Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731a.jpg" align="right" border="0" height="265" width="353">The
Commerce
Department indicated that real GDP declined last quarter at a 1.0%
annual rate, indicating a slowing in the U.S. recession. The diminution
in the rate of GDP decline versus the prior two quarters was due to a
reduced rate of inventory decumulation and a smaller shortfall in
domestic sales. The 2Q reading compares to Consensus expectations for a
1.5% decline. Revisions to past data, nonetheless, indicate a greater
decline in GDP for all of the current recession. It now amounts to a
3.7% drop since the official peak in 4Q '07. Also, comprehensive
revision of the National Income Accounts, the first since 2003,
incorporate some restructuring of PCE categories and a new impact of
natural disasters. In addition there are new input-output tables and
re-indexing to 2005=100.

Though its magnitude
diminished somewhat last quarter to 0.8 percentage points, the
reduction of unwanted inventories has been a major force behind this
recession. Three factors are behind the large size: 1) The size of the
shortfall in final sales, 2) No inclination to hold inventories due to
rising prices and 3) Tighter inventory management systems. The negative
contribution from inventories this recession rivals the
early-1980s.&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731b.jpg" align="right" border="0" height="265" width="353">
Improvement in the foreign
trade sector helped the domestic economy last quarter, but for reasons
that emphasize the weakness in global activity. Improvement in real net
exports added 1.4 percentage points to 2Q GDP growth after a 2.6 point
addition during 1Q. That addition occurred because a 7.0% (-15.7% y/y)
decline in exports was accompanied by a 15.1% (-18.6% y/y) decline in
imports.&nbsp;Credit storm sinking global trade
from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=440A110B-5056-9F12-1273B38469A2401E&amp;method=display_body">here</a>.
Domestic demand remained under pressure last quarter, but
the negative forces eased somewhat from earlier in the recession. After
having declined over 3% in each of the final quarters of 2008, real
personal consumption expenditures last quarter slipped at a 1.2% annual
rate (-1.8% y/y), following a 0.6% 1Q decline. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731c.jpg" align="right" border="0" height="265" width="353">
The auto sector
exemplifies this moderation in decline. Spending on motor vehicles fell
at an 11.9% rate in 2Q after a 6.7% 1Q gain, compared to quarterly
declines between 20% and 40% last year. Weak corporate profits,
however, continue to prompt weakness in business fixed investment which
fell last quarter at an 8.9% rate (-19.5% y/y). These figures, however,
compare favorably to the severely depressed activity in the housing
sector. Residential investment fell last quarter at a 29.3% annual rate
(-27.1% y/y) which was every bit like the declines since late-2006.

Finally, improved spending by the government sector
helped to offset weakness in private sector spending. A 5.6% 2Q
increase (2.2% y/y) was the strongest since 2003. It was fueled by a
10.9% (6.4% y/y) gain in Federal spending which reflected a 13.3 (3.2%
y/y) rise in defense expenditures. Even spending by states and
localities rose for the first time in three quarters (-0.3%
y/y).Pricing
power has suffered as a result of economic weakness. The
chained GDP price deflator rose at just a 0.2% annual rate last quarter
and the uptick pulled the y/y gain down to 1.6% which was its weakest
since 2002. Expectations had been for a 1.0% quarterly rise. Domestic
prices, however, were even weaker. The 0.7% uptick followed a sharp 1Q
decline and pulled the y/y change to a negative 0.3%. The PCE price
index recovered all of a 1Q decline but the y/y decline of 0.2% is the
weakest price performance since 1950. The residential investment chain
price index made up half of the 1Q decline and remained down a
near-record 4.0% y/y. The weakness in business spending caused the
nonresidential investment price index to fall for the second straight
quarter (+0.9% y/y). The U.S. National Income &amp; Product
Account data is available in Haver's USECON and the
USNA databases.
<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/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">2Q '09 (Advance)</th>
<th scope="col">1Q '09 (Final)</th>
<th scope="col">4Q '08</th>
<th scope="col">2Q 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">GDP</td>
<td>-1.0</td>
<td>-6.4</td>
<td>-5.4</td>
<td>-3.9</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-0.8</td>
<td>-2.4</td>
<td>-0.6</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-0.2</td>
<td>-4.1</td>
<td>-4.7</td>
<td>-3.0</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.4</td>
<td>2.6</td>
<td>-0.1</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-1.5</td>
<td>-6.4</td>
<td>-4.9</td>
<td>-3.9</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.2</td>
<td>1.9</td>
<td>0.1</td>
<td>1.5</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

</body></html>

The Commerce Department indicated that real GDP declined last quarter at a 1.0% annual rate, indicating a slowing in the U.S. recession. The diminution in the rate of GDP decline versus the prior two quarters was due to a reduced rate [...]

Rate of U.S. GDP Decline Slows in Q2 2009

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731a.jpg" align="right" border="0" height="265" width="353">The
Commerce
Department indicated that real GDP declined last quarter at a 1.0%
annual rate, indicating a slowing in the U.S. recession. The diminution
in the rate of GDP decline versus the prior two quarters was due to a
reduced rate of inventory decumulation and a smaller shortfall in
domestic sales. The 2Q reading compares to Consensus expectations for a
1.5% decline. Revisions to past data, nonetheless, indicate a greater
decline in GDP for all of the current recession. It now amounts to a
3.7% drop since the official peak in 4Q '07. Also, comprehensive
revision of the National Income Accounts, the first since 2003,
incorporate some restructuring of PCE categories and a new impact of
natural disasters. In addition there are new input-output tables and
re-indexing to 2005=100.

Though its magnitude
diminished somewhat last quarter to 0.8 percentage points, the
reduction of unwanted inventories has been a major force behind this
recession. Three factors are behind the large size: 1) The size of the
shortfall in final sales, 2) No inclination to hold inventories due to
rising prices and 3) Tighter inventory management systems. The negative
contribution from inventories this recession rivals the
early-1980s.&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731b.jpg" align="right" border="0" height="265" width="353">
Improvement in the foreign
trade sector helped the domestic economy last quarter, but for reasons
that emphasize the weakness in global activity. Improvement in real net
exports added 1.4 percentage points to 2Q GDP growth after a 2.6 point
addition during 1Q. That addition occurred because a 7.0% (-15.7% y/y)
decline in exports was accompanied by a 15.1% (-18.6% y/y) decline in
imports.&nbsp;Credit storm sinking global trade
from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=440A110B-5056-9F12-1273B38469A2401E&amp;method=display_body">here</a>.
Domestic demand remained under pressure last quarter, but
the negative forces eased somewhat from earlier in the recession. After
having declined over 3% in each of the final quarters of 2008, real
personal consumption expenditures last quarter slipped at a 1.2% annual
rate (-1.8% y/y), following a 0.6% 1Q decline. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731c.jpg" align="right" border="0" height="265" width="353">
The auto sector
exemplifies this moderation in decline. Spending on motor vehicles fell
at an 11.9% rate in 2Q after a 6.7% 1Q gain, compared to quarterly
declines between 20% and 40% last year. Weak corporate profits,
however, continue to prompt weakness in business fixed investment which
fell last quarter at an 8.9% rate (-19.5% y/y). These figures, however,
compare favorably to the severely depressed activity in the housing
sector. Residential investment fell last quarter at a 29.3% annual rate
(-27.1% y/y) which was every bit like the declines since late-2006.

