Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416c.jpg" align="left" border="0">
The chart above makes it clear that it is not the consumer
sector that is leading IP lower in Europe. Capital goods and
intermediate goods output are falling by 23% Year/Year compared to
consumer goods output that is down by just 7.7%. Over three months
capital goods output is declining at a 41% pace and intermediates goods
output is off at a 23% pace compared to minus 10% for consumer goods.
In the quarter to date the same sorts of caution hold sway as Q1 is
shaping up to be a terrible quarter for the industrial sector. Moreover
the rates of declines have sped up from 12-months to 6-months to three
months. Across countries German shows the a clear persisting pattern of
deceleration in industrial output. France and Spain see their growth
rates slowing the rate of decline over three months compared to six
months while Italy and the UK show flat growth rates in three months
compared to six months. 
 

Still there is scant goods in the Area&#8217;s industrial sector
this month. The preference is in step with ongoing declines in
industrial output in the US extraordinary weakness in Japan and in
China; China has posted another drop in exports (fifth monthly drop in
a row) and registered its slowest growth rate in about a decade. The
pull back is global and it is still pulling back. It may be slowing but
not even that is clear. 
 
 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col"> E-Area MFG IP
</th></tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol"> Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol"> E-Area Detail</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Dec 08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td> Q-1</td>
</tr>
<tr class="even">
<td class="firstcol">MFG</td>
<td>-2.4%</td>
<td>-3.2%</td>
<td>-3.3%</td>
<td>-30.3%</td>
<td>-31.7%</td>
<td>-28.4%</td>
<td>-24.7%</td>
<td>-19.6%</td>
<td>-17.5%</td>
<td> -30.9%</td>
</tr>
<tr class="even">
<td class="firstcol">Consumer</td>
<td>-1.6%</td>
<td>-0.8%</td>
<td>-0.3%</td>
<td>-10.4%</td>
<td>-7.4%</td>
<td>-9.2%</td>
<td>-6.9%</td>
<td>-7.7%</td>
<td>-6.2%</td>
<td> -9.6%</td>
</tr>
<tr class="even">
<td class="firstcol">C-Durables</td>
<td>-4.3%</td>
<td>-1.8%</td>
<td>-2.5%</td>
<td>-29.4%</td>
<td>-28.8%</td>
<td>-28.5%</td>
<td>-21.3%</td>
<td>-21.2%</td>
<td>-16.9%</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">C-Non-durables</td>
<td>-1.4%</td>
<td>-0.7%</td>
<td>-0.1%</td>
<td>-8.3%</td>
<td>-4.8%</td>
<td>-6.3%</td>
<td>-4.5%</td>
<td>-5.9%</td>
<td>-4.5%</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Intermediate</td>
<td>-2.4%</td>
<td>-1.0%</td>
<td>-6.4%</td>
<td>-32.9%</td>
<td>-37.3%</td>
<td>-34.0%</td>
<td>-30.6%</td>
<td>-23.4%</td>
<td>-21.3%</td>
<td> -32.0%</td>
</tr>
<tr class="even">
<td class="firstcol">Capital</td>
<td>-3.0%</td>
<td>-7.0%</td>
<td>-2.9%</td>
<td>-41.0%</td>
<td>-41.5%</td>
<td>-35.8%</td>
<td>-30.4%</td>
<td>-23.9%</td>
<td>-21.5%</td>
<td> -43.3%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Main E-Area Countries and
UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Dec 08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-2- Date</td>
</tr>
<tr class="even">
<td class="firstcol">Germany:</td>
<td>-3.4%</td>
<td>-7.3%</td>
<td>-4.8%</td>
<td>-47.3%</td>
<td>-48.9%</td>
<td>-39.3%</td>
<td>-32.0%</td>
<td>-22.5%</td>
<td>-19.6%</td>
<td> -49.1%</td>
</tr>
<tr class="even">
<td class="firstcol">France: IPxConstruct'n</td>
<td>-0.5%</td>
<td>-3.9%</td>
<td>-1.6%</td>
<td>-21.5%</td>
<td>-28.7%</td>
<td>-24.7%</td>
<td>-22.9%</td>
<td>-15.5%</td>
<td>-14.5%</td>
<td> -25.9%</td>
</tr>
<tr class="even">
<td class="firstcol">Italy</td>
<td>-4.0%</td>
<td>-1.1%</td>
<td>-4.2%</td>
<td>-31.6%</td>
<td>-28.6%</td>
<td>-31.1%</td>
<td>-24.8%</td>
<td>-20.3%</td>
<td>-16.8%</td>
<td> -28.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Spain</td>
<td>1.5%</td>
<td>-7.9%</td>
<td>1.4%</td>
<td>-19.5%</td>
<td>-46.6%</td>
<td>-24.6%</td>
<td>-40.3%</td>
<td>-24.0%</td>
<td>-24.6%</td>
<td> -37.0%</td>
</tr>
<tr class="even">
<td class="firstcol">UK: EU member</td>
<td>-0.9%</td>
<td>-3.0%</td>
<td>-1.9%</td>
<td>-20.7%</td>
<td>-27.4%</td>
<td>-20.4%</td>
<td>-20.2%</td>
<td>-13.8%</td>
<td>-13.0%</td>
<td> -24.2%</td>
</tr>
</tbody>
</table>
</body></html>

