Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709c.jpg" align="left" border="0">
The current recession started over eighteen months ago and roughly
eight billion dollars are being paid each month in unemployment
benefits under state programs. For the jobless who have exhausted their
unemployment benefits, recent discussion in Washington of extending the
duration of benefits may come too late. For those receiving benefits,
the news is welcome in this tough job environment. Data in Haver's USECON
database focuses on the magnitude of the labor market difficulties, not
only by dollars paid and the duration of unemployment but by which
industries and states have been most affected.
The average duration of unemployment recently has been running 15.7
weeks. That is up by one full week from the beginning of the year and,
given the severity of this recession, it likely will rise further.
During the severe recessions of 1973-75 and 1981-82, the peaks in
average duration were above 17 weeks. Notable this cycle has been the
jump in the benefit exhaustion rate to a record 49.2%. (The exhaustion
rate is the percent of claimants who collect all of their
unemployment.) Past cycle highs were nearer to 40%. As this recession
has now lasted so long, the higher rate is no surprise. The states with
the higher benefit exhaustion rates include New Jersey (57.3%),
California (55.5%), Massachusetts (48.8%) and New York (46.5%). (These
figures are available in Haver's REGIONAL database.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709d.jpg" align="right" border="0">
Also under current discussion is raising the level of weekly dollars
paid in insurance. The current average of $315.71 is up 6.2% from last
year and up from an average $212.13 ten years ago. Adjusted for
inflation using the CPI, benefits have risen 18% over those ten years
helped by the recent decline in oil prices.
The industry breakout of continued unemployment claims indicates
that roughly one-third of all continuing unemployment insurance
benefits are being collected by workers in the manufacturing (20.3%)
and construction (13.6%) industries. The factory sector's share of all
claims being paid is up to 20% from 13% early last year. The
administration &amp; support sectors follow with 10.0% of workers
collecting, but that rate has been stable since 2005. The retail trade
sector follows with a steady 8.0% collecting while 5.4% of workers in
the professional/scientific and tech services area collect.
Surprisingly, perhaps, workers in the health care &amp; social services
industry account for 4.7% of those collecting, but that is down from an
8.0% 2007 peak. Finally, 3.0% of workers in the finance &amp; insurance
industries collect but that is down from a 4.8% share late in 2007.
The elasticity of the unemployment rate with respect to benefits from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/working-papers//2008/wp08-15.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance Benefits</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Average Duration (Weeks)</td>
<td>15.68</td>
<td>15.21</td>
<td>15.18</td>
<td>15.19</td>
<td>15.14</td>
<td>15.38</td>
</tr>
<tr>
<td class="firstcol">Exhaustion Rate (%)</td>
<td>49.23</td>
<td>47.06</td>
<td>36.80</td>
<td>37.84</td>
<td>35.22</td>
<td>35.42</td>
</tr>
</tbody>
</table>
 U.S. Initial Claims For Unemployment Insurance Fall Sharply But Continuing Claims Reach A New Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 9, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709a.jpg" align="left" height="265" width="353">
The labor market may have given another sign of improvement in the
U.S. economy. Initial claims for unemployment insurance fell a
surprisingly sharp 52,000 last week to 565,000 after a slightly revised
13,000 decline during the prior week. The latest level was off from the
March peak of 674,000 and it was the lowest level since mid-January.
The four-week average of claims, which smoothes out some of the
volatility in the weekly numbers, also fell to 606,000. The latest
weekly level was quite a bit lower than Consensus expectations for
610,000.
The Labor Department indicated that the largest increases in initial
claims for the week ending June 27 were in New Jersey (+7,876),
Massachusetts (+4,730), Kansas (+4,469), Kentucky (+3,614), and New
York (+3,019), while the largest decreases were in Florida (-12,493),
Illinois (-5,321), Pennsylvania (-3,949), California (-2,919), and
Tennessee (-2,743).
Continuing claims for unemployment insurance jumped 159,000 to a new
record high, though these figures do lag the initial claims by one
week. Continuing claims provide an indication of workers' ability to
find employment. At 6,883,000 claims were more than double the year ago level. The four-week average of continuing claims also touched a new record high. The series dates back to 1966.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709b.jpg" align="right" height="265" width="353">
The insured rate of unemployment inched up just slightly to 5.1%,
essentially where it has been for the last eight weeks. It was,
however, the highest rate since 1983. 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 June 20