Finally, improved spending by the government sector
helped to offset weakness in private sector spending. A 5.6% 2Q
increase (2.2% y/y) was the strongest since 2003. It was fueled by a
10.9% (6.4% y/y) gain in Federal spending which reflected a 13.3 (3.2%
y/y) rise in defense expenditures. Even spending by states and
localities rose for the first time in three quarters (-0.3%
y/y).Pricing
power has suffered as a result of economic weakness. The
chained GDP price deflator rose at just a 0.2% annual rate last quarter
and the uptick pulled the y/y gain down to 1.6% which was its weakest
since 2002. Expectations had been for a 1.0% quarterly rise. Domestic
prices, however, were even weaker. The 0.7% uptick followed a sharp 1Q
decline and pulled the y/y change to a negative 0.3%. The PCE price
index recovered all of a 1Q decline but the y/y decline of 0.2% is the
weakest price performance since 1950. The residential investment chain
price index made up half of the 1Q decline and remained down a
near-record 4.0% y/y. The weakness in business spending caused the
nonresidential investment price index to fall for the second straight
quarter (+0.9% y/y).
 The U.S. National Income &amp; Product
Account data is available in Haver's USECON and the
USNA databases.
<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/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">2Q '09 (Advance)</th>
<th scope="col">1Q '09 (Final)</th>
<th scope="col">4Q '08</th>
<th scope="col">2Q 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">GDP</td>
<td>-1.0</td>
<td>-6.4</td>
<td>-5.4</td>
<td>-3.9</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>-0.8</td>
<td>-2.4</td>
<td>-0.6</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-0.2</td>
<td>-4.1</td>
<td>-4.7</td>
<td>-3.0</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>1.4</td>
<td>2.6</td>
<td>-0.1</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-1.5</td>
<td>-6.4</td>
<td>-4.9</td>
<td>-3.9</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.2</td>
<td>1.9</td>
<td>0.1</td>
<td>1.5</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

EMU Inflation Rate Moves
Lower&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 31, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731d.jpg" align="left" border="0">
Inflation remains under control in the EMU region in July.
Despite ECB concerns about inflation and German and other concerns
about the degree of stimulus money supply growth remains very tepid in
the EMU region and inflation continues to drop. In July the FLASH HICP
(a figure for which there are no details available) fell by 0.2%.
Overall inflation on this measure is a negative 0.6% over 12-months and
is running at a pace of zero over three months. 
 

HICP inflation has fallen in two of the last three months in
Germany. German inflation is down by 0.7% over 12-months. Inflation
even fell in Italy in July and prices in Italy are falling over
12-months as well. 
 

On balance the news from Europe is quite good on the inflation
front. Japan also reported out a decline in CPI prices. For Japan it
was June inflation falling by 1.7% Yr/Yr. 
 

Growth: both sides of the pond 
The US GDP report reverberated with signs that the slowdown is abating
as US exports cut the rate of descent and most US GDP components cut
their rate of descent as well. US GDP dropped at just a 1% annual rate,
making positive growth in Q3 a real possibility. The fact that nearly
all GDP components in the US cut their pace of decline is a good sign.
The fact that inflation remains under control throughout the global
economy is another good sign. The data from the EU Commission yesterday
reminded us that although &#8216;things&#8217; are improving the diffusion readings
on growth by sector show that that contraction is overwhelmingly the
name of the game across Europe. The US alone looks poised to break the
growth barrier any minute. 
 

Growth, inflation and central banks 
Today is a day when we are getting some of the news we have been
waiting on for a long time. It is still not clear how much of an
inflation threat we have when the US economy turns around. For now the
growth turnaround appears to be nearly at hand. Inflation appears to
still be well under wraps. It seems that the world&#8217;s central banks are
in a good a position to look at what they have done and to make the
needed adjustments without creating one sort of chaos or another. But
you never can tell until they have done something. The one fly in the
ointment is the still large external imbalances and the behavior of
exchange rates. Everyone seems to want a weak currency and
mathematically it just is not possible. This will be the market to keep
close watch on as things begin to improve. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="8" scope="col" class="firstcol">Trends
in EMU HICP; Flash Index</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>-0.2%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>0.9%</td>
<td>1.3%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.8%</td>
<td>1.1%</td>
<td>-1.5%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>1.2%</td>
<td>1.9%</td>
<td>2.5%</td>
</tr>
<tr class="even">
<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>
</tr>
<tr class="even">
<td class="firstcol">HICP</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">Germany</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-0.6%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>-1.1%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>4.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>#N/A</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>-1.0%</td>
<td>5.0%</td>
</tr>
<tr class="even">
<td class="firstcol">Core excl FE&amp;A</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">Germany</td>
<td>#N/A</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.2%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.9%</td>
<td>1.6%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td colspan="4">Blue shaded area data trail by one
month</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
U.S. Employment Cost Index Remains
Weak, But State &amp; Local Government Workers See Some Pickup 
by <a href="/comment/Stone.html">Carol
Stone</a> July 31, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731e.jpg" align="left" border="0" height="265" width="353">
Employment compensation remained sluggish in Q2, although it
picked up slightly. The total employment cost index rose 0.4%,
following Q1's 0.3% and also a bit better than expectations for 0.3%.
However, the improvement came in state and local government workers,
who saw a 1.0% rise compared with 0.8% in Q1; private industry workers'
compensation had a second consecutive record-small 0.2% increase. On a
year-to-year basis, the total slower more, with a rise of just 1.8%
from 2.1% in Q1.
Wage and salary growth also ticked up from 0.3% in Q1 to 0.4%
in Q2. As with total compensation, the "gain" occurred among state and
local governments, which went from 0.7% to 1.0%. Private sector workers
got a slim 0.2% raise, the same as the quarter before.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090731f.jpg" align="right" border="0" height="265" width="353">
These gains for state and local governments are interesting.
Both major categories had a marked acceleration in wages. Public
administration went from 0.8% in Q1 to 1.2% in Q2, and education and
health services from 0.5% to 0.9%. The public administration number is
the strongest since Q4 2006, while education and health is marginally
more than the recent trends. In light of recent budget pressures in
that sector, these labor cost increases would seem to be unsustainable.
Total benefit costs for all civilian workers slowed to a 0.3%
increase in Q2 from 0.5% in Q1. This produced a 1.8% year-to-year
increase; it is the lowest since mid-1997, but not worse than that
period. The associated non-published information on health benefit
costs showed a 4.4% rise in the latest 12 months, about in line with
the trends of the last two or three years.
The employment cost index figures are available in Haver's
USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI
- Private Industry Workers</a> (%)</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">4Q '08</th>
<th scope="col">2Q 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">Compensation</td>
<td>0.2</td>
<td>0.2</td>
<td>0.5</td>
<td>1.5</td>
<td>2.8</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp;
Salaries</td>
<td>0.2</td>
<td>0.2</td>
<td>0.5</td>
<td>1.5</td>
<td>3.0</td>
<td>3.4</td>
<td>&nbsp;2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>0.2</td>
<td>0.2</td>
<td>0.4</td>
<td>1.3</td>
<td>2.6</td>
<td>2.4</td>
<td>2.9</td>
</tr>
</tbody>
</table>
</body></html>

Rate of U.S. GDP Decline Slows inQ2 2009

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730c.jpg" align="left" border="0" height="265" width="353">BETTER:
The EU commission indices for EU and EMU continue to show substantial
progress. The EU index rose to 75.0 from 71.1 while the EU index rose
to 76.0 from 73.2. The better showing in the EMU rise implies a better
rise in the month by non EMU members of EU. On a mo/mo basis the UK
index did rise sharply by 7.3% compared to Spain&#8217;s 5.3%, the best among
large EMU nations. 
&#8230;but still low: Overall the EU and EMU indices are standing the bottom
26% to 21% of their respective ranges. That is still a very low
reading. But the UK has bounced some 31% from its lowest level on this
overall index and Italy has risen by 25%. The least rebound by a major
EU/EMU economy is the 11.9% rises from its low reading posted by
Germany. Germany also has the lowest ranked sentiment index among large
EU/EMU economies (even though it is third highest by raw score).
 INDUSTRY: EU industry readings are only
in the
19th percentile of their range like services. But unfortunately the
worst reading on its components are from the selling prices expectation
that is in the bottom 7% of its historic range and from orders that are
in the bottom 3% of their range (both overall orders and export
orders). The production trend is in the 23rd percentile of its range
and production expectations are in the 35th percentile or their range -
despite the weaker reading in orders. Employment is a sort of neutral
17.8 percentile reading which is the same as for EMU industry
confidence overall. So we can&#8217;t say for industry that the problem is
jobs, it&#8217;s just demand.&nbsp;

