Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720g.jpg" align="left" border="0" height="265" width="353">
Industrial orders in Italy made a slight bounce in May. French
orders fell after a slight bounce in April. Neither shows any sign of
upward momentum and the downward momentum has only just been trimmed if
we compare 3-month growth rates to 12-month growth rates. 
What is interesting is the very different performance in foreign
orders as between Italy and France and Germany. Germany is showing some
very substantial recovery in foreign-sourced orders. But it Italy,
foreign order are falling at an accelerating pace through May. In
France, foreign orders have shown a clear patterns of progress with the
three-month growth rate reduced to an annual pace of -9.7% compared to
-24% Yr/Yr. 
Whatever progress is being experienced in Europe, it is irregular.
Clearly some economies in the Zone are doing better than others despite
the common currency regime - and that is true for sales overseas
underlining the that exchange rates are not the only factor in the
success of foreign sales efforts. The more variance there is across
e-Zone countries in their respective economic performances, the more it
will wear on the fragile e-Zone area where talk of integration is tough
despite member countries efforts to continue to go it alone on fiscal
policy. Europe still has a recession and still has some divisive
political forces to weather. And yet more European &#8216;integration&#8217; lies
ahead. 

<table border="0" cellspacing="0" width="100%">

</table>
Italy Orders<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>

</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-2.6%</td>
<td>-20.9%</td>
<td>-24.3%</td>
<td>-29.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.2%</td>
<td>-2.9%</td>
<td>-9.3%</td>
<td>-39.4%</td>
<td>-27.5%</td>
<td>-33.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>0.5%</td>
<td>-3.9%</td>
<td>1.0%</td>
<td>-9.3%</td>
<td>-22.7%</td>
<td>-26.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-7.3%</td>
<td>-22.3%</td>
<td>-21.9%</td>
</tr>
<tr>
<td colspan="7">French Orders</td>
</tr>
<tr>
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>-5.7%</td>
<td>-22.3%</td>
<td>-9.2%</td>
<td>-23.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.4%</td>
<td>6.5%</td>
<td>-8.8%</td>
<td>-9.7%</td>
<td>-12.4%</td>
<td>-27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>-1.4%</td>
<td>1.4%</td>
<td>-15.1%</td>
<td>-15.0%</td>
</tr>
</tbody>
</table>
</body></html>

Industrial orders in Italy made a slight bounce in May. French orders fell after a slight bounce in April. Neither shows any sign of upward momentum and the downward momentum has only just been trimmed if we compare 3-month growth [...]

Industrial Orders Trends Begin To Turn...Ever So Slowly

Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720e.jpg">
The Conference Board&#39;s Index of Leading Economic Indicators continued to suggest a pending economic recovery. The June composite index of leaders rose another 0.7% after gains of 1.3% (upwardly revised) and 1.0% during the prior two months. The combined 3.0% rise during those three months was the strongest since early 2002 while the index itself was at the highest level since last July. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.
For the third straight month, nearly three quarters of the ten components of the leading index increased with the largest positive contributions coming from a steeper yield curve, higher building permits and higher stock prices. The money supply and consumer expectations made slight negative contributions.
Again suggesting that the rate of decline in the economy is slowing were the coincident indicators. They fell 0.2%, about as they have for three consecutive months. These compare with monthly declines of 0.6%-to-1.1% dating back to September. The negative contributions from lower employment and production have eased. The remaining two component series actually rose during June, led by very slight gains in real disposable income and business sales. Over the last ten years there has been a 76% correlation between this y/y change and real GDP.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720f.jpg">
In a sign that excesses in the U.S. economy are diminishing, the lagging index fell for the sixth month in the last seven. The declines have been paced by a longer duration of unemployment, lower commercial and industrial loans and lower consumer installment credit. The ratio of coincident-to-lagging indicators (a measure of economic excess) rose m/m to the highest level since December.
The Conference Board figures are available in Haver&#39;s BCI database. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
World Economic Outlook Update; Contractionary Forces Receding But Weak Recovery Ahead from the international Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.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/BCI/BCI.HTM">Business Cycle Indicators</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March 6-Month % (AR)</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">Leading</td>
<td>0.7</td>
<td>1.3</td>
<td>1.0</td>
<td>4.1</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.7</td>
<td>-5.9</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.8</td>
<td>-0.6</td>
<td>-5.9</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>


</html>

The Conference Board's Index of Leading Economic Indicators continued to suggest a pending economic recovery. The June composite index of leaders rose another 0.7% after gains of 1.3% (upwardly revised) and 1.0% during the prior two [...]