were in Michigan (6.8 percent), Puerto Rico (6.8), Oregon (6.7),
Pennsylvania (6.4), Nevada (6.2), Wisconsin (5.7), California (5.3),
Illinois (5.3), North Carolina (5.3), and South Carolina (5.3).
The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database.
Federal Reserve's Initiatives to Support Minority-Owned Institutions is the title of today's speech by Fed Governor Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20090709a.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">07/04/09</th>
<th scope="col">06/27/09</th>
<th scope="col">06/20/09</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>
<td class="firstcol">Initial Claims</td>
<td>565</td>
<td>617</td>
<td>630</td>
<td>54.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,883</td>
<td>6,724</td>
<td>113.9%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
 Consumer Credit Usage Falls For An Unprecedented Fourth Straight Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 9, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709e.jpg" align="left" border="0" height="265" width="353">
The consumer continued to deleverage this spring. The Federal
Reserve reported late yesterday that consumer credit outstanding during
May fell for the fourth straight month and for the eighth month since
last summer. The $3.3B decline was the shallowest of the unprecedented
streak, but it followed huge double-digit drops during the prior three
months. The decline in credit usage has been just one factor behind the
recent retrenchment in retail spending though the May drop was short of
expectations for a $7.1B decline.
Usage of revolving credit fell a sharp $2.9B during May following an
even sharper decline of $8.7B during April. The latest was the eighth
decline in as many months and it lowered usage by 3.6% versus one year
ago. Non-revolving credit (autos &amp; other consumer durables), which
accounts for nearly two-thirds of the total, ticked lower by $0.4B in
May but the decline was quite a bit shallower than during the prior two
months. Compared to the decline in revolving credit usage, the drop
here has been less dramatic. The 0.7% y/y shortfall compares to a 6.8%
drop after the 1990-91 recession but it is similar to the pullbacks
during 1975 and even the "credit crunch" recession of 1980.
These figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.
Credit data are available in Haver's USECON database. The Flow of Funds data are in Haver's FFUNDS database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709f.jpg" align="right" border="0" height="265" width="353">
Commercial real estate is the topic of today's testimony by
Jon D. Greenlee, Associate Director, Division of Banking Supervision
and Regulation at the Federal Reserve and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/greenlee20090709a.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">Consumer Credit (m/m Chg, SAAR)</th>
<th scope="col">May</th>
<th scope="col">April</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">Total</td>
<td>$-3.3B</td>
<td>&nbsp;$-16.5B</td>
<td>-1.8%</td>
<td>1.7%</td>
<td>5.5%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-2.9B</td>
<td>$-8.7B</td>
<td>-3.6%</td>
<td>2.3%</td>
<td>7.4%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-0.4B</td>
<td>$-7.8B</td>
<td>-0.7%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
 UK Trade Picture: Better In Month But In Flux 
by <a href="/comment/Brusca.html">Robert Brusca</a> July 9, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090709g.jpg" align="left" border="0">
The UK trade balance shrank to 6.26bln sterling in May from 7.14bln
in April. Exports edged lower, while imports fell by 4% in May. Export
and import trends do not show very dramatic signs of change. Exports
are declining by a bit less than imports and their rate of decline is
more persistently losing that negative edge, but that remains a very
gradual process. For imports the declines over various horizons are
still large. The pace of decline over three months is less than for six
months; the drop over six months shows acceleration in the drop
compared to 12 months. Import trends are still a chaotic. 
Exports and imports of road vehicles have picked up, perhaps in
response to various vehicle purchase plans in effect in the UK and
around Europe. Vehicle sales have picked up because of such incentives. 
Trends for capital goods shipments are worsening for exports and for imports over 12- 6- and 3-months. 
For other groups of exports and imports the patterns are still too varying to categorize. 
German trade reported a bounce in exports with imports still falling
in May. German orders (especially foreign orders) and industrial output
have been on the mend in other recent reports. Still, it is too soon to
throw the UK figures in with that lot and call them positive. The UK
trade accounts still have divergent trends and the improvement in trade
has given way to deterioration and then to more improvement. It is too
much in flux to be sure of. Both export and import trends are still
under clear downward pressure Yr/Yr. There is no solid sign of trade
flows returning to an expansion path any time soon for the UK. 

