Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506f.jpg" align="left" border="0" height="265" width="353">
Among the signs that the global downturn may be bottoming are
recent increases in some commodity prices. The Commodity Research
Bureau Index of Spot Prices is up 11.2% from its recent low of 305.59
(1967=100) reached on March 18, as shown in the first chart. Even the
price of oil has recently begun to rise as can be seen in the second
chart that shows the daily prices of such specific commodities as
aluminum, copper, soybeans and oil.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506g.jpg" align="right" border="0" height="265" width="353">
As a result of the rise in prices, commodity producing
countries are experiencing increased demand for their for their
currencies. Many of these countries have seen substantial appreciation
of the currencies within the past two months or so. Since March 6th for
example, the South African Rand has appreciated 23.4%. Other commodity
producing countries, such as Brazil, Australia and Indonesia have seen
their currencies appreciate by 9.2%, 12.2%, and 13.3% respectively.
Japan and the Euro Area are much less dependent on commodities than
say, Indonesia, and therefore the rise in commodity prices has had
little effect on their exchange rates.The yen actually depreciated
slightly in this period and the Euro appreciated 4.9%.
Reflecting these and other exchange rate changes, the U.S.
Dollar has depreciated about 5.1% over the past two months according to
the J.P. Morgan Effective Nominal Trade Weighted Exchange Rate.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">(EXCHANGE
RATES</th>
<th scope="col">&nbsp;</th>
<th scope="col">Wk Ending&nbsp;
May 1st</th>
<th scope="col">Wk Ending Mar 6th</th>
<th scope="col">Appreciation
/Depreciation</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Brazil</td>
<td>Real/USD</td>
<td>&nbsp;2.3735</td>
<td>2.1730</td>
<td>9.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>USD/A$</td>
<td>.6381</td>
<td>&nbsp;.7162</td>
<td>12.24</td>
</tr>
<tr>
<td class="firstcol">South Africa</td>
<td>Rand/USD</td>
<td>10.4100</td>
<thd>8.4350</thd>
<td>23.41</td>
</tr>

</tbody><tbody>
<tr class="odd">
<td class="firstcol">Indonesia</td>
<td>Rupiah/USD</td>
<td>11990</td>
<td>10585</td>
<td>13.27</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea</td>
<td>Won/USD</td>
<td>1554.8</td>
<td>1345.4</td>
<td>15.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>Yen/USD</td>
<td>98.15</td>
<td>99.10</td>
<td>-0.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro</td>
<td>USD/Euro</td>
<td>1.2658</td>
<td>1.3275</td>
<td>&nbsp;4.87</td>
</tr>
<tr>
<td class="firstcol">USD</td>
<td>Broad Trade Wtd</td>
<td>98.5</td>
<td>93.4</td>
<td>-5.08</td>
</tr>
</tbody>
</table>
</body></html>

Among the signs that the global downturn may be bottoming are recent increases in some commodity prices. The Commodity Research Bureau Index of Spot Prices is up 11.2% from its recent low of 305.59 (1967=100) reached on March 18, as [...]

Commodity Prices And Exchange Rates

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506h.jpg" align="left" border="0" height="265" width="353">
April&#8217;s jump is the second largest increase in Markit&#8217;s e-Area
Services PMI index since late 2000. The April surge brings the index up
to 43.76 still well below a neutral reading of 50 but that still leaves
the index relatively low in its historic range in the 21st percentile.
Over the same period, however, the EU Commission&#8217;s EMU service sector
index stands at the 8th percentile in its range, a relatively weaker
reading. If we assess the Markit reading on a queuing basis, by ranking
the index reading and telling where the current percentile of the
ranked readings stands, we find it is in the bottom 5% of all readings.
That is more similar to the dismal EU Commission&#8217;s assessment. Anyway
you slice it the index it is showing improvement but the current
assessment is still poor. 
 

The month&#8217;s move is strongly in the right direction and the
improvement is cast wide across reporting EMU countries. It also fits
nicely with the pattern of improvement reported by the Markit MFG
indices. The current ISM reading ranks 97th out of the last 102
readings. Most EMU countries are at about that some relative position.
Ireland is worse off, posting the second worst reading in the last 102
observations. Over this same period the US ISM for nonMFG, the closest
comparison we have to the EMU reading, also ranks 97th out of the same
102 observations. The US and EMU &#8216;services&#8217; sectors are roughly in the
same cyclical position. 
 

