%, new orders for manufacturing were
down 2.57%, motor vehicle sales were down 1.37% and retail sales,
excluding motor vehicle sales, were flat.&nbsp; These data
suggested that the economic expansion might be somewhat slower than
earlier expectations and may have dampened some of the optimism of the
participants.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215f.jpg" align="right" border="0" height="265" width="353">In spite
of the decline in the overall outlook,
participants in the survey are still relatively optimistic regarding
the profit outlook.&nbsp; There are only four industries out of the
thirteen industries surveyed where the current balance of opinion is
for lower profits.&nbsp; These are: banking, construction,
utilities and services.&nbsp; They are shown in the second
chart.&nbsp;&nbsp; Of the remaining industries--insurance,
chemicals/pharmaceuticals, steel/metal, electronics, machinery,
telecommunications, information technology--the balance of opinion is
for higher profits; and for vehicles/automotive and consumption/trade,
the balance of opinion is for smaller losses.&nbsp; The balance of
opinion for higher profits has risen significantly for the information
technology, machinery, steel/metal and chemicals/pharmaceuticals
industries, as can be seen in the third chart.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec 09</th>
<th scope="col">Nov 09</th>
<th scope="col">Oct&nbsp; 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09</th>
<th scope="col">April 09</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current Conditions</td>
<td>-60.6</td>
<td>-65.6</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>
</tr>
<tr>
<td class="firstcol">Macro Expectations (6 Months
Ahead)&nbsp;</td>
<td>50.4</td>
<td>51.1</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>
</tr>
</tbody>
</table>

 Factory Production Resumes
Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> December 15, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215g.jpg" align="right" border="0" height="265" width="353">Industrial
production resumed the increase that began this past July. The November
0.8% gain followed an unrevised unchanged reading for October and it
exceeded Consensus expectations for a 0.6% rise. The improvement from
October was across-the-board but it was greatest in the construction
supplies and in the materials areas. Output of consumer goods rose a
moderate 0.3% and that was led by a 2.9% (-13.5% y/y) increase in
furniture production and a 1.9% (-6.9% y/y) increase in motor vehicle
output. Output of machinery also rose (-19.7% y/y) as did computers
&amp; electronics (-4.0% y/y) production. Less the motor vehicle
&amp; high-tech sectors output increased 0.8%&nbsp;(-5.1% y/y)
last month. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215h.jpg" align="right" border="0" height="265" width="353">During
November, production increases amongst
industries sagged somewhat to 52.9% of the total from the high of 60.6%
during August. The breadth of increase from last July also dipped to a
still-firm 59.9%, near the strongest since early-2007.

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091215i.jpg" align="right" border="0" height="265" width="353">Capacity
utilization rose further to 71.3%, its
highest level since December. In the factory sector alone utilization
rose to 68.4%. Utilization in the primary metals area has risen sharply
to 59.1% with the rebound in output. There's also been a slight rise in
utilization in the machinery area but it's down most elsewhere. The
overall increase was caused by another estimated 0.1% (-0.9% y/y)
decline in industry capacity.
The industrial production data
are available in Haver's USECON database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (SA,%)</th>
<th scope="col">November</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">Total Output</td>
<td>0.8</td>
<td>0.0</td>
<td>0.5</td>
<td>-5.2</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>1.1</td>
<td>-0.2</td>
<td>0.6</td>
<td>-4.8</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>0.3</td>
<td>0.1</td>
<td>1.0</td>
<td>-1.9</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>0.5</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-8.1</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>1.6</td>
<td>-1.6</td>
<td>-1.2</td>
<td>-12.5</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>1.2</td>
<td>0.1</td>
<td>0.7</td>
<td>-4.8</td>
<td>-1.9</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>-1.8</td>
<td>1.6</td>
<td>0.3</td>
<td>-5.1</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>71.3</td>
<td>70.6</td>
<td>70.0</td>
<td>74.4 (Nov. '08)</td>
<td>77.5</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>

