Tom Moeller

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Expanding on last week&#39;s piece by Louise Curley on the Haver Analytics website, past deflation of pricing power has eased and may be tuning positive. By extension, U.S. economic improvement may be in the offing. What is unknown, of course, is when the improvement sets in and how strong it will be. To begin with, economic liquidity is on the rise. The yield spread between the 10-year Treasury note and the Federal funds rate has steepened dramatically since its inverted stance at the beginning of last year. That steepening occurred as Treasury yields first dropped sharply when the recession intensified late last year, then rose as the economic news was digested. The Fed&#39;s response to the recession was, of course, to first lower the Fed funds rate to near zero and then leave it there, pumping in economic liquidity all the while.
Liquidity indeed has increased due to the Fed&#39;s actions. Though it decelerated recently, growth the money stock (M2) over the last six months has roughly tripled to 15% while the level of bank reserves has more than doubled. These increases have yet, however, to translate into any surge in economic activity. Indeed, the lags between liquidity provision and overall economic activity have been up to six months in the past, and they likely will be longer this time around. The &quot;front-end&quot; economic response to Fed easing comes from the consumer &amp; housing sectors. Historically, retail spending recovered quickly at a rate of 5% or more to end recessions. This time, while spending has stabilized, a robust recovery is in question. A rebuilding of consumers&#39; balance sheets, i.e. a rise in the savings rate, has started but may take some time to play out. Moreover, any delay in a spending recovery may be lengthened by consumer demographics. They soon will dampen the spending impetus with the aging of the baby-boom population. That all will dampen any improvement in housing activity, which has yet to materially begin.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511e.jpg">
The rise in liquidity has yet to devalue the U.S. dollar. A lower dollar would improve the outlook for exports with lower prices and dampen imports with higher prices. The delay probably is the result of the developing economic weakness abroad. In fact, the dollar&#39;s trade-weighted value rose by 20% as of early this year and is down just moderately since its peak this March. The dollar really is not working much as a stabilizing factor of the U.S. foreign trade imbalance.
Commodity prices have strengthened significantly with more liquidity. Lower oil prices last year pulled down the measures of industrial commodity prices, but this year the measures have risen. That not only reflects the moderate recovery in oil which has raised the FIBER commodity price measure by more than one-quarter, but metals prices have risen as well. Copper scrap prices have nearly doubled from their January low while aluminum prices have risen 15% during the last two months. Steel scrap prices have moved sideways since January, but the level is up by nearly one half from the December low. Lead and zinc prices have significantly strengthened as well. In addition to higher metals prices are several indications that activity outside of the industrial sector is recovering. Prices for cotton are now one-third higher than this past March. Even the housing-related prices of framing lumber and wallboard bottomed and have risen modestly.
When these signals will translate into an end to the U.S. recession is, of course, the overriding question. The Blue Chip economic forecast indicates that recovery will begin in the second half of this year. But while economic growth typically has surged following past recessions, the Consensus forecast is for just 2.1% growth next year followed by moderate 2.5% to 3.0% growth in the years following. As for prices, the recovery in economic activity, combined with the liquidity highlighted above, is expected to halt any decline in prices. Indeed, consumer price inflation is expected to stabilize next year then rise to a 2.5% rate in 2011 and thereafter.
The figures referenced above are available in Haver&#39;s USWEEKLY database. The Blue Chip Economic forecast data is in USECON.
Lessons of the Financial Crisis for Banking Supervision is last week&#39;s speech by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090507a.htm">here.</a>

German Industrial Output Halts Its Strong Of Declines      
by <a href="/comment/Brusca.html">Robert Brusca</a> May 11, 2009


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511f.jpg" width="353">
On a seasonally adjusted basis, industrial production in France declined 1.4% from February to March; and, in Italy, 4.6.%. For the quarter industrial production in France was down 6.8% compared with 6.9% in the fourth quarter. The comparable figures for Italy were 8.4% and 9.8%. To the extent that industrial production is a predictor of gross domestic product, these figures suggest that the first quarter decline in GDP in France will be about the same as in the fourth quarter of last year, that is, 1.12% (or 4.4% at an annual rate), while that in Italy is likely to be somewhat greater than the 1.49% (or 7.5% at an annual rate) in the fourth quarter of last year. The first chart shows quarterly data for industrial production and GDP for France and the second, the similar data for Italy.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511g.jpg" width="353">
These production data indicate the depth and severity of the recession in these countries in the first quarter, but should not detract from the implications of more recent data such as the purchasing managers surveys and business confidence measures that suggest that the these economies are, at worst reaching a bottom or at best, showing faint signs of improvement.
One can even see some light in the monthly unadjusted production data. The year over year decline in industrial product in France was 12.6% in March, down from 18.6% in February. The comparable figures for Italy were 18.2% and 24.1%