SERVICE: Services Confidence in EMU stands
at it 12.1% percentile lower than for EU overall (19.0%). The weakest
reading for services is from current employment which is as low a
reading as it ever has seen. Current demand is the next lowest in the
bottom 10 percentile of its range. The business climate in services
ranks in the 12th percentile overall. Expected demand and expected
employment are more upbeat but still in only the 15th percentile of
their respective ranges. Despite some monthly improvement employment in
this sector is weak and expectations while improving are still very
weak. The weakest service sector by the relative measure of the
position of the index in its range is France followed closely by Spain;
the strongest is the UK.

RETAILING: Retailing ranks in the 28th
percentile of its range in EMU, making it relatively less strong than
in EU (35th percentile). The present situation is rated as in the 26th
percentile; the expected business situation is at a higher raw reading
but a lower position in its range at the 23rd range percentile.
Employment expectations are a weak 8% reading. The Italy has the
highest retail range reading in the 46th range percentile compared to
the UK in the 42nd percentile while Spain is at a 28 percentile
reading, worst reading for a large EMU country.&nbsp;

CONSUMER CONFIDENCE: Consumer confidence
ranks about the same as the retailing reading, in the 29th percentile
of its EMU range (below the 32.4 percentile for EU). Spain and Italy
have the highest relative consumer rankings at or above a 50 percentile
range reading; the UK reading is at the 42nd percentile. Germany stands
the lowest among large EMU nations at the 16th percentile. EU consumers
rate the past 12-months as in the bottom 5% of all readings
historically. While the next 12-months reading posted a much, much
higher 48th percentile reading.&nbsp;

SUMMING UP: The consumer confidence results
epitomize the EU/EMU results. Current conditions have improved from
their worst. Yet the quantitative measures that look forward are not
yet very strong. Still expectations for the future are advancing
strongly in Europe. There seems to be a much more &#8216;hard to pin down&#8217;
blanket optimism about the future that is in existence.&nbsp; 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="13">EU
Sectors and Country level Overall Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EU</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue rank%</td>
<td>R-SQ 
w/Overall</td>
</tr>
<tr>
<td class="firstcol">Overall</td>
<td>75</td>
<td>71.1</td>
<td>67.9</td>
<td>64</td>
<td>26.3</td>
<td>242</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>100</td>
<td>3.6%</td>
<td>1.00</td>
</tr>
<tr>
<td class="firstcol">Industrial</td>
<td>-30</td>
<td>-33</td>
<td>-34</td>
<td>-36</td>
<td>19.6</td>
<td>244</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-7</td>
<td>2.8%</td>
<td>0.90</td>
</tr>
<tr>
<td class="firstcol">Consumer Confid</td>
<td>-21</td>
<td>-23</td>
<td>-26</td>
<td>-28</td>
<td>32.4</td>
<td>224</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>10.8%</td>
<td>0.86</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-21</td>
<td>35.5</td>
<td>232</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-5</td>
<td>7.6%</td>
<td>0.66</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-37</td>
<td>-37</td>
<td>-39</td>
<td>-38</td>
<td>10.9</td>
<td>232</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-16</td>
<td>7.6%</td>
<td>0.47</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-19</td>
<td>-23</td>
<td>-26</td>
<td>-30</td>
<td>19.0</td>
<td>242</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>11</td>
<td>3.6%</td>
<td>0.75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Jul-09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>3.8%</td>
<td>4.3%</td>
<td>4.3%</td>
<td>76.0</td>
<td>21.7</td>
<td>236</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>6.0%</td>
<td>0.95</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>4.1%</td>
<td>4.3%</td>
<td>1.5%</td>
<td>80.8</td>
<td>17.6</td>
<td>235</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>6.4%</td>
<td>0.70</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.4%</td>
<td>4.4%</td>
<td>3.9%</td>
<td>81.2</td>
<td>19.8</td>
<td>236</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>6.0%</td>
<td>0.84</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>1.4%</td>
<td>7.3%</td>
<td>83.7</td>
<td>30.1</td>
<td>228</td>
<td>122</td>
<td>67</td>
<td>55</td>
<td>100</td>
<td>9.2%</td>
<td>0.83</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>5.2%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>79.0</td>
<td>24.7</td>
<td>230</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>8.4%</td>
<td>0.73</td>
</tr>
<tr>
<td class="firstcol">Memo:UK</td>
<td>7.3%</td>
<td>4.1%</td>
<td>7.8%</td>
<td>73.8</td>
<td>24.5</td>
<td>242</td>
<td>128</td>
<td>56</td>
<td>72</td>
<td>100</td>
<td>3.6%</td>
<td>0.59</td>
</tr>
<tr>
<td class="firstcol">Since April 1988</td>
<td></td>
<td></td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>251</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="9">Sentiment is an index, sector
readings are net balance diffusion measures</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>


</body></html>

BETTER: The EU commission indices for EU and EMU continue to show substantial progress. The EU index rose to 75.0 from 71.1 while the EU index rose to 76.0 from 73.2. The better showing in the EMU rise implies a better rise in the [...]

EMU Recovery Continues

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730a.jpg" width="353">
The rate of improvement in the job market again appears to have slowed. The latest figures from the Labor Department indicate that initial claims rose for the second consecutive week after sharp declines early in the month. The latest increase to 584,000 from an upwardly revised level during the prior period returned claims to near where they started July. Nevertheless, so far this month the 559,000 average level of claims is down from the 616,000 averaged during June and from the March high of 674,000. The four-week average of claims, which smoothes out some of the volatility in the weekly numbers, fell to 559,000 which was its lowest level since late-January. Claims of 580,000 had been expected during the latest week.
The Labor Department indicated that the largest increases in initial claims for the week ending July 18 were in California (+4,290, 41.1% y/y), Michigan (+3,654, 21.0% y/y), Florida (+3,291, 41.2% y/y), Connecticut (+749, 79.1% y/y), and Indiana (+526, -0.7% y/y)), while the largest decreases were in New York (-22,052, 46.2% y/y), Wisconsin (-6,791, 5.5% y/y), Missouri (-6,529, 63.1% y/y), Pennsylvania (-6,420, 60.2% y/y), and Ohio (-5,062, 28.5% y/y).
The rate of labor market improvement may have slowed, but a trend improvement in conditions is clearly evident from the decline in continuing claims for unemployment insurance. They fell a modest 54,000 last week after a similar decline during the prior week. However, the average this month is down sharply from June and the weekly figure is the lowest since mid-April. The continuing claims figures lag initial claims by one week and provide an indication of workers&#39; ability to find employment. Despite the latest decline, however, the level of 6,197,000 claims still up sharply from the year ago level. The four-week average of continuing claims fell back to 6,416,250 which was the lowest since mid-May. The series dates back to 1966.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730b.jpg" width="353">
The insured rate of unemployment remained at 4.7% which was the lowest level since mid-April. During the last ten years, there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.
The highest insured unemployment rates in the week ending July 11 were in Puerto Rico (7.3 percent), Michigan (7.2), Oregon (6.7), Pennsylvania (6.4), Nevada (6.2), Wisconsin (6.1), Connecticut (5.6), New Jersey (5.6), Arkansas (5.5), California (5.5), North Carolina (5.5), and South Carolina (5.5). The lowest rates were in Wyoming (3.0), Texas (3.1), Maine (3.3), Colorado (3.4), Maryland (3.6), Minnesota (3.9), Florida (4.4), Mississippi (4.4) and Georgia (4.6).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090729/default.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">07/25/09</th>
<th scope="col">07/18/09</th>
<th scope="col">07/11/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>584</td>
<td>559</td>
<td>524</td>
<td>32.1%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,197</td>
<td>6,251</td>
<td>87.3%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td></td>
<td>4.7</td>
<td>4.7</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The rate of improvement in the job market again appears to have slowed. The latest figures from the Labor Department indicate that initial claims rose for the second consecutive week after sharp declines early in the month. The latest [...]