The chart above makes it clear that it is not the consumer sector that is leading IP lower in Europe. Capital goods and intermediate goods output are falling by 23% Year/Year compared to consumer goods output that is down by just [...]

E-Area IP Plunges

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416a.jpg" width="353">
The breather in the housing market downturn proved short-lived as housing starts fell to the second lowest level on record. The Commerce Department indicated that total housing starts in March reversed nearly all of their February gain and fell 10.8% to 510,000. The February level was revised down slightly and the latest figure compares to Consensus expectations for 550,000 starts.
The reversal occurred as starts of multi-family homes fell 29.0% to 152,000 after a downwardly revised 62.1% February increase. The latest levels are the lowest since the early 1990s.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416b.jpg" width="353">
Despite these latest declines, a bottom in the housing market seems to be forming. Starts of single-family homes were unchanged last month at 358,000 after a slight uptick in February. Nevertheless, they remained near the record low for the series which dates back to 1959. The latest level is down eighty percent since the peak in early 2006. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
By region, starts of single-family units in the Northeast roughly repeated their February gain and rose 30.6% (-29.9% y/y). Starts in the Midwest ticked up a lesser 3.6% (-47.2% y/y) after their sharp 17.0% February recovery but in the South, single-family starts were quite weak. They fell to a new record low (-49.7% y/y). In the West, starts also were depressed as their 3.3% uptick (-59.6% y/y) followed a 25.6% February decline. Starts here have fallen 87.3% from their 2005 peak.
The latest figures covering permits to build single-family homes, a leading indicator of starts, also suggest that a bottom in housing activity may be forming. Though they fell 7.4% last month, that followed a 16.1% rise in February and permits roughly equal the December level.
The housing starts figures can be found in Haver&#39;s USECON database.
The Fed&#39;s latest Beige Book covering regional economic conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090415/fullreport20090415.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">March</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 class="odd">
<td class="firstcol">Total</td>
<td>510</td>
<td>572</td>
<td>488</td>
<td>-48.4%</td>
<td>903</td>
<td>1,341</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>358</td>
<td>358</td>
<td>356</td>
<td>-49.6</td>
<td>617</td>
<td>1,034</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>152</td>
<td>214</td>
<td>132</td>
<td>-45.1</td>
<td>286</td>
<td>307</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>513</td>
<td>564</td>
<td>531</td>
<td>-45.0</td>
<td>880</td>
<td>1,389</td>
<td>1,844</td>
</tr>
</tbody>
</table>
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</html>

The breather in the housing market downturn proved short-lived as housing starts fell to the second lowest level on record. The Commerce Department indicated that total housing starts in March reversed nearly all of their February [...]