U.S. Leading Indicators Rise For A Third Month Signaling Economic Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
</body></html>

The current recession has been harshest in the labor market. Employers look to cut costs as top-line revenues falter. Though the June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the speed of the rate's recent [...]

U.S. Unemployment Rates Rise Sharply And Rapidly For All

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720a.jpg" align="right" border="0" height="265" width="353">
The current recession has been harshest in the labor market.
Employers look to cut costs as top-line revenues falter. Though the
June unemployment rate of 9.5% was below the 1981-82 peak of 10.8%, the
speed of the rate's recent increase has been notably swift. Today the
rate is up 3.9 percentage points from one year ago. That matches the
record increase for twelve months set during the 1973-75 recession when
the unemployment rate reached its peak of 9.0%. The recent increase is
against a 3.8% decline in employment during the last twelve months and
by 4.4% since the recession began in late-2007.
It's not bad enough that the overall rate of unemployment has
risen so quickly to its current level, but the experience of specific
groups has been most severe. The unemployment rate for men over the
last year has risen a record 4.7 percentage points to a near-record
10.6%. For teenage men, the 12-month increase to an unemployment rate
of 26.2% lags the record increase only slightly while the increase in
the adult male unemployment rate to 9.2% sets a new record, up 4.7
percentage points y/y. The pain for women has been every bit as great.
The 3.0 point, twelve-month increase to an unemployment rate of 8.3%
about matches the record pace. For teenage women, the speed of the
rate's increase to 21.8% also is near the record. Finally, the adult
women unemployment rate is up nearly three points to 7.0%, also near
the record twelve-month increase reached back in 1975.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720b.jpg" align="right" border="0" height="265" width="353">
Schooling matters when it comes to employability, and the
Labor Department measures individuals' level of education. For those
with a college degree, the labor market has indeed weakened, but not as
significantly as the overall figures have. For these individuals
employment has declined 1.2% during the last year compared to 3.7%
growth as recently as 2007. That weakening has doubled the unemployment
rate, but only to 4.7%. For those with less than a high school diploma,
the story is different and more dire. The unemployment rate more than
doubled to 15.5% as employment fell 6.0% y/y. For high school graduates
without college the unemployment rate also doubled to 15.5%. For those
with at least some college the unemployment rate rate rose but to a
lesser 8.0%. Back to school and back to work: community
colleges and workforce development is a recent article from
the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/community/investments/0905/Choi_Laura.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720c.jpg" align="right" border="0" height="265" width="353">
The job market figures also indicate great divergence by race
and age. The white teenager unemployment rate jumped sharply last month
to 21.4% from 16.7% for all of last year. Black teens also experienced
joblessness, but at much higher level. Their level of unemployment
touched 37.9% last month and employment over the last year fell 14.2%
versus a lesser 10.7% decline amongst white teens. For adult whites,
unemployment doubled to a below average 8.1% as employment fell 3.2%
y/y while blacks' unemployment rose to 13.7%. Monetary policy
and racial unemployment rates is a 2000
article from the Federal Reserve Bank of Atlanta and it can be found <a href="http://www.frbatlanta.org/frbatlanta/filelegacydocs/ACF74.pdf">
here</a>.

