Tom Moeller

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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>

</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

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002h.jpg" align="left" border="0" height="265" width="353">
August&#8217;s EMU PPI excluding construction rose by 0.7% following
a drop of 0.9% in July. Still the three-month growth rate (annualized)
is now positive at 0.7% the six month growth rate is at -3.9% and the
12-month growth rate is at -7.6%. Inflation is gaining a toe hold again
in EMU at the producer price level. The ECB ahs a ceiling arrangement
for the HICP only (harmonized index of consumer inflation). 
 

Even so, inflation does not appear to be cooking in any sense
of the word. For consumer goods, prices were still flat in August and,
at -0.3%, the three month growth rate for consumer goods is still close
to its six month annualized pace at -0.6%. There is no pressure there.
Capital goods prices continued to fall in August dropping by 0.1%. Over
three months, capital goods prices are falling by 0.8%; that is a
slight but only a slight improvement from dropping by 1.4% at an annual
rate over six months. There is not much inflation pressure from capital
goods prices either. 
 

Virtually all the inflation pressure in the PPI is coming from
industrial supplies or intermediate goods. Intermediate goods prices
rose by 0.4% in August. They are also up at a 1.1% annual rate over
three months and down at an annual rate of 3.6% over six months. 
 

Across EMU countries the headline PPI rose in all of the
largest of them. Ex food and energy prices rose in Germany and in
France as well. For all these price measures, the August rise is
balanced by a drop in July. 
 

Still the bottom line is that prices are on the move again.
While it does not look like the pressures are very widespread across
commodity classifications or very intense, the pressure seems quite
real and widespread cross the larger EMU nations. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Constructions</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>0.7%</td>
<td>-3.9%</td>
<td>-7.6%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-2.6%</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Cap Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-3.6%</td>
<td>-7.4%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>4.1%</td>
<td>-0.7%</td>
<td>-7.1%</td>
<td>6.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.6%</td>
<td>-6.8%</td>
<td>-9.4%</td>
<td>-7.6%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany excl Energy</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-3.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France&nbsp;</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>-2.9%</td>
<td>-8.4%</td>
<td>7.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France excl Food &amp;
Energy</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-2.6%</td>
<td>-3.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>-2.8%</td>
<td>-7.8%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>-1.7%</td>
<td>6.2%</td>
<td>1.0%</td>
<td>-6.5%</td>
<td>21.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Euro Area Harmonized PPI ex
construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

August’s EMU PPI excluding construction rose by 0.7% following a drop of 0.9% in July. Still the three-month growth rate (annualized) is now positive at 0.7% the six month growth rate is at -3.9% and the 12-month growth rate is at [...]

PPI Points Way Higher for Euro Area Inflation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002g.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment. Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
In addition to fewer layoffs, hiring plans have picked up and were more than double last year&#39;s level. There have been strong increase in services, electronics and entertainment/leisure industries.
The Challenger figures are available in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>66,404</td>
<td>76,456</td>
<td>-30.2%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>25,047</td>
<td>13,100</td>
<td>162.6</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>
</body>
</html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year. During the last [...]