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
<th scope="col">Mar 09</th>
<th scope="col">Feb &nbsp; 09</th>
<th scope="col">Jan 09</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol"> Italy</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Index</td>
<td>Index</td>
<td>Index</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production SA</td>
<td>80.8</td>
<td>84.7</td>
<td>88.8</td>
<td>-4.60</td>
<td>-4.62</td>
<td>1.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production NSA</td>
<td>81.6</td>
<td>85.4</td>
<td>90.6</td>
<td>-18.23</td>
<td>-24.09</td>
<td>-22.80</td>
</tr>
<tr class="even">
<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td> M/M % </td>
<td>M/M %</td>
<td>M/M %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production SA</td>
<td>84.6</td>
<td>85.5</td>
<td>86.2</td>
<td>-1.37</td>
<td>-0.91</td>
<td>-3.92</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2005=100)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Industrial Production NSA</td>
<td>93.0</td>
<td>85.5</td>
<td>89.0</td>
<td>-12.59</td>
<td>-18.57</td>
<td>-16.04</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090511e.jpg" width="353">
Taken in a rather broad perspective the downturn according to the OECD&#146;s LEIs which are cyclically adjusted is quite severe; the worst since 1970, at least. But the US and several counties in OECD Europe are showing signs of doing less badly which means, potentially, showing signs of turning the corner on recession. 
Readings for France and Italy are up for three months running through March. China and UK indices are up for two months in a row. The OECD has characterized these economies and well as the OECD regions as being in a &#145;strong slowdown&#146;. It now says that in France, Italy and the UK troughs may have been reached. 
Among developing countries China shows the clearest sign of troughing while Brazil and India continue to emit signals that say that they are still declining. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
OECD Trend-restored leading Indicators
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5"> Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> 3Mos</td>
<td> 6Mos</td>
<td> 12mos</td>
<td> Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-5.7%</td>
<td> -10.4%</td>
<td> -9.5%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>-8.8%</td>
<td> -13.0%</td>
<td> -10.9%</td>
<td> -1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-11.5%</td>
<td> -15.6%</td>
<td> -12.1%</td>
<td> -1.0%</td>
</tr>
<tr class="grey4">
<td colspan="5">Six month readings at 6-Mo Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td> Recent six</td>
<td> 6Mo Ago</td>
<td> 12Mo Ago</td>
<td> 18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td> -10.4%</td>
<td> -8.5%</td>
<td> -1.2%</td>
<td> -0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td> -13.0%</td>
<td> -8.7%</td>
<td> -1.9%</td>
<td> -0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD JAPAN</td>
<td> -15.6%</td>
<td> -8.4%</td>
<td> -2.6%</td>
<td> 0.7%</td>
</tr>
<tr class="grey1">
<td colspan="5">Slowdowns indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body>
</html>

Expanding on last week's piece Louise Curley Curley on the Haver Analytics website, past deflation of pricing power has eased and may be tuning positive. By extension, U.S. economic improvement may be in the offing. What is unknown, of [...]

Liquidity, Exchange Rates & Commodity Prices Point Toward U.S. Economic Improvement

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508d.jpg" align="left" border="0">
German industrial production halted its string of six
consecutive declines with a flat result in March. Over three months the
negative growth rate for IP has flattened but at a still horrific -33%
(saar). Ironically, the capital goods sector shows the worst results
and fasted decline in its three month rate of growth compared to other
sectors. Yet the capital goods sector is the only sector with an output
increase in March &#8211; and a strong one at that. 
 

Construction is in its second month of increasing output.
However, manufacturing output fell in March, but it did trim that drop
to -0.2% from -3.5% previously. And of course the flat IP result fits
in nicely with the surge in German orders in March. The process of
blunting the forces of the downturn and establishing an environment of
growth is now fully engaged in Germany, Europe&#8217;s largest economy.
Coupled with the fresh ECB rate cut and the ECB&#8217;s decision on to engage
in covered bond purchases, Europe has some new reason for hope. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Total German IP
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Saar exept m/m</td>
<td>Mar-09</td>
<td> Feb-09</td>
<td> Jan-09</td>
<td> 3-mo</td>
<td> 6-mo</td>
<td> 12-mo</td>
<td> Quarter-to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.0%</td>
<td>-3.4%</td>
<td>-6.3%</td>
<td>-32.7%</td>
<td>-33.1%</td>
<td>-20.3%</td>
<td>-40.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-0.6%</td>
<td>-22.7%</td>
<td>-14.6%</td>
<td>-9.8%</td>
<td>-13.9%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>2.5%</td>
<td>-5.2%</td>
<td>-13.5%</td>
<td>-50.1%</td>
<td>-41.5%</td>
<td>-24.7%</td>
<td>-55.8%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>-2.4%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td>-27.0%</td>
<td>-40.4%</td>
<td>-26.2%</td>
<td>-43.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>7.6%</td>
<td>1.9%</td>
<td>-7.5%</td>
<td>5.5%</td>
<td>14.6%</td>
<td>4.9%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>-7.7%</td>
<td>-37.8%</td>
<td>-37.1%</td>
<td>-22.9%</td>
<td>-45.7%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-43.3%</td>
<td>-33.1%</td>
<td>-46.5%</td>
</tr>
</tbody>
</table>
</body></html>

German industrial production halted its string of six consecutive declines with a flat result in March. Over three months the negative growth rate for IP has flattened but at a still horrific -33% (saar). Ironically, the capital goods [...]