U.S. Weekly Claims For Jobless Insurance Rise, But Falling Trend Suggests Improved Labor Market

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730a.jpg" align="left" border="0" height="265" width="353">
The rate of improvement in the job market again appears to
have slowed. The latest figures from the Labor Department indicate that
initial claims rose for the second consecutive week after sharp
declines early in the month. The latest increase to 584,000 from an
upwardly revised level during the prior period returned claims to near
where they started July. Nevertheless, so far this month the 559,000
average level of claims is down from the 616,000 averaged during June
and from the March high of 674,000. The four-week average of claims,
which smoothes out some of the volatility in the weekly numbers, fell
to 559,000 which was its lowest level since late-January. Claims of
580,000 had been expected during the latest week.
The Labor Department indicated that the largest increases in
initial claims for the week ending July 18 were in California (+4,290,
41.1% y/y), Michigan (+3,654, 21.0% y/y), Florida (+3,291, 41.2% y/y),
Connecticut (+749, 79.1% y/y), and Indiana (+526, -0.7% y/y)), while
the largest decreases were in New York (-22,052, 46.2% y/y), Wisconsin
(-6,791, 5.5% y/y), Missouri (-6,529, 63.1% y/y), Pennsylvania (-6,420,
60.2% y/y), and Ohio (-5,062, 28.5% y/y).
The rate of labor market improvement may have slowed, but a
trend improvement in conditions is clearly evident from the decline in
continuing claims for unemployment insurance. They fell a modest 54,000
last week after a similar decline during the prior week. However, the
average this month is down sharply from June and the weekly figure is
the lowest since mid-April. The continuing claims figures lag initial
claims by one week and provide an indication of workers' ability to
find employment. Despite the latest decline, however, the level of 6,197,000
claims still up sharply from the year ago level. The
four-week average of continuing claims fell back to 6,416,250 which was
the lowest since mid-May. The series dates back to 1966.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730b.jpg" align="right" border="0" height="265" width="353">
The insured rate of unemployment remained at 4.7% which was
the lowest level since mid-April. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.
The highest insured unemployment rates in the week ending July
11 were in Puerto Rico (7.3 percent), Michigan (7.2), Oregon (6.7),
Pennsylvania (6.4), Nevada (6.2), Wisconsin (6.1), Connecticut (5.6),
New Jersey (5.6), Arkansas (5.5), California (5.5), North Carolina
(5.5), and South Carolina (5.5). The lowest rates were in Wyoming
(3.0), Texas (3.1), Maine (3.3), Colorado (3.4), Maryland (3.6),
Minnesota (3.9), Florida (4.4), Mississippi (4.4) and Georgia (4.6).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database
The Fed's latest Beige Book covering
regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090729/default.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">07/25/09</th>
<th scope="col">07/18/09</th>
<th scope="col">07/11/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>584</td>
<td>559</td>
<td>524</td>
<td>32.1%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,197</td>
<td>6,251</td>
<td>87.3%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td></td>
<td>4.7</td>
<td>4.7</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
EMU Recovery Continues 
by <a href="/comment/Brusca.html">
Robert
Brusca</a>July
30, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090730c.jpg" align="left" border="0" height="265" width="353">BETTER:
The EU commission indices for EU and EMU continue to show substantial
progress. The EU index rose to 75.0 from 71.1 while the EU index rose
to 76.0 from 73.2. The better showing in the EMU rise implies a better
rise in the month by non EMU members of EU. On a mo/mo basis the UK
index did rise sharply by 7.3% compared to Spain&#8217;s 5.3%, the best among
large EMU nations. 
&#8230;but still low: Overall the EU and EMU indices are standing the bottom
26% to 21% of their respective ranges. That is still a very low
reading. But the UK has bounced some 31% from its lowest level on this
overall index and Italy has risen by 25%. The least rebound by a major
EU/EMU economy is the 11.9% rises from its low reading posted by
Germany. Germany also has the lowest ranked sentiment index among large
EU/EMU economies (even though it is third highest by raw score).
 INDUSTRY: EU industry readings are only
in the
19th percentile of their range like services. But unfortunately the
worst reading on its components are from the selling prices expectation
that is in the bottom 7% of its historic range and from orders that are
in the bottom 3% of their range (both overall orders and export
orders). The production trend is in the 23rd percentile of its range
and production expectations are in the 35th percentile or their range -
despite the weaker reading in orders. Employment is a sort of neutral
17.8 percentile reading which is the same as for EMU industry
confidence overall. So we can&#8217;t say for industry that the problem is
jobs, it&#8217;s just demand.&nbsp;

SERVICE: Services Confidence in EMU stands
at it 12.1% percentile lower than for EU overall (19.0%). The weakest
reading for services is from current employment which is as low a
reading as it ever has seen. Current demand is the next lowest in the
bottom 10 percentile of its range. The business climate in services
ranks in the 12th percentile overall. Expected demand and expected
employment are more upbeat but still in only the 15th percentile of
their respective ranges. Despite some monthly improvement employment in
this sector is weak and expectations while improving are still very
weak. The weakest service sector by the relative measure of the
position of the index in its range is France followed closely by Spain;
the strongest is the UK.

RETAILING: Retailing ranks in the 28th
percentile of its range in EMU, making it relatively less strong than
in EU (35th percentile). The present situation is rated as in the 26th
percentile; the expected business situation is at a higher raw reading
but a lower position in its range at the 23rd range percentile.
Employment expectations are a weak 8% reading. The Italy has the
highest retail range reading in the 46th range percentile compared to
the UK in the 42nd percentile while Spain is at a 28 percentile
reading, worst reading for a large EMU country.&nbsp;

CONSUMER CONFIDENCE: Consumer confidence
ranks about the same as the retailing reading, in the 29th percentile
of its EMU range (below the 32.4 percentile for EU). Spain and Italy
have the highest relative consumer rankings at or above a 50 percentile
range reading; the UK reading is at the 42nd percentile. Germany stands
the lowest among large EMU nations at the 16th percentile. EU consumers
rate the past 12-months as in the bottom 5% of all readings
historically. While the next 12-months reading posted a much, much
higher 48th percentile reading.&nbsp;

