Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519f.jpg" align="right" border="0" height="265" width="353">While
continuing to be pessimistic about current conditions, German investors
and financial analysts have become surprisingly more optimistic about
the economic outlook over the next six months.&nbsp;&nbsp; The
ZEW indicator of current economic conditions in May declined a further
1.2% and is now at a balance between pessimists and optimists of
-92.8%, close to the lowest on record, -96.1% in March 2003. The
indicator of sentiment for the economic outlook for the next six
months, however, rose sharply in May to 31.1% from 13.6% in April and
is now at a three year high and is above the long term average of
26.2%.&nbsp;<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519g.jpg" two indicators are shown in the first chart align="right" border="0" height="265" width="353">
Among the factors that may have accounted for some of the improvement
in the outlook of the participants in the survey, which was conducted
between May 4th and May 18 was the ongoing rise in stock prices that
had begun in early March.&nbsp; By May 18, the Frankfurt Extra Dax
stock price index was up over 30% from the low on March 6. In addition,
there were the releases of March exports and new orders showing the
first month to month increases since early 2008, as shown in the second
chart.&nbsp; The year to year declines in these series of 21.7% and
33.1%, respectively, probably were important factors in the appraisal
of current conditions.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519h.jpg" align="right" border="0" height="265" width="353">
While the participants in the survey, still
expect profits in most industries to decline, they have moderated their
views on the declines and they expect profits in Banking and Insurance
to increase.&nbsp; The third chart shows the profit expectations
for the Banking, Automotive and Information Technology
industries.&nbsp;



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> ZEW
Indicators % Bal</th>
<th scope="col">May 09</th>
<th scope="col">Apr &nbsp; 09</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb09&nbsp;</th>
<th scope="col">Jan 09</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Current Macroeconomic Conditions</td>
<td>-92.8</td>
<td>-91.6</td>
<td>-89.1</td>
<td>-86.2</td>
<td>-77.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Macroeconomic
Expectations&nbsp; 6 M0 ahead&nbsp;</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Mar 09</td>
<td>Feb 09&nbsp;</td>
<td>Jan 09</td>
<td>M/M%</td>
<td>Y/Y%</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (Bil Euros)</td>
<td>66.42</td>
<td>65.97</td>
<td>84.15</td>
<td>0.68</td>
<td>-21.70</td>
</tr>
<tr class="even">
<td class="firstcol">New Orders (2005=100)</td>
<td>80.5</td>
<td>72.9</td>
<td>120.3</td>
<td>3.34</td>
<td>-33.08</td>
</tr>
</tbody>
</table>
</body></html>

While continuing to be pessimistic about current conditions, German investors and financial analysts have become surprisingly more optimistic about the economic outlook over the next six months. The ZEW indicator of current economic [...]

German Investors And Financial Analysts More Optimistic

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519e.jpg" width="353">
According to the International Council of Shopping Centers-Goldman Sachs Index, store sales stuttered last week and reversed all of the gains early in the month. In fact weekly sales fell to their lowest since late-March. For the month so far, chain store sales are down just slightly from April after that month&#39;s 1.4% rise from the March average.
During the last ten years there has been a 64% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales. These 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.
Not only did sales decline, but the leading indicator of sales fell as well and reversed earlier increases. Nevertheless, the y/y change remained less depressed at -2.4% versus the 6.0% rate of decline last Fall.
Comparing patterns of default among prime and subprime mortgages from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2009_part2_amromin_paulson.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">05/16/09</th>
<th scope="col">05/09/09</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>486.8</td>
<td>492.7</td>
<td>-0.3%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

According to the International Council of Shopping Centers-Goldman Sachs Index, store sales stuttered last week and reversed all of the gains early in the month. In fact weekly sales fell to their lowest since late-March. For the [...]

