Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091007a.jpg" align="left" border="0" height="265" width="353">
Order Trends: German new orders growth was
extended as foreign orders snapped back after a one-month decline.
Domestic orders fell by 1.9% after surging by 9.5% in July. Orders have
been rising steadily, strongly, over the past six months with domestic
orders up in five of those six months and foreign orders up in four of
those six months. Both series are showing continuing acceleration not
just growth. In the current quarter domestic orders are outpacing on
the back of a one month 9.5% spurt in orders in July as the new quarter
began. 
 

Foreign order sources: Orders from
countries outside the euro zone alone jumped 5.9%, in August while
foreign demand for German manufactured goods from the other 15
countries sharing the euro rose by just 2.8% in August from the month
earlier. Growth outside of the e-Zone drove German orders this past
month. 
 

Euro-Area policy cuts no slack - Apart
from orders, the European Commission Wednesday warned nine countries,
including Germany, that their budget deficits are too large. This is
the legacy effect of having used domestic deficit spending to bolster
the economy in the recession. That policy response was good thing, but
it now puts those countries afoul of EU Commission rules. 
 

Out of touch with reality? The warning
comes at an odd time since Euro-central bankers and policy officials in
the US have underscored that the time is not right to withdraw
stimulus. Hanging the &#8216;Sword of Damocles&#8217; over the heads of the various
ECB nations does not seem like the right policy tilt to encourage them
to keep their stimulus efforts in place. It sounds a lot like pressure
to get you house in order NOW! The EU Commission is using bad judgment
and being too strict on rules of evaluations at a time like this. Yes
it is just this sort of thinking that keeps the euro strong but it also
unduly complicates and hampers policy. This stance reminds me of the
ECB&#8217;s problems in cutting rates in timely fashion in the recession. The
target rate ceiling on the HICP hampered the ECB in the pits of the
crisis. It cut rates as a part of an &#8216;international effort&#8217;, using that
as an excuse to cut rates with headline inflation well over its ceiling
at the time. I suppose we are to understand that this warning from the
EU Commission as a formality that has come as scheduled. But in times
such as these what is the merit? Does this act brand the EU Commission
tough or as out of touch? 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>1.4%</td>
<td>3.1%</td>
<td>3.8%</td>
<td>38.7%</td>
<td>17.8%</td>
<td>-21.1%</td>
<td>-2.4%</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.6%</td>
<td>-2.4%</td>
<td>6.9%</td>
<td>42.1%</td>
<td>19.2%</td>
<td>-24.0%</td>
<td>-3.8%</td>
<td>30.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-1.9%</td>
<td>9.5%</td>
<td>0.5%</td>
<td>35.5%</td>
<td>16.4%</td>
<td>-17.6%</td>
<td>-0.9%</td>
<td>59.5%</td>
</tr>
<tr class="even">
<td class="firstcol">Real Sector Sales</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>
<td class="firstcol">MFG/Mining</td>
<td>2.7%</td>
<td>-0.5%</td>
<td>1.1%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.6%</td>
<td>1.8%</td>
<td>14.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-8.4%</td>
<td>-3.0%</td>
<td>-4.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>1.6%</td>
<td>0.5%</td>
<td>-2.6%</td>
<td>-2.3%</td>
<td>-1.1%</td>
<td>-20.6%</td>
<td>-1.8%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurable</td>
<td>0.2%</td>
<td>-0.9%</td>
<td>0.5%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-6.2%</td>
<td>-3.2%</td>
<td>-6.3%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>4.2%</td>
<td>-2.0%</td>
<td>1.4%</td>
<td>15.4%</td>
<td>7.4%</td>
<td>-20.9%</td>
<td>4.8%</td>
<td>18.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>2.5%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>23.9%</td>
<td>11.3%</td>
<td>-16.2%</td>
<td>1.0%</td>
<td>22.9%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td>2.6%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.9%</td>
<td>1.9%</td>
<td>14.3%</td>
</tr>
</tbody>
</table>
</body></html>

Order Trends: German new orders growth was extended as foreign orders snapped back after a one-month decline. Domestic orders fell by 1.9% after surging by 9.5% in July. Orders have been rising steadily, strongly, over the past six [...]

German Orders Growth Extended

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006g.jpg" width="353">
Indications that consumer spending might be improving faded during the last several weeks. During the latest week, chain store sales slipped 0.3% leaving them 0.6% below September after that month&#39;s 0.7% decline.
During the last ten years there has been a 69% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales. The weekly figures are available in Haver&#39;s SURVEYW database.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
Prospects for improvement in sales seem limited. The leading indicator of sales slipped 0.3% (-0.1% y/y) during the latest week though it had risen somewhat earlier this summer.
A Bit Better, But Very Far From Best are yesterday&#39;s comments by New York Fed President William C. Dudley and they are available <a href="http://www.newyorkfed.org/newsevents/speeches/2009/dud091005.html">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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">10/03/09</th>
<th scope="col">09/26/09</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">Total Weekly Chain Store Sales</td>
<td>486.5</td>
<td>485.0</td>
<td>1.0%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

Indications that consumer spending might be improving faded during the last several weeks. During the latest week, chain store sales slipped 0.3% leaving them 0.6% below September after that month's 0.7% decline. During the last ten [...]