SUMMING UP: The consumer confidence results
epitomize the EU/EMU results. Current conditions have improved from
their worst. Yet the quantitative measures that look forward are not
yet very strong. Still expectations for the future are advancing
strongly in Europe. There seems to be a much more &#8216;hard to pin down&#8217;
blanket optimism about the future that is in existence.&nbsp; 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol" colspan="13">EU
Sectors and Country level Overall Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EU</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue rank%</td>
<td>R-SQ 
w/Overall</td>
</tr>
<tr>
<td class="firstcol">Overall</td>
<td>75</td>
<td>71.1</td>
<td>67.9</td>
<td>64</td>
<td>26.3</td>
<td>242</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>100</td>
<td>3.6%</td>
<td>1.00</td>
</tr>
<tr>
<td class="firstcol">Industrial</td>
<td>-30</td>
<td>-33</td>
<td>-34</td>
<td>-36</td>
<td>19.6</td>
<td>244</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-7</td>
<td>2.8%</td>
<td>0.90</td>
</tr>
<tr>
<td class="firstcol">Consumer Confid</td>
<td>-21</td>
<td>-23</td>
<td>-26</td>
<td>-28</td>
<td>32.4</td>
<td>224</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>10.8%</td>
<td>0.86</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-21</td>
<td>35.5</td>
<td>232</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-5</td>
<td>7.6%</td>
<td>0.66</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-37</td>
<td>-37</td>
<td>-39</td>
<td>-38</td>
<td>10.9</td>
<td>232</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-16</td>
<td>7.6%</td>
<td>0.47</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>-19</td>
<td>-23</td>
<td>-26</td>
<td>-30</td>
<td>19.0</td>
<td>242</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>11</td>
<td>3.6%</td>
<td>0.75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Jul-09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">EMU</td>
<td>3.8%</td>
<td>4.3%</td>
<td>4.3%</td>
<td>76.0</td>
<td>21.7</td>
<td>236</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>6.0%</td>
<td>0.95</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>4.1%</td>
<td>4.3%</td>
<td>1.5%</td>
<td>80.8</td>
<td>17.6</td>
<td>235</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>6.4%</td>
<td>0.70</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>0.4%</td>
<td>4.4%</td>
<td>3.9%</td>
<td>81.2</td>
<td>19.8</td>
<td>236</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>6.0%</td>
<td>0.84</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>1.4%</td>
<td>7.3%</td>
<td>83.7</td>
<td>30.1</td>
<td>228</td>
<td>122</td>
<td>67</td>
<td>55</td>
<td>100</td>
<td>9.2%</td>
<td>0.83</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>5.2%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>79.0</td>
<td>24.7</td>
<td>230</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>8.4%</td>
<td>0.73</td>
</tr>
<tr>
<td class="firstcol">Memo:UK</td>
<td>7.3%</td>
<td>4.1%</td>
<td>7.8%</td>
<td>73.8</td>
<td>24.5</td>
<td>242</td>
<td>128</td>
<td>56</td>
<td>72</td>
<td>100</td>
<td>3.6%</td>
<td>0.59</td>
</tr>
<tr>
<td class="firstcol">Since April 1988</td>
<td></td>
<td></td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>251</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td colspan="9">Sentiment is an index, sector
readings are net balance diffusion measures</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>


</body></html>

U.S. Weekly Claims For JoblessInsurance Rise, But Falling Trend Suggests Improved Labor Market

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729d.jpg" align="left" border="0" height="265" width="353">
Japan retail sales fell in June but June caps a three-month
period in which sales have expanded. Still, in the quarter-to-date
Japan&#8217;s retail sales are falling but only slightly. 
 

Over 12-months retail sales are off by about 3%, led by
declines in fabric and apparel and the rest of retail which dropped by
4.2%. Auto sales are only off by 0.5% Yr/Yr. Food and beverage sales
are off by 1.2%. Sales at department stores and supermarkets slipped
6.7% on the year, and after those figures are adjusted for the number
of stores (same-store sales), sales posted their 15th straight monthly
decline, according to METI. 
 

This is hardly a robust picture of activity yet today the MoF
upgraded its assessment of Japan&#8217;s economy for the first time in five
years. The Ministry of Economy, Trade and Industry said. The
government's massive stimulus measures, which include tax-cut programs
such as incentives to buy new cars, may help to boost retail sales in
the future. For now the consumer is in the doldrums and spending habits
remain subdued. Leading indicators for Japan have not turned the corner
to signal positive trends yet. 
 
 


Japan Retail Sales Trends
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Total SA</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>-1.6%</td>
<td>-2.9%</td>
<td>1.2%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Not
seasonally adjusted</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">Total: Nominal</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>0.7%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-1.9%</td>
<td>-4.1%</td>
<td>7.5%</td>
<td>4.7%</td>
<td>-5.7%</td>
<td>-0.5%</td>
<td>-3.2%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.4%</td>
<td>2.0%</td>
<td>-1.0%</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-1.2%</td>
<td>14.8%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fabric
apparel&amp; access</td>
<td>-4.5%</td>
<td>1.4%</td>
<td>1.5%</td>
<td>-6.5%</td>
<td>-1.0%</td>
<td>-5.7%</td>
<td>-6.6%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rest of Retail</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>3.5%</td>
<td>2.3%</td>
<td>-4.2%</td>
<td>-5.0%</td>
<td>-1.9%</td>
</tr>
</tbody>
</table>
</body></html>

Japan retail sales fell in June but June caps a three-month period in which sales have expanded. Still, in the quarter-to-date Japan’s retail sales are falling but only slightly. Over 12-months retail sales are off by about 3%, led by [...]

Japan Retail Sales Remain Sour

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729a.jpg">
The recent improvement in factory sector activity stuttered last month as June durable goods orders fell. The 2.5% decline reversed nearly all of the increases during the prior two months. Moreover, the May increase was revised weaker. Consensus expectations had been for a lesser 0.6% drop. That&#39;s not to say that the recent improvement in factory sector orders was totally reversed last month. Most of the latest decline was due to lower orders for aircraft. On a three-month basis durable goods orders less the transportation sector overall have risen at a 7.2% annual rate.
Perhaps setting the stage for an orders rebound is the lower level of factory inventories. Inventories of durable goods fell for the sixth consecutive month. The 0.9% decline (-4.3% y/y) followed a 1.1% May decline that was deeper than reported initially. Notable, though, has been the vigor of the recent cutback of unwanted inventories On a three-month basis, decumulation of durable goods inventories continued last month at a near-record 12.3% annual rate. Decumulation of inventories has been notable across industries, but especially so in the metals, machinery and motor vehicle sectors. <img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729b.jpg">
Lower new orders for transportation equipment paced last month&#39;s decline in the total. The 12.8% m/m decline followed a 2.7% gain during May. Notably weak were orders for commercial aircraft which fell 38.5% (-61.0% y/y), reversing all of the strong gain during May. In addition, orders for motor vehicles &amp; parts fell 1.0% (-31.8% y/y) following the 8.7% May decline, prompted by lower sales. Adding to this weakness was a 2.5% decline in orders for computers &amp; electronic products (-15.1% y/y) which returned them to the lowest level since January. Computer orders slipped just 1.2% (-17.3% y/y) after a strong May but orders for communications equipment fell a hard 10.8% (-26.2% y/y) to their lowest level since late-2005. Moving the other way were machinery orders which posted a 4.4% increase (-26.3% y/y) after a firm May gain. Orders for primary metals were even stronger as they posted an 8.9% increase but that nevertheless left them off by nearly one-half from their year ago level. Electrical equipment orders were up just 0.9% (-31.1% y/y) following large declines during May and April.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729c.jpg">
The recent improvement in the capital goods sector indeed stuttered last month. Orders for nondefense capital goods fell 3.4% as aircraft orders plunged. Conversely, orders excluding aircraft rose for a second month. The 1.4% increase followed a stronger May gain and that was enough to raise orders to their highest level this year. During the last ten years there has been an 80% correlation between the y/y change in nondefense capital goods orders and the change in equipment &amp; software spending in the GDP accounts. The correlation of the GDP figure with capital goods shipments is, as one would expect, a larger 92%.
Despite the improvement in orders, shipments of durable goods continued to languish. Shipments of durable goods slipped 0.2% (-21.0% y/y) last month and have fallen in each month since February of last year. That y/y decline in shipments has been accompanied by a 21.9% y/y drop in industrial production of durable goods which has shown little or no sign of turning around. During the last ten years, there has been an 80% correlation between the change in shipments of durable goods and the change in durables industrial production.
The durable goods figures are available in Haver&#39;s USECON database.
Monetary Policy in the 2008--2009 Recession from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/economic_quarterly/2009/spring/pdf/hetzel2.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>-2.5</td>
<td>1.3</td>
<td>-26.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>1.1</td>
<td>0.8</td>
<td>-24.1</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.4</td>
<td>9.1</td>
<td>-28.8</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.4</td>
<td>4.3</td>
<td>-22.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The recent improvement in factory sector activity stuttered last month as June durable goods orders fell. The 2.5% decline reversed nearly all of the increases during the prior two months. Moreover, the May increase was revised [...]