U.S. Chain Store Sales Reverse Earlier Gains

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519c.jpg" width="353">
Regular gasoline prices moved even higher last week. The rise to an average $2.31 per gallon of regular left them up 70 cents (43.5%) from the December low and it was the highest level since early-November. Yesterday, cash market prices traded higher still at $1.77 per gallon versus $1.66 averaged last week and these were the highest prices since last October. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519d.jpg" width="353">
Higher crude oil prices are behind the rise in gasoline costs. Crude prices averaged $58.07 last week for a barrel of West Texas Intermediate, up from the December low of $32.37 per barrel. Yesterday, crude oil prices rose by another $1.00 to $59.03. Prices reached a high of $145.66 last July. The latest increases occurred despite a 3.0% rise in crude oil production during the latest four weeks versus last year. The figures on crude oil production are available in Haver&#39;s OILWKLY database.
Higher gasoline prices &amp; economic weakness continued to lower gasoline demand last week by 2.5% y/y. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 7.9% y/y led by a 41.4% drop in demand for residual fuel oil and a 16.9% drop in distillate demand. In addition, the price gains have occurred despite an 11.0% rise in inventories of crude oil &amp; petroleum products. These numbers are available in Haver&#39;s OILWKLY database.
Finally, the price of natural gas has shown life. Gains during the last two weeks raised the price to $4.23 per mmbtu (-62.7% y/y), the highest level since early March. However, still near the lowest level since 2002, the latest average price was down by two-thirds from the high reached in early-July of $13.19/mmbtu.
The Effect of the Fed&#39;s Purchase of Long-Term Securities on the Yield Curve from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/es/09/ES0925.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">05/18/09</th>
<th scope="col">05/11/09</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>2.31</td>
<td>2.24</td>
<td>-39.1%</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>58.07</td>
<td>51.07</td>
<td>-54.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Regular gasoline prices moved even higher last week. The rise to an average $2.31 per gallon of regular left them up 70 cents (43.5%) from the December low and it was the highest level since early-November. Yesterday, cash market [...]

Gasoline Prices Continue To Move Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519a.jpg" width="353">
Falling to the lowest level on record during April, total U.S. housing starts were off by more than one-half from one year ago. The Commerce Department reported that total housing starts of 458,000 (AR) were down 12.8% from March after that month&#39;s 8.5% decline. Modest revisions to the series extend back to 2007 and the latest figure compares to Consensus expectations for 523,000 starts.
The decline to the record low was led by a 46.1% month-to-month drop in starts of multi-family homes to 90,000. So weak was construction of apartments and condominiums that the decline pulled the level roughly three-quarters below April of last year.
As was the case last month, there is a sign in the latest report that a bottom in the housing market may be forming. Starts of single-family homes increased 2.8% from March after two months of having been unchanged. Regardless, single-family starts remained near the record low for the series which dates back to 1959 and the latest level was down eighty percent since the peak in early-2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519b.jpg" width="353">
By region, starts of single-family units in the Northeast reversed all of their March rise with a 13.6% (-34.5% y/y) decline. Starts in the Midwest, however, rose to their highest level since November (-36.6% y/y). In the South, single-family starts continued weak. They fell to another record low (-47.6% y/y) but in the West starts jumped 26.6% (-50.6% y/y).
The latest level of building permits also plumbed a new record low last month with a 3.3% decline from March. Overall, permits were down by one-half from last April. Single-family home permits, a leading indicator of starts, however, ticked up 3.6% from March (-42.3% y/y).
The housing starts figures can be found in Haver&#39;s USECON database.
U.S. Household Deleveraging and Future Consumption Growth from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-16.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</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>458</td>
<td>525</td>
<td>574</td>
<td>-54.2%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>368</td>
<td>358</td>
<td>357</td>
<td>-45.6</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>90</td>
<td>167</td>
<td>217</td>
<td>-72.3</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>494</td>
<td>511</td>
<td>550</td>
<td>-50.2</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>
</body>
</html>

Falling to the lowest level on record during April, total U.S. housing starts were off by more than one-half from one year ago. The Commerce Department reported that total housing starts of 458,000 (AR) were down 12.8% from March [...]