Weekly Chain Store Sales Tick Higher After Sharp September Decline

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006d.jpg" align="right" border="0" height="265" width="353">The Central
Bank of Australia raised its policy interest rate from 3.00% to 3.25%
today, the first of the Group of 20 to increase interest rates since
the start of the global financial crisis in late 2007. In
relative terms, the recession in Australia has been mild.&nbsp; The
first two charts comparing the levels in the rate of unemployment and
the changes in Gross Domestic Product with those in the United States
and the Euro Area show that there has been considerably less
unemployment in Australia and that its decline in total activity has
been milder and of shorter duration.&nbsp; GDP in Australia has
actually increased in the first two quarters of 2009.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006e.jpg" align="right" border="0" height="265" width="353">
Among the
reasons for Australia's better performance is the condition of its
financial system.&nbsp;&nbsp; Australia's financial system had
not been disrupted to the extent that those of the Americans, British
and Europeans had been by unsound practices.&nbsp; Moreover, demand
for Australian natural resources has been maintained at relatively high
levels.&nbsp; After a slow down in late 2008 Australia's most
important trading partner, China, rapidly regained its high growth
trend in 2009 and its demand for Australia's
resources.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006f.jpg" align="right" border="0" height="265" width="353">
Economic conditions in Australia in
recent months have been stronger than expected.&nbsp;&nbsp; The
Reserve Bank of Australia publishes quarterly forecasts of
GDP.&nbsp; Its last two forecasts of May 2009 and August 2009 are
shown in the third chart compared with the actual results in the first
and second quarters of 2009.&nbsp; In May, the Bank was forecasting
year over year percent declines for the four quarters of 2009 and for
the first quarter of 2010.&nbsp; The Bank raised its forecast in
August but still actual conditions were stronger than expected. The
bank's forecast for the first and second quarters of this
year--0.40%&nbsp; and 0.25% year over year increases-were below the
actual year over year increases of 0.32% and 0.53% .&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">
UNEMPLOYMENT RATE (%)</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>
<th scope="col">FEB 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>5.8</td>
<td>5.8</td>
<td>5.6</td>
<td>5.7</td>
<td>5.5</td>
<td>5.7</td>
<td>5.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>9.3</td>
<td>9.2</td>
<td>9.0</td>
<td>8.8</td>
<td>8.5</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>9.7</td>
<td>9.4</td>
<td>9.5</td>
<td>9.4</td>
<td>8.9</td>
<td>8.5</td>
<td>8.1</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">GDP (Q/Q %
chg)</td>
<td>Q2 09</td>
<td>Q1 09</td>
<td>Q4 08</td>
<td>Q3 08&nbsp;</td>
<td>Q2 08&nbsp;</td>
<td>Q1 09&nbsp;</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>0.62</td>
<td>0.40</td>
<td>-0.71</td>
<td>0.32</td>
<td>0.34</td>
<td>0.74</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>-0.12</td>
<td>-2.45</td>
<td>-1.81</td>
<td>-0.35</td>
<td>-.033</td>
<td>0.79</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>-0.18</td>
<td>-1.65</td>
<td>-1.37</td>
<td>-0.68</td>
<td>0.36</td>
<td>-0.18</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Central Bank of Australia raised its policy interest rate from 3.00% to 3.25% today, the first of the Group of 20 to increase interest rates since the start of the global financial crisis in late 2007. In relative terms, the [...]

Central Bank Of Australia Raises Interest Rate 25 Basis Points To 3.25%

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006a.jpg">
The pump price for regular gasoline fell last week to the lowest level since late-July. At an average $2.50 per gallon the price dropped a nickel from the prior week and may have broken out of the sideways pattern since early-June. These prices compare to the December low of $1.61. Yesterday, prices fell further. The wholesale gasoline price was down to $1.65 per gallon. 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.
During August, the consumer price index for gasoline recouped the July decline with a not seasonally adjusted 3.3% increase. Seasonally adjusted gas prices were quite firm and rose 9.1% m/m, up 40.3% YTD.
Crude oil prices have led the decline in refined product prices. Light sweet crude oil prices (WTI) fell to $68.41 per barrel, though that still was up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil fell further to $66.84 per barrel versus a daily high of $71.55 last week.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006b.jpg">
The demand for gasoline continued to improve through mid-month. The y/y rise of 1.1% was the first meaningful positive comparison since early-2007. Demand for residual fuel oil slacked off from its earlier strength and fell 5.1% y/y while distillate demand is off 13.2% y/y. Finally, oil remains plentiful as evidenced by a 16.5% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline recently have surged and are up 19.2% 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 to an average of $3.48 per mmbtu (-54.9% 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 were up from last week&#39;s level at $3.54/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</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>2.50</td>
<td>2.55</td>
<td>-31.2%</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>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

The pump price for regular gasoline fell last week to the lowest level since late-July. At an average $2.50 per gallon the price dropped a nickel from the prior week and may have broken out of the sideways pattern since early-June. [...]

Weekly Gasoline Prices Fall To Lowest Level In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006a.jpg" align="left" border="0">
The pump price for regular gasoline fell
last week to the lowest level since late-July. At an average $2.50 per
gallon the price dropped a nickel from the prior week and may have
broken out of the sideways pattern since early-June. These prices
compare to the December low of $1.61. Yesterday, prices fell further.
The wholesale gasoline price was down to $1.65 per gallon. 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.
During August, the consumer price index for gasoline recouped
the July decline with a not seasonally adjusted 3.3% increase.
Seasonally adjusted gas prices were quite firm and rose 9.1% m/m, up
40.3% YTD.
Crude oil prices have led the decline in
refined product prices. Light sweet crude oil prices (WTI) fell to
$68.41 per barrel, though that still was up from the December low of
$32.37. Yesterday, the spot market price for light sweet crude oil fell
further to $66.84 per barrel versus a daily high of $71.55 last week.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006b.jpg" align="right" border="0">
The demand for gasoline continued to improve through
mid-month. The y/y rise of 1.1% was the first meaningful positive
comparison since early-2007. Demand for residual fuel oil slacked off
from its earlier strength and fell 5.1% y/y while distillate demand is
off 13.2% y/y. Finally, oil remains plentiful as evidenced by a 16.5%
y/y rise in inventories of crude oil &amp; petroleum products.
Inventories of gasoline recently have surged and are up 19.2% 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 to an average of
$3.48 per mmbtu (-54.9% 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 were up from last week's level at $3.54/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">09/28/09</th>
<th scope="col">09/21/09</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>2.50</td>
<td>2.55</td>
<td>-31.2%</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>68.41</td>
<td>71.36</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 German Orders Growth Extended 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091007a.jpg" align="left" border="0" height="265" width="353">
Order Trends: German new orders growth was
extended as foreign orders snapped back after a one-month decline.
Domestic orders fell by 1.9% after surging by 9.5% in July. Orders have
been rising steadily, strongly, over the past six months with domestic
orders up in five of those six months and foreign orders up in four of
those six months. Both series are showing continuing acceleration not
just growth. In the current quarter domestic orders are outpacing on
the back of a one month 9.5% spurt in orders in July as the new quarter
began. 
 