UK Trade trends for goods<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>

</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey3">
<td class="firstcol">Balance*</td>
<td>-££ 6.26</td>
<td>-££ 7.14</td>
<td>-££ 6.62</td>
<td>-££ 6.89</td>
<td>-££ 7.34</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">All Exp</td>
<td>-0.8%</td>
<td>-1.5%</td>
<td>-12.3%</td>
<td>-13.7%</td>
<td>-14.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital gds</td>
<td>-2.8%</td>
<td>-8.0%</td>
<td>-34.3%</td>
<td>-28.1%</td>
<td>-16.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Road Vehicles</td>
<td>14.5%</td>
<td>-8.3%</td>
<td>-10.6%</td>
<td>-39.8%</td>
<td>-35.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Basic Materials</td>
<td>-22.2%</td>
<td>11.6%</td>
<td>-33.3%</td>
<td>-3.6%</td>
<td>-44.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>-0.6%</td>
<td>4.2%</td>
<td>11.9%</td>
<td>17.5%</td>
<td>9.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">All IMP</td>
<td>-4.0%</td>
<td>1.5%</td>
<td>-16.1%</td>
<td>-20.1%</td>
<td>-15.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital gds</td>
<td>-7.5%</td>
<td>-0.7%</td>
<td>-42.6%</td>
<td>-37.1%</td>
<td>-19.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Road Vehicles</td>
<td>5.5%</td>
<td>-5.6%</td>
<td>-9.4%</td>
<td>-22.5%</td>
<td>-38.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Basic Materials</td>
<td>-2.0%</td>
<td>-2.0%</td>
<td>-16.5%</td>
<td>-39.8%</td>
<td>-36.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>-2.1%</td>
<td>5.5%</td>
<td>8.2%</td>
<td>5.7%</td>
<td>9.3%</td>
</tr>
<tr class="grey1">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

The current recession started over eighteen months ago and roughly eight billion dollars are being paid each month in unemployment benefits under state programs. For the jobless who have exhausted their unemployment benefits, recent [...]

U.S. Pays $8 Billion In Unemployment Benefits

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708c.jpg" align="left" border="0" height="265" width="353">
German industrial production rose by 3.7% in May from April.
It has risen in two of the last three-months. IP is accelerating,
rising at a 5.4% annual rate over three-months compared to a rate of
minus 22.2% over six-months and minus 18.1% over twelve-months. Still in the quarter to date IP is
contracting at a pace of 6.1%. Two months into the second quarter,
despite the stirring in the industrial sector, IP is still a
subtraction from growth. 
Construction is showing a steady acceleration and positive
growth rates over 3-months, 6-months and 12-months. Manufacturing is up
at a strong 10% annual rate over three-months but still falling at a
6.6% pace in the current quarter.
Industrial orders are rising on a much more explosive path
over this period. But orders are a precursor to increases in output.
Among large EMU countries Spain and the UK also have reported
industrial output measures for May. For each of them the May result for
MFG output was negative. But MFG output in Spain and in the UK had
risen in April. In the UK
output is falling at a 0.9% pace in Q2. In Spain output is dropping at
a 3% pace in Q2. 
These trends have the trappings of a bottoming in progress but
not here yet. The German chemicals industry reported that it had made a
recession bottom already. For Germany , as a whole, capital goods
orders are leading the way out. In May these orders surged by 8.3%
compared to April, but that was after a 6.9% plunge in April output
itself. Intermediate goods output was up by 4.3% in May. The consumer
is not a major factor in the rebound. Output from consumer goods
industries is up by 0.6% in May, the second monthly rise in a row, but
it is still falling at a pace of 5.4% in Q2. Capital goods output is
declining at an 11.5% pace in Q2 and intermediate goods output is
falling at a 2.1% pace. There
are signs of stirring but no evidence that the real positive thrust is
here yet.
Overall there is evidence of the drop in output and the
decline in GDP slowing or of a bottom forming and tentative signs of a
rise from the lows being put in place for industrial output. The UK reported consumer sentiment
rose in June as another sign of optimism in Europe . The G-8 is getting
ready to meet and tell us that we have not turned the corner yet. The
message from that is for countries not to reverse the stimulus that is
in place but a further subtle message is not to commence any new
stimulus either.




<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7">Total German IP </th>
<th>Quarter</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<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>
<td>to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>3.7%</td>
<td>-2.6%</td>
<td>0.3%</td>
<td>5.4%</td>
<td>-22.2%</td>
<td>-18.1%</td>
<td>-8.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.6%</td>
<td>0.5%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>-5.7%</td>
<td>-5.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>8.3%</td>
<td>-6.9%</td>
<td>3.7%</td>
<td>19.1%</td>
<td>-31.2%</td>
<td>-22.6%</td>
<td>-11.5%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>4.3%</td>
<td>-1.0%</td>
<td>-1.7%</td>
<td>6.4%</td>
<td>-23.5%</td>
<td>-21.8%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</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">Construction</td>
<td>-3.2%</td>
<td>0.0%</td>
<td>6.0%</td>
<td>11.2%</td>
<td>5.0%</td>
<td>1.3%</td>
<td>14.8%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>4.9%</td>
<td>-3.1%</td>
<td>0.8%</td>
<td>10.1%</td>
<td>-24.6%</td>
<td>-19.5%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>4.4%</td>
<td>0.1%</td>
<td>0.0</td>
<td>38.4%</td>
<td>-17.4%</td>
<td>-28.8%</td>
<td>19.4%</td>
</tr>
</tbody>
</table>
</body></html>

German industrial production rose by 3.7% in May from April. It has risen in two of the last three-months. IP is accelerating, rising at a 5.4% annual rate over three-months compared to a rate of minus 22.2% over six-months and minus [...]

