Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428d.jpg" align="left" border="0" height="265" width="353">
Although South Korea's real Gross Domestic Product improved
slightly in the first quarter of this year, the economy is still in
recession. GDP rose 0.21% at a seasonally adjusted annual rate (saar)
in the first quarter of 2009, but it is 18.6%%, saars, below the third
quarter of 2008. The fourth quarter of last year saw precipitous
declines in practically every sector of the economy--the exception
being an increase in Government Consumption expenditures.The table
below shows the saars for the major components of GDP and the attached
chart shows the saars for private consumption, gross capital formation
and exports of goods and services. Gross capital formation suffered the
biggest decline, 50.14% saar in the fourth quarter of 2008. Inventories
were cut by 914 billion chained 2005 Won while expenditures on
equipment declined at a saar of 45.80%. The decline in construction was
a saar of 11.42%. Exports of goods and services declined by 32.2% while
imports of goods and services declined at a saar of 45.8%
Government stimulus programs resulting in increased government
consumption expenditures and construction spending were largely
responsible for the increase in activity that took place in the first
quarter. Private consumption improved slightly but private business
spending on equipment continued to decline and there was a major
liquidation of inventories amounting to 8.5 trillion chained 2005 won.
The declines in exports and imports moderated in the first quarter but
were still significant.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
Seasonally adjusted annual rates of return 
&nbsp;ex where noted</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007&nbsp;</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Gross Domestic Product&nbsp;</td>
<td>0.21</td>
<td>-18.78</td>
<td>0.97</td>
<td>1.72</td>
<td>4.38</td>
<td>2.22</td>
<td>5.11</td>
<td>5.16</td>
</tr>
<tr>
<td class="firstcol">Private Consumption</td>
<td>1.79</td>
<td>-17.29</td>
<td>-0.05</td>
<td>-0.65</td>
<td>4.29</td>
<td>0.92</td>
<td>4.06</td>
<td>4.73</td>
</tr>
<tr class="odd">
<td class="firstcol">Government Consumption</td>
<td>15.23</td>
<td>4.11</td>
<td>4.30</td>
<td>4.83</td>
<td>4.97</td>
<td>4.21</td>
<td>5.39</td>
<td>6.58</td>
</tr>
<tr>
<td class="firstcol">Gross Capital Formation</td>
<td>-40.34</td>
<td>-50.14</td>
<td>8.34</td>
<td>3.04</td>
<td>3.16</td>
<td>0.80</td>
<td>3.55</td>
<td>4.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Construction</td>
<td>23.06</td>
<td>-11.42</td>
<td>0.23</td>
<td>-1.23</td>
<td>-9.73</td>
<td>-2.10</td>
<td>1.44</td>
<td>0.53</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Equipment</td>
<td>-33.11</td>
<td>-45.80</td>
<td>0.68</td>
<td>1.55</td>
<td>-1.40</td>
<td>-1.99</td>
<td>9.29</td>
<td>8.19</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Inventory
Change&nbsp; (Bil. chained 2005 Won)</td>
<td>-8522</td>
<td>-914</td>
<td>6376</td>
<td>4979</td>
<td>4512</td>
<td>14958</td>
<td>7210</td>
<td>10017</td>
</tr>
<tr>
<td class="firstcol">Exports of
Goods&amp;Services</td>
<td>-15.64</td>
<td>-31.20</td>
<td>-1.62</td>
<td>-11.34</td>
<td>-0.11</td>
<td>5.73</td>
<td>12.61</td>
<td>11.37</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports of
Goods&amp;Services</td>
<td>-30.38</td>
<td>-45.83</td>
<td>4.29</td>
<td>12.31</td>
<td>-3.01</td>
<td>3.66</td>
<td>11.68</td>
<td>11.29</td>
</tr>
</tbody>
</table>
</body></html>

Although South Korea's real Gross Domestic Product improved slightly in the first quarter of this year, the economy is still in recession. GDP rose 0.21% at a seasonally adjusted annual rate (saar) in the first quarter of 2009, but it [...]

