Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623c.jpg" align="left" border="0" height="265" width="353">
Tentative signs of recovery in the U.S. economy have recently
become more vague. The immediate effect of this backpedaling is evident
in energy markets where the cash market price for a gallon of regular
gasoline is down roughly twenty-five cents during just the last week.
Yesterday, the cash market price for a gallon of regular gasoline was
$1.79 versus the daily high of $2.04 last week and the weekly average
of $1.98. If sustained these declines likely be reflected in the retail
price for regular gasoline which last week rose
slightly to an average $2.69 per gallon of regular. That increase
pulled prices up by more than $1.00 per gallon, or by more than
one-half, from the December low to 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.
The tenuous nature of the recovery also is reflected in a
lower price for crude oil. Crude prices dropped
yesterday to $66.93 from last week's high of $71.37 and from an average
$70.61 last week for a barrel of West Texas Intermediate. The
speculation of weaker demand came against the backdrop of a 3.8%
year-to-year rise in crude oil production during the latest four weeks.
In addition, oil is plentiful as evidenced by a 13.4% y/y rise in
inventories of crude oil &amp; petroleum products. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.
Finally, an earlier plateau of natural gas prices was
sustained. The Monday price of $3.96 per mmbtu (-69.4% y/y) held
roughly steady with last week but that price was up slightly from the
earlier low of 3.56. Current prices are down by two-thirds from the
high reached in early-July of $13.19/mmbtu.
Fighting Downturns with Fiscal Policy from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-20.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">06/22/09</th>
<th scope="col">06/15/09</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>2.69</td>
<td>2.67</td>
<td>-34.0%</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>70.61</td>
<td>70.83</td>
<td>-47.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body></html>

Tentative signs of recovery in the U.S. economy have recently become more vague. The immediate effect of this backpedaling is evident in energy markets where the cash market price for a gallon of regular gasoline is down roughly [...]

Gasoline Prices Off Sharply With Weaker Economic News

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623a.jpg" width="353">
The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, the same as they did during April, to 4.77M (AR). Consensus expectations had been for April sales of 4.80M homes. Total sales include sales of condos and co-ops.
Home affordability recovered most of its April slip and rose to near its record high. The increase came despite a modest m/m gain in home prices from an April level that was revised sharply lower. Home prices remained down by one-quarter from the 2007 peak. The series dates back to 1971.
The recently enacted tax credit is for first-time home buyers of either a new or a pre-owned home. The credit of up to $8,000 extends through the rest of this year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php"> here</a><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623b.jpg" width="353">
Sales of existing single-family homes alone increased 1.9% last month and they were up 4.9% from the January low. Nevertheless, sales remained near the lowest level since July 1997. (These data have a longer history than the total series).
The number of unsold homes (condos &amp; single-family) on the market reversed roughly half of a sharp April increase with a 3.5% decline and year-to-year inventories are down 15.3%. At the current sales rate there was a 9.6 months&#39; supply on the market which was near the lowest since 2007. For single-family homes the inventory also fell 3.3% (-15.8% y/y). At the current sales rate there was a 9.0 month&#39;s supply, near the lowest since 2007.
The data on existing home sales, prices and affordability can be found in Haver&#39;s USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
Why has home ownership fallen among the young? from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/workingpapers/wp2009_01.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">Existing Home Sales (Thous)</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</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>4,770</td>
<td>4,660</td>
<td>-3.6%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>800</td>
<td>770</td>
<td>-10.1</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,090</td>
<td>1,000</td>
<td>-4.4</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,740</td>
<td>1,740</td>
<td>-8.9</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,140</td>
<td>1,150</td>
<td>11.8</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,250</td>
<td>4,170</td>
<td>-3.0</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>173,000</td>
<td>166,600</td>
<td>-16.8</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>


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The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, [...]

U.S. Existing Home Sales Rise With Affordability And Tax Credit

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Ezone 16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

The EMU (16-country) consolidated balance of trade with countries outside the region fell to eru336mln in April from eur1.7bln in March. The Year-to-date deficit of eur2.5BLn is below the YTD average for the same period of a year ago [...]

EMU Trade Balance Deficit For Goods Shrinks

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
</body></html>

Germany's IFO institute reported today that its business climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This was the third month of improvement. The business climate index is made up of the business community's [...]

German Business Confidence Improving But Still Subdued

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
EMU Trade Balance Deficit For
Goods Shrinks 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> June 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Ezone
16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns;
mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

German Business ConfidenceImproving But Still Subdued

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090619d.jpg" align="left" border="0" height="265" width="353">
UK retail sales fell unexpectedly in May and, combined with
news of greater public sector borrowing, markets sold off with
particular pressure on the pound sterling. The UK has been posting some
of the best economic numbers in Europe but with the slippage in retail
sales some of that optimism has faded. Still there are upbeat signs in
the UK economy. 
 

One sign of optimism is still retail sales themselves.
Although the Yr/Yr figures are worsening the six months trends have
barely turned lower and three-month trends are sill quite strong and
advancing. Perhaps the disappointment is more about markets getting
ahead of themselves than about any real disappointment in retail sales
trends themselves. 
 

The UK housing market is showing some signs of stirring.
Mortgage lending still fell in the recent month (May) but lenders
suspect that demand for purchases has been increasing. It is mostly
re-mortgaging activity that has been slackening off. It is reported
that for every home for sale there are four who are looking to buy
according to a survey by the U.K.'s National Association of Estate
Agents on Thursday. There are still signs of an upswing in the UK. 
 