German IP Follows Orders Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708a.jpg" width="353">
The Mortgage Bankers Association latest report on mortgage applications provided further evidence that home purchases are recovering but that the refinancing boom is most assuredly over. Overall, mortgage applications recovered 10.9% last week and recovered most of the prior week&#39;s decline. However, applications nevertheless remained near the lowest level since last November.
The interest in home buying has improved, in part due to distress sales. Purchase applications rose 6.7% last week to the highest level since they spiked in early April. Since the early-February low, purchase application have risen 21.1% as new and existing home sales have recovered.
The interest in refinancing an existing mortgage, conversely, has virtually dried up. Applications to refinance did rise 15.2% last week. However, that made up just half of the prior week&#39;s decline and left them at the lowest level since November. Since their peak in January, refinance applications have fallen by three quarters.
Since the beginning of this year, fixed-rate mortgage applications have fallen by slightly more than one half while adjustable-rate mortgages have doubled.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708b.jpg" width="353">
The end of the refinancing boom can be traced, in part, to the rise in interest rates. The effective interest rate on a conventional 15-year mortgage slipped last week to 5.09% but that remained up from the April low of 4.69%. For a 30-year mortgage, the rate also slipped last week to 5.57% but remained up from the 4.81% low. Interest rates on 15- and 30-year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. Up also were adjustable 1-Year mortgage rates which remained stable at 6.61% versus the low near 6.0% during January. Nevertheless, the rate remained down from the 7.07% peak reached last fall.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage. Moreover, during the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The figures for weekly mortgage applications are available in Haver&#39;s SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
IMF Moves to Boost Resources to Combat Global Crisis from the International Monetary can be found <a href="http://www.imf.org/external/pubs/ft/survey/so/2009/NEW070609A.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">07/03/09</th>
<th scope="col">06/26/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>493.1</td>
<td>444.8</td>
<td>-4.0%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>285.6</td>
<td>267.7</td>
<td>-21.9%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,707.1</td>
<td>1,482.2</td>
<td>23.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Mortgage Bankers Association latest report on mortgage applications provided further evidence that home purchases are recovering but that the refinancing boom is most assuredly over. Overall, mortgage applications recovered 10.9% [...]