</body></html>

U.S. PPI Jumps As Fuel CostsSurge; Core Prices Remain Strong

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214e.jpg" align="left" border="0" height="265" width="353">
After rising for five consecutive months, industrial
production fell 0.6% in the Euro Area in October and 0.7% in the entire
European Union. The attached chart shows the index of Industrial
Production (2005=100) for the Euro Area and the European Union. There
is a spurious correlation between the two series due the fact that the
EU series includes the EA series. As with much of the data on the Euro
Area and the European Union it is not possible to derive a non Euro
Area part of the European Union.
Not all of the countries of the European Union have reported
October data. Euro stat's totals for the Euro Area and the European
Union include their estimates of the missing data and these estimates
are not published. The totals are, therefore, preliminary and
frequently revised.
In the Euro Area, the big three--Germany experienced a 1.8%
decline in industrial production, France, a 0.9% decline and Italy, a
0.5% increase. Declines were recorded in Ireland, 2.8%, Greece, 0.8%,
Portugal, 1.4%. The biggest decline in production in the Euro area,
that of Slovenia, was 3.2%. The largest increase in production in the
Euro Area was in Finland at 2.2%.
Of the published data, among the non Euro Area countries,
industrial production in the UK declined 0.1%, and in Sweden, 0.5%.
Industrial Production in Latvia and Lithuania increased 0.1% and 0.4%
respectively. Production in Bulgaria rose 2.1%, the first increase
since September, 2008.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (2005=100)</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 08&nbsp;</th>
<th scope="col">Apr 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">European Area (m/m % change)</td>
<td>-0.73</td>
<td>0.12</td>
<td>0.68</td>
<td>0.18</td>
<td>0.32</td>
<td>0.53</td>
<td>-0.39</td>
</tr>
<tr>
<td class="firstcol">European Union (m/m % change)</td>
<td>-0.61</td>
<td>0.21</td>
<td>1.13</td>
<td>0.26</td>
<td>0.86</td>
<td>1.06</td>
<td>-0.47</td>
</tr>
<tr class="odd">
<td class="firstcol">Bulgaria</td>
<td>2.1</td>
<td>-3.6</td>
<td>-0.21</td>
<td>-0.5</td>
<td>-0.6</td>
<td>-1.4</td>
<td>-0.1</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>-3.2</td>
<td>0.7</td>
<td>8.0</td>
<td>-0.6</td>
<td>0.3</td>
<td>2.9</td>
<td>-4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>-2.8</td>
<td>11.3</td>
<td>-16.0</td>
<td>7.9</td>
<td>7.3</td>
<td>-3.6</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">Finland</td>
<td>2.2</td>
<td>-1.7</td>
<td>2.4</td>
<td>-1.6</td>
<td>1.5</td>
<td>-0.7</td>
<td>-1.9</td>
</tr>
</tbody>
</table>
</body></html>

After rising for five consecutive months, industrial production fell 0.6% in the Euro Area in October and 0.7% in the entire European Union. The attached chart shows the index of Industrial Production (2005=100) for the Euro Area and [...]

A Pause In Economic Activity In The European Union

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214d.jpg" align="left" border="0" height="265" width="353">
Industrial output in EMU has backtracked. The 0.3% drop in
October flattens out progress in the sector and leaves manufacturing IP
flat in the fourth quarter compared to its level in Q3. Consumer goods
output is off sharply in the new quarter while capital goods output is
strongly higher. Intermediate goods output is up sharply.
Among the five largest EU economics only Spain saw a rise in
IP month-to-month in October. Still three month growth rates are up for
the zone and are strong for the Big Five except for a 1.8% annual rate
drop in the UK and a horrific-looking -20.2% from Spain whose numbers
are notoriously volatile (Spain&#8217;s three month growth rate for IP was UP
by 28% in Sept, just one month ago).
Japan&#8217;s TankanIn Asia Japan has reported
out its Tankan results for December. Its large company index rose by a
solid nine points and exceeded the forecasts of economists. Still at a
raw reading of -24 it clearly says that large corporate respondents are
still more negative than positive in this Tankan diffusion
presentation. Even if they are less negative than they were last
quarter the results are far from satisfying. Firms in Japan are
engaging in deeper spending cuts to stay alive in a still-tough
economy. Japan has slipped back into the grip of deflation something
that tends to make businessmen more defense-minded- that is not the way
to mount a recovery. With the yen still so strong it is hard for Japan
to export itself to prosperity. Paradoxically Japanese firms continue
to engage in outsourcing with Sony making a new announcement to that
effect transferring work to China. While outsourcing may solve the
firm&#8217;s problems it does not help Japan out of its economic difficulties.
The global recoveryOn balance world trade
is making some recovery and that is helping trade-dependent countries
like Japan to do better. But Japan is still beset with problems and
large block of pubic indebtedness that keeps its government from
engaging in too much in the way of pump-priming expenditures. Europe is
having a simple slip but its broader growth rates tell a story of
slowing that transcends one monthly report. When central bankers and
national leaders say that they are still concerned about the economy
and that there is a risk of backsliding and that it is too soon to take
away the special stimulus brought forward in the crisis&#8230; this is the
sort of report that brings those concerns to life.
Treatment of the heroes of the crisisAgainst
this background we have to wonder about the all the flack being
shoveled onto Fed Chairman Ben Bernanke&#8217;s plate. Bernanke&#8217;s efforts
bolstered not just the US, but the world economy. Do the Fed bashers on
the House and Senate banking committees really have any idea what they
are protesting when they go after Gentile Ben? It was the fall in
standards and directions imposed on markets by the law makers who put
political agendas ahead of smart business practices as much as anything
that got us into this mess. Now we can see that despite huge government
and central banker efforts around the world the path to recovery
remains tentative. The US Congress is deeply involved in a witch hunt
for scapegoats. The Fed Chairman is a more convenient a target than he
is to blame. But with an angry electorate in the US and the next
election cycle looming a scapegoat is a prime need for politicians.