Challenger Layoffs Fall Further To Cycle Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002a.jpg" width="353">
Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the &quot;Cash-for-Clunkers&quot; sales program. Sales last month fell 34.6% m/m to 9.22M units according to the Autodata Corporation. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). September sales were weaker than the expected 9.6M sales rate and were at their lowest since February.
Sales of domestically made vehicles fell by more than one-third from August to 6.62M units and they were down 29.7% y/y. Sales of fuel efficient cars fell nearly 40% m/m while light truck sales posted a 29% m/m decline that left them down one-third versus last September. Year-to-date, sales of domestic vehicles overall were down 13.1% following last year&#39;s 35.8% drop from December-to-December.
Imported light vehicles similarly fell with the end of the government&#39;s sales program. A 36.5% m/m decline to 2.60 units more than reversed the August increase. Sales of imported autos fell a hard 36.3% while sales of imported light trucks also fell by more than one-third m/m. Year-to-date, sales of imported vehicles were slightly below last year&#39;s average.
Overall, import&#39;s share of the U.S. light vehicle market slipped to 28.2% last month from 29.0% in August. It reached 26.5% during all of last year. (Imported vehicles are those produced outside the United States.) Imports&#39; share of the U.S. car market totaled 35.3%, versus 34.3% last year while the share of the light truck market was 19.7%, up slightly from 18.3% last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002b.jpg" width="353">
The U.S. vehicle sales figures can be found in Haver&#39;s USECON database.
Regulatory reform is yesterday&#39;s House testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091001a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Sept. 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>9.22</td>
<td>14.09</td>
<td>11.24</td>
<td>-26.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.02</td>
<td>8.05</td>
<td>6.20</td>
<td>-20.3</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.25</td>
<td>5.26</td>
<td>4.11</td>
<td>-23.8</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.77</td>
<td>2.78</td>
<td>2.09</td>
<td>-12.9</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.20</td>
<td>6.05</td>
<td>5.04</td>
<td>-33.0</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.37</td>
<td>4.75</td>
<td>4.06</td>
<td>-34.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.83</td>
<td>1.31</td>
<td>0.98</td>
<td>-26.1</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>


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Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the "Cash-for-Clunkers" sales program. Sales last month fell [...]

U.S. Vehicle Sales Payback August Strength

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002c.jpg" align="right" border="0" height="265" width="353">
For September, the employment figures from the Bureau of Labor
Statistics were uniformly weak. Payrolls fell a more-than-expected
263,000. Hours worked fell again. The unemployment rate rose to 9.8%,
the highest since 1983. All in all, they suggest that the rate of
decline in the job market has slowed, but an upturn still is not
evident.
Nonfarm payrolls fell 263,000 during September. That exceeded
expectations for a 180,000 decline and while the August shortfall was
lessened, July's was deepened. So far during this recession employment
has fallen by a total of 7.2 million, by far the record for a 21-month
period. In percentage terms, jobs are down 5.2% since the 2007 peak,
also a record. If there is good news, it's that the decline in payroll
declines moderated to an average 256,000 over the last three months
versus a peak rate of 701,000 this past winter.
The length of the average workweek fell back to the cycle low
of 33.0 hours. Combined with the decline in payrolls that was enough to
pull 3Q aggregate hours worked (employment times hours) down at a 3.0%
annual rate after a 7.8% decline during 2Q. Productivity needs to rise
more than that if real GDP is going to rise as is widely expected.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002d.jpg" align="right" border="0" height="265" width="353">
The increase in the unemployment rate to 9.8% from 9.7% was
as-expected and it left the rate at the highest level since 1983. The
rate's cycle low of 4.4% occurred in October 2006. The official
unemployment rate pales, however, in comparison to the rate which
includes "marginally attached workers" and those who are working
part-time for economic reasons. It rose to 17.0%. Including
"discouraged workers" the unemployment rate stood at 10.2%.
The increase in the overall jobless rate was due to a 785,000
(-4.3% y/y) decline in household employment. That was shallower than
the worst monthly declines of this past winter but worse than those of
the last several months. It was accompanied by a sharp 571,000 (-0.4%
y/y) decline in the labor force reflecting the discouraged workers.
Also from the household survey, the median duration of unemployment
jumped m/m to 17.3 weeks, just below this cycle's high reached in June.
The ranks of the long-term unemployed rose to 5.438 million (166.4%
y/y), an historic high. By educational attainment, those with a high
school diploma but no college saw employment fall 5.2% y/y while those
with a bachelor's degree or higher experienced a 0.7% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002e.jpg" align="right" border="0" height="265" width="353">
From the payroll survey, the quickening in the rate of job
loss last month was due to a faster 94,000 (-3.1% y/y) decline in
private service payrolls. Declines were broad-based notably in retail
trade, educational services, and professional &amp; tech services.
Also, in the government sector employment fell a sharp 53,000 (-0.6%
y/y as budgets shrank with lower tax revenues. The number of local
gov't jobs led the decline with a 37,000 (-0.9% y/y) drop. Jobs with
the federal government fell 5,000 (+1.9% y/y) for the third decline in
the last four months. Manufacturing sector jobs fell 51,000 last month
after a 66,000 July decline. These shortfalls compare to average
monthly declines of 131,000 this year. Construction jobs fell 64,000
and they fell an average 89,000 each month this year.
The breath of the decline in payroll employment extended to
14.9% of industries during the last twelve months while it rose to
28.0% during the last three months.
Average hourly earnings ticked up just 0.1% during September.
That pulled the y/y gain down to 2.5% which was its weakest since
late-2004, down from 4.2% reached during 2007. Earnings in the factory
sector actually have improved recently and rose 0.7% (2.8% y/y). Growth
in durable sector's earnings rose 0.7% and the y/y rate quickened to
3.7%. Earnings in the private service sector rose just 0.5% (2.7% y/y)
while construction sector earnings fell 1.4% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002f.jpg" align="right" border="0" height="265" width="353">
The Labor Department offered a preliminary look at the
benchmark revision to the payroll data to be issued in February, 2010.
The revised data show that the level of payroll employment as of March
of 2009 will be lowered by 824,000, or 0.6%, from current published
numbers.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Fed Policy in the Financial Crisis: Arresting
the Adverse Feedback Loop from the Federal Reserve Bank
of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0907.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-263</td>
<td>-201</td>
<td>-304</td>
<td>-4.2%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-216</td>
<td>-276</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-51</td>
<td>-66</td>
<td>-41</td>
<td>-12.0%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-64</td>
<td>-60</td>
<td>-69</td>
<td>-15.3%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-147</td>
<td>-69</td>
<td>-188</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.1</td>
<td>33.1</td>
<td>33.6 (Sept. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.8%</td>
<td>9.7%</td>
<td>9.4%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