Foreign order sources: Orders from
countries outside the euro zone alone jumped 5.9%, in August while
foreign demand for German manufactured goods from the other 15
countries sharing the euro rose by just 2.8% in August from the month
earlier. Growth outside of the e-Zone drove German orders this past
month. 
 

Euro-Area policy cuts no slack - Apart
from orders, the European Commission Wednesday warned nine countries,
including Germany, that their budget deficits are too large. This is
the legacy effect of having used domestic deficit spending to bolster
the economy in the recession. That policy response was good thing, but
it now puts those countries afoul of EU Commission rules. 
 

Out of touch with reality? The warning
comes at an odd time since Euro-central bankers and policy officials in
the US have underscored that the time is not right to withdraw
stimulus. Hanging the &#8216;Sword of Damocles&#8217; over the heads of the various
ECB nations does not seem like the right policy tilt to encourage them
to keep their stimulus efforts in place. It sounds a lot like pressure
to get you house in order NOW! The EU Commission is using bad judgment
and being too strict on rules of evaluations at a time like this. Yes
it is just this sort of thinking that keeps the euro strong but it also
unduly complicates and hampers policy. This stance reminds me of the
ECB&#8217;s problems in cutting rates in timely fashion in the recession. The
target rate ceiling on the HICP hampered the ECB in the pits of the
crisis. It cut rates as a part of an &#8216;international effort&#8217;, using that
as an excuse to cut rates with headline inflation well over its ceiling
at the time. I suppose we are to understand that this warning from the
EU Commission as a formality that has come as scheduled. But in times
such as these what is the merit? Does this act brand the EU Commission
tough or as out of touch? 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Year Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>1.4%</td>
<td>3.1%</td>
<td>3.8%</td>
<td>38.7%</td>
<td>17.8%</td>
<td>-21.1%</td>
<td>-2.4%</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>4.6%</td>
<td>-2.4%</td>
<td>6.9%</td>
<td>42.1%</td>
<td>19.2%</td>
<td>-24.0%</td>
<td>-3.8%</td>
<td>30.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>-1.9%</td>
<td>9.5%</td>
<td>0.5%</td>
<td>35.5%</td>
<td>16.4%</td>
<td>-17.6%</td>
<td>-0.9%</td>
<td>59.5%</td>
</tr>
<tr class="even">
<td class="firstcol">Real Sector Sales</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>
<td class="firstcol">MFG/Mining</td>
<td>2.7%</td>
<td>-0.5%</td>
<td>1.1%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.6%</td>
<td>1.8%</td>
<td>14.4%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-8.4%</td>
<td>-3.0%</td>
<td>-4.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>1.6%</td>
<td>0.5%</td>
<td>-2.6%</td>
<td>-2.3%</td>
<td>-1.1%</td>
<td>-20.6%</td>
<td>-1.8%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurable</td>
<td>0.2%</td>
<td>-0.9%</td>
<td>0.5%</td>
<td>-0.8%</td>
<td>-0.4%</td>
<td>-6.2%</td>
<td>-3.2%</td>
<td>-6.3%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>4.2%</td>
<td>-2.0%</td>
<td>1.4%</td>
<td>15.4%</td>
<td>7.4%</td>
<td>-20.9%</td>
<td>4.8%</td>
<td>18.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>2.5%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>23.9%</td>
<td>11.3%</td>
<td>-16.2%</td>
<td>1.0%</td>
<td>22.9%</td>
</tr>
<tr>
<td class="firstcol">All Manufacturing Sales</td>
<td>2.6%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>13.8%</td>
<td>6.7%</td>
<td>-16.9%</td>
<td>1.9%</td>
<td>14.3%</td>
</tr>
</tbody>
</table>
 Central Bank Of Australia Raises
Interest Rate 25 Basis Points To 3.25% 
by <a href="/comment/Curley.html">Louise
Curley</a> October 6, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006d.jpg" align="right" border="0" height="265" width="353">The Central
Bank of Australia raised its policy interest rate from 3.00% to 3.25%
today, the first of the Group of 20 to increase interest rates since
the start of the global financial crisis in late 2007.
 In
relative terms, the recession in Australia has been mild.&nbsp; The
first two charts comparing the levels in the rate of unemployment and
the changes in Gross Domestic Product with those in the United States
and the Euro Area show that there has been considerably less
unemployment in Australia and that its decline in total activity has
been milder and of shorter duration.&nbsp; GDP in Australia has
actually increased in the first two quarters of 2009.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006e.jpg" align="right" border="0" height="265" width="353">
Among the
reasons for Australia's better performance is the condition of its
financial system.&nbsp;&nbsp; Australia's financial system had
not been disrupted to the extent that those of the Americans, British
and Europeans had been by unsound practices.&nbsp; Moreover, demand
for Australian natural resources has been maintained at relatively high
levels.&nbsp; After a slow down in late 2008 Australia's most
important trading partner, China, rapidly regained its high growth
trend in 2009 and its demand for Australia's
resources.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006f.jpg" align="right" border="0" height="265" width="353">Economic
conditions in Australia in
recent months have been stronger than expected.&nbsp;&nbsp; The
Reserve Bank of Australia publishes quarterly forecasts of
GDP.&nbsp; Its last two forecasts of May 2009 and August 2009 are
shown in the third chart compared with the actual results in the first
and second quarters of 2009.&nbsp; In May, the Bank was forecasting
year over year percent declines for the four quarters of 2009 and for
the first quarter of 2010.&nbsp; The Bank raised its forecast in
August but still actual conditions were stronger than expected. The
bank's forecast for the first and second quarters of this
year--0.40%&nbsp; and 0.25% year over year increases-were below the
actual year over year increases of 0.32% and 0.53% .&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">
UNEMPLOYMENT RATE (%)</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>
<th scope="col">FEB 09 </th>
<th scope="col"> Jan 09 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>5.8</td>
<td>5.8</td>
<td>5.6</td>
<td>5.7</td>
<td>5.5</td>
<td>5.7</td>
<td>5.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>9.6</td>
<td>9.5</td>
<td>9.4</td>
<td>9.3</td>
<td>9.2</td>
<td>9.0</td>
<td>8.8</td>
<td>8.5</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>9.7</td>
<td>9.4</td>
<td>9.5</td>
<td>9.4</td>
<td>8.9</td>
<td>8.5</td>
<td>8.1</td>
<td>7.6</td>
</tr>
<tr>
<td class="firstcol">GDP (Q/Q %
chg)</td>
<td>Q2 09</td>
<td>Q1 09</td>
<td>Q4 08</td>
<td>Q3 08&nbsp;</td>
<td>Q2 08&nbsp;</td>
<td>Q1 09&nbsp;</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>0.62</td>
<td>0.40</td>
<td>-0.71</td>
<td>0.32</td>
<td>0.34</td>
<td>0.74</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>-0.12</td>
<td>-2.45</td>
<td>-1.81</td>
<td>-0.35</td>
<td>-.033</td>
<td>0.79</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>-0.18</td>
<td>-1.65</td>
<td>-1.37</td>
<td>-0.68</td>
<td>0.36</td>
<td>-0.18</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
 Weekly Chain Store Sales Tick
Higher After Sharp September Decline 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091006g.jpg" align="left" border="0" height="265" width="353">
Indications that consumer spending might be improving faded
during the last several weeks. During the latest week, chain store
sales slipped 0.3% leaving them 0.6% below September after that month's
0.7% decline.
During the last ten years there has been a 69% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. The weekly figures are available
in Haver's SURVEYW database.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