U.S. Housing Starts Fall to Second Lowest Level on Record But Bottom May Be Forming

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416a.jpg" align="left" border="0">
The breather in the housing market downturn proved short-lived
as housing starts fell to the second lowest level on record. The
Commerce Department indicated that total housing starts in March
reversed nearly all of their February gain and fell 10.8%
to 510,000. The February level was revised down slightly and the latest
figure compares to Consensus expectations for 550,000 starts.
The reversal occurred as starts of multi-family homes fell
29.0% to 152,000 after a downwardly revised 62.1% February increase.
The latest levels are the lowest since the early 1990s.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416b.jpg" align="right" border="0">
Despite these latest declines, a bottom in the housing market
seems to be forming. Starts of single-family homes were unchanged last
month at 358,000 after a slight uptick in February. Nevertheless, they
remained near the record low for the series which dates back to 1959.
The latest level is down eighty percent since the peak in early 2006.
During the last ten years, there has been an 84% correlation between
the q/q change in single-family starts and their contribution to
quarterly GDP growth.
By region, starts of single-family units in the Northeast
roughly repeated their February gain and rose 30.6% (-29.9% y/y).
Starts in the Midwest ticked up a lesser 3.6% (-47.2% y/y) after their
sharp 17.0% February recovery but in the South, single-family starts
were quite weak. They fell to a new record low (-49.7% y/y). In the
West, starts also were depressed as their 3.3% uptick (-59.6% y/y)
followed a 25.6% February decline. Starts here have fallen 87.3% from
their 2005 peak.
The latest figures covering permits
to build single-family homes, a leading indicator of
starts, also suggest that a bottom in housing activity may be forming.
Though they fell 7.4% last month, that followed a 16.1% rise in
February and permits roughly equal the December level.
The housing starts figures can be found in Haver's USECON
database.
The Fed's latest Beige Book covering regional economic
conditions can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090415/fullreport20090415.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">March</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 class="odd">
<td class="firstcol">Total</td>
<td>510</td>
<td>572</td>
<td>488</td>
<td>-48.4%</td>
<td>903</td>
<td>1,341</td>
<td>1,812</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>358</td>
<td>358</td>
<td>356</td>
<td>-49.6</td>
<td>617</td>
<td>1,034</td>
<td>1,474</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>152</td>
<td>214</td>
<td>132</td>
<td>-45.1</td>
<td>286</td>
<td>307</td>
<td>338</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>513</td>
<td>564</td>
<td>531</td>
<td>-45.0</td>
<td>880</td>
<td>1,389</td>
<td>1,844</td>
</tr>
</tbody>
</table>
E-Area IP Plunges 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> April 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416c.jpg" align="left" border="0">
The chart above makes it clear that it is not the consumer
sector that is leading IP lower in Europe. Capital goods and
intermediate goods output are falling by 23% Year/Year compared to
consumer goods output that is down by just 7.7%. Over three months
capital goods output is declining at a 41% pace and intermediates goods
output is off at a 23% pace compared to minus 10% for consumer goods.
In the quarter to date the same sorts of caution hold sway as Q1 is
shaping up to be a terrible quarter for the industrial sector. Moreover
the rates of declines have sped up from 12-months to 6-months to three
months. Across countries German shows the a clear persisting pattern of
deceleration in industrial output. France and Spain see their growth
rates slowing the rate of decline over three months compared to six
months while Italy and the UK show flat growth rates in three months
compared to six months. 
 

Still there is scant goods in the Area&#8217;s industrial sector
this month. The preference is in step with ongoing declines in
industrial output in the US extraordinary weakness in Japan and in
China; China has posted another drop in exports (fifth monthly drop in
a row) and registered its slowest growth rate in about a decade. The
pull back is global and it is still pulling back. It may be slowing but
not even that is clear. 
 