<table border="0" cellpadding="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="11" style="padding-left: 0.25em; padding-right: 0.25em;">EURO-AREA
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar
except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area
Detail</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q-4</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.3%</td>
<td>2.5%</td>
<td>1.4%</td>
<td>0.6%</td>
<td>-12.1%</td>
<td>-13.7%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-1.7%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-8.3%</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>0.6%</td>
<td>-5.4%</td>
<td>-3.7%</td>
<td>-10.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Durables</td>
<td>-1.4%</td>
<td>-5.1%</td>
<td>5.1%</td>
<td>-6.3%</td>
<td>1.3%</td>
<td>-12.9%</td>
<td>-9.2%</td>
<td>-18.0%</td>
<td>-18.2%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Non-durables</td>
<td>-1.6%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-8.1%</td>
<td>-0.6%</td>
<td>-2.2%</td>
<td>1.9%</td>
<td>-3.3%</td>
<td>-1.5%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;Intermediate</td>
<td>1.2%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>13.7%</td>
<td>15.4%</td>
<td>15.6%</td>
<td>12.6%</td>
<td>-12.8%</td>
<td>-16.0%</td>
<td>13.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital</td>
<td>0.0%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>12.8%</td>
<td>6.9%</td>
<td>6.2%</td>
<td>3.4%</td>
<td>-16.8%</td>
<td>-18.7%</td>
<td>9.3%</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Main
Euro-Area Countries
and UK IP in MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Only</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q:4-Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany:</td>
<td>-1.6%</td>
<td>3.7%</td>
<td>2.1%</td>
<td>17.6%</td>
<td>20.8%</td>
<td>19.1%</td>
<td>16.1%</td>
<td>-13.5%</td>
<td>-13.9%</td>
<td>9.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France:IPxConstruct'n</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>3.0%</td>
<td>3.7%</td>
<td>9.0%</td>
<td>7.9%</td>
<td>6.6%</td>
<td>-8.4%</td>
<td>-10.6%</td>
<td>-3.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>0.8%</td>
<td>-5.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>4.0%</td>
<td>-13.7%</td>
<td>-16.5%</td>
<td>-5.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-3.0%</td>
<td>-20.2%</td>
<td>28.0%</td>
<td>-0.2%</td>
<td>19.0%</td>
<td>-13.0%</td>
<td>-12.6%</td>
<td>-20.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK: EU member</td>
<td>0.0%</td>
<td>1.6%</td>
<td>-2.0%</td>
<td>-1.8%</td>
<td>0.5%</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>-7.8%</td>
<td>-9.8%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body></html>

Industrial output in EMU has backtracked. The 0.3% drop in October flattens out progress in the sector and leaves manufacturing IP flat in the fourth quarter compared to its level in Q3. Consumer goods output is off sharply in the new [...]

EMU MFG Progress Hits The Skids.... More Questions Arise In Japan Despite Improved Tankan