Prospects for improvement in sales seem limited. The leading
indicator of sales slipped 0.3% (-0.1% y/y) during the latest week
though it had risen somewhat earlier this summer.
A Bit Better, But Very Far From Best are
yesterday's comments by New York Fed President William C. Dudley and
they are available <a href="http://www.newyorkfed.org/newsevents/speeches/2009/dud091005.html">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/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">10/03/09</th>
<th scope="col">09/26/09</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">Total Weekly Chain
Store Sales</td>
<td>486.5</td>
<td>485.0</td>
<td>1.0%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>

</body></html>

Weekly Gasoline Prices Fall ToLowest Level In One Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005d.jpg" align="right" border="0" height="265" width="353">
There is a little good news in today's preliminary estimates
of August retail trade for the Euro Area. The value of trade managed a
small increase of 0.40% after three successive monthly declines. The
volume of trade actually declined by 0.18%. It was only a rise in
prices of 0.58% that accounted for the rise in the value of trade. The
first chart shows indexes of the value, volume and prices of Euro
Retail Trade. (We calculated the index of prices by dividing the index
of value of trade by the index of volume and multiplying the result by
100.).These are preliminary estimates for the whole area because not
all 16 countries have yet reported retail sales data. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005e.jpg" align="right" border="0" height="265" width="353">
France and Italy
are important omissions.Eurostat estimates total sales after a
significant number of countries have reported sales data. Data are
revised as more countries report.Among those countries that have
reported, Austria, Belgium, Portugal, Slovenia, and Germany show
declines in value; Finland showed no change and Slovakia and Spain
showed small gains..The Producer Price Index was also released today
and it, too, shows a small increase in August. While one month rise
does not set a trend, it may be an indication that the deflationary
impact of falling oil prices has run its course.



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> EURO
AREA&nbsp; (2005=100)</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Aug 08</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y %&nbsp;</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">Value of Retail Trade</td>
<td>104.57</td>
<td>104.17</td>
<td>108.76</td>
<td>0.40</td>
<td>-3.83</td>
<td>108.7</td>
<td>106.2</td>
<td>103.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Volume of Retail Trade</td>
<td>100.22</td>
<td>100.40</td>
<td>102.64</td>
<td>-0.18</td>
<td>-236</td>
<td>103.0</td>
<td>103.7</td>
<td>102.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade Price Index</td>
<td>104.36</td>
<td>103.76</td>
<td>105.96</td>
<td>0.58</td>
<td>-1.51</td>
<td>105.6</td>
<td>102.4</td>
<td>101.2</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">Producers Price Index</td>
<td>106.2</td>
<td>105.95</td>
<td>114.25</td>
<td>0.24</td>
<td>-7.05</td>
<td>111.8</td>
<td>106.6</td>
<td>104.2</td>
</tr>
</tbody>
</table>
</body></html>

There is a little good news in today's preliminary estimates of August retail trade for the Euro Area. The value of trade managed a small increase of 0.40% after three successive monthly declines. The volume of trade actually declined [...]