For September, the employment figures from the Bureau of Labor Statistics were uniformly weak. Payrolls fell a more-than-expected 263,000. Hours worked fell again. The unemployment rate rose to 9.8%, the highest since 1983. All in [...]

U.S. Payrolls Decline Again While Jobless Rate Increases

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002c.jpg" align="right" border="0" height="265" width="353">
For September, the employment figures from the Bureau of Labor
Statistics were uniformly weak. Payrolls fell a more-than-expected
263,000. Hours worked fell again. The unemployment rate rose to 9.8%,
the highest since 1983. All in all, they suggest that the rate of
decline in the job market has slowed, but an upturn still is not
evident.
Nonfarm payrolls fell 263,000 during September. That exceeded
expectations for a 180,000 decline and while the August shortfall was
lessened, July's was deepened. So far during this recession employment
has fallen by a total of 7.2 million, by far the record for a 21-month
period. In percentage terms, jobs are down 5.2% since the 2007 peak,
also a record. If there is good news, it's that the decline in payroll
declines moderated to an average 256,000 over the last three months
versus a peak rate of 701,000 this past winter.
The length of the average workweek fell back to the cycle low
of 33.0 hours. Combined with the decline in payrolls that was enough to
pull 3Q aggregate hours worked (employment times hours) down at a 3.0%
annual rate after a 7.8% decline during 2Q. Productivity needs to rise
more than that if real GDP is going to rise as is widely expected.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002d.jpg" align="right" border="0" height="265" width="353">
The increase in the unemployment rate to 9.8% from 9.7% was
as-expected and it left the rate at the highest level since 1983. The
rate's cycle low of 4.4% occurred in October 2006. The official
unemployment rate pales, however, in comparison to the rate which
includes "marginally attached workers" and those who are working
part-time for economic reasons. It rose to 17.0%. Including
"discouraged workers" the unemployment rate stood at 10.2%.
The increase in the overall jobless rate was due to a 785,000
(-4.3% y/y) decline in household employment. That was shallower than
the worst monthly declines of this past winter but worse than those of
the last several months. It was accompanied by a sharp 571,000 (-0.4%
y/y) decline in the labor force reflecting the discouraged workers.
Also from the household survey, the median duration of unemployment
jumped m/m to 17.3 weeks, just below this cycle's high reached in June.
The ranks of the long-term unemployed rose to 5.438 million (166.4%
y/y), an historic high. By educational attainment, those with a high
school diploma but no college saw employment fall 5.2% y/y while those
with a bachelor's degree or higher experienced a 0.7% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002e.jpg" align="right" border="0" height="265" width="353">
From the payroll survey, the quickening in the rate of job
loss last month was due to a faster 94,000 (-3.1% y/y) decline in
private service payrolls. Declines were broad-based notably in retail
trade, educational services, and professional &amp; tech services.
Also, in the government sector employment fell a sharp 53,000 (-0.6%
y/y as budgets shrank with lower tax revenues. The number of local
gov't jobs led the decline with a 37,000 (-0.9% y/y) drop. Jobs with
the federal government fell 5,000 (+1.9% y/y) for the third decline in
the last four months. Manufacturing sector jobs fell 51,000 last month
after a 66,000 July decline. These shortfalls compare to average
monthly declines of 131,000 this year. Construction jobs fell 64,000
and they fell an average 89,000 each month this year.
The breath of the decline in payroll employment extended to
14.9% of industries during the last twelve months while it rose to
28.0% during the last three months.
Average hourly earnings ticked up just 0.1% during September.
That pulled the y/y gain down to 2.5% which was its weakest since
late-2004, down from 4.2% reached during 2007. Earnings in the factory
sector actually have improved recently and rose 0.7% (2.8% y/y). Growth
in durable sector's earnings rose 0.7% and the y/y rate quickened to
3.7%. Earnings in the private service sector rose just 0.5% (2.7% y/y)
while construction sector earnings fell 1.4% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002f.jpg" align="right" border="0" height="265" width="353">
The Labor Department offered a preliminary look at the
benchmark revision to the payroll data to be issued in February, 2010.
The revised data show that the level of payroll employment as of March
of 2009 will be lowered by 824,000, or 0.6%, from current published