German Industrial Output Halts Its Strong Of Declines

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508a.jpg" align="right" border="0">
Some easing
of the weakness in the U.S. labor market may be evident in the April
figures from the Bureau of Labor Statistics, but the labor market
remains soft. Nonfarm payrolls fell 539,000 last
month. It was the smallest monthly decline since October and it
compares with Consensus expectations for a 610,000 decline. Declines in
employment during the prior two months, however, were revised deeper.
During this recession so far, employment has fallen a total of 5.7
million, the record for a 16-month period. Even after accounting for
the labor force's larger size, that's a huge number. In percentage
terms, jobs are down 4.2% since the 2007 peak.The unemployment
rate very much reflects the softness in the labor market.
The rise to an expected 8.9% brought it to the highest level since
September of 1983 and that compares to the recent low of 4.4% in
October of 2006. Last months' increase reflected a&nbsp; 683,000
jump (+0.5% y/y) in the labor force juxtaposed against a moderate
rebound in household employment of 120,000 (-3.6% y/y). These household
sector figures additionally show that long-term unemployment rose
further. The average duration of unemployment rose during April to a
new record 21.4 weeks, up from 16.9 weeks during 2007. The number of
those unemployed for longer than 15 weeks more than doubled during the
last year and they accounted for nearly half of all those who are
unemployed.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508b.jpg" align="right" border="0">A glimmer of hope for the job market may be
evident. The payroll survey showed that 28.2% of industries were hiring
last month, the highest percentage since last October. The breadth of
job loss, nonetheless, remains large. In the construction industry
110,000 jobs were lost last month, bringing the total to 1.4 million
since early 2007.&nbsp; Factory jobs were down another 149,000
April, adding to the 10-year downtrend during which over 5 million jobs
have been shed, nearly one-third of the total,. In the private service
sector, the picture remained bleak as it shed 341,000 jobs last month
and nearly 3.0 million (3.0%) since the peak in late 2007. The
government sector picked up some of the job market slack last month as
more workers were hired to take the 2010 Census. Government sector
payrolls rose 72,000 (0.7% y/y) after having been flat since the middle
of last year.The length of the average workweek remained stable at a
much-reduced level of 33.2 hours. That compares with a fairly stable
level near 34 hours through late-2007 but it's been trending lower from
the high over 38 hours in the mid-1960s.The weak labor
market has taken a further toll on average hourly earnings in private
industries. The 0.1% m/m gain last month was the weakest in five years
and it pulled the three- month annualized growth rate to 1.7%, also the
lowest since early-2004. The private service sector has felt the brunt
of that weakness. The annual growth in earnings fell to just 3.2% last
month, down from a five percent growth rate in early 2006.
Surprisingly, annual growth in earnings in the factory sector has held
up at 2.8% and construction sector earnings rose a stable
4.5%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508c.jpg" align="right" border="0">The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.Trends in
consumer sentiment and spending from the Federal Reserve Bank
of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf">here.</a>
Public and Private Sector Compensation: What is Affordable
in This Recession and Beyond? - A Conference Summary, also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262a.pdf">here.</a>
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</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">Payroll Employment</td>
<td>-539</td>
<td>-699</td>
<td>-681</td>
<td>-3.8%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-663</td>
<td>-651</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-149</td>
<td>-167</td>
<td>-172</td>
<td>-10.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-110</td>
<td>-135</td>
<td>-113</td>
<td>-13.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-269</td>
<td>-381</td>
<td>-386</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.2</td>
<td>33.3</td>
<td>33.8 (April '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.9%</td>
<td>8.5%</td>
<td>8.1%</td>
<td>5.0% (April '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

Some easing of the weakness in the U.S. labor market may be evident in the April figures from the Bureau of Labor Statistics, but the labor market remains soft. Nonfarm payrolls fell 539,000 last month. It was the smallest monthly [...]