South Korea's GDP Increases in Q1 09, but is Still at Recession Levels

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428i.jpg" width="353">
Consumer spending firmed this month. Though chain store sales slipped 0.7% last week, the International Council of Shopping Centers-Goldman Sachs Index indicated that on average April sales so far rose 1.4% from the March average following that month&#39;s tepid 0.3% uptick. The year-to-year change in the indicator remained, however, negative.
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.
The outlook for sales continued cautiously optimistic. The leading indicator of sales has been moving sideways since early February.
Too big to fail from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/publications_papers/studies/tbtf/index.cfm"> 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">04/24/09</th>
<th scope="col">04/17/09</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>488.0</td>
<td>491.3</td>
<td>-1.7%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


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Consumer spending firmed this month. Though chain store sales slipped 0.7% last week, the International Council of Shopping Centers-Goldman Sachs Index indicated that on average April sales so far rose 1.4% from the March average [...]

U.S. Chain Store Sales Firm During April

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428g.jpg" width="353">
Regular gasoline prices last week averaged $2.05 per gallon, steady with the level reached in late March and up 41 cents from the December low. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY database.
 Crude oil prices, however, slipped again due to soft economic news. The price for a barrel of West Texas Intermediate fell to $47.83 last week, down from the late-March high of $53.09. Prices remained up, however, from the December low of $32.37 per barrel. Prices reached a high of $145.66 last July. The figures on crude oil production and inventories are available in Haver&#39;s Weekly Oil Statistics database.
<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428h.jpg" width="353">
In what has been a steady rate of decline, gasoline demand last week fell 2.5% y/y versus the 4.8% rate of decline seen last October. Less driving has been the result of higher gasoline prices and economic weakness. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 6.5% y/y led by a 40.1% drop in demand for residual fuel oil. These numbers are available in Haver&#39;s OILWKLY database.
The price of natural gas fell even further with the end to of winter heating season. Prices fell to $3.45 per mmbtu (-67.1% y/y) which was near the lowest level since 2002. The latest average price was down more than two-thirds from the high reached in early-July of $13.19/mmbtu.
Fed Confronts Financial Crisis by Expanding Its Role as Lender of Last Resort from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0902.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">04/27/09</th>
<th scope="col">04/20/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.05</td>
<td>2.06</td>
<td>-43.1%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>47.83</td>
<td>49.80</td>
<td>-59.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Regular gasoline prices last week averaged $2.05 per gallon, steady with the level reached in late March and up 41 cents from the December low. The figures are reported by the U.S. Department of Energy and can be found in Haver's [...]

Gasoline Prices Continue To Hover Just Over $2.00 Per Gallon

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428e.jpg" align="right" border="0" height="265" width="353">
Consumers seem to be getting into a better mood which may
translate into more spending. The April index of consumer confidence,
reported by the Conference Board, improved sharply. Rising to its
highest level since November, the reading of 39.2 was up by more than
half from the February low. Lest there's too much excitement, however,
the level of confidence remained down by more than half from 2007
average. The latest figure was quite a bit firmer than Consensus
expectations for a reading of 29.0.
The Conference Board data can be found in Haver's CBDB
database.
During the last ten years there has been an 86% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
Consumers' improved expectations drove the rise in confidence
this month with a 63.9% rise from the March level. The percentage of
respondents expecting business conditions to improve rose sharply to
15.6%, the highest level since 2007, but a reduced 25.3% still expected
them to worsen. That improvement was expected by 13.9% of respondents
to generate more jobs, double the recent low.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428f.jpg" align="right" border="0" height="265" width="353">
The present conditions index rose just modestly and remained
near its recent low. It remained off by more than three-quarters from a
year earlier. Jobs were seen as hard to get by 47.9% of respondents,
near the highest since 1992, and jobs were seen as plentiful by only
4.5%. Business conditions were seen as good by just 7.6% and that was
near the 1991 low. Those who thought conditions were bad fell slightly
to 45.7%, still near the highest since 1983.
Expectations for the inflation rate in twelve months have been
roughly stable since November at 5.9%. That's down from last year's
high of 7.7%. Expectations about interest rates has started to increase
with 38.8% of respondents expecting higher rates while 23.5% expect
rates to fall. A greatly lessened 36.4% of respondents expected lower
stock prices.
Are Fiscal Stimulus Funds Going to the "Right"
States? from the Federal Reserve Bank of San Francisco
is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-14.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">Conference
Board &nbsp;(SA, 1985=100)</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 class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>39.2</td>
<td>26.9</td>
<td>-37.6</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>23.7</td>
<td>21.9</td>
<td>-71.1</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>49.5</td>
<td>30.2</td>
<td>-1.0</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

Consumers seem to be getting into a better mood which may translate into more spending. The April index of consumer confidence, reported by the Conference Board, improved sharply. Rising to its highest level since November, the [...]