numbers.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Fed Policy in the Financial Crisis: Arresting
the Adverse Feedback Loop from the Federal Reserve Bank
of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0907.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-263</td>
<td>-201</td>
<td>-304</td>
<td>-4.2%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-216</td>
<td>-276</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-51</td>
<td>-66</td>
<td>-41</td>
<td>-12.0%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-64</td>
<td>-60</td>
<td>-69</td>
<td>-15.3%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-147</td>
<td>-69</td>
<td>-188</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.1</td>
<td>33.1</td>
<td>33.6 (Sept. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.8%</td>
<td>9.7%</td>
<td>9.4%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 U.S. Vehicle Sales Payback August
Strength 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002a.jpg" align="left" border="0" height="265" width="353">
Payback time came last month for vehicle sales that were
pulled forward by price discounts. U.S. unit sales of light
vehicles during September fell sharply with the end of the
"Cash-for-Clunkers" sales program. Sales last month fell 34.6% m/m to
9.22M units according to the Autodata Corporation. (Seasonal adjustment
of the figures is provided by the U.S. Bureau of Economic Analysis).
September sales were weaker than the expected 9.6M sales rate and were
at their lowest since February.
Sales of domestically made vehicles fell
by more than one-third from August to 6.62M units and they were down
29.7% y/y. Sales of fuel efficient cars fell nearly 40% m/m while light
truck sales posted a 29% m/m decline that left them down one-third
versus last September. Year-to-date, sales of domestic vehicles overall
were down 13.1% following last year's 35.8% drop from
December-to-December.
Imported light vehicles similarly fell with
the end of the government's sales program. A 36.5% m/m decline to 2.60
units more than reversed the August increase. Sales of imported autos
fell a hard 36.3% while sales of imported light trucks also fell by
more than one-third m/m. Year-to-date, sales of imported vehicles were
slightly below last year's average.
Overall, import's share of the U.S. light
vehicle market slipped to 28.2% last month from 29.0% in August. It
reached 26.5% during all of last year. (Imported vehicles are those
produced outside the United States.) Imports' share of the U.S. car
market totaled 35.3%, versus 34.3% last year while the share of the
light truck market was 19.7%, up slightly from 18.3% last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002b.jpg" align="right" border="0" height="265" width="353">
The U.S. vehicle sales figures can be found in Haver's
USECON database.
Regulatory reform is yesterday's House
testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091001a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Sept. 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>9.22</td>
<td>14.09</td>
<td>11.24</td>
<td>-26.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.02</td>
<td>8.05</td>
<td>6.20</td>
<td>-20.3</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.25</td>
<td>5.26</td>
<td>4.11</td>
<td>-23.8</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.77</td>
<td>2.78</td>
<td>2.09</td>
<td>-12.9</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.20</td>
<td>6.05</td>
<td>5.04</td>
<td>-33.0</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.37</td>
<td>4.75</td>
<td>4.06</td>
<td>-34.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>0.83</td>
<td>1.31</td>
<td>0.98</td>
<td>-26.1</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>
 Challenger Layoffs Fall Further To
Cycle Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002g.jpg" align="left" border="0" height="265" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas
indicated that job cut announcements fell last month to the current
cycle low. They dropped to 66,404, compared to a high of 241,748 cuts
in February of this year.
During the last ten years there has been a 67% (inverse)
correlation between the three month moving average of announced job
cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
In addition to fewer layoffs, hiring plans have picked up and
were more than double last year's level. There have been strong
increase in services, electronics and entertainment/leisure industries.
The Challenger figures are available in Haver's SURVEYS
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>66,404</td>
<td>76,456</td>
<td>-30.2%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>25,047</td>
<td>13,100</td>
<td>162.6</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>