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214a.jpg" align="right" border="0" height="265" width="353">
As the downward momentum in business sales recently slackened,
so too did businesses' attitude toward holding inventories. In constant
dollars, during 3Q '09 inventory cuts turned into accumulation that
added 0.9 percentage points to real GDP growth. In October the turn
continued as business inventories rose 0.2%, the first monthly increase
since last year. The gain followed a slightly revised 0.5% September
drop. Consensus expectations were for a 0.2% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214b.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation last month was apparent in the factory
and wholesale sectors. Wholesale inventories rose 0.3% but the gain was
largely driven by a 4.6% (+24.1% y/y) increase in petroleum
inventories. Elsewhere, accumulation was limited. In the factory
sector, inventories posted a modest 0.4% increase after a 1.4% drop.
However, the increase also was primarily driven by a 6.4% jump in
petroleum inventories.
Retail inventories were unchanged during October as motor
vehicle inventories rose 0.6% (-26.6% y/y) after a 4.1% September
increase. Furniture inventories also increased by 1.0% (-11.1% y/y)
after a 0.2% rise during September. Elsewhere, retail inventories
continued to decline, but at a slower rate. Clothing inventories fell
0.6% (-11.3% y/y) which was less than the 1.8% September drop. General
merchandise inventories fell negligibly (-6.3% y/y) following a 0.5%
September decline. Inventories at building materials and garden supply
stores fell 0.7% (-10.1% y/y) after a reduced 0.4% September decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214c.jpg" align="right" border="0" height="265" width="353">
For the fifth straight month, business sales rose and the 1.1%
(-8.2% y/y) increase reflected across-the-board gains. Retail sales
rose 1.3% during October and increased another 1.4% last month. Sales
of merchant wholesalers were quite strong for the third month although
much of the increase reflects higher oil prices. Factory shipments
jumped 3.5% (-1.2% y/y) but again, a 7.0% rise petroleum shipments
accounted for much of the total gain.
Despite a possible interest in slowing the rate of inventory
cutbacks, the inventory-to-sales ratio for total business fell to a
cycle low of 1.30 versus a high of 1.46 in January. The latest was the
lowest since last September. In the retail sector the ratio fell and
reversed the September increase. For manufacturers and wholesalers, the
ratio fell to new cycle lows.
The business sales and inventory data are available in Haver's
USECON database.
Visit the Wall Street Journal's Blog <a href="http://blogs.wsj.com/economics/2009/12/13/remembering-paul-samuelson/">Remembering
Paul Samuelson </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Business
Inventories (%)</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">Total</td>
<td>0.2</td>
<td>-0.5</td>
<td>-1.6</td>
<td>-12.6</td>
<td>0.6</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.0</td>
<td>0.5</td>
<td>-2.6</td>
<td>-13.5</td>
<td>-3.1</td>
<td>2.5</td>
<td>3.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Auto</td>
<td>-0.2</td>
<td>-0.7</td>
<td>-0.7</td>
<td>-7.6</td>
<td>-1.8</td>
<td>2.7</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.3</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-13.5</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.4</td>
<td>-1.3</td>
<td>-0.9</td>
<td>-11.2</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
</tr>
</tbody>
</table>
</body></html>

As the downward momentum in business sales recently slackened, so too did businesses' attitude toward holding inventories. In constant dollars, during 3Q '09 inventory cuts turned into accumulation that added 0.9 percentage points to [...]