Bad News: U.S. Jobless Rate Jumps to 8.9% Good News: Speed of Job Losses Ease

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508a.jpg" align="right" border="0">
Some easing
of the weakness in the U.S. labor market may be evident in the April
figures from the Bureau of Labor Statistics, but the labor market
remains soft. Nonfarm payrolls fell 539,000 last
month. It was the smallest monthly decline since October and it
compares with Consensus expectations for a 610,000 decline. Declines in
employment during the prior two months, however, were revised deeper.
During this recession so far, employment has fallen a total of 5.7
million, the record for a 16-month period. Even after accounting for
the labor force's larger size, that's a huge number. In percentage
terms, jobs are down 4.2% since the 2007 peak.
The unemployment
rate very much reflects the softness in the labor market.
The rise to an expected 8.9% brought it to the highest level since
September of 1983 and that compares to the recent low of 4.4% in
October of 2006. Last months' increase reflected a&nbsp; 683,000
jump (+0.5% y/y) in the labor force juxtaposed against a moderate
rebound in household employment of 120,000 (-3.6% y/y). These household
sector figures additionally show that long-term unemployment rose
further. The average duration of unemployment rose during April to a
new record 21.4 weeks, up from 16.9 weeks during 2007. The number of
those unemployed for longer than 15 weeks more than doubled during the
last year and they accounted for nearly half of all those who are
unemployed.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508b.jpg" align="right" border="0">A glimmer of hope for the job market may be
evident. The payroll survey showed that 28.2% of industries were hiring
last month, the highest percentage since last October. The breadth of
job loss, nonetheless, remains large. In the construction industry
110,000 jobs were lost last month, bringing the total to 1.4 million
since early 2007.&nbsp; Factory jobs were down another 149,000
April, adding to the 10-year downtrend during which over 5 million jobs
have been shed, nearly one-third of the total,. In the private service
sector, the picture remained bleak as it shed 341,000 jobs last month
and nearly 3.0 million (3.0%) since the peak in late 2007. The
government sector picked up some of the job market slack last month as
more workers were hired to take the 2010 Census. Government sector
payrolls rose 72,000 (0.7% y/y) after having been flat since the middle
of last year.
The length of the average workweek remained stable at a
much-reduced level of 33.2 hours. That compares with a fairly stable
level near 34 hours through late-2007 but it's been trending lower from
the high over 38 hours in the mid-1960s.
The weak labor
market has taken a further toll on average hourly earnings in private
industries. The 0.1% m/m gain last month was the weakest in five years
and it pulled the three- month annualized growth rate to 1.7%, also the
lowest since early-2004. The private service sector has felt the brunt
of that weakness. The annual growth in earnings fell to just 3.2% last
month, down from a five percent growth rate in early 2006.
Surprisingly, annual growth in earnings in the factory sector has held
up at 2.8% and construction sector earnings rose a stable
4.5%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508c.jpg" align="right" border="0">The figures referenced above are available in
Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Trends in
consumer sentiment and spending from the Federal Reserve Bank
of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf">here.</a>

Public and Private Sector Compensation: What is
Affordable
in This Recession and Beyond? - A Conference Summary, also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflmay2009_262a.pdf">here.</a>
&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</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">Payroll Employment</td>
<td>-539</td>
<td>-699</td>
<td>-681</td>
<td>-3.8%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-663</td>
<td>-651</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-149</td>
<td>-167</td>
<td>-172</td>
<td>-10.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-110</td>
<td>-135</td>
<td>-113</td>
<td>-13.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-269</td>
<td>-381</td>
<td>-386</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.2</td>
<td>33.3</td>
<td>33.8 (April '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.9%</td>
<td>8.5%</td>
<td>8.1%</td>
<td>5.0% (April '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>

German Industrial Output Halts Its
Strong Of Declines &nbsp;&nbsp;&nbsp;&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> May 8, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090508d.jpg" align="left" border="0">
German industrial production halted its string of six
consecutive declines with a flat result in March. Over three months the
negative growth rate for IP has flattened but at a still horrific -33%
(saar). Ironically, the capital goods sector shows the worst results
and fasted decline in its three month rate of growth compared to other
sectors. Yet the capital goods sector is the only sector with an output
increase in March &#8211; and a strong one at that. 
 

Construction is in its second month of increasing output.
However, manufacturing output fell in March, but it did trim that drop
to -0.2% from -3.5% previously. And of course the flat IP result fits
in nicely with the surge in German orders in March. The process of
blunting the forces of the downturn and establishing an environment of
growth is now fully engaged in Germany, Europe&#8217;s largest economy.
Coupled with the fresh ECB rate cut and the ECB&#8217;s decision on to engage
in covered bond purchases, Europe has some new reason for hope. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Total
German IP
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Saar exept m/m</td>
<td>Mar-09</td>
<td> Feb-09</td>
<td> Jan-09</td>
<td> 3-mo</td>
<td> 6-mo</td>
<td> 12-mo</td>
<td> Quarter-to-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.0%</td>
<td>-3.4%</td>
<td>-6.3%</td>
<td>-32.7%</td>
<td>-33.1%</td>
<td>-20.3%</td>
<td>-40.1%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>-2.0%</td>
<td>-3.7%</td>
<td>-0.6%</td>
<td>-22.7%</td>
<td>-14.6%</td>
<td>-9.8%</td>
<td>-13.9%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>2.5%</td>
<td>-5.2%</td>
<td>-13.5%</td>
<td>-50.1%</td>
<td>-41.5%</td>
<td>-24.7%</td>
<td>-55.8%</td>
</tr>
<tr>
<td class="firstcol">Intermed</td>
<td>-2.4%</td>
<td>-1.3%</td>
<td>-4.0%</td>
<td>-27.0%</td>
<td>-40.4%</td>
<td>-26.2%</td>
<td>-43.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="8">Memo</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>7.6%</td>
<td>1.9%</td>
<td>-7.5%</td>
<td>5.5%</td>
<td>14.6%</td>
<td>4.9%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">MFG IP</td>
<td>-0.2%</td>
<td>-3.5%</td>
<td>-7.7%</td>
<td>-37.8%</td>
<td>-37.1%</td>
<td>-22.9%</td>
<td>-45.7%</td>
</tr>
<tr>
<td class="firstcol">MFG Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-43.3%</td>
<td>-33.1%</td>
<td>-46.5%</td>
</tr>
</tbody>
</table>
</body></html>