U.S. Durable Goods Orders Decline Led By Aircraft & Computers; Lower Inventories May Set Stage for Rebound

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729a.jpg" align="left" border="0">
The recent improvement in factory sector activity stuttered
last month as June durable goods orders fell. The 2.5% decline reversed
nearly all of the increases during the prior two months. Moreover, the
May increase was revised weaker. Consensus expectations had been for a
lesser 0.6% drop. That's not to say that the recent improvement in
factory sector orders was totally reversed last month. Most of the
latest decline was due to lower orders for aircraft. On a three-month
basis durable goods orders less the transportation sector overall have
risen at a 7.2% annual rate.
Perhaps setting the stage for an orders rebound is the lower
level of factory inventories. Inventories of durable goods fell for the
sixth consecutive month. The 0.9% decline (-4.3% y/y) followed a 1.1%
May decline that was deeper than reported initially. Notable, though,
has been the vigor of the recent cutback of unwanted inventories
On a three-month basis, decumulation of durable goods
inventories continued last month at a near-record 12.3% annual rate.
Decumulation of inventories has been notable across industries, but
especially so in the metals, machinery and motor vehicle sectors. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729b.jpg" align="right" border="0">
Lower new orders for transportation equipment paced last
month's decline in the total. The 12.8% m/m decline followed a 2.7%
gain during May. Notably weak were orders for commercial aircraft which
fell 38.5% (-61.0% y/y), reversing all of the strong gain during May.
In addition, orders for motor vehicles &amp; parts fell 1.0%
(-31.8% y/y) following the 8.7% May decline, prompted by lower sales.
Adding to this weakness was a 2.5% decline in orders for computers
&amp; electronic products (-15.1% y/y) which returned them to the
lowest level since January. Computer orders slipped just 1.2% (-17.3%
y/y) after a strong May but orders for communications equipment fell a
hard 10.8% (-26.2% y/y) to their lowest level since late-2005. Moving
the other way were machinery orders which posted a 4.4% increase
(-26.3% y/y) after a firm May gain. Orders for primary metals were even
stronger as they posted an 8.9% increase but that nevertheless left
them off by nearly one-half from their year ago level. Electrical
equipment orders were up just 0.9% (-31.1% y/y) following large
declines during May and April.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729c.jpg" align="left" border="0">
The recent improvement in the capital goods sector indeed
stuttered last month. Orders for nondefense capital goods fell 3.4% as
aircraft orders plunged. Conversely, orders excluding aircraft rose for
a second month. The 1.4% increase followed a stronger May gain and that
was enough to raise orders to their highest level this year. During the
last ten years there has been an 80% correlation between the y/y change
in nondefense capital goods orders and the change in equipment
&amp; software spending in the GDP accounts. The correlation of the
GDP figure with capital goods shipments is, as one would expect, a
larger 92%.
Despite the improvement in orders, shipments of durable goods
continued to languish. Shipments of durable goods slipped 0.2% (-21.0%
y/y) last month and have fallen in each month since February of last
year. That y/y decline in shipments has been accompanied by a 21.9% y/y
drop in industrial production of durable goods which has shown little
or no sign of turning around. During the last ten years, there has been
an 80% correlation between the change in shipments of durable goods and
the change in durables industrial production.
The durable goods figures are available in Haver's USECON
database.
Monetary Policy in the 2008--2009 Recession from
the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/economic_quarterly/2009/spring/pdf/hetzel2.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>-2.5</td>
<td>1.3</td>
<td>-26.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>1.1</td>
<td>0.8</td>
<td>-24.1</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.4</td>
<td>9.1</td>
<td>-28.8</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.4</td>
<td>4.3</td>
<td>-22.8</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
Japan Retail Sales Remain Sour
 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090729d.jpg" align="left" border="0" height="265" width="353">
Japan retail sales fell in June but June caps a three-month
period in which sales have expanded. Still, in the quarter-to-date
Japan&#8217;s retail sales are falling but only slightly. 
 

Over 12-months retail sales are off by about 3%, led by
declines in fabric and apparel and the rest of retail which dropped by
4.2%. Auto sales are only off by 0.5% Yr/Yr. Food and beverage sales
are off by 1.2%. Sales at department stores and supermarkets slipped
6.7% on the year, and after those figures are adjusted for the number
of stores (same-store sales), sales posted their 15th straight monthly
decline, according to METI. 
 

This is hardly a robust picture of activity yet today the MoF
upgraded its assessment of Japan&#8217;s economy for the first time in five
years. The Ministry of Economy, Trade and Industry said. The
government's massive stimulus measures, which include tax-cut programs
such as incentives to buy new cars, may help to boost retail sales in
the future. For now the consumer is in the doldrums and spending habits
remain subdued. Leading indicators for Japan have not turned the corner
to signal positive trends yet. 
 
 


Japan Retail Sales Trends
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Total SA</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>-1.6%</td>
<td>-2.9%</td>
<td>1.2%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Not
seasonally adjusted</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">Total: Nominal</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.1%</td>
<td>-0.8%</td>
<td>-3.0%</td>
<td>0.7%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-1.9%</td>
<td>-4.1%</td>
<td>7.5%</td>
<td>4.7%</td>
<td>-5.7%</td>
<td>-0.5%</td>
<td>-3.2%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.4%</td>
<td>2.0%</td>
<td>-1.0%</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-1.2%</td>
<td>14.8%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Fabric
apparel&amp; access</td>
<td>-4.5%</td>
<td>1.4%</td>
<td>1.5%</td>
<td>-6.5%</td>
<td>-1.0%</td>
<td>-5.7%</td>
<td>-6.6%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rest of Retail</td>
<td>1.1%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>3.5%</td>
<td>2.3%</td>
<td>-4.2%</td>
<td>-5.0%</td>
<td>-1.9%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders DeclineLed By Aircraft & Computers; Lower Inventories May Set Stage for Rebound

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Winnie Tapasanun

260116R23.jpg

260116S23.jpg

Industrial production (IP) rose a more-than-expected 0.4% m/m in December following a 0.4% rise in November (+0.2% initially) and a 0.3% decline in October (-0.1% previously), data from the Federal Reserve Board showed. December marked the third m/m gain in four months. A 0.1% m/m December increase had been expected in the Action Economics Forecast Survey. The year-on-year growth rate slowed to 2.0% in December, the lowest since September, from 2.5% in November; this compared with a 0.3% y/y decline in December 2024. The December IP index at 102.3 was 3.1% above a low of 99.2 in January 2024. IP rose 0.2% q/q in Q4 2025 after a 0.6% q/q gain in Q3 2025, increasing at a 0.7% annualized rate following a 2.3% Q3 annualized pace. In 2025, IP rose 1.3% after declines of 0.7% in 2024 and 0.2% in 2023.