U.S. Consumer Confidence Jumps Sharply With Improved Expectations

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428a.jpg" align="left" border="0" height="265" width="353">
The S&amp;P/Case-Shiller 20 Home Price
Composite Index fell 1.9% during February and the decline lowered
prices by 18.6% during the last twelve months and by 29.9% since their
peak in May 2006. The series dates back only to 2000 and the
February decline in prices was as expected.
The S&amp;P/Case-Shiller home price series can be found in
Haver's USECON database but the city data is in the
REGIONAL database.
The Case-Shiller index of 20 U.S. cities and their surrounding
areas is weighted to reflect price changes due to extensive remodeling,
home additions or extreme neglect. For example, smaller weights are
assigned to sales of homes that have undergone extensive remodeling.
The Case-Shiller composite index of homes in 10 metropolitan
areas, which has a longer history and dates back to 1987, also fell
1.9% and was down 18.8% year-to-year. The measure was down 31.0% since
the 2006 peak.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090428b.jpg" align="right" border="0" height="265" width="353">
Weakest Regions: Home prices in Phoenix,
Nevada were quite weak and fell 35.2% y/y and in San Francisco prices
fell 31.0% y/y, off 44.0% from their early-2006 peak. Home prices in
Las Vegas, Nevada fell 31.7% y/y and were down 48.0% from their peak.
Prices in Miami fell 29.5% y/y while home prices in Los Angeles were
down 24.0% y/y. In Tampa they fell 23.0% and in Detroit home prices
dropped by 23.5% y/y, off 40.9% from the peak.
Less Weak Regions: In the Northeast, the
decline in home prices continued less severe. Prices in New York fell
10.2% y/y, off 17.4% from their 2006 peak. Prices were down 7.2%
year-to-year in Boston but in Chicago home prices were down a larger
17.6% y/y, 24.5% from the 2007 peak. In Cleveland, Ohio the decline in
home prices accelerated during February and they fell 4.1% m/m and 8.4%
y/y but in Dallas prices were off by a modest 4.5% y/y and by 8.8% from
the 2007 peak. In Charlotte, North Carolina prices fell a moderate 9.3%
y/y and in Denver home prices prices fell just 5.6% y/y.
The latest press release from Standard &amp; Poor's can be
found <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_042841.pdf">here</a>.
An overview of the S&amp;P/Case-Shiller home price series can be
found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The Case-Shiller data is available in Haver's USECON
database.
Can Monetary Policy Affect GDP Growth? from
the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/es/09/ES0921.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">S&amp;P/Case-Shiller
Home Price Index (SA, Jan 00 = 100)</th>
<th scope="col">February</th>
<th scope="col">January</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">20 City Composite
Index</td>
<td>144.56</td>
<td>147.36</td>
<td>-18.6%</td>
<td>-15.8%</td>
<td>-3.8%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
</body></html>

The S&P/Case-Shiller 20 Home Price Composite Index fell 1.9% during February and the decline lowered prices by 18.6% during the last twelve months and by 29.9% since their peak in May 2006. The series dates back only to 2000 and the [...]

Case-Shiller Home Price Index Falls Further

Case-Shiller Home Price IndexFalls Further

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090424e.jpg" align="left" border="0" height="265" width="353">
The IFO index in German rose in April sparking some optimism
that the index has made its financial cycle low. 
 

Sectors are improving across the board. MFG improved forma
diffusion reading of -42.9 to -38. Wholesaling improved to -30.6 from
-31.7. Retailing is up to -26.5 from -28.3. Services stands at -7 after
posting a -10 in March. On construction slipped on the month to -24.3
from -22.1. 
 