U.S. Business Inventories' Gain The First Since 2008

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214a.jpg" align="right" border="0" height="265" width="353">
As the downward momentum in business sales recently slackened,
so too did businesses' attitude toward holding inventories. In constant
dollars, during 3Q '09 inventory cuts turned into accumulation that
added 0.9 percentage points to real GDP growth. In October the turn
continued as business inventories rose 0.2%, the first monthly increase
since last year. The gain followed a slightly revised 0.5% September
drop. Consensus expectations were for a 0.2% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214b.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation last month was apparent in the factory
and wholesale sectors. Wholesale inventories rose 0.3% but the gain was
largely driven by a 4.6% (+24.1% y/y) increase in petroleum
inventories. Elsewhere, accumulation was limited. In the factory
sector, inventories posted a modest 0.4% increase after a 1.4% drop.
However, the increase also was primarily driven by a 6.4% jump in
petroleum inventories.
Retail inventories were unchanged during October as motor
vehicle inventories rose 0.6% (-26.6% y/y) after a 4.1% September
increase. Furniture inventories also increased by 1.0% (-11.1% y/y)
after a 0.2% rise during September. Elsewhere, retail inventories
continued to decline, but at a slower rate. Clothing inventories fell
0.6% (-11.3% y/y) which was less than the 1.8% September drop. General
merchandise inventories fell negligibly (-6.3% y/y) following a 0.5%
September decline. Inventories at building materials and garden supply
stores fell 0.7% (-10.1% y/y) after a reduced 0.4% September decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214c.jpg" align="right" border="0" height="265" width="353">
For the fifth straight month, business sales rose and the 1.1%
(-8.2% y/y) increase reflected across-the-board gains. Retail sales
rose 1.3% during October and increased another 1.4% last month. Sales
of merchant wholesalers were quite strong for the third month although
much of the increase reflects higher oil prices. Factory shipments
jumped 3.5% (-1.2% y/y) but again, a 7.0% rise petroleum shipments
accounted for much of the total gain.
Despite a possible interest in slowing the rate of inventory
cutbacks, the inventory-to-sales ratio for total business fell to a
cycle low of 1.30 versus a high of 1.46 in January. The latest was the
lowest since last September. In the retail sector the ratio fell and
reversed the September increase. For manufacturers and wholesalers, the
ratio fell to new cycle lows.
The business sales and inventory data are available in Haver's
USECON database.
Visit the Wall Street Journal's Blog <a href="http://blogs.wsj.com/economics/2009/12/13/remembering-paul-samuelson/">Remembering
Paul Samuelson </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Business
Inventories (%)</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">Total</td>
<td>0.2</td>
<td>-0.5</td>
<td>-1.6</td>
<td>-12.6</td>
<td>0.6</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.0</td>
<td>0.5</td>
<td>-2.6</td>
<td>-13.5</td>
<td>-3.1</td>
<td>2.5</td>
<td>3.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Auto</td>
<td>-0.2</td>
<td>-0.7</td>
<td>-0.7</td>
<td>-7.6</td>
<td>-1.8</td>
<td>2.7</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.3</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-13.5</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.4</td>
<td>-1.3</td>
<td>-0.9</td>
<td>-11.2</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
</tr>
</tbody>
</table>
 EMU MFG Progress Hits The
Skids.... More Questions Arise In Japan Despite Improved Tankan 
by <a href="/comment/Brusca.html">Robert
Brusca</a> December 14, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214d.jpg" align="left" border="0" height="265" width="353">
Industrial output in EMU has backtracked. The 0.3% drop in
October flattens out progress in the sector and leaves manufacturing IP
flat in the fourth quarter compared to its level in Q3. Consumer goods
output is off sharply in the new quarter while capital goods output is
strongly higher. Intermediate goods output is up sharply.
Among the five largest EU economics only Spain saw a rise in
IP month-to-month in October. Still three month growth rates are up for
the zone and are strong for the Big Five except for a 1.8% annual rate
drop in the UK and a horrific-looking -20.2% from Spain whose numbers
are notoriously volatile (Spain&#8217;s three month growth rate for IP was UP
by 28% in Sept, just one month ago).
Japan&#8217;s TankanIn Asia Japan has reported
out its Tankan results for December. Its large company index rose by a
solid nine points and exceeded the forecasts of economists. Still at a
raw reading of -24 it clearly says that large corporate respondents are
still more negative than positive in this Tankan diffusion
presentation. Even if they are less negative than they were last
quarter the results are far from satisfying. Firms in Japan are
engaging in deeper spending cuts to stay alive in a still-tough
economy. Japan has slipped back into the grip of deflation something
that tends to make businessmen more defense-minded- that is not the way
to mount a recovery. With the yen still so strong it is hard for Japan
to export itself to prosperity. Paradoxically Japanese firms continue
to engage in outsourcing with Sony making a new announcement to that
effect transferring work to China. While outsourcing may solve the
firm&#8217;s problems it does not help Japan out of its economic difficulties.
The global recoveryOn balance world trade
is making some recovery and that is helping trade-dependent countries
like Japan to do better. But Japan is still beset with problems and
large block of pubic indebtedness that keeps its government from
engaging in too much in the way of pump-priming expenditures. Europe is
having a simple slip but its broader growth rates tell a story of
slowing that transcends one monthly report. When central bankers and
national leaders say that they are still concerned about the economy
and that there is a risk of backsliding and that it is too soon to take
away the special stimulus brought forward in the crisis&#8230; this is the
sort of report that brings those concerns to life.
Treatment of the heroes of the crisisAgainst
this background we have to wonder about the all the flack being
shoveled onto Fed Chairman Ben Bernanke&#8217;s plate. Bernanke&#8217;s efforts
bolstered not just the US, but the world economy. Do the Fed bashers on
the House and Senate banking committees really have any idea what they
are protesting when they go after Gentile Ben? It was the fall in
standards and directions imposed on markets by the law makers who put
political agendas ahead of smart business practices as much as anything
that got us into this mess. Now we can see that despite huge government
and central banker efforts around the world the path to recovery
remains tentative. The US Congress is deeply involved in a witch hunt
for scapegoats. The Fed Chairman is a more convenient a target than he
is to blame. But with an angry electorate in the US and the next
election cycle looming a scapegoat is a prime need for politicians.