U.S. Housing Starts' Fall To Record Low Paced By Lower Multi-family Building

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519a.jpg" align="left" border="0" height="265" width="353">
Falling to the lowest level on record during April, total U.S.
housing starts were off by more than one-half from one year ago. The
Commerce Department reported that total housing starts of
458,000 (AR) were down 12.8% from March after that month's 8.5%
decline. Modest revisions to the series extend back to 2007 and the
latest figure compares to Consensus expectations for 523,000 starts.
The decline to the record low was led by a 46.1%
month-to-month drop in starts of multi-family homes to 90,000. So weak
was construction of apartments and condominiums that the decline pulled
the level roughly three-quarters below April of last year.
As was the case last month, there is a sign in the latest
report that a bottom in the housing market may be forming. Starts of
single-family homes increased 2.8% from March after two months of
having been unchanged. Regardless, single-family starts remained near
the record low for the series which dates back to 1959 and the latest
level was down eighty percent since the peak in early-2006.
During the last ten years, there has been an 84% correlation between
the q/q change in single-family starts and their contribution to
quarterly GDP growth.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519b.jpg" align="right" border="0" height="265" width="353">
By region, starts of single-family units in the Northeast
reversed all of their March rise with a 13.6% (-34.5% y/y) decline.
Starts in the Midwest, however, rose to their highest level since
November (-36.6% y/y). In the South, single-family starts continued
weak. They fell to another record low (-47.6% y/y) but in the West
starts jumped 26.6% (-50.6% y/y).
The latest level of building permits also plumbed a new record
low last month with a 3.3% decline from March. Overall, permits were
down by one-half from last April. Single-family home permits,
a leading indicator of starts, however, ticked up 3.6% from March
(-42.3% y/y).
The housing starts figures can be found in Haver's USECON
database.
U.S. Household Deleveraging and Future
Consumption Growth from the Federal Reserve Bank of San
Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-16.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">February</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>458</td>
<td>525</td>
<td>574</td>
<td>-54.2%</td>
<td>900</td>
<td>1,342</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>368</td>
<td>358</td>
<td>357</td>
<td>-45.6</td>
<td>616</td>
<td>1,036</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>90</td>
<td>167</td>
<td>217</td>
<td>-72.3</td>
<td>285</td>
<td>306</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>494</td>
<td>511</td>
<td>550</td>
<td>-50.2</td>
<td>895</td>
<td>1,392</td>
<td>1,844</td>
</tr>
</tbody>
</table>
Gasoline Prices Continue To Move
Higher 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 19, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519c.jpg" align="left" border="0" height="265" width="353">
Regular gasoline prices moved even higher
last week. The rise to an average $2.31 per gallon of regular left them
up 70 cents (43.5%) from the December low and it was the highest level
since early-November. Yesterday, cash market prices traded higher still
at $1.77 per gallon versus $1.66 averaged last week and these were the
highest prices since last October. The figures are reported by the U.S.
Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519d.jpg" align="right" border="0" height="265" width="353">
Higher crude oil prices are behind the rise
in gasoline costs. Crude prices averaged $58.07 last week for a barrel
of West Texas Intermediate, up from the December low of $32.37 per
barrel. Yesterday, crude oil prices rose by another $1.00 to $59.03.
Prices reached a high of $145.66 last July. The latest increases
occurred despite a 3.0% rise in crude oil production during the latest
four weeks versus last year. The figures on crude oil production are
available in Haver's OILWKLY database.
Higher gasoline prices &amp; economic weakness continued
to lower gasoline demand last week by 2.5% y/y. The
change in demand is measured using the latest four weeks versus the
same four weeks in 2008. Demand for all petroleum
products was down 7.9% y/y led by a 41.4% drop in demand for residual
fuel oil and a 16.9% drop in distillate demand. In addition, the price
gains have occurred despite an 11.0% rise in inventories of crude oil
&amp; petroleum products. These numbers are available in Haver's OILWKLY
database.
Finally, the price of natural gas has shown life. Gains during
the last two weeks raised the price to $4.23 per mmbtu (-62.7% y/y),
the highest level since early March. However, still near the lowest
level since 2002, the latest average price was down by two-thirds from
the high reached in early-July of $13.19/mmbtu.
The Effect of the Fed's Purchase of Long-Term
Securities on the Yield Curve from the Federal Reserve Bank
of St. Louis can be found <a href="http://research.stlouisfed.org/publications/es/09/ES0925.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">05/18/09</th>
<th scope="col">05/11/09</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>2.31</td>
<td>2.24</td>
<td>-39.1%</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>58.07</td>
<td>51.07</td>
<td>-54.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Reverse
Earlier Gains 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 19, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519e.jpg" align="left" border="0" height="265" width="353">
According to the International Council of Shopping
Centers-Goldman Sachs Index, store sales stuttered last week and
reversed all of the gains early in the month. In fact weekly sales fell
to their lowest since late-March. For the month so far, chain store
sales are down just slightly from April after that month's 1.4% rise
from the March average.
During the last ten years there has been a 64% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. These 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.