The IFO diffusion indices are still deeply into negative
territory. The overall index stands in the bottom 5 percentile of its
range. The combination of weakness across sectors is clearly unusual
since the overall IFO is at a lower position in its range than are ANY
of its components. The IFO&#8217;s signal joins that of the Zew index and of
the Markit MFG and Services sector indices that point to a turnaround
but continue to embrace very low current readings 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Summary of IFO Sector Diffusion readings: CLIMATE</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">CLIMATE SUM</td>
<td>Current</td>
<td>Last Mo</td>
<td colspan="6">Since Jan 1991*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Average</td>
<td>Median</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>% Range</td>
</tr>
<tr>
<td class="firstcol">All Sectors</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-8.8</td>
<td>-9.3</td>
<td>17.5</td>
<td>-36.2</td>
<td>53.7</td>
<td>5.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; MFG</td>
<td>-38.0</td>
<td>-42.9</td>
<td>-1.3</td>
<td>0.4</td>
<td>27.5</td>
<td>-42.9</td>
<td>70.4</td>
<td>7.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-24.3</td>
<td>-22.1</td>
<td>-28.9</td>
<td>-30.3</td>
<td>0.7</td>
<td>-50.1</td>
<td>50.8</td>
<td>50.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-30.6</td>
<td>-31.7</td>
<td>-14.2</td>
<td>-16.0</td>
<td>24.0</td>
<td>-38.9</td>
<td>62.9</td>
<td>13.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-26.5</td>
<td>-28.3</td>
<td>-15.4</td>
<td>-15.0</td>
<td>21.5</td>
<td>-40.2</td>
<td>61.7</td>
<td>22.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services</td>
<td>-7.0</td>
<td>-10.0</td>
<td>10.9</td>
<td>9.5</td>
<td>28.5</td>
<td>-14.5</td>
<td>43.0</td>
<td>17.4%</td>
</tr>
<tr class="even">
<td colspan="9">* June 2001 for Services</td>
</tr>
</tbody>
</table>
</body></html>

The IFO index in German rose in April sparking some optimism that the index has made its financial cycle low. Sectors are improving across the board. MFG improved forma diffusion reading of -42.9 to -38. Wholesaling improved to -30.6 [...]

IFO Is Up In Month Diffusion, Indices Gain Too

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090427c.jpg" align="left" border="0" height="265" width="353">
The consumer confidence reading for Italy has been weak in
this cycle but not quite as weak as it was in the previous two
downturns in the early 1980s and early 1990s. Despite the bad press
this business cycle keeps getting, in Italy consumers have not
generally gotten as despondent as in the past two cycles nor have they
stayed as depressed for as long. That is probably against public
perceptions of this recession. Indeed, when I looked at these results I
double checked the spread sheet to see if I&#8217;d entered the dates
correctly &#8211; and I had. I was (I am!) surprised. 
 

The chart on Italy&#8217;s consumer disposition is demonstrating a
clear uptrend, albeit in an oscillating fashion. This month&#8217;s reading
is the highest it has been Since December 2007. Moreover the 5.1 point
jump m/m is the fifth largest month-to-month jump in the index since
early 1992. The level of the index is still low but the jump is large. 
 

The rise in the index is notable &#8211; especially given the size
of the rise - since Italian unemployment is expected to rise further
and consumer conditions are importantly a reflection of labor market
conditions. In Germany, too, the GfK index of consumer sentiment which
is a survey that projects readings for May shows consumer confidence
unchanged even though last week the leading German research institutes
came out with harsher assessments for the German economy for 2009. For
some reason- and Italian consumers are not alone in this &#8211; consumer
confidence is firming in the face of news that is in many ways
worsening. 
 
 
 

The devil is in the details -- Italian consumers assess their
own mood with an index value of 104.9 which stands in the 33rd
percentile of its range of values back to January of 1992. The index is
weaker than this level only 27% of the time. So while these are low
readings they are not among the worst ever. The overall situation for
the past 12-months is evaluated as in the 58th percentile of its range,
ranking 121st out of 208 observations leaving it in the bottom 41st
percentile of its range. These statistics give the raw readings more
meaning by putting them in the context of the range of values and in
the context of rankings (frequency). We use &#8216;the percentile of the
range of value&#8217; instead of &#8216;percent of mean&#8217; since these components can
move in both positive and negative ranges: &#8216;percent of mean&#8217; is just
not meaningful. Being in the 58th percentile means that although the
reading is above the mid point of its range it is still a moderate
reading: In fact it appears as an even lower reading in this case since
60% of the time the assessment is better than this. In this way we can
use percentage of range and ranking data to close in on what the
current reading really means 
 

Over the next 12 months the reading for the overall situation
is, however, lower residing in the 20th percentile of its range and
being lower only 16% of the time. By this reading we see that
conditions have not been good and they are expected to get worse.
Still, in the last two recessions these metrics were even worse.
Unemployment for the next 12-months remains very bad, in the 75th
percentile of its range but with the fifth worst reading overall- a
ranking that puts it in the top 3% all time. That is to say that
unemployment fears have been worse than this only 3% of the time. 
 