U.S. Mortgage Applications For Purchase Rise But Applications To Refinance Remain Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708a.jpg" align="left" border="0" height="265" width="353">
The Mortgage Bankers Association latest report on mortgage
applications provided further evidence that home purchases are
recovering but that the refinancing boom is most assuredly over.
Overall, mortgage applications recovered 10.9% last week and recovered
most of the prior week's decline. However, applications nevertheless
remained near the lowest level since last November.
The interest in home buying has improved, in part due to
distress sales. Purchase applications rose 6.7% last week to the
highest level since they spiked in early April. Since the
early-February low, purchase application have risen 21.1% as new and
existing home sales have recovered.
The interest in refinancing an existing mortgage, conversely,
has virtually dried up. Applications to refinance did rise 15.2% last
week. However, that made up just half of the prior week's decline and
left them at the lowest level since November. Since their peak in
January, refinance applications have fallen by three quarters.
Since the beginning of this year, fixed-rate mortgage
applications have fallen by slightly more than one half while
adjustable-rate mortgages have doubled.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708b.jpg" align="right" border="0" height="265" width="353">
The end of the refinancing boom can be traced, in part, to the
rise in interest rates. The effective interest rate on a conventional
15-year mortgage slipped last week to 5.09% but that remained up from
the April low of 4.69%. For a 30-year mortgage, the rate also slipped
last week to 5.57% but remained up from the 4.81% low. Interest rates
on 15- and 30-year mortgages are closely correlated (&gt;90%) with
the rate on 10-year Treasury securities. Up also were adjustable 1-Year
mortgage rates which remained stable at 6.61% versus the low near 6.0%
during January. Nevertheless, the rate remained down from the 7.07%
peak reached last fall.
During the last ten years there has been a (negative) 79%
correlation between the level of applications for purchase and the
effective interest rate on a 30-year mortgage. Moreover, during the
last ten years there has been a 61% correlation between the y/y change
in purchase applications and the change in new plus existing single
family home sales.
The figures for weekly mortgage applications are available in
Haver's SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of
the top lenders in the U.S. housing industry to derive its refinance,
purchase and market indexes. The weekly survey covers roughly 50% of
all U.S. residential mortgage applications processed each week by
mortgage banks, commercial banks and thrifts. Visit the Mortgage
Bankers Association site <a href="http://www.mbaa.org">here</a>.
IMF Moves to Boost Resources to Combat Global Crisis
from the International Monetary can be found <a href="http://www.imf.org/external/pubs/ft/survey/so/2009/NEW070609A.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/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">07/03/09</th>
<th scope="col">06/26/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>493.1</td>
<td>444.8</td>
<td>-4.0%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>285.6</td>
<td>267.7</td>
<td>-21.9%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,707.1</td>
<td>1,482.2</td>
<td>23.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
 German IP Follows Orders
Higher 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> July 8, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090708c.jpg" align="left" border="0" height="265" width="353">
German industrial production rose by 3.7% in May from April.
It has risen in two of the last three-months. IP is accelerating,
rising at a 5.4% annual rate over three-months compared to a rate of
minus 22.2% over six-months and minus 18.1% over twelve-months. Still in the quarter to date IP is
contracting at a pace of 6.1%. Two months into the second quarter,
despite the stirring in the industrial sector, IP is still a
subtraction from growth. 
Construction is showing a steady acceleration and positive
growth rates over 3-months, 6-months and 12-months. Manufacturing is up
at a strong 10% annual rate over three-months but still falling at a
6.6% pace in the current quarter.
Industrial orders are rising on a much more explosive path
over this period. But orders are a precursor to increases in output.
Among large EMU countries Spain and the UK also have reported
industrial output measures for May. For each of them the May result for
MFG output was negative. But MFG output in Spain and in the UK had
risen in April. In the UK
output is falling at a 0.9% pace in Q2. In Spain output is dropping at
a 3% pace in Q2. 
These trends have the trappings of a bottoming in progress but
not here yet. The German chemicals industry reported that it had made a
recession bottom already. For Germany , as a whole, capital goods
orders are leading the way out. In May these orders surged by 8.3%
compared to April, but that was after a 6.9% plunge in April output
itself. Intermediate goods output was up by 4.3% in May. The consumer
is not a major factor in the rebound. Output from consumer goods
industries is up by 0.6% in May, the second monthly rise in a row, but
it is still falling at a pace of 5.4% in Q2. Capital goods output is
declining at an 11.5% pace in Q2 and intermediate goods output is
falling at a 2.1% pace. There
are signs of stirring but no evidence that the real positive thrust is
here yet.
Overall there is evidence of the drop in output and the
decline in GDP slowing or of a bottom forming and tentative signs of a
rise from the lows being put in place for industrial output. The UK reported consumer sentiment
rose in June as another sign of optimism in Europe . The G-8 is getting
ready to meet and tell us that we have not turned the corner yet. The
message from that is for countries not to reverse the stimulus that is
in place but a further subtle message is not to commence any new
stimulus either.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7">Total German IP </th>
<th>Quarter</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<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>
<td>to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>3.7%</td>
<td>-2.6%</td>
<td>0.3%</td>
<td>5.4%</td>
<td>-22.2%</td>
<td>-18.1%</td>
<td>-8.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.6%</td>
<td>0.5%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>-5.7%</td>
<td>-5.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>8.3%</td>
<td>-6.9%</td>
<td>3.7%</td>
<td>19.1%</td>
<td>-31.2%</td>
<td>-22.6%</td>
<td>-11.5%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>4.3%</td>
<td>-1.0%</td>
<td>-1.7%</td>
<td>6.4%</td>
<td>-23.5%</td>
<td>-21.8%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</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">Construction</td>
<td>-3.2%</td>
<td>0.0%</td>
<td>6.0%</td>
<td>11.2%</td>
<td>5.0%</td>
<td>1.3%</td>
<td>14.8%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>4.9%</td>
<td>-3.1%</td>
<td>0.8%</td>
<td>10.1%</td>
<td>-24.6%</td>
<td>-19.5%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>4.4%</td>
<td>0.1%</td>
<td>0.0</td>
<td>38.4%</td>
<td>-17.4%</td>
<td>-28.8%</td>
<td>19.4%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Mortgage Applications ForPurchase Rise But Applications To Refinance Remain Low