Not only did sales decline, but the leading indicator of sales
fell as well and reversed earlier increases. Nevertheless, the y/y
change remained less depressed at -2.4% versus the 6.0% rate of decline
last Fall.
Comparing patterns of default among prime and
subprime mortgages from the Federal Reserve Bank of Chicago
is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2009_part2_amromin_paulson.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">05/16/09</th>
<th scope="col">05/09/09</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>486.8</td>
<td>492.7</td>
<td>-0.3%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
German Investors And FinancialAnalysts More Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> May 19, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519f.jpg" align="right" border="0" height="265" width="353">While
continuing to be pessimistic about current conditions, German investors
and financial analysts have become surprisingly more optimistic about
the economic outlook over the next six months.&nbsp;&nbsp; The
ZEW indicator of current economic conditions in May declined a further
1.2% and is now at a balance between pessimists and optimists of
-92.8%, close to the lowest on record, -96.1% in March 2003. The
indicator of sentiment for the economic outlook for the next six
months, however, rose sharply in May to 31.1% from 13.6% in April and
is now at a three year high and is above the long term average of
26.2%.&nbsp;<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519g.jpg" two indicators are shown in the first chart align="right" border="0" height="265" width="353">
Among the factors that may have accounted for some of the
improvement
in the outlook of the participants in the survey, which was conducted
between May 4th and May 18 was the ongoing rise in stock prices that
had begun in early March.&nbsp; By May 18, the Frankfurt Extra Dax
stock price index was up over 30% from the low on March 6. In addition,
there were the releases of March exports and new orders showing the
first month to month increases since early 2008, as shown in the second
chart.&nbsp; The year to year declines in these series of 21.7% and
33.1%, respectively, probably were important factors in the appraisal
of current conditions.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090519h.jpg" align="right" border="0" height="265" width="353">While the
participants in the survey, still
expect profits in most industries to decline, they have moderated their
views on the declines and they expect profits in Banking and Insurance
to increase.&nbsp; The third chart shows the profit expectations
for the Banking, Automotive and Information Technology
industries.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"> ZEW
Indicators % Bal</th>
<th scope="col">May 09</th>
<th scope="col">Apr &nbsp; 09</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb09&nbsp;</th>
<th scope="col">Jan 09</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Current Macroeconomic Conditions</td>
<td>-92.8</td>
<td>-91.6</td>
<td>-89.1</td>
<td>-86.2</td>
<td>-77.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Macroeconomic
Expectations&nbsp; 6 M0 ahead&nbsp;</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Mar 09</td>
<td>Feb 09&nbsp;</td>
<td>Jan 09</td>
<td>M/M%</td>
<td>Y/Y%</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (Bil Euros)</td>
<td>66.42</td>
<td>65.97</td>
<td>84.15</td>
<td>0.68</td>
<td>-21.70</td>
</tr>
<tr class="even">
<td class="firstcol">New Orders (2005=100)</td>
<td>80.5</td>
<td>72.9</td>
<td>120.3</td>
<td>3.34</td>
<td>-33.08</td>
</tr>
</tbody>
</table>