By **industry groups**, manufacturing production grew 0.2% (2.0% y/y) in December, up for the third time in four months, following a 0.3% increase in November (0.0% initially) and a 0.6% drop in October (-0.4% previously). Durable goods production edged up 0.1% (3.1% y/y) in December, the first m/m increase since September, after a 0.1% downtick in November. Within durables, the following categories rose m/m in December, including output rises of 2.4% (3.5% y/y) in primary metals, 1.7% (1.3% y/y) in electrical equipment, appliances & components, 1.5% (17.2% y/y) in aerospace & miscellaneous transportation equipment, 0.8% (-2.2% y/y) in furniture & related products, 0.2% (4.8% y/y) in machinery, and 0.1% (7.4% y/y) in computer & electronic products. Notably, aircraft & parts production climbed 2.1% (30.0% y/y), the third m/m increase in four months, reversing a 2.1% November drop. To the downside, the following durable goods categories fell m/m in December, including drops of 2.3% (-5.5% y/y) in wood products, 1.1% (-2.8% y/y) in motor vehicles & parts, 1.1% (-1.0% y/y) in nonmetallic mineral products, 0.1% (+2.6% y/y) in fabricated metal products, and 0.1% (-3.7% y/y) in miscellaneous durables goods.

Nondurable goods production increased 0.3% (1.0% y/y) in December, the third m/m gain in four months, after a 0.8% rebound in November. The December increase reflected m/m output rises of 1.8% (2.1% y/y) in petroleum & coal products, 0.5% (1.9% y/y) in food, beverages & tobacco, and 0.3% (-0.2% y/y) in plastics & rubber products. In contrast, the following nondurable goods categories declined m/m in December, including output drops of 1.3% (-0.8% y/y) in textiles & product mills, 1.1% (-0.5% y/y) in apparel & leather goods, 0.3% (-3.1% y/y) in paper, 0.3% (-3.4% y/y) in printing & related support activities, and 0.1% (+1.6% y/y) in chemicals.

Utilities output recovered 2.6% (2.3% y/y) in December, the third m/m rise in four months, following a 0.3% decline in November (-0.4% initially), reflecting a 1.2% rebound (1.3% y/y) in electric utilities output and a 12.0% jump (8.7% y/y) in natural gas utilities output. Mining activity, however, fell 0.7% (+1.7% y/y), the third m/m slide in four months, after an unrevised 1.7% November gain.

By **market groups**, business equipment output advanced 0.8% (10.1% y/y) in December, up for the third time in four months, after a 0.3% increase in November. Consumer goods output rose 0.7% (0.7% y/y) after a 0.7% November rebound, reflecting a 0.7% decline (-3.5% y/y) in durable consumer goods and a 1.1% gain (1.8% y/y) in nondurable consumer goods. Materials production grew 0.2% (1.7% y/y), the third m/m increase in four months, after a 0.5% November rise. In contrast, construction supplies production fell 0.3% (+1.3% y/y) in December, the second m/m fall in three months, reversing a 0.3% increase in November.

In **special classifications**, factory output of selected high-tech industries rose 0.7% (10.9% y/y) in December, the third successive m/m rise, following a downwardly revised 0.5% gain in November (+1.1% initially). Manufacturing production excluding selected high-tech industries grew 0.2% (1.7% y/y) in December, the third m/m gain in four months, after a 0.3% increase in November. Meanwhile, manufacturing production excluding selected high-tech and motor vehicles & parts rose 0.3% (2.1% y/y), also up for the third time in four months, after a 0.4% November increase.

Capacity utilization rose to 76.3% in December, the highest since July, from 76.1% in November (76.0% initially). The Action Economics Forecast Survey forecasted 76.0%. The December reading was 3.2 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization held at 75.6% in December and November (75.4% previously); the December rate was 2.6 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

260116T23.jpg

260116U23.jpg

- December IP +0.4% (+2.0% y/y), third m/m rise in four months, led by a 2.6% gain in utilities.
- Manufacturing +0.2% (+2.0% y/y), w/ durables +0.1% and nondurables +0.3%.
- Selected high-tech +0.7%, third consecutive m/m rise; motor vehicles -1.1%, fourth straight m/m fall.
- Mining -0.7%, third m/m decline in four months.
- Key categories in market groups mostly increase.
- Capacity utilization at a five-month-high 76.3%; mfg. capacity utilization steady at 75.6%.

U.S. Industrial Production Increases in December on Utilities Rebound

260116E.jpg

The European Monetary Union has concluded a year of weak-to-moderate growth with inflation largely toeing the line. As always, the inflation picture is more complicated than a simple statement. When we look at inflation, we look at the headline, we look at the core, to make sure that the volatile food & energy elements aren't dominating the index, and then we look across some of the main participants to see if the trend for inflation is shared broadly across the largest countries in the Monetary Union. When we apply those kinds of standards, the grading for the year is reduced. However, based on the headline alone, it was an excellent year for the ECB.

**Headline Inflation in 2025**
Headline inflation in 2025 rose by 2%, exactly on the target of the European Central Bank. It rose over six months at a 2% annual rate and then concluded the year over the last three months, rising at a 1.6% annual rate with some margin below the target set by the central bank itself.

**Country Headline Inflation Trends**
On a country basis, the performance is not nearly as good. While year-on-year results look pretty good, with Germany at 2%, France at 0.7% and Italy at 1.3%, Spain comes in at 3.1%. So the three largest monetary union economies come in at or below 2% with Spain as a rogue observation. When we look further at the sequence of inflation within the year, we see Germany at 2% over 12 months, rising to 3.1% over 6 months, rising further to 4% over 3 months. Inflation is accelerating at the end of the year even as Germany hits the target! This is something to keep an eye on. For France, the inflation rate also accelerates slightly but stays below the bar of 2% over three months, six months, and 12 months. For Italy, inflation is decelerating from 1.3% over 12 months to -0.3% over six months, and then inflation in Italy is contracting at a 1.9% annual rate over three months. Spanish inflation shows clear trouble with a 3.1% 12-month pace, rising to 4.6% at an annual rate over six months, and rising further to 5.9% at an annual rate over three months.

**Core Inflation**
For core inflation, the Monetary Union’s consolidated numbers are not yet compiled. However, for the four largest economies, we do have core or ex-energy inflation. For Germany, it's inflation excluding energy. On that basis, German inflation is 2.2% over 12 months, it rises to 2.7% over six months, then falls back to a 2% annual pace over three months All-in-all not a bad performance. For France, core inflation is below 2% over 12 months, six months, and three months. In Italy, once again, we see inflation decelerating: Italian inflation is 2% over 12 months - right on the ECB target. It falls to a 1.3% annual rate over six months and then falls further to a 0.3% annual rate over three months. For Spain, the core has another very difficult story for the Monetary Union. Inflation is 2.7% over 12 months, it rises to 3.1% over six months and stays at an annual rate of about 3% over three months. This is too high and it looks stubborn, particularly because it is the core.

260116.jpg

**Across the Big Four**
On balance, what we see is that the ECB grades-out well, based on headline inflation and based on its sequential performance for the European economic union as a whole. But large countries, show headline inflation building some steam particularly in the largest economy, Germany, and in Spain, the smallest of the BIG-4 economies. Inflation is once again mixed in the Monetary Union with German and Spanish inflation too high and with French and Italian inflation running either at or below the 2% mark and with Italy showing a tendency towards weaker prices for both the headline and the core. The change in prices over these various periods shows inflation gets the most help from oil prices over 12 months where Brent, measured in euros, falls by 22.6%; over six months Brent prices fall by 37% at an annual rate; and over three months Brent oil prices are unchanged, so that the headline isn't getting help at all from oil prices except through lagged effects.