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707d.jpg" align="right" border="0" height="265" width="353">The volume
of new orders in German Manufacturing rose 4.4% in May after a small
rise of 0.1% in April and a 3.7% rise in March.&nbsp; The three
month rise has brought the level of new orders to 84.5
(2005=100).&nbsp; This is still 33% below the peak of 126.1
recorded in November, 2007.&nbsp; Sales of German Manufacturing and
Mining product rose 4.5% in May after a decline of 2.0% in April and a
1.6% rise in March. Sales are now at an index level of 91.8, 21% below
the peak of 115.7 reached in January, 2008.&nbsp; To put the recent
improvements in perspective, the volume of new orders and sales over
the 8 plus years are shown in the first chart. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707e.jpg" align="right" border="0" height="265" width="353">Much of the
improvement in both orders and sales was due to a jump in foreign
sales.&nbsp; While domestic new orders rose 3.9% in May, new orders
from the Euro Area countries rose, 5.2% and from the non Euro Area
countries, 8.2%.&nbsp; The comparable figures for sales were 2.9%,
3.9% and 9.4%.&nbsp;&nbsp; The month to month percent changes
in domestic new orders, Euro Area countries new orders and Non Euro
Area countries new orders are shown in the second chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707f.jpg" align="right" border="0" height="265" width="353">Signs of
recovery in new orders and sales in the manufacturing sector are
particularly important for Germany as manufacturing plays such an
important role in the German economy.&nbsp; Manufacturing accounts
for about 25% of Germany's GDP in contrast to the United States where
manufacturing accounts for about 14% of the economy.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMAN
MANUFACTURING ORDERS AND SALES (2005=100)</th>
<th scope="col">May 09</th>
<th scope="col">Apr&nbsp; 09</th>
<th scope="col">May 08</th>
<th scope="col">M/M% Chg&nbsp;</th>
<th scope="col">Y/Y % Chg</th>
<th scope="col">2008 </th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">New Orders,&nbsp;</td>
<td>84.5</td>
<td>80.9</td>
<td>118.6</td>
<td>4.45</td>
<td>-28.75</td>
<td>111.3</td>
<td>119.7</td>
<td>108.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>86.2</td>
<td>83.0</td>
<td>113.8</td>
<td>3.86</td>
<td>-24.25</td>
<td>108.3</td>
<td>114.8</td>
<td>106.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Euro Area Countries</td>
<td>83.1</td>
<td>79.0</td>
<td>122.8</td>
<td>5.19</td>
<td>-32.33</td>
<td>113.9</td>
<td>124.0</td>
<td>110.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non Euro Area
Countries</td>
<td>88.5</td>
<td>81.8</td>
<td>124.8</td>
<td>8.19</td>
<td>-29.09</td>
<td>118.0</td>
<td>125.0</td>
<td>113.4</td>
</tr>
<tr class="even">
<td class="firstcol">Sales</td>
<td>91.8</td>
<td>87.8</td>
<td>113.1</td>
<td>4.56</td>
<td>-18.83</td>
<td>111.2</td>
<td>111.6</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>92.2</td>
<td>89.6</td>
<td>107.7</td>
<td>2.90</td>
<td>-14.39</td>
<td>106.7</td>
<td>106.4</td>
<td>102.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Euro Area Countries</td>
<td>88.5</td>
<td>85.2</td>
<td>116.8</td>
<td>3.87</td>
<td>-24.23</td>
<td>113.6</td>
<td>116.1</td>
<td>107.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non Euro Area
Countries</td>
<td>93.8</td>
<td>85.7</td>
<td>122.8</td>
<td>9.45</td>
<td>-23.62</td>
<td>121.1</td>
<td>119.9</td>
<td>110.9</td>
</tr>
</tbody>
</table>

</body></html>

The volume of new orders in German Manufacturing rose 4.4% in May after a small rise of 0.1% in April and a 3.7% rise in March. The three month rise has brought the level of new orders to 84.5 (2005=100). This is still 33% below the [...]

German Manufacturing Orders And Sales Recovering From Their Steep Declines

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707c.jpg" width="353">
The Fourth of July seems to have prompted consumer spending this year. During the latest week, chain store sales ticked up all of 0.1%. That, however, was enough to pull the y/y change up to +0.5% after a y/y gain of 0.6% last week. Maybe the consumer is finding his footing? These are the first positive comparisons since late last year. But the consumer definitely isn&#39;t spending with wild abandonee. The latest gains fall well short of the three-to-seven percent growth rates logged during the last several years.
During the last ten years there has been a 69% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales. The weekly figures are available in Haver&#39;s SURVEYW database.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
In tandem with the idea that the consumer isn&#39;t yet spending freely, the leading indicator of sales ticked up all of 0.1% during the latest week. That uptick left the indicator down 2.5% y/y and it has been flat-to-lower all this year.
Exit Strategies for the Federal Reserve from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/econ/bullard/PhiladelphiaGIC28june2009FINAL653pm.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">07/04/09</th>
<th scope="col">06/27/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>493.8</td>
<td>493.4</td>
<td>0.5%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


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The Fourth of July seems to have prompted consumer spending this year. During the latest week, chain store sales ticked up all of 0.1%. That, however, was enough to pull the y/y change up to +0.5% after a y/y gain of 0.6% last week. [...]