 PPI Points Way Higher for Euro
Area Inflation 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002h.jpg" align="left" border="0" height="265" width="353">
August&#8217;s EMU PPI excluding construction rose by 0.7% following
a drop of 0.9% in July. Still the three-month growth rate (annualized)
is now positive at 0.7% the six month growth rate is at -3.9% and the
12-month growth rate is at -7.6%. Inflation is gaining a toe hold again
in EMU at the producer price level. The ECB ahs a ceiling arrangement
for the HICP only (harmonized index of consumer inflation). 
 

Even so, inflation does not appear to be cooking in any sense
of the word. For consumer goods, prices were still flat in August and,
at -0.3%, the three month growth rate for consumer goods is still close
to its six month annualized pace at -0.6%. There is no pressure there.
Capital goods prices continued to fall in August dropping by 0.1%. Over
three months, capital goods prices are falling by 0.8%; that is a
slight but only a slight improvement from dropping by 1.4% at an annual
rate over six months. There is not much inflation pressure from capital
goods prices either. 
 

Virtually all the inflation pressure in the PPI is coming from
industrial supplies or intermediate goods. Intermediate goods prices
rose by 0.4% in August. They are also up at a 1.1% annual rate over
three months and down at an annual rate of 3.6% over six months. 
 

Across EMU countries the headline PPI rose in all of the
largest of them. Ex food and energy prices rose in Germany and in
France as well. For all these price measures, the August rise is
balanced by a drop in July. 
 

Still the bottom line is that prices are on the move again.
While it does not look like the pressures are very widespread across
commodity classifications or very intense, the pressure seems quite
real and widespread cross the larger EMU nations. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Constructions</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>0.7%</td>
<td>-3.9%</td>
<td>-7.6%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-2.6%</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Cap Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-3.6%</td>
<td>-7.4%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>4.1%</td>
<td>-0.7%</td>
<td>-7.1%</td>
<td>6.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.6%</td>
<td>-6.8%</td>
<td>-9.4%</td>
<td>-7.6%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany excl Energy</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-3.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France&nbsp;</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>-2.9%</td>
<td>-8.4%</td>
<td>7.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France excl Food &amp;
Energy</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-2.6%</td>
<td>-3.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>-2.8%</td>
<td>-7.8%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>-1.7%</td>
<td>6.2%</td>
<td>1.0%</td>
<td>-6.5%</td>
<td>21.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Euro Area
Harmonized PPI ex
construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13
countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Payrolls Decline Again WhileJobless Rate Increases