Also notable during this recession is how much the
unemployment rate has risen despite slower growth in the labor force.
The labor force growth rate of 0.3% y/y through June is down from 1.4%
during all of 2006. Drop-outs from the labor force, the so-called
discouraged-workers, have been numerous and total 5.9 million, up 26%
since the recession began. Had they remained in the labor force the
unemployment rate would now stand at 13.3%, up 5.4 percentage points
from the recession's start. That compares to the 4.5 percentage point
increase in the official unemployment rate to 9.5%.
The labor department also keeps track of why individuals are
not working full time, or so-called underemployment. At 6.5 million,
the number of those putting in less than 34 hours per week due to slack
work has more than doubled since the recession began. Those who could
only find part-time work also has doubled to 2.2 million. Even the
number of those who found a job and saw it end within a week rose by
two-thirds during the last year to 211,000. In all, the jobless rate
for the unemployed plus workers who are marginally attached plus those
working part-time for economic reasons constitute 16.8% of the labor
force, double the 2006-07 low. A dynamic analysis of recent
changes in the rate of part-time employment is a 1991
working paper from the Federal Reserve Bank of Cleveland and it can be
found <a href="http://www.clevelandfed.org/research/Workpaper/1991/wp9120.pdf">
here</a>.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720d.jpg" align="right" border="0" height="265" width="353">
Industry employment trends are behind the relative severity of
the employment patterns above. Factory sector jobs have fallen 14.0%
since the recession began and construction jobs are down 17.1%. Even
for the service sector, which typically is somewhat insulated from the
full force behind cyclical downturns which drive employment lower, this
time is different. Private service sector jobs are off 3.6% from their
peak led by an 8.2% decline in professional &amp; business service
jobs. Jobs in the financial services group also have fallen a severe
5.9%, retail jobs are down 5.1% while government payrolls are up just
slightly.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Civilian
Unemployment Rate</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">&nbsp;June '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.5</td>
<td>9.4</td>
<td>5.6</td>
<td>5.8</td>
<td>4.6</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Sex</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Female</td>
<td>8.3</td>
<td>8.0</td>
<td>5.3</td>
<td>5.4</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Male</td>
<td>10.6</td>
<td>10.5</td>
<td>5.9</td>
<td>6.2</td>
<td>4.7</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; By Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>24.0</td>
<td>22.7</td>
<td>18.8</td>
<td>18.7</td>
<td>15.7</td>
<td>15.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.9</td>
<td>8.8</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Educational
Attainment</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Less Than High School</td>
<td>15.5</td>
<td>15.5</td>
<td>8.9</td>
<td>9.0</td>
<td>7.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Bachelors Degree or Higher</td>
<td>4.7</td>
<td>4.8</td>
<td>2.4</td>
<td>2.6</td>
<td>2.0</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; By Race &amp; Age</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
White</td>
<td>8.7</td>
<td>8.6</td>
<td>5.0</td>
<td>5.2</td>
<td>4.1</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>21.4</td>
<td>20.3</td>
<td>17.0</td>
<td>16.7</td>
<td>13.9</td>
<td>13.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>8.1</td>
<td>8.1</td>
<td>4.4</td>
<td>4.6</td>
<td>3.7</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Black or African American</td>
<td>14.7</td>
<td>14.9</td>
<td>9.4</td>
<td>10.1</td>
<td>8.3</td>
<td>8.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16-19</td>
<td>37.9</td>
<td>39.4</td>
<td>29.8</td>
<td>31.2</td>
<td>29.4</td>
<td>29.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20 &amp; Over</td>
<td>&nbsp;13.7</td>
<td>13.8</td>
<td>8.5</td>
<td>9.1</td>
<td>7.2</td>
<td>7.9</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Rise For A
Third Month Signaling Economic Recovery 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720e.jpg" align="left" border="0">
The Conference Board's Index of Leading Economic Indicators
continued to suggest a pending economic recovery. The June composite
index of leaders rose another 0.7% after gains of 1.3% (upwardly
revised) and 1.0% during the prior two months. The combined 3.0% rise
during those three months was the strongest since early 2002 while the
index itself was at the highest level since last July. The leading
index is based on actual reports for eight economic data series. The
Conference Board initially estimates two series, orders for consumer
goods and orders for capital goods.
For the third straight month, nearly three quarters of the ten
components of the leading index increased with the largest positive
contributions coming from a steeper yield curve, higher building
permits and higher stock prices. The money supply and consumer
expectations made slight negative contributions.
Again suggesting that the rate of decline in the economy is
slowing were the coincident indicators. They fell 0.2%, about as they
have for three consecutive months. These compare with monthly declines
of 0.6%-to-1.1% dating back to September. The negative contributions
from lower employment and production have eased. The remaining two
component series actually rose during June, led by very slight gains in
real disposable income and business sales. Over the last ten years
there has been a 76% correlation between this y/y change and real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720f.jpg" align="right" border="0">
In a sign that excesses in the U.S. economy are diminishing,
the lagging index fell for the sixth month in the last seven. The
declines have been paced by a longer duration of unemployment, lower
commercial and industrial loans and lower consumer installment credit.
The ratio of coincident-to-lagging indicators (a measure of economic
excess) rose m/m to the highest level since December.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.



World Economic Outlook Update; Contractionary
Forces Receding But Weak Recovery Ahead from the
international Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.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/BCI/BCI.HTM">Business
Cycle Indicators</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March 6-Month % (AR)</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">Leading</td>
<td>0.7</td>
<td>1.3</td>
<td>1.0</td>
<td>4.1</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.7</td>
<td>-5.9</td>
<td>-0.8</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2</td>
<td>-0.8</td>
<td>-0.6</td>
<td>-5.9</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
Industrial Orders Trends Begin To
Turn...Ever So Slowly 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090720g.jpg" align="left" border="0" height="265" width="353">
Industrial orders in Italy made a slight bounce in May. French
orders fell after a slight bounce in April. Neither shows any sign of
upward momentum and the downward momentum has only just been trimmed if
we compare 3-month growth rates to 12-month growth rates. 
 