Bad News: U.S. Jobless Rate Jumpsto 8.9% Good News: Speed of Job Losses Ease

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507e.jpg" align="left" border="0">
Foreign orders that had been falling a bit faster than those
from domestic sources were up by a sharp 5.6% m/m in May compared to a
rise of 1.1% for orders from domestic sources. German factory orders
from outside the 16-nation euro region rose 5.1 percent in March from
February indicating that much of the orders strength was not just
foreign but outside the zone as well. Export orders for investment
goods rose 9.1 percent, driven by demand from within and outside the
euro area. 
 

Data trends however have swallowed up the good news. Three
month growth rates of orders and sales are still declining faster than
they did over six-months. Order growth is still accelerating in the
downward direction. In the quarter the drop in sales and in orders
remains horrific. 
 

Even so the rise in orders is an encouraging sign. Even if the
sharp rise this month has been crushed by the trends of past weakness,
it is step in the right direction. This is how the trip toward
stability starts. Germany is getting its break in terms of improved
demand from external sources. Germany&#8217;s domestic initiatives- as well
as initiatives from the e-Zone itself- are not yet bearing much fruit.
At least the ECB took some further steps today in monetary policy to
cut rates and to shoulder added policy moves. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-12.8%</td>
<td>-33.1%</td>
<td>3.2%</td>
<td>-46.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>5.6%</td>
<td>-0.9%</td>
<td>-10.9%</td>
<td>-24.5%</td>
<td>-13.1%</td>
<td>-36.0%</td>
<td>3.9%</td>
<td>-53.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>1.1%</td>
<td>-5.5%</td>
<td>-1.8%</td>
<td>-22.6%</td>
<td>-12.0%</td>
<td>-29.4%</td>
<td>2.2%</td>
<td>-36.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real Sector Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>1.5%</td>
<td>-4.7%</td>
<td>-6.6%</td>
<td>-33.7%</td>
<td>-18.6%</td>
<td>-21.9%</td>
<td>3.3%</td>
<td>-45.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer</td>
<td>-0.4%</td>
<td>-3.3%</td>
<td>-6.0%</td>
<td>-33.0%</td>
<td>-18.2%</td>
<td>-11.7%</td>
<td>-0.9%</td>
<td>-25.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Durables</td>
<td>-1.4%</td>
<td>-7.8%</td>
<td>-2.2%</td>
<td>-37.4%</td>
<td>-20.9%</td>
<td>-22.9%</td>
<td>0.1%</td>
<td>-40.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Non-Durable</td>
<td>-0.3%</td>
<td>-2.6%</td>
<td>-6.6%</td>
<td>-32.4%</td>
<td>-17.8%</td>
<td>-9.7%</td>
<td>-1.0%</td>
<td>-22.8%</td>
</tr>
<tr>
<td class="firstcol">Captial Gds</td>
<td>4.8%</td>
<td>-5.2%</td>
<td>-9.4%</td>
<td>-34.5%</td>
<td>-19.1%</td>
<td>-24.8%</td>
<td>6.0%</td>
<td>-53.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>-0.7%</td>
<td>-3.3%</td>
<td>-4.6%</td>
<td>-29.6%</td>
<td>-16.1%</td>
<td>-24.6%</td>
<td>4.0%</td>
<td>-44.0%</td>
</tr>
<tr>
<td class="firstcol">All MFG-Sales</td>
<td>1.5%</td>
<td>-4.8%</td>
<td>-6.6%</td>
<td>-33.5%</td>
<td>-18.5%</td>
<td>-22.1%</td>
<td>3.3%</td>
<td>-45.3%</td>
</tr>
</tbody>
</table>
</body></html>

Foreign orders that had been falling a bit faster than those from domestic sources were up by a sharp 5.6% m/m in May compared to a rise of 1.1% for orders from domestic sources. German factory orders from outside the 16-nation euro [...]