In terms of the levels of the readings the US is now a hair
behind the level posted in EMU and behind it as a percentage of the
mean as well. So EMU services have rebounded quite sharply but in
comparisons with the US, the US rebound was sharper. The main reason
that the US is better off in percentile terms is that it had carved out
a lower low in this cycle than did EMU services. So its standing in its
range is better relative to its lower low. Both service sectors are now
on about the same path for recovery. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Markit Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-13</td>
<td>43.76</td>
<td>40.95</td>
<td>39.24</td>
<td>41.32</td>
<td>41.77</td>
<td>45.11</td>
<td>21.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Germany</td>
<td>43.76</td>
<td>42.30</td>
<td>41.32</td>
<td>42.46</td>
<td>44.05</td>
<td>47.77</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; France</td>
<td>46.52</td>
<td>43.64</td>
<td>40.18</td>
<td>43.45</td>
<td>43.27</td>
<td>46.12</td>
<td>25.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Italy</td>
<td>42.05</td>
<td>39.10</td>
<td>37.85</td>
<td>39.67</td>
<td>39.98</td>
<td>43.80</td>
<td>17.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Spain</td>
<td>42.30</td>
<td>34.11</td>
<td>31.73</td>
<td>36.05</td>
<td>33.39</td>
<td>35.39</td>
<td>43.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Ireland</td>
<td>32.16</td>
<td>35.69</td>
<td>31.78</td>
<td>33.21</td>
<td>33.39</td>
<td>37.02</td>
<td>1.1%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="8">EU only</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; UK (CIPs)</td>
<td>48.68</td>
<td>45.47</td>
<td>43.24</td>
<td>45.80</td>
<td>43.36</td>
<td>45.17</td>
<td>42.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; US NONFMG ISM</td>
<td>43.70</td>
<td>40.80</td>
<td>41.60</td>
<td>42.03</td>
<td>41.08</td>
<td>45.09</td>
<td>26.3%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">EU Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol">EU Index</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; EU Services</td>
<td>-30</td>
<td>-31</td>
<td>-29</td>
<td>-32.67</td>
<td>-30.67</td>
<td>-24.83</td>
<td>8.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">EMU</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Services</td>
<td>-24</td>
<td>-25</td>
<td>-24</td>
<td>-24.33</td>
<td>-20.67</td>
<td>-11.42</td>
<td>1.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Cons Confidence</td>
<td>-31</td>
<td>-34</td>
<td>-33</td>
<td>-32.67</td>
<td>-30.67</td>
<td>-15.89</td>
<td>8.3%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Germany-Ccon</td>
<td>-34</td>
<td>-31</td>
<td>-29</td>
<td>-31.33</td>
<td>-26.33</td>
<td>-16.92</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; France-Ccon</td>
<td>-32</td>
<td>-36</td>
<td>-36</td>
<td>-34.67</td>
<td>-33.67</td>
<td>-28.75</td>
<td>10.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Ital-Ccon</td>
<td>-25</td>
<td>-31</td>
<td>-28</td>
<td>-28.00</td>
<td>-27.67</td>
<td>-25.25</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Spain-Ccon</td>
<td>-39</td>
<td>-43</td>
<td>-48</td>
<td>-43.33</td>
<td>-44.00</td>
<td>-41.00</td>
<td>18.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; UK-Ccon</td>
<td>-22</td>
<td>-28</td>
<td>-32</td>
<td>-27.33</td>
<td>-28.83</td>
<td>-25.67</td>
<td>34.2%</td>
</tr>
<tr class="grey4">
<td colspan="8" class="firstcol">percentile is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

April’s jump is the second largest increase in Markit’s e-Area Services PMI index since late 2000. The April surge brings the index up to 43.76 still well below a neutral reading of 50 but that still leaves the index relatively low in [...]