 
 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"> E-Area
MFG IP
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol"> Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol"> E-Area Detail</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td> Q-1</td>
</tr>
<tr class="even">
<td class="firstcol">MFG</td>
<td>-2.4%</td>
<td>-3.2%</td>
<td>-3.3%</td>
<td>-30.3%</td>
<td>-31.7%</td>
<td>-28.4%</td>
<td>-24.7%</td>
<td>-19.6%</td>
<td>-17.5%</td>
<td> -30.9%</td>
</tr>
<tr class="even">
<td class="firstcol">Consumer</td>
<td>-1.6%</td>
<td>-0.8%</td>
<td>-0.3%</td>
<td>-10.4%</td>
<td>-7.4%</td>
<td>-9.2%</td>
<td>-6.9%</td>
<td>-7.7%</td>
<td>-6.2%</td>
<td> -9.6%</td>
</tr>
<tr class="even">
<td class="firstcol">C-Durables</td>
<td>-4.3%</td>
<td>-1.8%</td>
<td>-2.5%</td>
<td>-29.4%</td>
<td>-28.8%</td>
<td>-28.5%</td>
<td>-21.3%</td>
<td>-21.2%</td>
<td>-16.9%</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">C-Non-durables</td>
<td>-1.4%</td>
<td>-0.7%</td>
<td>-0.1%</td>
<td>-8.3%</td>
<td>-4.8%</td>
<td>-6.3%</td>
<td>-4.5%</td>
<td>-5.9%</td>
<td>-4.5%</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Intermediate</td>
<td>-2.4%</td>
<td>-1.0%</td>
<td>-6.4%</td>
<td>-32.9%</td>
<td>-37.3%</td>
<td>-34.0%</td>
<td>-30.6%</td>
<td>-23.4%</td>
<td>-21.3%</td>
<td> -32.0%</td>
</tr>
<tr class="even">
<td class="firstcol">Capital</td>
<td>-3.0%</td>
<td>-7.0%</td>
<td>-2.9%</td>
<td>-41.0%</td>
<td>-41.5%</td>
<td>-35.8%</td>
<td>-30.4%</td>
<td>-23.9%</td>
<td>-21.5%</td>
<td> -43.3%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Main E-Area
Countries and
UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-2- 
Date</td>
</tr>
<tr class="even">
<td class="firstcol">Germany:</td>
<td>-3.4%</td>
<td>-7.3%</td>
<td>-4.8%</td>
<td>-47.3%</td>
<td>-48.9%</td>
<td>-39.3%</td>
<td>-32.0%</td>
<td>-22.5%</td>
<td>-19.6%</td>
<td> -49.1%</td>
</tr>
<tr class="even">
<td class="firstcol">France: IPxConstruct'n</td>
<td>-0.5%</td>
<td>-3.9%</td>
<td>-1.6%</td>
<td>-21.5%</td>
<td>-28.7%</td>
<td>-24.7%</td>
<td>-22.9%</td>
<td>-15.5%</td>
<td>-14.5%</td>
<td> -25.9%</td>
</tr>
<tr class="even">
<td class="firstcol">Italy</td>
<td>-4.0%</td>
<td>-1.1%</td>
<td>-4.2%</td>
<td>-31.6%</td>
<td>-28.6%</td>
<td>-31.1%</td>
<td>-24.8%</td>
<td>-20.3%</td>
<td>-16.8%</td>
<td> -28.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Spain</td>
<td>1.5%</td>
<td>-7.9%</td>
<td>1.4%</td>
<td>-19.5%</td>
<td>-46.6%</td>
<td>-24.6%</td>
<td>-40.3%</td>
<td>-24.0%</td>
<td>-24.6%</td>
<td> -37.0%</td>
</tr>
<tr class="even">
<td class="firstcol">UK: EU member</td>
<td>-0.9%</td>
<td>-3.0%</td>
<td>-1.9%</td>
<td>-20.7%</td>
<td>-27.4%</td>
<td>-20.4%</td>
<td>-20.2%</td>
<td>-13.8%</td>
<td>-13.0%</td>
<td> -24.2%</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for
Unemployment Insurance Fall Back 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416d.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance gave another
indication that the worst of the labor market's deterioration is
moderating. The level of 610,000 claims last week was down from an
upwardly revised 663,000 and it was the second consecutive weekly fall.
Consensus expectations for 660,000 claims.
The Labor Department indicated that the largest increases in
initial claims for the week ending April 4 were in Michigan (+5,408),
Missouri (+4,986), Texas (+3,734), New Jersey (+2,368), and
Pennsylvania (+2,194), while the largest decreases were in California
(-4,708), Ohio (-2,716), Alabama (-2,421), Florida (-1,539), and
Wisconsin (-1,078).
Continuing claims for unemployment insurance reached yet
another record high of 6,022,000 and now they have more than
doubled the year ago level. The series dates back to 1966.
The four-week average of continuing claims also rose to another record
of 5,796,000. Continuing claims provide some indication of workers'
ability to find employment and they lag the initial claims figures by
one week.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416e.jpg" align="right" border="0" height="265" width="353">
Though the latest level of continuing claims was a record, the
labor force has grown as well, by nearly 30% over the last twenty
years. Therefore, the insured rate of unemployment is not at a record
high. It rose slightly to 4.5% which was the highest since 1983. During
the last ten years there has been a 93% correlation between the level
of the insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.
The 4.4% insured unemployment rate by far understates labor
market distress in some states. The highest insured unemployment rates
in the week ending March 28 were in Michigan (8.0 percent), Oregon
(7.9), Rhode Island (7.1), Idaho (7.0), Wisconsin (7.0), Pennsylvania
(6.7), Nevada (6.2), Alaska (6.0), Montana (6.0), and Vermont (5.9).