<table border="0" cellpadding="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="11" style="padding-left: 0.25em; padding-right: 0.25em;">EURO-AREA
MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar
except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-Area
Detail</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q-4</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.3%</td>
<td>2.5%</td>
<td>1.4%</td>
<td>0.6%</td>
<td>-12.1%</td>
<td>-13.7%</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-1.7%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-8.3%</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>0.6%</td>
<td>-5.4%</td>
<td>-3.7%</td>
<td>-10.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Durables</td>
<td>-1.4%</td>
<td>-5.1%</td>
<td>5.1%</td>
<td>-6.3%</td>
<td>1.3%</td>
<td>-12.9%</td>
<td>-9.2%</td>
<td>-18.0%</td>
<td>-18.2%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;&nbsp;C-Non-durables</td>
<td>-1.6%</td>
<td>0.7%</td>
<td>-1.2%</td>
<td>-8.1%</td>
<td>-0.6%</td>
<td>-2.2%</td>
<td>1.9%</td>
<td>-3.3%</td>
<td>-1.5%</td>
<td>--</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;Intermediate</td>
<td>1.2%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>13.7%</td>
<td>15.4%</td>
<td>15.6%</td>
<td>12.6%</td>
<td>-12.8%</td>
<td>-16.0%</td>
<td>13.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital</td>
<td>0.0%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>12.8%</td>
<td>6.9%</td>
<td>6.2%</td>
<td>3.4%</td>
<td>-16.8%</td>
<td>-18.7%</td>
<td>9.3%</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Main
Euro-Area Countries
and UK IP in MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG Only</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>3-Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo</td>
<td>Q:4-Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany:</td>
<td>-1.6%</td>
<td>3.7%</td>
<td>2.1%</td>
<td>17.6%</td>
<td>20.8%</td>
<td>19.1%</td>
<td>16.1%</td>
<td>-13.5%</td>
<td>-13.9%</td>
<td>9.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France:IPxConstruct'n</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>3.0%</td>
<td>3.7%</td>
<td>9.0%</td>
<td>7.9%</td>
<td>6.6%</td>
<td>-8.4%</td>
<td>-10.6%</td>
<td>-3.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>0.8%</td>
<td>-5.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>6.0%</td>
<td>4.4%</td>
<td>4.0%</td>
<td>-13.7%</td>
<td>-16.5%</td>
<td>-5.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>-3.0%</td>
<td>0.5%</td>
<td>-3.0%</td>
<td>-20.2%</td>
<td>28.0%</td>
<td>-0.2%</td>
<td>19.0%</td>
<td>-13.0%</td>
<td>-12.6%</td>
<td>-20.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK: EU member</td>
<td>0.0%</td>
<td>1.6%</td>
<td>-2.0%</td>
<td>-1.8%</td>
<td>0.5%</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>-7.8%</td>
<td>-9.8%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
 A Pause In Economic Activity In
The European Union 
by <a href="/comment/Curley.html">Louise
Curley</a> December 14, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091214e.jpg" align="left" border="0" height="265" width="353">
After rising for five consecutive months, industrial
production fell 0.6% in the Euro Area in October and 0.7% in the entire
European Union. The attached chart shows the index of Industrial
Production (2005=100) for the Euro Area and the European Union. There
is a spurious correlation between the two series due the fact that the
EU series includes the EA series. As with much of the data on the Euro
Area and the European Union it is not possible to derive a non Euro
Area part of the European Union.
Not all of the countries of the European Union have reported
October data. Euro stat's totals for the Euro Area and the European
Union include their estimates of the missing data and these estimates
are not published. The totals are, therefore, preliminary and
frequently revised.
In the Euro Area, the big three--Germany experienced a 1.8%
decline in industrial production, France, a 0.9% decline and Italy, a
0.5% increase. Declines were recorded in Ireland, 2.8%, Greece, 0.8%,
Portugal, 1.4%. The biggest decline in production in the Euro area,
that of Slovenia, was 3.2%. The largest increase in production in the
Euro Area was in Finland at 2.2%.
Of the published data, among the non Euro Area countries,
industrial production in the UK declined 0.1%, and in Sweden, 0.5%.
Industrial Production in Latvia and Lithuania increased 0.1% and 0.4%
respectively. Production in Bulgaria rose 2.1%, the first increase
since September, 2008.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (2005=100)</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 08&nbsp;</th>
<th scope="col">Apr 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">European Area (m/m % change)</td>
<td>-0.73</td>
<td>0.12</td>
<td>0.68</td>
<td>0.18</td>
<td>0.32</td>
<td>0.53</td>
<td>-0.39</td>
</tr>
<tr>
<td class="firstcol">European Union (m/m % change)</td>
<td>-0.61</td>
<td>0.21</td>
<td>1.13</td>
<td>0.26</td>
<td>0.86</td>
<td>1.06</td>
<td>-0.47</td>
</tr>
<tr class="odd">
<td class="firstcol">Bulgaria</td>
<td>2.1</td>
<td>-3.6</td>
<td>-0.21</td>
<td>-0.5</td>
<td>-0.6</td>
<td>-1.4</td>
<td>-0.1</td>
</tr>
<tr>
<td class="firstcol">Slovenia</td>
<td>-3.2</td>
<td>0.7</td>
<td>8.0</td>
<td>-0.6</td>
<td>0.3</td>
<td>2.9</td>
<td>-4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>-2.8</td>
<td>11.3</td>
<td>-16.0</td>
<td>7.9</td>
<td>7.3</td>
<td>-3.6</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">Finland</td>
<td>2.2</td>
<td>-1.7</td>
<td>2.4</td>
<td>-1.6</td>
<td>1.5</td>
<td>-0.7</td>
<td>-1.9</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Business Inventories' GainThe First Since 2008

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

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

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

Cost of transporting crude oil has soared to series high

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

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

Is recent drop in sentiment signaling softer growth ahead?