Retail Sales in The Euro Area Get a Lift From Price Increases

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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005a.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity broadened last month to its highest level
since May of last year. The Composite Index for the nonmanufacturing
sector from the Institute for Supply Management (ISM) rose to 50.9, a
level that indicates there was growth in overall service sector
activity. The latest level was the highest since May of last year and
the figure outpaced Consensus expectations for an increase to 50.0. A
level of the ISM index above 50 indicates rising overall service sector
activity. Since the series' inception in 1997 there has been a 64%
correlation between the level of the composite index index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
ISM surveys more than 370 purchasing
managers in more than 62 industries including law firms, hospitals,
government and retailers. The nonmanufacturing survey dates back to
July 1997. The figures are available in Haver's USECON database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005b.jpg" align="right" border="0" height="265" width="353">The
improvement in the index again was broad-based amongst the
component series. The business activity index for the service sector
remained above the break-even level of 50 for the second month. The new
orders series also broached 50, up from November's low of 35.6. In
addition, the employment index rose to 44.2 and that was the highest
level since August of last year. Since the series' inception in 1997
there has been an 80% correlation between the level of the ISM
nonmanufacturing employment index and the m/m change in payroll
employment in the service-producing plus the construction
industries.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005c.jpg" power ebbed service sector despite improvement overall activity pricing gave back more than half august gain declined to just nine percent (nsa of firms reported higher while an increased reporting lower prices since its inception ten years ago there has been a correlation between and q change in the gdp services chain price index align="right" border="0" height="265" width="353">
&gt;Beginning
with the
January 2008 Nonmanufacturing <cite>Report On Business</cite>®,
the composite index is calculated as an indicator of the overall
economic condition for the non-manufacturing sector. It is a composite
index based on the diffusion indices of four of the indicators
(business activity, new orders, employment and supplier deliveries)
with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here.</a>

 Housing's Great Fall: Putting Household
Balance Sheets Together Again from the Federal Reserve Bank
of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>50.9</td>
<td>48.4</td>
<td>50.0</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>55.1</td>
<td>51.3</td>
<td>51.5</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>54.2</td>
<td>49.9</td>
<td>50.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>44.3</td>
<td>43.5</td>
<td>44.2</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries</td>
<td>50.0</td>
<td>49.0</td>
<td>53.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>48.8</td>
<td>63.1</td>
<td>70.6</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

</body></html>

Improvement in service sector activity broadened last month to its highest level since May of last year. The Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose to 50.9, a level that [...]

U.S. ISM Nonmanufacturing Index Increases To Highest Since May '08

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005a.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity broadened last month to its highest level
since May of last year. The Composite Index for the nonmanufacturing
sector from the Institute for Supply Management (ISM) rose to 50.9, a
level that indicates there was growth in overall service sector
activity. The latest level was the highest since May of last year and
the figure outpaced Consensus expectations for an increase to 50.0. A
level of the ISM index above 50 indicates rising overall service sector
activity. Since the series' inception in 1997 there has been a 64%
correlation between the level of the composite index index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
ISM surveys more than 370 purchasing
managers in more than 62 industries including law firms, hospitals,
government and retailers. The nonmanufacturing survey dates back to
July 1997. The figures are available in Haver's USECON database.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005b.jpg" align="right" border="0" height="265" width="353">The
improvement in the index again was broad-based amongst the
component series. The business activity index for the service sector
remained above the break-even level of 50 for the second month. The new
orders series also broached 50, up from November's low of 35.6. In
addition, the employment index rose to 44.2 and that was the highest
level since August of last year. Since the series' inception in 1997
there has been an 80% correlation between the level of the ISM
nonmanufacturing employment index and the m/m change in payroll
employment in the service-producing plus the construction
industries.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005c.jpg" power ebbed service sector despite improvement overall activity pricing gave back more than half august gain declined to just nine percent (nsa of firms reported higher while an increased reporting lower prices since its inception ten years ago there has been a correlation between and q change in the gdp services chain price index align="right" border="0" height="265" width="353">
&gt;Beginning
with the
January 2008 Nonmanufacturing <cite>Report On Business</cite>®,
the composite index is calculated as an indicator of the overall
economic condition for the non-manufacturing sector. It is a composite
index based on the diffusion indices of four of the indicators
(business activity, new orders, employment and supplier deliveries)
with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here.</a>

 Housing's Great Fall: Putting Household
Balance Sheets Together Again from the Federal Reserve Bank
of St. Louis can be found <a href="http://www.stlouisfed.org/publications/re/articles/?id=1716">here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>50.9</td>
<td>48.4</td>
<td>50.0</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>55.1</td>
<td>51.3</td>
<td>51.5</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>54.2</td>
<td>49.9</td>
<td>50.6</td>
<td>47.0</td>
<td>54.8</td>
<td>57.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>44.3</td>
<td>43.5</td>
<td>44.2</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Supplier
Deliveries</td>
<td>50.0</td>
<td>49.0</td>
<td>53.5</td>
<td>51.1</td>
<td>51.1</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>48.8</td>
<td>63.1</td>
<td>70.6</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