Weekly Chain Store Sales Recover Around The Holiday

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707a.jpg">
The energy markets continued to reflect the recent and developing worry that forward momentum in the U.S. economy has faded. Yesterday, the cash market price for a gallon of regular gasoline fell to $1.71 versus the daily high of $2.04 reached in the middle of June. For the full week, the average price fell to $1.84. Retail gas prices have followed these declines, but to a lesser extent. The pump price for regular gasoline fell last week to an average $2.61 per gallon, down eight cents from the high. Nevertheless prices remained up by one dollar from the December low and were at the highest level since late-October. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Lower crude oil prices have led the decline in refined product prices. Yesterday the one-month futures price for light sweet crude oil dropped to $64.05 from an average $69.36 last week. Prices had reached a daily high of $72.68.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707b.jpg">
The weakness in energy prices is against the backdrop of soft demand. The ongoing recession reduced the demand for motor gasoline by 1.8% y/y during the last four weeks. There is good news, however. The rate of decline has moderated from the 4.8% shortfall this past autumn. Demand for distillate also is off sharply though residual fuel oil demand has moved higher. Finally, oil remains plentiful as evidenced by a 13.5% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline are flat y/y but crude oil inventories less the SPR are up by 16.8%. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Finally, natural gas prices did recover during the last two weeks, but the trend since April has definitely been sideways. Last week&#39;s average price of $3.69 per mmbtu (-72.1% y/y) was down from a recent high of $4.02. Current prices are down by two-thirds from the high reached in early-July of $13.19/mmbtu.
Time variation in the inflation passthrough of energy prices from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/RWP09-06.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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">07/06/09</th>
<th scope="col">06 /29/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.61</td>
<td>2.64</td>
<td>-36.5%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>69.36</td>
<td>68.76</td>
<td>-51.3%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

The energy markets continued to reflect the recent and developing worry that forward momentum in the U.S. economy has faded. Yesterday, the cash market price for a gallon of regular gasoline fell to $1.71 versus the daily high of [...]

Gasoline Prices Decline As Economic Momentum Fades Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707a.jpg" align="left" border="0">
The energy markets continued to reflect the recent and
developing worry that forward momentum in the U.S. economy has faded.
Yesterday, the cash market price for a gallon of regular gasoline fell
to $1.71 versus the daily high of $2.04 reached in the middle of June.
For the full week, the average price fell to $1.84. Retail gas prices
have followed these declines, but to a lesser extent. The pump
price for regular gasoline fell last week to an average
$2.61 per gallon, down eight cents from the high. Nevertheless prices
remained up by one dollar from the December low and were at the highest
level since late-October. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Lower crude oil prices have led the
decline in refined product prices. Yesterday the one-month futures
price for light sweet crude oil dropped to $64.05 from an average
$69.36 last week. Prices had reached a daily high of $72.68.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707b.jpg" align="right" border="0">
The weakness in energy prices is against the backdrop of soft
demand. The ongoing recession reduced the demand for motor gasoline by
1.8% y/y during the last four weeks. There is good news, however. The
rate of decline has moderated from the 4.8% shortfall this past autumn.
Demand for distillate also is off sharply though residual fuel oil
demand has moved higher. Finally, oil remains plentiful as evidenced by
a 13.5% y/y rise in inventories of crude oil &amp; petroleum
products. Inventories of gasoline are flat y/y but crude oil
inventories less the SPR are up by 16.8%. The figures on crude oil
production and inventories are available in Haver's OILWKLY database.
Finally, natural gas prices did recover during the last two
weeks, but the trend since April has definitely been sideways. Last
week's average price of $3.69 per mmbtu (-72.1% y/y) was down from a
recent high of $4.02. Current prices are down by two-thirds from the
high reached in early-July of $13.19/mmbtu.
Time variation in the inflation passthrough of energy
prices from the Federal Reserve Bank of Kansas City can be
found <a href="http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/RWP09-06.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/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">07/06/09</th>
<th scope="col">06 /29/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.61</td>
<td>2.64</td>
<td>-36.5%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>69.36</td>
<td>68.76</td>
<td>-51.3%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Recover
Around The Holiday 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707c.jpg" align="left" border="0" height="265" width="353">
The Fourth of July seems to have prompted consumer spending
this year. During the latest week, chain store sales ticked up all of
0.1%. That, however, was enough to pull the y/y change up to +0.5%
after a y/y gain of 0.6% last week. Maybe the consumer is finding his
footing? These are the first positive comparisons since late last year.
But the consumer definitely isn't spending with wild abandonee. The
latest gains fall well short of the three-to-seven percent growth rates
logged during the last several years.
During the last ten years there has been a 69% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. The weekly figures are available
in Haver's SURVEYW database.
The ICSC-Goldman
Sachs retail chain-store sales index is constructed using the
same-store sales (stores open for one year) reported by 78 stores of
seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney,
Sears and Wal-Mart.