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

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

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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Michael J. Moran

260430N.jpg

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Real GDP grew at an annual rate of 2.0% in the first quarter of 2026, almost identical to the expected advance of 2.1%. The latest change was comfortably within the range of recent observations and close to the economy’s potential rate of growth. The year-over-year change totaled 2.7%, but that shift reflected what might be viewed as a special factor (robust growth in the second and third quarters that offset a trade-tariff-induced drop in 2025-Q1 GDP).

Business fixed investment was the star of the show in the first quarter, registering growth of 10.4%. Outlays for information processing equipment and software were especially strong, while outlays for industrial equipment and Research & Development contributed positively as well. Outlays for structures remained decidedly soft, dropping for the ninth consecutive quarter. Building of data centers have been vigorous, but softness in offices and manufacturing facilities has dwarfed the strength in this new area.

Federal spending surged 9.4% in Q1, but the rise reflected the reopening of most federal agencies after their closure during much of the fourth quarter. Excluding this noise, support from the federal government has been softening. Nondefense outlays peaked in the fourth quarter of 2024, and they were 6.9% shy of that total in the first quarter. Defense spending also peaked in 2024-Q4 and has eased 2.4% since then. Defense spending most likely will grow in coming quarters because of the efforts in the Middle East. Orders for defense goods have already started to rise.

Consumer spending rose 1.5% in the first quarter, a bit shy of the 2.1% pace over the four quarters of last year and less than half the rates in 2023 and 2024. Consumer spending showed signs of softening in late 2025 and January of this year, but activity picked up in February and March. Firm tax refunds might have provided a boost to household spending in the latest months. Some of the tax cuts from the One Big Beautiful Bill were applied retroactively to 2025, but withholding schedules were not adjusted last year. Thus, many households are receiving larger-than-normal tax refunds.

International trade acted as a drag on economic growth in Q1, with net exports subtracting 1.3 percentage points from the GDP increase. Exports did well in the first quarter with growth of 12.9%, but imports were even stronger with a jump of 21.4%. The real trade deficit of $1.1 trillion was noticeably smaller than the shortfall of $1.4 trillion in 2025-Q1 when importers were rushing to get goods into the US before the imposition of tariffs. Still, the trade shortfall was sizeable and its effect on growth noticeable.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Robust business investment led the advance; moderate support from consumers.
- Government spending jumped with the reopening of most federal agencies.
- The trade sector remained volatile, making a sizeable negative contribution in Q1.

Q1 GDP: Weathering the Challenges; Trend-Like Growth

Andrew Cates

**Front-End Yields Reflect Policy Reassessment**
Against a backdrop of key central bank meetings either having just taken place or imminent, short-dated government bond yields have moved decisively higher across most major economies since the escalation of the Middle East conflict, with the sharpest increase seen in the UK. The rise in 2-year yields reflects a repricing of near-term monetary policy expectations, as markets respond to the inflationary implications of higher energy prices and the growing likelihood that central banks will delay easing cycles. Moves have been most pronounced in economies where inflation is expected to be more persistent—most notably the UK—while increases have been more modest in the US and particularly Japan, where policy normalisation remains gradual. In effect, the front end of the curve is signalling a shift away from the “rate cuts soon” narrative that prevailed earlier in the year toward a more cautious, higher-for-longer policy outlook.

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**US Recession Risks Remain Contained—For Now**
Despite the recent deterioration in the macro backdrop, real-time recession risk indicators for the US remain relatively subdued. This is notable given the combination of softer growth momentum, higher bond yields and heightened geopolitical risk. The nowcast—derived from a blend of high-frequency activity data and financial stress measures—has historically tended to move sharply when conditions turn, rather than drift higher gradually. That asymmetry is important in the current environment. While recession risks are not yet flashing red, past cycles suggest they can reprice abruptly, and arguably at present if energy-driven inflation were to feed much more forcefully into financial conditions or begin to weigh more materially on demand.

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**Consumer Confidence Diverges: Europe and UK Slide, US Stabilises**
Consumer confidence has weakened across the major economies, but the deterioration has been more pronounced in the euro area and the UK than in the US. While sentiment in the US has recently edged up, it remains at relatively subdued levels. By contrast, confidence in Europe and the UK has fallen more sharply, reflecting greater exposure to higher energy costs and a more direct squeeze on real household incomes. This divergence is consistent with broader macro trends, suggesting that demand in Europe may prove more sensitive to the current shock, with weaker sentiment feeding more quickly into consumption.