 Retail Sales in The Euro Area Get
a Lift From Price Increases 
by <a href="/comment/Curley.html">
Louise Curley</a> October 5, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005d.jpg" align="right" border="0" height="265" width="353">There is a little good news
in today's preliminary estimates
of August retail trade for the Euro Area. The value of trade managed a
small increase of 0.40% after three successive monthly declines. The
volume of trade actually declined by 0.18%. It was only a rise in
prices of 0.58% that accounted for the rise in the value of trade. The
first chart shows indexes of the value, volume and prices of Euro
Retail Trade. (We calculated the index of prices by dividing the index
of value of trade by the index of volume and multiplying the result by
100.).These are preliminary estimates for the whole area because not
all 16 countries have yet reported retail sales data. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091005e.jpg" align="right" border="0" height="265" width="353">France and
Italy
are important omissions.Eurostat estimates total sales after a
significant number of countries have reported sales data. Data are
revised as more countries report.Among those countries that have
reported, Austria, Belgium, Portugal, Slovenia, and Germany show
declines in value; Finland showed no change and Slovakia and Spain
showed small gains..The Producer Price Index was also released today
and it, too, shows a small increase in August. While one month rise
does not set a trend, it may be an indication that the deflationary
impact of falling oil prices has run its course.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> EURO
AREA&nbsp; (2005=100)</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Aug 08</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y %&nbsp;</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">Value of Retail Trade</td>
<td>104.57</td>
<td>104.17</td>
<td>108.76</td>
<td>0.40</td>
<td>-3.83</td>
<td>108.7</td>
<td>106.2</td>
<td>103.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Volume of Retail Trade</td>
<td>100.22</td>
<td>100.40</td>
<td>102.64</td>
<td>-0.18</td>
<td>-236</td>
<td>103.0</td>
<td>103.7</td>
<td>102.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade Price Index</td>
<td>104.36</td>
<td>103.76</td>
<td>105.96</td>
<td>0.58</td>
<td>-1.51</td>
<td>105.6</td>
<td>102.4</td>
<td>101.2</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">Producers Price Index</td>
<td>106.2</td>
<td>105.95</td>
<td>114.25</td>
<td>0.24</td>
<td>-7.05</td>
<td>111.8</td>
<td>106.6</td>
<td>104.2</td>
</tr>
</tbody>
</table>
</body></html>

U.S. ISM Nonmanufacturing IndexIncreases To Highest Since May '08

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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

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Andrew Cates

**The growth consensus for 2026** 
Consensus growth forecasts for 2026 have continued to firm over the past six months, with upward revisions most pronounced in economies that are more directly exposed to the global AI investment cycle. Taiwan stands out, reflecting its central role in advanced semiconductor manufacturing and the spillovers from sustained AI-related capex across the global tech supply chain. The US has also seen a sizeable upgrade, consistent with strong domestic investment in AI infrastructure and data-centre capacity, alongside resilient demand for high-value tech services. Elsewhere in Asia, upgrades to South Korea and, to a lesser extent, China and India point to a broader regional benefit from the AI-driven electronics and capital-goods cycle, even as underlying macro conditions remain mixed. Canada has also seen modest upward revisions, likely reflecting its close integration with US investment trends. By contrast, revisions across much of Europe and Japan have been more muted, while forecasts for Russia remain under downward pressure.

260115Z1.jpg

**The next steps for central bank policy** 
Based on responses to the special questions in the latest Blue Chip survey, the chart highlights how uncertain panelists remain about the precise timing of the next policy move, even where there is broad agreement on direction. Expectations for both the Fed and the Bank of England are now loosely centred on March 2026 as the most likely window for the next easing step, but the spread of responses points to limited conviction and a high sensitivity to incoming data. By contrast, panelists continue to see the ECB as largely through its easing cycle, with a clear majority expecting any further move only later, if at all. The Bank of Japan remains the clear outlier: while further tightening is still the central expectation, views are split on timing, with panelists divided between a March move and a hike pushed beyond April 2026—highlighting ongoing uncertainty over the durability of domestic inflation and wage dynamics.

260115Z2.jpg

**The UK economy and BoE policy** 
While Blue Chip panelists remain divided on the precise timing of the Bank of England’s next policy cut, the latest run of UK data is tilting market expectations toward an earlier move. Economic releases have increasingly fallen short of expectations, a pattern that has coincided with a steady decline in short-dated gilt yields. The negative surprise profile reflects a combination of weak household demand and softer labour-market indicators. This has generated downside momentum in the data, reinforcing the case—at least from a market perspective—for earlier or deeper policy easing.

260115Z3.jpg

**The impact of Artificial Intelligence**
Responses to the special questions in the latest Blue Chip survey also suggest that panelists are divided over the timing of AI’s macroeconomic impact in the US. A sizeable share already reports seeing noticeable effects, consistent with the rapid pace of AI-related investment and adoption over the past year. At the same time, a similarly large group expects AI’s impact to become more evident only over the next one to three years, implying a belief that productivity and growth effects will materialise with a lag. These views are notable given that a majority of panelists continue to judge anticipated AI-related gains as being overstated in financial markets, underscoring the risk of disappointment—and potential equity market volatility—if realised outcomes fail to match elevated expectations.

260115Z4.jpg

**US business formation and productivity growth**
The chart points to a renewed pick-up in US productivity growth alongside a marked step-up in business applications, a combination that has naturally fuelled interest in the role of AI. The acceleration in output per hour over the past year coincides with a surge in corporate formations, potentially reflecting both heightened investment in new technologies and the emergence of new, AI-enabled business models. That said, productivity growth has historically been highly cyclical, often strengthening late in the cycle or during periods of labour hoarding and cost discipline, before fading again. As such, while AI may be contributing at the margin, it remains too early to conclude that the recent improvement marks a durable, technology-driven shift rather than another cyclical upswing.