The CBI industrial trend survey is still very weak but its
index moved up to -51 from -56 in May as well. 
 

On balance the reaction to retail sales may prove to be
excessively pessimistic since improving trends still seem to the rule,
not the exception, in the UK. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">UK Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</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>Yr Ago</td>
<td>Quarter 2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>1.2%</td>
<td>6.3%</td>
<td>2.4%</td>
<td>-1.1%</td>
<td>6.4%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>0.6%</td>
<td>0.2%</td>
<td>0.8%</td>
<td>6.6%</td>
<td>4.8%</td>
<td>3.8%</td>
<td>8.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing footwear</td>
<td>-2.3%</td>
<td>-1.0%</td>
<td>1.3%</td>
<td>-7.9%</td>
<td>1.7%</td>
<td>-8.5%</td>
<td>8.5%</td>
<td>-9.3%</td>
</tr>
<tr>
<td class="firstcol" colspan="9">&nbsp;</td>
</tr>
<tr>
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Ex Auto</td>
<td>-0.7%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>6.0%</td>
<td>2.0%</td>
<td>-1.7%</td>
<td>6.1%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body></html>

UK retail sales fell unexpectedly in May and, combined with news of greater public sector borrowing, markets sold off with particular pressure on the pound sterling. The UK has been posting some of the best economic numbers in Europe [...]

UK Retail Sales Fall And Markets Quiver

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090619a.jpg" width="353">
New figures available in Haver&#39;s SURVEYS database point up how chain store sales have been influenced this year by sales at Wal-Mart. The International Council of Shopping Centers (ICSC) along with Goldman Sachs produce monthly chain store sales figures with and without this big, value-priced retailer. Both data sets paint a picture of recovery in consumer spending; however, sales minus Wal-Mart have been less vibrant. Estimates suggest that Wal-Mart boosted sales growth by four percentage points or more during the depths of the recession. Before this recession began, the sales gains were more comparable to one another -- except in the 2001 recession, when a differential also opened up.
Wal-Mart does not currently report monthly sales along with the other retailers; instead, it reports just quarterly. Therefore, the monthly figures must be interpolated as they are by ICSC and are available only with a lag. These numbers show that from June to December, sales without Wal-Mart fell 6.8% but with Wal-Mart they were down a lesser 2.5%. The quest for value was acute. Now that consumer spending seems to be recovering from last year&#39;s slump, bargain hunting has become less intense. Sales excluding the retail giant rose 3.2% from January through April while sales with Wal-Mart rose a comparable 1.8%. Sales without Wal-Mart during May slipped 0.5% and Wal-Mart&#39;s sales will be available shortly.
The lesson clearly is that value matters a lot when times get tough. What sales patterns might we continue to see into the recovery? The historical evidence shows that the inroads made by Wal-Mart may be sustained, but that the growth differentials between sales with or without this big retailer will narrow. During the whole year following the recession of 2001, for instance, overall chain store sales rose by 2.3%, but without Wal-Mart they increased 1.8%.It will be useful to continue to watch both series for the fullest perspective of consumers&#39; spending patterns.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090619b.jpg" width="353">
Regardless of which chain store sales series is observed, consumer spending currently is under pressure. Gains in store sales are just moderate versus last year. Furniture &amp; appliance store sales are lower though apparel store sales have risen slightly. The consumer spending prospects do, however, look brighter. Consumer confidence and consumer sentiment have been rising this year along with after-tax incomes due to recent tax cuts. Moreover, weakness in pricing power has enabled real after-tax incomes to grow this year at a 6.3% annual rate following their measly 1.3% gain during 2008. Even the job market has improved marginally as first time claims for unemployment insurance have fallen.
The chain store figures sighted above are comparable-store, or same-store, sales figures. As such they are similar to the weekly chain store sales values reported by ICSC/Goldman Sachs. These are available in Haver&#39;s SURVEYW database.
From 1996, this article from the Federal Reserve Bank of New York concludes that chain store sales can significantly improve the accuracy of predictions for several measures of consumer spending. It can be found <a href="http://www.newyorkfed.org/research/epr/96v02n2/9610harr.pdf">here.</a>
Oil prices and consumer spending from the Federal Reserve Bank of Richmond is available <a href="http://www.richmondfed.org/publications/research/economic_quarterly/2005/summer/pdf/mehrapetersen.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ICSC/Goldman Sachs Chain Store Sales (SA, 1977=100)</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">March</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</td>
<td>--</td>
<td>--</td>
<td>486.9</td>
<td>-0.3%</td>
<td>478.0</td>
<td>-0.8%</td>
<td>1.0%</td>
<td>2.3%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">Excluding Wal-Mart</td>
<td>104.4</td>
<td>-4.6%</td>
<td>104.9</td>
<td>-2.8%</td>
<td>103.5</td>
<td>-5.2%</td>
<td>-0.6%</td>
<td>3.0%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

New figures available in Haver's SURVEYS database point up how chain store sales have been influenced this year by sales at Wal-Mart. The International Council of Shopping Centers (ICSC) along with Goldman Sachs produce monthly chain [...]

U.S. Consumers' Quest For Value

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.

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**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.

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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.

Economy in Brief

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