What is interesting is the very different performance in
foreign
orders as between Italy and France and Germany. Germany is showing some
very substantial recovery in foreign-sourced orders. But it Italy,
foreign order are falling at an accelerating pace through May. In
France, foreign orders have shown a clear patterns of progress with the
three-month growth rate reduced to an annual pace of -9.7% compared to
-24% Yr/Yr. 
 

Whatever progress is being experienced in Europe, it is
irregular.
Clearly some economies in the Zone are doing better than others despite
the common currency regime - and that is true for sales overseas
underlining the that exchange rates are not the only factor in the
success of foreign sales efforts. The more variance there is across
e-Zone countries in their respective economic performances, the more it
will wear on the fragile e-Zone area where talk of integration is tough
despite member countries efforts to continue to go it alone on fiscal
policy. Europe still has a recession and still has some divisive
political forces to weather. And yet more European &#8216;integration&#8217; lies
ahead. 
 


<table border="0" cellspacing="0" width="100%">
</table>
Italy Orders
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-2.6%</td>
<td>-20.9%</td>
<td>-24.3%</td>
<td>-29.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.2%</td>
<td>-2.9%</td>
<td>-9.3%</td>
<td>-39.4%</td>
<td>-27.5%</td>
<td>-33.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>0.5%</td>
<td>-3.9%</td>
<td>1.0%</td>
<td>-9.3%</td>
<td>-22.7%</td>
<td>-26.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-1.1%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-7.3%</td>
<td>-22.3%</td>
<td>-21.9%</td>
</tr>
<tr>
<td colspan="7">French Orders</td>
</tr>
<tr>
<td class="firstcol">Saar exept m/m</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>-5.7%</td>
<td>-22.3%</td>
<td>-9.2%</td>
<td>-23.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>0.4%</td>
<td>6.5%</td>
<td>-8.8%</td>
<td>-9.7%</td>
<td>-12.4%</td>
<td>-27.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">IP xConstruct</td>
<td>2.4%</td>
<td>-0.6%</td>
<td>-1.4%</td>
<td>1.4%</td>
<td>-15.1%</td>
<td>-15.0%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Unemployment Rates RiseSharply And Rapidly For All

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>.
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.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">Housing Starts (000s, SAAR)</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">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


</html>

Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. [...]

U.S. Housing Starts Post A Surprising Gain During June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717a.jpg" width="353">
Perhaps this is the convincing sign that housing activity has turned the corner from its dramatic decline. Housing starts increased to 582,000 (AR) units last month versus 562,000 starts during May which was revised up from 532,000. The latest figure greatly exceeded Consensus expectations for 528,000 starts.
Higher starts of single-family homes led the increase in the total last month. The 14.4% m/m rise was the fourth consecutive monthly increase. The gains have been off the record low for the series which dates back to 1959 and the latest level was down three-quarters from the peak in early-2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
Starts of multi-family homes fell to 112,000 and reversed slightly more than half their gain during May. Starts of apartments, condominiums &amp; town houses remained down by roughly two-thirds from the 2006 peak.
By region increases in starts of single-family units last month spread across the country. Single-family starts in the Midwest rose 26.4% to their highest level since October (-18.0% y/y). In the Northeast, single-family starts also firmed after two months of decline and rose to the highest level this year (-42.4% y/y). Starts in the West rose for the fourth straight month (-22.2% y/y) and in the South single-family starts rose a lesser 8.1% m/m. It was the third straight monthly gain (-34.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090717b.jpg" width="353">
Overall, building permits during June remained near the record low. Though the latest gain was the second in a row and to the highest level this year, it still left permits slightly lower than at yearend. Overall, permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by higher single-family permits. Single-family permits, a leading indicator of starts, were stronger than the total and rose for the third straight month. They were up 16.2% since December (-28.9% y/y). Permits to build multi-family units rose 18.8% but only after eleven straight months of decline (-76.6% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
Strong Medicine for an Ailing Economy from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=084C6ABC-5056-9F12-1274013344A169C9&amp;method=display_body">here</a>. 
Productivity Swings and Housing Prices from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci15-3.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">Housing Starts (000s, SAAR)</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">Total</td>
<td>582</td>
<td>562</td>
<td>-46.0%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>470</td>
<td>411</td>
<td>-28.2</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>112</td>
<td>151</td>
<td>-73.5</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>563</td>
<td>518</td>
<td>-52.0</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716g.jpg" width="353">
According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June of last year. The index is compiled from survey questions asking builders to rate market conditions as &#147;good&#148;, &#147;fair&#148;, &#147;poor&#148; or &#147;very high&#148; to &#147;very low&#148;. Numerical results over 50 indicate a predominance of &#147;good&#148; readings.
Also showing improvement during all of the first quarter was the Home Builders&#39; Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income. It jumped to a record high of 72.5% buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)
The Home Builders Association indicated that its sub-index of present sales rose this month to the highest level since June &#39;08. At a reading of 17 the figure was up significantly from the January low of 6. Since 1990, the year-to-year change in this index has had an 80% correlation with the year-to-year percentage change in new single-family home sales.
The index of builders&#146; expectations for home sales in six months held stable but remained near its highest since September. The &#147;traffic&quot; of prospective buyers also improved from June and was up from the record lows of this past Winter.
The strength in the July composite index readings was concentrated in the South. Elsewhere in the country composite indexes were flat-to-lower.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716h.jpg" width="353">
The NAHB has compiled the Housing Market Index since 1985. The weights assigned to the individual index components are .5920 for single family detached sales, present time; .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver&#146;s SURVEYS database.
Today&#39;s House testimony by Fed Governor Elizabeth A. Duke titled Consumer Protection can be found <a href="http://www.federalreserve.gov/newsevents/testimony/duke20090716a.htm">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/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">&nbsp;July &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index (All Good = 100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales: Next Six Months</td>
<td>26</td>
<td>26</td>
<td>23</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of Prospective Buyers</td>
<td>14</td>
<td>13</td>
<td>12</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body>
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According to the National Association of Home Builders, improvement in the housing market continued during July. Their Composite Housing Market Index recovered the June slip and rose to 17, which equaled the highest level since June [...]