German Orders In Surprise Rebound

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507c.jpg" width="353">
Another sign that the U.S. job market is firming was provided by the decline in initial claims for unemployment insurance. They fell 34,000 last week to 601,000 which was their lowest level since late-January. Claims have fallen 11.0% from the March high. Still, despite the improvement, claims remain near the ten-year high. The four-week average of claims fell to 623,500, the lowest level since mid-February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507d.jpg" width="353">
As was the case last week, if the pace of worker layoffs has slowed rehiring of unemployed workers has not picked up. Continuing claims for unemployment insurance increased to a record high of 6,351,000 and they remain twice the year ago level. The series dates back to 1966. The four-week average of continuing claims also rose to another record of 6,207,250. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The Labor Department indicated that the largest increases in initial claims for the week ending April 25 were in Michigan (+9,998), Massachusetts (+4,277), Kentucky (+3,681), North Carolina (+2,549), and New York (+2,219), while the largest decreases were in California (-10,833), Georgia (-4,174), South Carolina (-3,676), Wisconsin (-3,341), and New Jersey (-2,810).
Despite the improvement in the job market, the insured rate of unemployment which follows the continuing claims figures rose yet again to 4.8%. That level was double last April and the highest level since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.Clearly, the latest weekly figure understates labor market distress in some states. The highest insured unemployment rates in the week ending April 18 were in Oregon (7.6 percent), Michigan (7.2), Wisconsin (6.6), Pennsylvania (6.5), Idaho (6.4), Nevada (6.4), Rhode Island (6.1), New Jersey (5.8), Vermont (5.8), and Alaska (5.7).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">05/01/09</th>
<th scope="col">04/25/09</th>
<th scope="col">04/18/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>601</td>
<td>635</td>
<td>645</td>
<td>61.6%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,351</td>
<td>6,295</td>
<td>110.9%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

Another sign that the U.S. job market is firming was provided by the decline in initial claims for unemployment insurance. They fell 34,000 last week to 601,000 which was their lowest level since late-January. Claims have fallen 11.0% [...]

U.S. Initial Claims for Unemployment Insurance Fall Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507a.jpg" width="353">
It was a recovery, but not much of one. Labor productivity in the nonfarm business sector rose an expected 0.8% (AR) last quarter and mostly recouped a revised 0.6% slip at the end of last year. The latest uptick, however, has done little to diminish the drastic weakening of labor productivity of late. The unchanged level over six months is the weakest performance since early-2007 which itself was the poorest in ten years.
Though productivity growth has slowed dramatically, it would have been worse were businesses not quick in responding to the output shortfall by cutting employment and hours-worked. Output fell at an 8.2% annual rate last quarter after falling 8.8% during 4Q &#39;08. These declines marked the quickest back-to-back since early 1958. However, businesses responded quickly by cutting employment and hours worked at a 9.0% rate last quarter and by 8.3% during 4Q. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507b.jpg" width="353">
The drop in productivity growth has hurt corporations&#39; bottom lines due in no small part to the fact that growth in compensation costs has remained fairly firm. It rose 4.1% last quarter and that lifted the y/y growth to 4.2%. Annually, growth in compensation has been roughly stable near the 4% level since 2001.
The combination of recently diminished productivity growth and stable gains in compensation has increased costs. Growth in unit labor costs remained a firm 3.3% during 1Q following the 5.7% jump during 4Q. The increases raised the six-month growth in costs to 4.5% from just 0.9% during all of last year.
In the factory sector the pressure on corporations&#39; bottom lines has been more intense. Worker productivity fell 3.4% during 1Q (-3.3% y/y), down for the fourth consecutive quarter. Year-to-year, the drop in productivity came as output fell faster (-14.0%) than hours worked (-11.1%). Unit labor cost growth in the factory sector surged again. The 16.7% quarterly rate of increase during 1Q lifted the annual gain to 11.5% which compares to just a 3.2% gain during all of last year. That decline in productivity growth has outpaced firms&#39; ability to cut compensation costs. In fact, there&#39;s been no cut at all. Compensation growth of 12.8% last quarter lifted the y/y gain to 7.9%, nearly double last year&#39;s 4.1% advance.
The productivity &amp; cost figures are available in Haver&#39;s USECON database.
Accounting for cross-country differences in income per capita from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q1/brq109_cross-country-differences.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR, %)</th>
<th scope="col">1Q &#39;09</th>
<th scope="col">4Q &#39;08</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">Output per Hour</td>
<td>0.8</td>
<td>-0.6</td>
<td>1.8</td>
<td>2.8</td>
<td>1.4</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>4.1</td>
<td>5.2</td>
<td>4.2</td>
<td>3.7</td>
<td>4.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3</td>
<td>5.7</td>
<td>2.4</td>
<td>0.9</td>
<td>2.7</td>
<td>2.8</td>
</tr>
</tbody>
</table>
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It was a recovery, but not much of one. Labor productivity in the nonfarm business sector rose an expected 0.8% (AR) last quarter and mostly recouped a revised 0.6% slip at the end of last year. The latest uptick, however, has done [...]