260115Z5.jpg

**China’s export growth**
This week’s China trade data revealed that its export growth has continued to rotate away from the US and toward Europe and ASEAN, a pattern that has become more pronounced over the past year. While exports to the US have fallen sharply on a year-on-year basis, shipments to both Europe and ASEAN have held up markedly better, and in recent months have returned to positive growth. This divergence is consistent with the tightening of US trade policy toward China, including higher tariffs, expanded export controls and broader efforts to “de-risk” supply chains. By contrast, trade with Europe and ASEAN appears to be benefiting from trade diversion and re-routing, as Chinese firms redirect exports toward markets where barriers remain lower and supply-chain integration is deeper.

260115Z6.jpg

The global backdrop remains unsettled, reflected in rising gold prices amid geopolitical tensions—most recently around Venezuela—and renewed political noise, including questions over Federal Reserve independence. At the same time, however, many major equity indices remain at or close to all-time highs, buoyed by optimism around AI and reinforced by a run of relatively benign US inflation readings. Against this mixed backdrop, the charts this week point to a global outlook that is becoming more differentiated rather than uniformly weaker. Blue Chip forecasts for 2026 growth have edged higher over the past six months, with upgrades concentrated in economies most exposed to the AI investment cycle, notably the US and parts of Asia (chart 1). Central bank expectations remain fluid: while panelists broadly anticipate easing by the Fed and Bank of England, conviction around timing is limited, and the Bank of Japan remains an outlier with further tightening still expected (chart 2). In the UK, that uncertainty sits alongside a deteriorating data flow, with negative economic surprises increasingly tilting market expectations toward an earlier BoE rate cut (chart 3). Turning to the US, special questions highlight a divide over whether AI is already having a noticeable macro impact or whether its effects will emerge more gradually, a tension that mirrors concerns about over-optimism in financial markets (chart4). That debate is echoed in the recent pick-up in US productivity growth and the step-change in business formation—developments that may reflect AI-related dynamics but which also warrant caution given the historically cyclical nature of productivity (chart 5). Finally, China’s trade data point to a continued re-orientation of export growth away from the US and toward Europe and ASEAN, consistent with evolving US trade policy and broader supply-chain realignment (chart 6).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/2mhM227WWeJJ6kRv7sJMiE?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Between Optimism and Uncertainty

Sandy Batten

260114J8.jpg

260114K8.jpg

Existing home sales jumped 5.1% m/m (+1.4% y/y) in December to 4.35 million units (SAAR). This was the fourth consecutive monthly gain and was well above the 1.7% m/m increase expected by the Action Economics Forecast Survey. December sales were the highest since February 2023. For all of 2025, sales remained anemic, totaling just 4.084 million and only up slightly from 4.067 million in 2024, which was the lowest annual total in the history of the series dating back to 1999. The average effective 30-year mortgage interest rate fell to 6.51% in December from 6.54% in November. This is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 5.1% m/m (+1.8% y/y) in December to 3.95 million. This was the fourth consecutive monthly increase and highest level of single-family sales since February 2023. Sales of condos and co-ops surged 5.3% m/m (-2.4% y/y) in December to 400,000, more than reversing a 2.6% monthly drop in November. For all of 2025, sales of single-family homes edged up to 3.706 million from 3.673 million in 2024. By contrast, sales of condos and co-ops declined to 378,333 from 393,333 in 2024.

Compared to a month ago, sales rose 2.0% m/m in the Northeast, increased 2.0% m/m in the Midwest, jumped 6.9% m/m in the South (the largest monthly gain since February 2024), and surged 6.6% m/m in the West (the largest monthly gains since February). Year-over-year comparisons were less flattering. Compared to a year ago, sales were unchanged in both the Midwest and the West and fell 1.9% y/y in the Northeast. By contrast, sales rose 3.6% y/y in the South.

The median price of all existing homes (NSA) declined 1.1% m/m (+0.4% y/y) to $405,400 in December. The median price of an existing single-family home fell 1.3% m/m (+0.2% y/y) to $409,500 in December. Prices of single-family homes in the Northeast were essentially unchanged in December from November. However, prices in the other three regions fell: -3.6% m/m in the Midwest, -0.3% m/m in the South, -1.9% m/m in the West.

Inventories of homes for sale continued to weaken in December. The number of existing homes for sale (NSA) plummeted 18.1% m/m (+3.5% y/y) to 1.18 million units, the lowest level since January. The supply of homes on the market at the current selling rate (NSA) fell to 3.3 months, its lowest reading since last December.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

260114L8.jpg

260114M8.jpg

- Existing home sales jumped a much larger-than-expected 5.1% m/m in December, the fourth consecutive monthly gain.
- Month-over-month sales increased in each of the four major areas.
- But year-over-year sales rose only in the South.
- For all of 2025, sales totaled 4.084 million, up slightly from 4.067 million in 2024.

U.S. Existing Home Sales Jumped 5.1% in December

Michael J. Moran

260114J.jpg

260114K.jpg

The Bureau of Labor Statistics did not publish a report on producer prices for October because of the government shutdown, but it was able to collect sufficient data retroactively to construct all the usual statistics. Those results were included in the November report, which was published on January 14.

The producer price index for final demand rose 0.2% In November after an increase of 0.1 percent in October. These modest changes followed firmer increases in the prior three months (0.4% on average), leaving little change in the year-over-year increase. The Producer Price Index can fluctuate sharply from month-to-month, but the ups and downs recently have traced a sideways trend, with inflation remaining in a range of approximately 2.0% to 4.0% since early 2024. Inflation in the past several months has been in the middle of that range.