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**Euro area Credit Conditions Turn More Restrictive**
The latest ECB lending survey points to a clear tightening in credit conditions across the euro area, with banks raising lending standards for both firms and households while loan demand weakens. This combination—more restrictive supply alongside softer demand—is typically associated with a cooling in activity, particularly in interest-sensitive sectors. Recent evidence suggests that higher perceived risks, rising funding costs and geopolitical uncertainty are all weighing on banks’ willingness to lend, while weaker confidence and reduced investment appetite are dampening borrowing needs. The result is a tightening in financial conditions that is likely to amplify the broader slowdown already evident in survey data, reinforcing the more fragile growth dynamics now emerging across the region.

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**An Intensifying AI Boom with Supply-Side Undercurrents**
Against the backdrop of surging AI-related investment, semiconductor prices are not just high—they are rising at an increasingly rapid pace. This chart shows a clear acceleration in both prices and export values, pointing to an intensifying boom in global chip demand. While this is in part a reflection of strong, structural demand, supply-side factors may also be playing a growing role. Although the Middle East is not a direct source of key chip-making minerals, it is central to the energy and petrochemical inputs that underpin semiconductor production. Ongoing geopolitical tensions are therefore likely feeding into higher costs and renewed frictions across supply chains. The combination of accelerating demand and tightening supply conditions suggests that semiconductor inflation could prove more persistent—and more globally consequential—than currently assumed.

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**Labour Markets Reflect the AI Acceleration**
Our final chart this week highlights the extent to which the current AI boom is now feeding through into labour markets. This high-frequency indicator—based on the share of job listings containing AI-related keywords—shows a sharp and sustained increase since the widespread adoption of generative AI tools in late 2022. What began as a more traditional build-out in machine learning roles has evolved into a broader and more intense wave of hiring tied to generative AI capabilities, with demand accelerating markedly across multiple economies. The scale and persistence of this trend point to a structural shift rather than a cyclical upswing, reinforcing the view that AI is becoming an increasingly important driver of investment, productivity expectations and, potentially, broader macroeconomic dynamics.

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Against a backdrop of persistent geopolitical tensions, firmer energy prices and a busy week of central bank meetings—including the Fed, ECB, BoE and BoJ—financial markets have remained notably resilient, even as the macro narrative has softened at the margin. The message from this week’s charts is one of growing tension beneath that surface calm. Front-end bond yields have moved higher, signalling a shift toward a more cautious, “higher-for-longer” policy outlook (chart 1). At the same time, real-time recession indicators for the United States suggest risks remain contained for now (chart 2). Consumer confidence data paint a more uneven picture, with sharper declines in the euro area and UK than in the US, highlighting regional vulnerabilities to the current energy shock (chart 3). The ECB’s latest bank lending survey reinforces this, pointing to tighter credit conditions and weaker demand—factors that are likely to weigh further on European growth (chart 4). By contrast, developments in the semiconductor sector underline a different dynamic: an intensifying global boom, with accelerating price pressures reflecting both strong AI-driven demand and emerging supply-side constraints linked indirectly to energy and logistics disruptions (chart 5). Finally, labour market data confirm that the AI surge is not merely a market narrative but a tangible structural shift, with hiring for AI-related roles accelerating across economies (chart 6). Taken together, these signals point to a more complex macro environment—one in which resilient markets coexist with softening growth, more persistent inflation risks and increasingly delicate policy trade-offs.

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Charts of the Week: Tension Beneath the Surface

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance dropped by 26,000 to 189,000 in the week ending April 25, from 215,000 in the week ending April 18, revised from 214,000. The four-week average declined by 3,500 to 207,500 in the week ending April 25, from 211,000 the April 18 week, revised from 210,750. The Action Economics/Haver Analytics Survey looked for 214,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—dropped by 23,000 to 1.785 million in the week ending April 18, from 1.808 million in the week ending April 11, revised from 1.821 million. The four-week moving average declined to 1.797 million in the latest week from 1.809 million in the April 11 week. The insured unemployment rate remained at 1.2% in the week of April 11. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 11, the highest unemployment rates were in New Jersey (2.51%), Washington (2.25%), Massachusetts (2.21%), Rhode Island (2.10%), and California (2.06%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas, North Carolina and Mississippi (all 0.35%), Alabama (0.36%), South Dakota (0.41%) and Tennessee (0.43%). Rates in other notable states include New York (1.96%), Illinois (1.77%), Pennsylvania (1.40%), and Texas (1.04%). 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 dropped by 26,000 to 189,000.
- Continuing claims declined by 23,000 to 1.785 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims dropped in the Week of April 25

Sandy Batten

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

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

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

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

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

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

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

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

Winnie Tapasanun

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

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

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

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

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

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

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

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

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