**Summing Up**
Meanwhile, there are some signs of stronger growth taking root in Europe, especially in Germany with better industrial production being logged and with German industrial production looking significantly stronger than the PMI data, suggesting that perhaps PMI data are missing something about the rebound that is developing. Nonetheless, it was a good year for inflation and the ECB; however, it doesn't exactly end the year in the catbird’s seat. On the other hand, it does not end the year behind the curve. There are scattered pressures and needs among member countries which always makes monetary policy difficult. When some countries need higher interest rates and others need lower interest rates, the ECB is in a difficult spot. Clearly, Spain and Germany are experiencing different phenomenon than France and Italy. That could be the policy challenge for the year ahead.

Europe

Big Four Inflation in EMU 2025-Final

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

Michael J. Moran

260115J.jpg

260115K.jpg

The Bureau of Labor Statistics did not publish a report on export and import prices for October because of the government shutdown, and BLS was unable to construct statistics for October to include with the November report. The charts above have a gap in October, and the November figures are represented by a small dot.

Import prices have been remarkably stable in the past three years, as shown by the sideways movement in the level of the import price index (left chart). Focusing on percent changes (i.e. inflation rates) rather than the level of the index shows deflation in 2023 and early 2024 followed by higher prices more recently (right chart). Still, the net change in the past 12 months has totaled only 0.1% and the cumulative change in the past three years amounted to a decline of 0.4%.

A calm environment in the energy sector has helped to restrain import prices, as the price of crude oil showed little change in 2023 and 2024 and declined in 2025. Import prices excluding petroleum products have increased in recent years, but the changes have been modest: 0.9 in the past 12 months and 1.3% in the past three years.

The non-oil components of import prices have traced various patterns in recent years, but shifts have been largely offsetting. Prices of food and autos increased noticeably in 2023 and 2024, but they gave back much of those increases in 2025. Prices of capital goods were stable in 2023 and 2024, but they started to increase in 2025. Prices of consumer goods have been volatile, showing bursts of higher prices followed by discounting, leaving a modest net increase in the past three years.

The calm energy environment also seemed to play a role on the export side, as the industrial supply category showed little net change in prices over 2023 and 2024 before jumping in early 2025. Food prices followed a similar pattern, showing two years of restraint before moving higher in 2025. These two categories account for much of the upward movement in overall export prices in 2025. Prices of consumer goods also started to move higher in 2025 after little net change in the prior two years. Prices of capital goods and automobiles have traced reasonably steady upward paths.

Many observers might try to use the import component of this report to gain insight into the effect of tariffs on prices. That will be difficult because the figures from this report are pre-tariff; there will be no independent upward pressure on prices in this report because of tariffs. In fact, one should look for lower import prices in searching for a tariff effect. That is, if a foreign exporter were to absorb the tariff burden, that would be accomplished by reducing the pre-tariff price in order to keep the after-tariff price steady.

260115L.jpg

Some exporters to the US may have made such efforts. The nearby chart shows the month-to-month change in import prices in 2025, and May and June both showed lower prices. These months were especially important because they followed the announcement by President Trump of marked increases in tariffs in April. Also, some of the downward pressure occurred in components that would be sensitive to price (autos and consumer goods). Of course, May and June might be too soon after the announcement of draconian tariffs for foreign exporters to assess and change their pricing strategy.

The chart on monthly changes ends in September because the absence of an October reading prevents the calculation of the month-to-month changes for October and November. However, the two-month change from September to November is easily calculated, and the increase of 0.4% suggests little or no effort to absorb the burden of tariffs.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

- Import prices have changed little in the past three years.
- Export prices were stable in 2023-24, but moved higher in 2025.

Import & Export Prices: Generally Modest Changes

260115J39.jpg

260115JK9.jpg

The Empire State Manufacturing Index of General Business Conditions rose to a higher-than-expected 7.7 in January following a 17.2-drop to -3.7 in December, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 1.0 for January had been expected in the Action Economics Forecast Survey. The positive January figure indicated that the business activity in New York State expanded for the third time in four months; it was an improvement from -7.4 in January 2025 and a low of -29.7 in January 2024, though still below a high of 16.8 in November 2024. The percentage of respondents reporting an increase in general business conditions was 34.2% in January, up from 31.7% in December; the percentage reporting a decrease was 26.5%, down from December’s 35.4%. The latest survey was conducted between January 2 and January 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 51.2 in January following a 4.2-point decline to the neutral-level 50.0 in December (the lowest level since September); it was slightly up from 50.7 in January 2025 and well above a low of 43.0 in January 2024. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index rose to 6.6 in January after a 10.6-point drop to -1.0 in December, marking the third m/m gain in orders in four months and a sharp improvement from a low of -30.7 in January 2024. The shipments index jumped to 16.3 in January, the highest level since November 2024, following a 16.5-point fall to -5.0 in December; it was well above a low of -21.7 in April 2024. The unfilled orders index improved to -8.2 in January after a 9.1-point decrease to -14.9 in December, indicating that unfilled orders contracted for the eighth straight month but at a less severe pace; the index reached a low of -24.2 in January 2024. The inventories index fell to -2.1 in January, the lowest level since September, after a 2.7-point decline to 4.0 in December, signaling the first inventory contraction since October. Meanwhile, the delivery times index increased to 0.0 in January from -5.9 in December, with 12.4% of respondents reporting longer delivery times and an identical 12.4% reporting shorter times, indicating that delivery times were unchanged.

On the labor front, the number of employees index fell to -9.0 in January after a 1.0-point increase to 7.5 in December, indicating that employment contracted for the first time since September and reached its lowest level since January 2024. The index remained well below a peak of 24.9 in February 2022. In January, only 7.9% of respondents reported an increase in employment while a higher 16.8% reported a decline. The average workweek index dropped to -5.4 in January from 2.5 in December, turning negative for the first time since October and hitting the lowest level since April 2025.

Inflation pressures eased in January but remained high. The prices paid index fell to 42.8 in January, the lowest level since March 2025, after a 5.9-point decrease to 44.2 in December. Although still well below a peak of 84.9 in April 2022, the index remained above a low of 25.9 in December 2024 and a low of 20.8 in December 2023. In January, 44.5% of respondents reported higher prices paid while only 1.7% reported lower prices paid. The prices received index fell to 14.4 in January, the lowest reading since January 2025, from 25.4 in December. The index was up from a low of 7.5 in December 2024 and a low of 7.7 in July 2023 but far below a high of 51.9 in March 2022. In January, 18.9% of respondents reported higher prices received while 4.4% reported lower prices received.

Firms remained fairly optimistic about the future business outlook in the latest survey. The index for future business conditions eased to 30.3 in January after rising to 33.5 in December, with 50.6% of respondents expecting business conditions to improve over the next six months. Future new orders edged down to 33.3 in January from 34.5 in December, while future shipments rose to 34.9—the highest level since March 2022—from December’s 30.7. Growth in future employment strengthened to 14.9, the highest reading since November 2024, from December’s 7.8. Capital spending plans remained positive for the third consecutive month in January, with the future capital expenditures index rising to 10.3 from December’s 6.9. Expected prices paid fell to 52.6 in January from 55.4 in December and expected prices received fell to 36.5 from 41.6, with both measures at their lowest levels since December 2024.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

260115L39.jpg

260115M39.jpg

- General Business Conditions Index up 11.4 pts. to 7.7 in January.
- Positive: Shipments (16.3, highest since Nov. ’24) and new orders (6.6).
- Negative: Employment (-9.0, lowest since Jan. ’24), unfilled orders (-8.2), and inventories (-2.1, a four-month low).
- Prices paid at a 10-month-low 42.8 and prices received at a one-year-low 14.4.
- Firms fairly optimistic: Future Business Conditions Index down to a still-positive 30.3; future prices paid at a one-year-low 52.6.