EMU Services: In Near Lockstep With US

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<body>
 



<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"> <btotal german="" ip=""></btotal></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

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506c.jpg" width="353">
For April, the outplacement firm of Challenger, Grey &amp; Christmas indicated that cut announcements eased for the third month. The announcement of 132,590 layoffs followed 150,411 during March and both of the figures were down from the cycle high of 241,749 reached in January. Challenger also reported that announced hiring plans rose to the highest level since early-2007.
Announcement of job cuts in the pharmaceutical industry dropped sharply to 1,671 after their record March surge. Announcements in the electronics industry also halved their March jump and in the retail industry job cuts showed the third month of moderation and the number of jobs fell to a modest 2,927. Finally, the computer industry shed just 1,702 jobs which was the least since August of last year and cuts in the financial business fell to 6,645.
Picking up some steam were job cut announcements in the automotive sector which rose to 24,172 after easing during March. Also there was a pickup in layoffs in the industrial goods sector where there were 18,636 announcements. Employment cutbacks in the insurance industry also rose as there were 1,330 which was up sharply from the prior two months.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
The Challenger figures are available in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>132,590</td>
<td>150,411</td>
<td>47.3%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
</tbody>
</table>
</body>
</html>

For April, the outplacement firm of Challenger, Grey & Christmas indicated that cut announcements eased for the third month. The announcement of 132,590 layoffs followed 150,411 during March and both of the figures were down from the [...]

Challenger Layoffs Also Show Job Market Improvement

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506a.jpg" width="353">
Perhaps the labor market showed a sign of improvement during April. That could be the implication of the latest report from the payroll processor ADP in their latest National Employment Report. It indicated that private nonfarm payrolls fell 491,000 last month after a 708,000 decline during March which was revised shallower from the initial estimate of a 742,000 drop. The latest reading was the fifteenth consecutive monthly decline. However, the annualized rate of decline in payrolls eased somewhat to 6.5% during the last three months. 
The U.S. Bureau of Labor Statistics will report payroll employment this Friday. For comparison, March&#39;s 708,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 658,000 worker decline in the BLS measure of private sector payrolls. According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
ADP reported that last month medium sized payrolls fell 231,000 (-4.9% y/y) followed by a 183,000 (-3.6% y/y) worker decline in small sized payrolls. Large payrolls fell by 77,000 (-4.9% y/y). In the goods producing sector there were 262,000 fewer jobs in April (-11.0% y/y). Medium-sized payrolls fell 125,000 (-11.5% y/y) followed by a 91,000 (-10.2% y/y) shortfall in small-sized payrolls. Large payrolls fell 46,000 (-11.2% y/y). In the manufacturing sector alone, payrolls fell 159,000 (-10.9% y/y). It has fallen in almost every month since 2001.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090506b.jpg" width="353">
Employment in the service producing industry continued to fall sharply during April. The 229,000 (-2.8% y/y) decline was the thirteenth consecutive monthly decline. Medium-sized service payrolls fell 106,000 (-3.1% y/y) and small-sized payrolls were off 92,000 (-2.4% y/y). Large service producing payrolls dropped by 31,000 (-3.0% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/FINAL_Report_April_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-491,000</td>
<td>-708,000</td>
<td>-4.3%</td>
<td>-0.4</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>


</html>

Perhaps the labor market showed a sign of improvement during April. That could be the implication of the latest report from the payroll processor ADP in their latest National Employment Report. It indicated that private nonfarm [...]

ADP Report: Rate Of Job Loss Slowed During April

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090505g.jpg" align="left" border="0" height="265" width="353">
The PPI is not the ECB&#8217;s mandated inflation variable. The
central bank prefers the broader consumer-based HICP. But the drop in
the PPI excluding construction at -0.8% in March, at -10.5% over three
months (saar), at -12.3% over 6 months (saar) and at a minus three
percent over 12-months is nonetheless a compelling piece of evidence
for the ECB to confront. Capital goods inflation at +1.5% Yr/Yr is the
high inflation reading for the three main sectors. Consumer goods
prices are lower by 1.2% over 12-months and intermediate goods prices
are lower by 4.1% over 12-months. Europeans are not as worried about
deflation as policymakers in the US, yet they can&#8217;t deny these trends. 
 

Inflation, its breadth and its trends all point to the nearly
complete absence of anything that could be called inflation. Indeed
there is growing evidence for those who want to worry about that
opposite concern: deflation. On top of that, the European economy is
very weak. 
 

The controversial aspect of this is that Europe&#8217;s finance
ministers are not applying any new stimulus and the head of the
European Commission, Jean-Claude Junker, said that no policies except
those that are already approved should be implemented. That appears to
be an oblique warning from Junker to EU countries not to go off on
their own with any new programs of assistance. Even so Junker admits to
a growing unemployment crisis in Europe. Of course Europe has a more
extensive social safety network than the US. But as the EU Commission
and the OECD and the IMF have cuts forecasts the EU Commission has been
prepared to sit idle and wait for the results of its past stimulus
plans to play out. Moreover, the ECB has been content to let the Bank
of England and the Federal Reserve take the more aggressive monetary
policy actions. 
 