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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518d.jpg" align="right" border="0">While
faint signs of recovery have begun to appear in various
parts of the world, few have appeared in Eastern Europe and this
remains the case with today's reports from Eastern Europe that include
industrial production in Russia and the Ukraine, the labor force in
Slovenia and construction in Hungary.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518e.jpg" align="right" border="0">
Russia reported that industrial production in April declined
16.8% from April, 2008, greater than the 13.7% year to year decline of
March. This was the sixth consecutive decline and the largest recorded
since the Federal Statistical Service revised its methodology in 2003.
Production in manufacturing has shown similar trends but the declines
have been significantly bigger. In April, manufacturing production was
25.3% below April 2008.
The decline in production in Ukraine has been steeper than
that in Russia and in April was 33.5% below April of 2008, compared
with a shortfall of 30.8% in March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518f.jpg" align="right" border="0">
The first chart shows industrial
production in Russia and Ukraine.
The monthly decline in employment in Slovenia is slowing up.
It was 4,635 in March, compared with 5,056 in February and 9,187 in
January, but the unemployment rate continues to climb and was 8.4% in
March. Slovenia's level of employment and the unemployment rate are
shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">EASTERN
EUROPE</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar &nbsp; 09</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
<th scope="col">Y/Y Chg</th>
<th scope="col">Y/Y&nbsp; Chg&nbsp;</th>
<th scope="col">Y/Y&nbsp; Chg</th>
<th scope="col"> Y/Y&nbsp; Chg </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Apr 09</td>
<td>Mar &nbsp; 09</td>
<td>Feb 09</td>
<td>Jan 09&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Russia&nbsp; IP 2005=100</td>
<td>100.1</td>
<td>102.4</td>
<td>102.5</td>
<td>97.4</td>
<td>-16.8%</td>
<td>-13.7%</td>
<td>-13.2%</td>
<td>-16.0%</td>
</tr>
<tr class="even">
<td class="firstcol">Ukraine IP2005=100</td>
<td>80.4</td>
<td>84.5</td>
<td>78.0</td>
<td>73.9</td>
<td>-33.5%</td>
<td>-30.8%</td>
<td>-31.4%</td>
<td>-31.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Hungary Construction
Exp&nbsp; Bil of Forints</td>
<td>--</td>
<td>179.7</td>
<td>164.1</td>
<td>142.1</td>
<td>--</td>
<td>8.6%</td>
<td>-1.2%</td>
<td>-9.4%</td>
</tr>
<tr class="even">
<td class="firstcol">Slovenia Unemp Rate (%)</td>
<td>--</td>
<td>8.4</td>
<td>8.0</td>
<td>7.5</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia Employ Persons</td>
<td>--</td>
<td>865,459</td>
<td>870,094</td>
<td>875,150</td>
<td>--</td>
<td>-4635*</td>
<td>-5056*</td>
<td>-9187*</td>
</tr>
<tr>
<td colspan="9" class="firstcol">* month to
month change</td>
</tr>
</tbody>
</table>
</body></html>

While faint signs of recovery have begun to appear in various parts of the world, few have appeared in Eastern Europe and this remains the case with today's reports from Eastern Europe that include industrial production in Russia and [...]

News From Eastern Europe Still Mainly Negative

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518c.jpg" align="left" border="0">
Japan&#8217;s consumer confidence index is up for the fourth month
running. It is now a monthly reading - that accounts for the history of
dots on the chart which represent unconnected quarterly observations
ahead of the adoption of monthly surveys. The current reading for the
index is in the bottom third to quarter of its historic range, a low
position, but well off from its worst in this cycle. Notably, over the
last three months there have been sharp improvements in the overall
livelihood assessment. Income growth, Employment, Willingness to buy
durables, and Value of assets responses, all have risen over that
period. Of these, income growth is still the lowest in its range
standing in the bottom 11th- to 15th percentile depending on the period
for that calculation. Employment and value of assets responses lie just
below the boundary for the lower range quartile. Willingness to buy
durable goods is, however, much stronger in its range and is closer to
the midpoint at the 45th range percentile. 
 