U.S. Worker Productivity Inches Up, But Underlying Cost Pressures Mount

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507a.jpg" align="left" border="0">
It was a recovery, but not much of one. Labor productivity in
the nonfarm business sector rose an expected 0.8% (AR) last quarter and
mostly recouped a revised 0.6% slip at the end of last year. The latest
uptick, however, has done little to diminish the drastic weakening of
labor productivity of late. The unchanged level over six months is the
weakest performance since early-2007 which itself was the poorest in
ten years.
Though productivity growth has slowed dramatically, it would
have been worse were businesses not quick in responding to the output
shortfall by cutting employment and hours-worked. Output fell at an
8.2% annual rate last quarter after falling 8.8% during 4Q '08. These
declines marked the quickest back-to-back since early 1958. However,
businesses responded quickly by cutting employment and hours worked at
a 9.0% rate last quarter and by 8.3% during 4Q. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507b.jpg" align="right" border="0">
The drop in productivity growth has hurt corporations' bottom
lines due in no small part to the fact that growth in compensation
costs has remained fairly firm. It rose 4.1% last quarter and that
lifted the y/y growth to 4.2%. Annually, growth in compensation has
been roughly stable near the 4% level since 2001.
The combination of recently diminished productivity growth and
stable gains in compensation has increased costs. Growth in unit labor
costs remained a firm 3.3% during 1Q following the 5.7% jump during 4Q.
The increases raised the six-month growth in costs to 4.5% from just
0.9% during all of last year.
In the factory sector the pressure on corporations' bottom
lines has been more intense. Worker productivity fell 3.4% during 1Q
(-3.3% y/y), down for the fourth consecutive quarter. Year-to-year, the
drop in productivity came as output fell faster (-14.0%) than hours
worked (-11.1%). Unit labor cost growth in the factory sector surged
again. The 16.7% quarterly rate of increase during 1Q lifted the annual
gain to 11.5% which compares to just a 3.2% gain during all of last
year. That decline in productivity growth has outpaced firms' ability
to cut compensation costs. In fact, there's been no cut at all.
Compensation growth of 12.8% last quarter lifted the y/y gain to 7.9%,
nearly double last year's 4.1% advance.
The productivity &amp; cost figures are available in
Haver's USECON database.
Accounting for cross-country differences in income
per capita from the Federal Reserve Bank of Philadelphia can
be found <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q1/brq109_cross-country-differences.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">1Q '09</th>
<th scope="col">4Q '08</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">Output per Hour</td>
<td>0.8</td>
<td>-0.6</td>
<td>1.8</td>
<td>2.8</td>
<td>1.4</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>4.1</td>
<td>5.2</td>
<td>4.2</td>
<td>3.7</td>
<td>4.1</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3</td>
<td>5.7</td>
<td>2.4</td>
<td>0.9</td>
<td>2.7</td>
<td>2.8</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for
Unemployment Insurance Fall Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> May 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507c.jpg" align="left" border="0">
Another sign that the U.S. job market is firming was provided
by the decline in initial claims for unemployment insurance. They fell
34,000 last week to 601,000 which was their lowest level since
late-January. Claims have fallen 11.0% from the March high. Still,
despite the improvement, claims remain near the ten-year high. The
four-week average of claims fell to 623,500, the lowest level since
mid-February.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507d.jpg" align="right" border="0">
As was the case last week, if the pace of worker layoffs has
slowed rehiring of unemployed workers has not picked up. Continuing
claims for unemployment insurance increased to a record high of 6,351,000
and they remain twice the year ago level. The series dates
back to 1966. The four-week average of continuing claims also rose to
another record of 6,207,250. Continuing claims provide some indication
of workers' ability to find employment and they lag the initial claims
figures by one week.
The Labor Department indicated that the largest increases in
initial claims for the week ending April 25 were in Michigan (+9,998),
Massachusetts (+4,277), Kentucky (+3,681), North Carolina (+2,549), and
New York (+2,219), while the largest decreases were in California
(-10,833), Georgia (-4,174), South Carolina (-3,676), Wisconsin
(-3,341), and New Jersey (-2,810).
Despite the improvement in the job market, the insured rate of
unemployment which follows the continuing claims figures rose yet again
to 4.8%. That level was double last April and the highest level since
1983. During the last ten years there has been a 93% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.Clearly,
the latest weekly figure understates labor market distress in some
states. The highest insured unemployment rates in the week ending April
18 were in Oregon (7.6 percent), Michigan (7.2), Wisconsin (6.6),
Pennsylvania (6.5), Idaho (6.4), Nevada (6.4), Rhode Island (6.1), New
Jersey (5.8), Vermont (5.8), and Alaska (5.7).
The unemployment insurance claim data is available in Haver's WEEKLY
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">05/01/09</th>
<th scope="col">04/25/09</th>
<th scope="col">04/18/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>601</td>
<td>635</td>
<td>645</td>
<td>61.6%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,351</td>
<td>6,295</td>
<td>110.9%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
German Orders In Surprise Rebound 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> May 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090507e.jpg" align="left" border="0" height="265" width="353">
Foreign orders that had been falling a bit faster than those
from domestic sources were up by a sharp 5.6% m/m in May compared to a
rise of 1.1% for orders from domestic sources. German factory orders
from outside the 16-nation euro region rose 5.1 percent in March from
February indicating that much of the orders strength was not just
foreign but outside the zone as well. Export orders for investment
goods rose 9.1 percent, driven by demand from within and outside the
euro area. 
 