The household financial situation is in the 38th percentile
for the last 12 months and is expected to be in the 49th percentile of
range for the next 12-months. While 49th percentile is a &#8216;mid range&#8217;
reading that is misleading since the actual reading is lower than that
level only about 17 percent of the time. Apparently the range is wide
and skewed. 
 

Perhaps the real reason Italian consumer sentiment is not so
bad is that Italians remain optimistic about the future, despite their
adverse sentiment. When they assess if it it&#8217;s the right time to make a
major purchase they put the current situation in the 40Th percentile of
its range. But when they assess the future they put it in the 95th
percentile of the range. So Italian consumers seem to admit that the
current situation is bad and may get worse in the period ahead. Yet
they remain optimistic that there will be a better time to buy things
in the coming months by a wide margin. Consumer optimism on the time to
make major purchases stands in marked contrast to assessments of the
overall situation for the next 12months as well as to fears of
unemployment and pressures on the household budget. We might be
encouraged to dismiss some of this optimism except we see it arising in
Germany as well. It&#8217;s a trend to watch for elsewhere. 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Italy ISAE Consumer Confidence</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="3">Since Jan 1992 Rank</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Percentile</td>
<td>Rank</td>
<td>percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Confidence</td>
<td>104.9</td>
<td>99.8</td>
<td>104</td>
<td>102.6</td>
<td>33.4</td>
<td>151</td>
<td>27.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Last 12 months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">OVERALL SITUATION</td>
<td>-74</td>
<td>-84</td>
<td>-78</td>
<td>-75</td>
<td>58.4</td>
<td>121</td>
<td>41.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">PRICE TRENDS</td>
<td>-43</td>
<td>-45</td>
<td>-38.5</td>
<td>-33.5</td>
<td>4.1</td>
<td>207</td>
<td>0.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Next 12months</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">OVERALL SITUATION</td>
<td>-26</td>
<td>-35</td>
<td>-26</td>
<td>-22</td>
<td>20.6</td>
<td>174</td>
<td>16.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">PRICE TRENDS</td>
<td>9.5</td>
<td>7</td>
<td>7.5</td>
<td>8.5</td>
<td>19.4</td>
<td>96</td>
<td>53.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UNEMPLOYMENT</td>
<td>21</td>
<td>38</td>
<td>28</td>
<td>20</td>
<td>75.0</td>
<td>5</td>
<td>97.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">HOUSEHOLD BUDGET</td>
<td>1</td>
<td>5</td>
<td>8</td>
<td>4</td>
<td>17.0</td>
<td>198</td>
<td>4.8%</td>
</tr>
<tr class="grey2">
<td colspan="4">HOUSEHOLD FIN SITUATION</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Last 12 months</td>
<td>-37</td>
<td>-39</td>
<td>-35</td>
<td>-36</td>
<td>38.8</td>
<td>127</td>
<td>38.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Next12 months</td>
<td>-11</td>
<td>-10</td>
<td>-10</td>
<td>-10</td>
<td>49.0</td>
<td>172</td>
<td>17.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">HOUSEHOLD SAVINGS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current</td>
<td>60</td>
<td>69</td>
<td>66</td>
<td>59</td>
<td>72.7</td>
<td>13</td>
<td>93.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Future</td>
<td>-29</td>
<td>-33</td>
<td>-29</td>
<td>-38</td>
<td>40.4</td>
<td>159</td>
<td>23.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">MAJOR Purchases</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current</td>
<td>-41</td>
<td>-43</td>
<td>-39</td>
<td>-42</td>
<td>40.4</td>
<td>99</td>
<td>52.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Future</td>
<td>3</td>
<td>3</td>
<td>7</td>
<td>6</td>
<td>95.7</td>
<td>3</td>
<td>98.6%</td>
</tr>
<tr class="grey1">
<td colspan="8">Total number of months: 208</td>
</tr>
</tbody>
</table>
</body></html>

The consumer confidence reading for Italy has been weak in this cycle but not quite as weak as it was in the previous two downturns in the early 1980s and early 1990s. Despite the bad press this business cycle keeps getting, in Italy [...]

Consumer Confidence Improves Sharply In Italy

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.

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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.