Clearly there has been improvement in the Japanese consumer&#8217;s
assessment of the economy. Just as clearly the current readings on the
consumer&#8217;s feeling about the economy are poor. For now after such a
lengthy period of deterioration what is notable is the ongoing
improvement in these measures and quite a notable step of improvement
across the various responses. However bad off things are in Japan, they
are perceived to be getting better. Importantly these assessments are
not so beleaguered for spending any more. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Japan
Consumer Confidence
</th>
<th scope="col">Percentile</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3"> monthly</td>
<td colspan="3"> Change over</td>
<td colspan="2">of range*</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-mos</td>
<td>6-mos</td>
<td>12-Mos</td>
<td>Since 2004</td>
<td>Since 1988</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall Livelihood</td>
<td>33.8</td>
<td>31.1</td>
<td>29.4</td>
<td>4.6</td>
<td>4.2</td>
<td>0.8</td>
<td>28.6</td>
<td>26.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Income growth</td>
<td>33.4</td>
<td>32.0</td>
<td>31.1</td>
<td>2.0</td>
<td>-1.1</td>
<td>-4.1</td>
<td>15.1</td>
<td>11.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>23.3</td>
<td>18.3</td>
<td>14.9</td>
<td>9.1</td>
<td>-1.5</td>
<td>-12.7</td>
<td>22.2</td>
<td>22.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Willing to buy Durable Goods</td>
<td>39.0</td>
<td>34.2</td>
<td>31.4</td>
<td>8.4</td>
<td>10.2</td>
<td>4.8</td>
<td>45.9</td>
<td>45.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Value of Assets</td>
<td>32.2</td>
<td>28.8</td>
<td>28.7</td>
<td>4.1</td>
<td>3.2</td>
<td>-4.1</td>
<td>22.4</td>
<td>22.4</td>
</tr>
<tr>
<td colspan="9" class="firstcol">For
two-person households; *
Percentiles since Mar 2004 when series became monthly or full period</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s consumer confidence index is up for the fourth month running. It is now a monthly reading - that accounts for the history of dots on the chart which represent unconnected quarterly observations ahead of the adoption of monthly [...]

Japan's Consumer Confidence Is Up For The Fourth Month In A Row

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518a.jpg" align="left" border="0">
The pressure is diminishing in the U.S. housing market according to
the National Association of Home Builders. Their May index of sales
rose to 16, its highest level since last September and up from an
upwardly revised April level. The index is compiled from survey
questions asking builders to rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;,
&#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very low&#8221;. Numerical results over 50 indicate a predominance of &#8220;good&#8221; readings. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090518b.jpg" align="right" border="0">
The Home Builders Association indicated that its sub-index of
present sales rose to a reading of 14 from the upwardly revised April
figure. The latest improvement lifted the index to just below last
year's average level of 16.Since 1990, the year-to-year change in this
index has had an 80% correlation with the year-to-year percentage
change in new single-family home sales.
The index of builders&#8217; expectations for home sales in six months also rose to its highest since September. However, the &#8220;traffic" of prospective buyers was unchanged from April but still up from the record lows of this past Winter.
Index readings in each of the country's regions have improved from the recent lows.
Individuals' assessment of conditions for remodeling also have
improved. The conditions for major and minor alterations rose in the
first quarter to the highest level in nearly one year and expectations
rose as well.
During the fourth quarter the Home Builders' Housing Opportunity
Index, which is the share of homes sold that could be considered
affordable to a family earning the median income, rose even higher to
its highest level since early 2002. It was up by nearly one half from
the 2006 low due to lower home prices, lower interest rates and higher
income. (There is a break in the series from 2002 to 2003.)
The NAHB has compiled the Housing Market Index since 1985. The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s SURVEYS database.
The Role of Information in the Rise in Consumer Bankruptcies from the Federal Reserve Bank of Richmond is available <a href="http://http://www.richmondfed.org/publications/research/working_papers/2009/pdf/wp09-4.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/SURVEYS/@S4/@S4.HTM">Nat'l Association of Home Builders</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">&nbsp;May '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index (All Good = 100)</td>
<td>16</td>
<td>14</td>
<td>19</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>14</td>
<td>12</td>
<td>17</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales: Next Six Months</td>
<td>27</td>
<td>24</td>
<td>28</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of Prospective Buyers</td>
<td>13</td>
<td>13</td>
<td>18</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

The pressure is diminishing in the U.S. housing market according to the National Association of Home Builders. Their May index of sales rose to 16, its highest level since last September and up from an upwardly revised April level. [...]

U.S. Home Builders' Index Increases Again

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.

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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

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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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