Data trends however have swallowed up the good news. Three
month growth rates of orders and sales are still declining faster than
they did over six-months. Order growth is still accelerating in the
downward direction. In the quarter the drop in sales and in orders
remains horrific. 
 

Even so the rise in orders is an encouraging sign. Even if the
sharp rise this month has been crushed by the trends of past weakness,
it is step in the right direction. This is how the trip toward
stability starts. Germany is getting its break in terms of improved
demand from external sources. Germany&#8217;s domestic initiatives- as well
as initiatives from the e-Zone itself- are not yet bearing much fruit.
At least the ECB took some further steps today in monetary policy to
cut rates and to shoulder added policy moves. 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>3.3%</td>
<td>-3.1%</td>
<td>-6.7%</td>
<td>-23.9%</td>
<td>-12.8%</td>
<td>-33.1%</td>
<td>3.2%</td>
<td>-46.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>5.6%</td>
<td>-0.9%</td>
<td>-10.9%</td>
<td>-24.5%</td>
<td>-13.1%</td>
<td>-36.0%</td>
<td>3.9%</td>
<td>-53.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>1.1%</td>
<td>-5.5%</td>
<td>-1.8%</td>
<td>-22.6%</td>
<td>-12.0%</td>
<td>-29.4%</td>
<td>2.2%</td>
<td>-36.9%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real
Sector Sales</td>
</tr>
<tr>
<td class="firstcol">MFG/Mining</td>
<td>1.5%</td>
<td>-4.7%</td>
<td>-6.6%</td>
<td>-33.7%</td>
<td>-18.6%</td>
<td>-21.9%</td>
<td>3.3%</td>
<td>-45.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer</td>
<td>-0.4%</td>
<td>-3.3%</td>
<td>-6.0%</td>
<td>-33.0%</td>
<td>-18.2%</td>
<td>-11.7%</td>
<td>-0.9%</td>
<td>-25.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Durables</td>
<td>-1.4%</td>
<td>-7.8%</td>
<td>-2.2%</td>
<td>-37.4%</td>
<td>-20.9%</td>
<td>-22.9%</td>
<td>0.1%</td>
<td>-40.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Cons Non-Durable</td>
<td>-0.3%</td>
<td>-2.6%</td>
<td>-6.6%</td>
<td>-32.4%</td>
<td>-17.8%</td>
<td>-9.7%</td>
<td>-1.0%</td>
<td>-22.8%</td>
</tr>
<tr>
<td class="firstcol">Captial Gds</td>
<td>4.8%</td>
<td>-5.2%</td>
<td>-9.4%</td>
<td>-34.5%</td>
<td>-19.1%</td>
<td>-24.8%</td>
<td>6.0%</td>
<td>-53.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>-0.7%</td>
<td>-3.3%</td>
<td>-4.6%</td>
<td>-29.6%</td>
<td>-16.1%</td>
<td>-24.6%</td>
<td>4.0%</td>
<td>-44.0%</td>
</tr>
<tr>
<td class="firstcol">All MFG-Sales</td>
<td>1.5%</td>
<td>-4.8%</td>
<td>-6.6%</td>
<td>-33.5%</td>
<td>-18.5%</td>
<td>-22.1%</td>
<td>3.3%</td>
<td>-45.3%</td>
</tr>
</tbody>
</table>
</body></html>

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

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

260205Z1.jpg

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

260205Z2.jpg

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

260205Z3.jpg

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

260205Z4.jpg

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

260205Z5.jpg

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

260205Z6.jpg

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

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

260206E.jpg

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

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

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

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

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

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

260206.jpg

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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

Economy in Brief

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Liquidity, Exchange Rates & Commodity Prices Point Toward U.S. Economic Improvement

German Industrial Output Halts Its Strong Of Declines

Bad News: U.S. Jobless Rate Jumps to 8.9% Good News: Speed of Job Losses Ease

Bad News: U.S. Jobless Rate Jumpsto 8.9% Good News: Speed of Job Losses Ease

German Orders In Surprise Rebound

U.S. Initial Claims for Unemployment Insurance Fall Further

U.S. Worker Productivity Inches Up, But Underlying Cost Pressures Mount

U.S. Worker Productivity Inches Up, But Underlying Cost Pressures Mount