The goods and service components of final demand both posted annual inflation near 3.0% in November (goods at 3.2% and services at 2.9%), but they were moving along different trajectories. Good inflation was drifting upward, while service inflation was easing slightly. Casual observation suggests that tariffs might be playing a role in the pickup in goods inflation. Tariffs could be leading to higher prices of inputs for domestic producers, which might be passed on to final prices. The year-over-year increase in final goods inflation totaled only 0.4% in April, when President Trump announced draconian tariffs, but it has since climbed to 3.2%.

The final demand PPI, in addition to goods and service components, also has a construction component, although it has a small weight in the overall index (2.6%). This component was unchanged in November after an increase of 1.6% in October; the year-over-year change totaled 2.7%. The BLS claims that monthly changes in the construction component are seasonally adjusted, but the published figures seem to have residual seasonality. Specifically, the first month of many quarters often shows an outsized change. In the chart below, the spikes upward and downward are nearly always in the first month of a quarter.

In addition to final demand measures, the Bureau of Labor Statistics also publishes price indexes for intermediate goods and services produced by US firms. The intermediate service measure had been showing a downward drift in inflation, although it has taken a slight turn upward in recent months. Among producers of processed goods, inflation at the intermediate level has taken a sharp turn since mid-2024, moving from deflation to essentially no inflation one year later. Inflation remained close to zero for a time, but a renewed upward trend began in the spring of last year (after April – one wonders about the effect of tariffs).

The BLS publishes an index for unprocessed goods at the intermediate level, but this measure is wild. Month-to-month changes are often pronounced, and the year-over-year change swings sharply as well. Since mid-2024, year-over-year inflation has ranged from -32.1% to 9.3%.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

260114L.jpg

260114M.jpg

- Offsetting drifts in final demand for goods and services leave inflation steady at 3%.
- Inflation quickens for producers of intermediate goods and services.

Producer Prices: Range Bound Since Mid-2024

Winnie Tapasanun

260114N15.jpg

260114O15.jpg

Total retail sales rose 0.6% m/m in November—exceeding expectations—after a downwardly revised 0.1% easing in October (0.0% initially) and a 0.1% uptick in September (unrevised), data from the U.S. Census Bureau showed. November marked the fifth m/m gain in six months. A 0.4% m/m November increase had been expected in the Action Economics Forecast Survey. The year-on-year growth rate stood at 3.3% in November and October, the lowest since October 2024; this compared with 3.9% in November 2024 and remained far below a high of 17.1% in February 2022 and a peak of 51.8% in April 2021.

Excluding motor vehicles & parts, retail sales rose 0.5% (4.3% y/y) in November, the sixth straight m/m rise, after a 0.2% increase in October (+0.4% initially). A 0.3% m/m November increase had been expected. Sales of motor vehicles & parts grew 1.0% (-0.7% y/y) following a 1.6% October decline; this compared to a 2.5% rise (-4.3% y/y) in unit light vehicle sales following a 6.7% October drop.

Sales in the retail control group, which excludes autos, building materials, gasoline stations, and food services, rose 0.4% (5.1% y/y) in November, the sixth m/m rise in seven months, after a 0.6% rebound in October. These sales are used in the construction of personal consumption expenditures in NIPA accounts. Nonauto sales excluding gasoline & building materials rose 0.4% (5.0% y/y), also up for the sixth time in seven months, following a 0.5% October increase.

Sales by category mostly increased m/m in November. To the upside, sporting goods, hobby, book & music store sales climbed 1.9% (7.8% y/y) in November, the fourth m/m increase in five months, after gaining at the same rate in October. Miscellaneous store sales rose 1.7% (16.3% y/y), the third consecutive m/m rise, after a 1.5% October increase. Gasoline station sales recovered 1.4% (3.2% y/y), the fifth m/m gain in six months, following a 1.2% October drop. Building materials & garden equipment store sales rose 1.3% (-2.8% y/y), the first m/m rise since August, reversing a 1.3% October decrease. Clothing & accessory store sales grew 0.9% (7.5% y/y), the eighth m/m increase in nine months, after a 1.2% October gain. Nonstore retail sales rose 0.4% (7.2% y/y), the ninth m/m rise in 10 months, on top of a 1.0% October increase.

Meanwhile, electronics & appliance store sales held steady (2.7% y/y) in November after a 0.1% uptick in October and two consecutive m/m declines. General merchandise store sales were virtually unchanged (+2.1% y/y) in November after a 0.5% increase in October; within this grouping, department store sales fell 2.9% (+0.3% y/y) following a 4.9% October rebound (the largest m/m gain since February 2022). Furniture & home furnishing store sales slipped 0.1% (-1.4% y/y), the third m/m decline in four months, after a 1.8% October rise.

In the nondiscretionary sales categories, health & personal care store sales recovered 0.3% (6.7% y/y) in November, up for the second month in three, following a 0.2% decline in October. Food & beverage store sales edged up 0.1% (2.4% y/y), the fifth m/m increase in six months, after a 0.2% October rebound.

Consumers appeared to dine out in November despite still-high inflation. Restaurant & drinking place sales rose 0.6% (4.9% y/y) in November, the fifth m/m rise in six months, following an upwardly revised 0.1% easing in October (-0.4% initially).

Retail Sales data can be found in Haver's **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

260114P15.jpg

260114Q15.jpg

- November total retail sales +0.6% (+3.3% y/y); fifth m/m gain in six months.
- Ex-auto sales +0.5% (+4.3% y/y); auto sales +1.0% (-0.7% y/y).
- Gains m/m: sporting goods (+1.9%), misc. stores (+1.7%), gasoline stations (+1.4%), and bldg. materials (+1.3%).
- Declines m/m: department stores (-2.9%) and furniture stores (-0.1%).

U.S. Retail Sales Rise More Than Expected in November

Kathleen Stephansen, CBE

260114A1.jpg

260114B1.jpg

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.