So if there is a risk it is that Europe is getting behind the
curve and perhaps, along with that, a growing risk of deflation. The
continuing sharp drop in inflation &#8211; indeed, persisting negative rates
of inflation- hint at an ongoing economic unraveling. However, recent
economic data have suggested in several ways that the economic tailspin
had begun to enter a more controlled phase. 
 

In Spain, programs to arrest sharply rising unemployment seem
to be having some impact. In Germany a car scrappage scheme seems to
have boosted car registrations. The EU PMI for manufacturing shows a
rise in that key sensitive cyclical index that suggests the pace of
economic unraveling its slowing and that signal is echoed across Main
EMU countries. So while Europe&#8217;s policies may tread a riskier path that
those in the US there is also some evidence of economic responsiveness
to the counter cyclical policies already implemented and of course
there is that cushier social safety net in Europe. 
 

Nonetheless, this drop in the PPI is sharp, the largest drop
in 22 years. It is putting pressure on the ECB and is expected to
result in another rate cut from Europe&#8217;s central bank at its next
meeting. Reasons to oppose such a drop are increasingly scarce. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">E-Area and UK PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">E-Area</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total x Construct</td>
<td>-0.8%</td>
<td>-0.6%</td>
<td>-10.5%</td>
<td>-12.3%</td>
<td>-3.0%</td>
<td>5.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital Gds</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>1.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Gds</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-5.0%</td>
<td>-4.2%</td>
<td>-1.2%</td>
<td>5.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Intermediate&amp;Cap Gds</td>
<td>-0.9%</td>
<td>-1.0%</td>
<td>-14.1%</td>
<td>-13.8%</td>
<td>-4.1%</td>
<td>4.2%</td>
</tr>
<tr class="grey1">
<td colspan="7">&nbsp;</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-0.9%</td>
<td>-0.5%</td>
<td>-8.8%</td>
<td>-13.6%</td>
<td>-5.1%</td>
<td>5.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>-0.7%</td>
<td>-0.7%</td>
<td>-10.2%</td>
<td>-6.4%</td>
<td>1.0%</td>
<td>3.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Gy ExEnergy</td>
<td>-0.5%</td>
<td>-0.5%</td>
<td>-5.9%</td>
<td>-5.7%</td>
<td>-1.4%</td>
<td>2.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>-0.8%</td>
<td>-0.8%</td>
<td>-10.1%</td>
<td>-14.5%</td>
<td>-4.5%</td>
<td>6.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>-0.9%</td>
<td>0.0%</td>
<td>1.3%</td>
<td>-15.2%</td>
<td>0.2%</td>
<td>13.6%</td>
</tr>
<tr class="grey4">
<td colspan="7" class="firstcol">E-zone Harmonized PPI ex construction</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

The PPI is not the ECB’s mandated inflation variable. The central bank prefers the broader consumer-based HICP. But the drop in the PPI excluding construction at -0.8% in March, at -10.5% over three months (saar), at -12.3% over 6 [...]

Sharp, Widespread, PPI Drop Puts ECB On The Spot For A Rate Cut

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090505e.jpg" width="353">
Consumer spending recently has taken a firmer stance. Despite the news of weaker sales of light motor vehicle sales last month, chain store sales moved to a firmer footing. According to the International Council of Shopping Centers-Goldman Sachs Index store sales rose 0.7% last week and made up the decline of the prior period. The news for the full-month, however, is more encouraging. Added to increases early in the month, chain store sales for all of April rose 1.4% from the March average following that month&#39;s tepid 0.3% uptick.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090505f.jpg" width="353">
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.
Moreover, the outlook for sales continued cautiously optimistic. The leading indicator of sales has been moving sideways since early February. While still negative, the year-to-year change has improved to a negative 2.0%, up from the 6% rate of decline last Fall.
A Minsky Meltdown: Lessons for Central Bankers from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-15.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">05/02/09</th>
<th scope="col">04/25/09</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>491.3</td>
<td>488.0</td>
<td>-0.8%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

Consumer spending recently has taken a firmer stance. Despite the news of weaker sales of light motor vehicle sales last month, chain store sales moved to a firmer footing. According to the International Council of Shopping Centers- [...]

U.S. Chain Store Sales Rise 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.

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

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

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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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