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716e.jpg">
The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply negative levels this past Winter and, thus, suggests that recessionary forces have moderated. The index reached -38.23 this past March and the latest level was better than Consensus expectations for a reading of -5.0.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State. Participants from across the state in a variety of industries respond to a questionnaire and report the change in indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The figure is a diffusion index. Since the series&#39; inception in 2001, there has been a 75% correlation between its level and the three-month change in U.S. factory sector industrial production. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to independent survey questions; it is not a weighted combination of the components. The series dates back only to 2001.
Improvement in the new orders component paced last month&#39;s index with a gain to the highest level since December of 2007. The shipments index also improved to its highest since the middle of last year while the average workweek expanded moderately. The employment index also improved slightly to the highest level since last October. In the history of the NY employment index, there has been an 87% correlation between it and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department. <img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090716f.jpg">
To the downside was a sharp decline in the inventories index, to a series&#39; low, unfilled orders and delivery times.
Prices firmed as indicated by the first positive index reading since November. Nevertheless, the index level remained down sharply from last year. Since inception in 2001, there has been a 76% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.
The Empire State index of expected business conditions in six months slipped during July from its highest level since mid-2007. The subseries for new orders, shipments, employment and capital expenditures each fell but still remained improved from the winter lows..
The Empire State data is available in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-0.55</td>
<td>-9.41</td>
<td>-6.16</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>5.89</td>
<td>-8.15</td>
<td>4.52</td>
<td>-6.25</td>
<td>15.71</td>
<td>20.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>-20.83</td>
<td>-21.84</td>
<td>-6.32</td>
<td>-5.36</td>
<td>11.28</td>
<td>12.62</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>10.42</td>
<td>-5.75</td>
<td>77.89</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>


</html>

The Federal Reserve Bank of New York reported yesterday that its Empire State Factory Index of General Business Conditions improved to its highest level since April of last year. The latest reading of -0.55 compares to sharply [...]

Empire State Factory Conditions Improved To Best In Over One Year

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

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**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

260205C15.jpg

260205D15.jpg

- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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260205B2.jpg

Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

260205C2.jpg

260205D2.jpg

- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

260205E.jpg

German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief

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Industrial Orders Trends Begin To Turn...Ever So Slowly

U.S. Leading Indicators Rise For A Third Month Signaling Economic Recovery

U.S. Unemployment Rates Rise Sharply And Rapidly For All

U.S. Unemployment Rates RiseSharply And Rapidly For All

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U.S. Housing Starts Post A Surprising Gain During June

U.S. Home Builders’ Index Recovers To Its Highest Since June '08

Empire State Factory Conditions Improved To Best In Over One Year