In tandem with the idea that the consumer isn't yet spending
freely, the leading indicator of sales ticked up all of 0.1% during the
latest week. That uptick left the indicator down 2.5% y/y and it has
been flat-to-lower all this year.
Exit Strategies for the Federal Reserve
from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/econ/bullard/PhiladelphiaGIC28june2009FINAL653pm.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/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">07/04/09</th>
<th scope="col">06/27/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>493.8</td>
<td>493.4</td>
<td>0.5%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
German Manufacturing Orders And
Sales Recovering From Their Steep Declines 
by <a href="/comment/Curley.html">Louise
Curley</a> July 7, 2009

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707d.jpg" align="right" border="0" height="265" width="353">The volume
of new orders in German Manufacturing rose 4.4% in May after a small
rise of 0.1% in April and a 3.7% rise in March.&nbsp; The three
month rise has brought the level of new orders to 84.5
(2005=100).&nbsp; This is still 33% below the peak of 126.1
recorded in November, 2007.&nbsp; Sales of German Manufacturing and
Mining product rose 4.5% in May after a decline of 2.0% in April and a
1.6% rise in March. Sales are now at an index level of 91.8, 21% below
the peak of 115.7 reached in January, 2008.&nbsp; To put the recent
improvements in perspective, the volume of new orders and sales over
the 8 plus years are shown in the first chart. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707e.jpg" align="right" border="0" height="265" width="353">Much of
the
improvement in both orders and sales was due to a jump in foreign
sales.&nbsp; While domestic new orders rose 3.9% in May, new orders
from the Euro Area countries rose, 5.2% and from the non Euro Area
countries, 8.2%.&nbsp; The comparable figures for sales were 2.9%,
3.9% and 9.4%.&nbsp;&nbsp; The month to month percent changes
in domestic new orders, Euro Area countries new orders and Non Euro
Area countries new orders are shown in the second chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090707f.jpg" align="right" border="0" height="265" width="353">Signs of
recovery in new orders and sales in the manufacturing sector are
particularly important for Germany as manufacturing plays such an
important role in the German economy.&nbsp; Manufacturing accounts
for about 25% of Germany's GDP in contrast to the United States where
manufacturing accounts for about 14% of the economy.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMAN
MANUFACTURING ORDERS AND SALES (2005=100)</th>
<th scope="col">May 09</th>
<th scope="col">Apr&nbsp; 09</th>
<th scope="col">May 08</th>
<th scope="col">M/M% Chg&nbsp;</th>
<th scope="col">Y/Y % Chg</th>
<th scope="col">2008 </th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">New Orders,&nbsp;</td>
<td>84.5</td>
<td>80.9</td>
<td>118.6</td>
<td>4.45</td>
<td>-28.75</td>
<td>111.3</td>
<td>119.7</td>
<td>108.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>86.2</td>
<td>83.0</td>
<td>113.8</td>
<td>3.86</td>
<td>-24.25</td>
<td>108.3</td>
<td>114.8</td>
<td>106.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Euro Area Countries</td>
<td>83.1</td>
<td>79.0</td>
<td>122.8</td>
<td>5.19</td>
<td>-32.33</td>
<td>113.9</td>
<td>124.0</td>
<td>110.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non Euro Area
Countries</td>
<td>88.5</td>
<td>81.8</td>
<td>124.8</td>
<td>8.19</td>
<td>-29.09</td>
<td>118.0</td>
<td>125.0</td>
<td>113.4</td>
</tr>
<tr class="even">
<td class="firstcol">Sales</td>
<td>91.8</td>
<td>87.8</td>
<td>113.1</td>
<td>4.56</td>
<td>-18.83</td>
<td>111.2</td>
<td>111.6</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>92.2</td>
<td>89.6</td>
<td>107.7</td>
<td>2.90</td>
<td>-14.39</td>
<td>106.7</td>
<td>106.4</td>
<td>102.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Euro Area Countries</td>
<td>88.5</td>
<td>85.2</td>
<td>116.8</td>
<td>3.87</td>
<td>-24.23</td>
<td>113.6</td>
<td>116.1</td>
<td>107.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non Euro Area
Countries</td>
<td>93.8</td>
<td>85.7</td>
<td>122.8</td>
<td>9.45</td>
<td>-23.62</td>
<td>121.1</td>
<td>119.9</td>
<td>110.9</td>
</tr>
</tbody>
</table>

</body></html>

Gasoline Prices Decline AsEconomic Momentum Fades Further

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.

260205Z1.jpg

**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

260205X15.jpg

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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.

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- 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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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.

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- 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

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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.