Carol Stone, CBE

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001m.jpg" align="right" border="0" height="265" width="353">The headline sounded so promising: construction spending rose
0.8% in August, when forecasters had looked only for a 0.2% decrease.
But the pleasure with this result was short-lived. July's amount was
revised from -0.2% to -1.1% and June's from a marginal 0.1% increase to
a 1.4% fall. Some parts of the economy are improving, but much of
construction activity continues to lag. Total outlays in August were
11.6% below a year ago.
Nonresidential projects remain the weakest. Those outlays
edged down 0.1% in August, and July was revised from -1.2% to -2.6%,
while June's figure was cut back from -2.2% to -4.0%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001o.jpg" align="right" border="0" height="265" width="353">
Over these last 3
months combined, nonresidential outlays dropped by 6.5%; the weakest
segments have been lodging, commercial and amusements, each down
12-15%; education (private structures), offices, transportation,
manufacturing and communication, down 5-8%, and health care, power and
religious construction activity have been flat to somewhat higher.
However, as Tom Moeller pointed out here a month ago, these declines
result mainly from poor business profits during the worst of the
recession; planning and building lead-times mean that recent work
reflects those discouraging business conditions from at least several
months ago or more. Now profits are improving and recovery in the
residential sector seems to be more firmly established. So the
implications for sustained turnaround in nonresidential construction
are much more positive now.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001n.jpg" residential activity remains at low level but as just noted appears be coming back single-family construction rose august improvement residual an unpublished series calculated by haver gained offset decline multifamily building produce overall sector it too however was subject to downward revisions in june july such that these three months saw only total increase and the year-ago comparison is still a sizable align="right" border="0" height="265" width="353">
Public construction was down in August by 1.1%, as federal
building activity fell 7.6%, while state and local government outlays
decreased 0.5%. Increases over previous months mean that the
year-on-year comparison still shows a gain, this of 3.3%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
(%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</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>0.8</td>
<td>-1.1</td>
<td>-1.4</td>
<td>-11.6</td>
<td>-6.9</td>
<td>-1.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.8</td>
<td>-1.4</td>
<td>-3.2</td>
<td>-17.8</td>
<td>-11.1</td>
<td>-5.7</td>
<td>5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>4.7</td>
<td>0.6</td>
<td>-1.8</td>
<td>-26.7</td>
<td>-29.1</td>
<td>-19.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.1</td>
<td>-2.6</td>
<td>-4.0</td>
<td>-10.5</td>
<td>13.2</td>
<td>23.1</td>
<td>16.2</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-1.1</td>
<td>-0.7</td>
<td>2.2</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
<td>9.3</td>
</tr>
</tbody>
</table>
</body></html>

The headline sounded so promising: construction spending rose 0.8% in August, when forecasters had looked only for a 0.2% decrease. But the pleasure with this result was short-lived. July's amount was revised from -0.2% to -1.1% and [...]

U.S. Construction Spending Gains in August, But June & July Revised Down

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

260115N2.jpg

260115O2.jpg

The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia rose to 12.6 in January from -8.8 in December. The survey covers the third Federal Reserve District. A reading of -4.5 for January was expected by the Action Economics Forecast Survey. Over 23% of respondents reported increases in activity in January (up from 21% last month), exceeding the 11% reporting decreases (down from 30%); 63% of the firms reported no change in current activity (up from 50%). Survey responses were collected from January 5 to January 12.

The headline index is the answer to just one question: whether activity increased, decreased or was unchanged from the previous month. Haver Analytics calculates an ISM-adjusted current activity diffusion index from the five key components using the methodology employed to construct the national ISM index. This figure rose to 52.9 in January from 52.5 in December, inching further above the critical 50 value that separates contraction from expansion.

For the component indexes, the new orders index rose to 14.4 from 5.7 in December. The percentage of respondents reporting an increase in orders edged up to 28.3% in January from 27.4% in the prior month while 13.9% reported a decrease, down markedly from 21.7% in December. The shipments index increased to 9.5 in January from 3.2 in December. The percentage of respondents reporting an increase in shipments rose slightly to 27.3% from 26.2% while the percentage reporting a decrease fell to 17.8% from 23.0%. Delivery times lengthened marginally to 7.3 in January from 5.2 in December. The inventories index fell 17 points to -8.4 in January, its lowest level since July 2024.

Respondents continued to report overall increases in employment with the employment index remaining in positive territory. However, the index fell to 9.7 in January from 13.0 in December, indicating that gains in employment slowed in the latest month. The percentage of respondents reporting an increase in employment rose to 19.8% from 13.6% in December but the percentage reporting a decline jumped to 10.1% in January from 0.6% in December. The average workweek index fell from 12.5 in December to 9.1 in January.

On balance, the firms continued to report overall increases in prices. The prices paid index edged down 2 points to 46.9 in January, its second consecutive decrease and its lowest level since June. Nearly 47% of respondents reported increases in input prices, while none reported decreases; 53% reported no change. The current prices received index ticked up 2 points to 27.8. More than 31% of respondents reported increases in the prices of their own goods, 3% reported decreases, and 66% reported no change.

The diffusion index for future general activity declined from a revised reading of 38.1 in December to 25.5 in January, its lowest reading since July. Nearly 35% of respondents expect an increase in activity over the next six months (down from 53% last month), exceeding the 9% that expect a decrease. The future new orders index fell 6 points to 32.9, while the future shipments index ticked up 1 point to 40.8. On balance, the firms continue to expect increases in employment over the next six months with the future employment index rising 4 points to 28.8. Both future price indexes were well above their long-run averages: The future prices paid index rose 2 points to 66.6; the future prices received index moved up 5 points to 61.8. The index for future capital expenditures edged up 1 point to 30.3.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The indexes range from -100 to +100 with positive values indicating an increase in activity. The series from the survey dating back to May 1968 can be found in Haver’s **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- The headline index increased to 12.6 in January, the highest reading since September, from -8.8 in December.
- Both new orders and shipments increased in January.
- Delivery times lengthened while the pace of input price increases slowed.
- Employment decreased but remained in positive territory, indicating further gains in employment though at a slower pace.

Philly Fed Manufacturing Activity Rebounds in January

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 9,000 to 198,000 in the week ending January 10, from 207,000 in the week ending January 3, revised from 208,000. The four-week moving average of initial claims was 205,000 in the January 10 week, a decline of 6,500 from 211,500 in the January 3 week, revised from 211,750, and reaching is the lowest level for this average since January 20, 2024, when it was 203,250.

Federal government employees initially filed 646 (NSA) jobless insurance claims in the week ended January 3, after filing 476 claims in the week ended December 27.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” –decreased by 19,000 to 1.884 million in the week ended January 3 from 1.903 million in the December 27 week, revised from 1.914 million. The four-week moving average was 1.889 million in the week ending January 3, a decrease of 250 from the prior week, revised from 1.893 million. The insured unemployment rate stood at 1.2% in the week of January 3, unchanged from previous 5 weeks.

Federal government employees’ continuing benefits claims were 12,803 (NSA) in the week of December 27, 12,161 (NSA) from 12,129 (NSA) in the week of December 20. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 27, the highest unemployment rates were in Rhode Island (2.86%), New Jersey (2.85%), Washington (2.81%), Minnesota (2.74%), Massachusetts (2.59%), Oregon (2.28%), Montana (2.16%), California and Connecticut (both 2.12%) and Alaska (2.06%). The lowest rates were in Florida (0.31%), North Carolina (0.41%), Louisiana (0.43%), Alabama and Virginia (both 0.49%). Rates in other notable states include Illinois (2.18%), New York (2.10%), Pennsylvania (2.02%), and Texas (1.20%). 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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- Initial claims declined from the prior week.
- Continuing claims declined from the prior week.
- The insured unemployment rate was unchanged.

U.S. Initial Claims for Unemployment Insurance Declined in Latest Week

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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.

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- 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

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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.

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