Employment covered under the unemployment insurance program
has risen sharply. The Labor Department indicated that 133.9 million
workers were covered and that total amounts to 87% of the civilian
labor force. The percentage has been roughly stable for the last ten
years but it is up sharply from 60% to 65% in the mid-1970s.
The unemployment insurance claim data is available in Haver's WEEKLY
database.
Recession or Depression? Part II from the
Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/es/09/ES0919.pdf">here.</a>
What's Under The Tarp?, also from the St.
Louis Fed, is available <a href="http://research.stlouisfed.org/publications/es/09/ES0920.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">04/11/09</th>
<th scope="col">04/04/09</th>
<th scope="col">03/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>610</td>
<td>663</td>
<td>674</td>
<td>65.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,022</td>
<td>5,850</td>
<td>102.4%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Indicates
Further Economic Contraction; Rate of Decline Diminishing While
Expectations Up Sharply 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 16, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416f.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that economic
activity in the region continued to contract during April. The Index of
General Business conditions in the manufacturing sector came in at
-24.4 versus a reading of -35.0 last month and a low of -41.3 in
February. The latest beat expectations for a reading of -32
Though the latest figure remained negative it may indicate
that the decline in economic activity is moderating. During the last
ten years there has been a 70% correlation between the level of the
Philadelphia Fed Business Conditions Index and the three-month growth
in factory sector industrial production. There has been a 64%
correlation with q/q growth in real GDP.
The Philadelphia Fed constructs a diffusion index for total
business activity and each of the sub-indexes. The business conditions
index reflects a separate survey question.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090416g.jpg" align="right" border="0" height="265" width="353">
Amongst the sub-indexes the new orders component improved to
the highest level since January as 19.8% of respondents reported higher
orders. That was double the March low. The index of unfilled orders
also rose to its highest since last September. Still under pressure,
however, was the employment index which improved just slightly from the
March record low. Forty-five percent of respondents expected to reduce
employment levels, while only 0.2% expected to raise them. During the
last ten years there has been a 79% correlation between the index level
and the m/m change in manufacturing sector payrolls.
The prices paid index at -31.5 was near the record low. Five
percent of respondents planned to raise prices while thirty six percent
expected to lower them. During the last ten years there has been a 73%
correlation between the prices paid index and the three-month growth in
the intermediate goods PPI. There has been an 82% correlation with the
change in core intermediate goods prices.
The separate index of expected business conditions in six
months improved its highest level since late 2007. The expectations
index for new orders and shipments surged but expectations index for
employment improved just moderately.
The figures from the Philadelphia Federal Reserve can be found
in Haver's SURVEYS database.
The latest Business Outlook Survey from the Federal
Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0409.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">Philadelphia
Fed (%)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April&nbsp; '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-24.4</td>
<td>-35.0</td>
<td>-21.1</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>-31.5</td>
<td>&nbsp;-31.3</td>
<td>&nbsp;53.8</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
</body></html>

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<body>
 



<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415e.jpg">
In March, the year-to-year decline in U.S. industrial output of 12.7% was the result of reduced U.S. demand, inventory cutbacks and recessions abroad. To emphasize the size of that decline, it was the largest since the factory sector&#39;s wind-down following World War II.
It&#39;s the same story as earlier for the U.S. industrial sector. Output fell 1.5% last month, the same as an unrevised 1.5% drop during February. For 2008 and 2007, however, production was revised weaker. Consensus expectations had been for a 0.9% decline in March output.
And the rate of decline has picked up steam. During the last three months, the rate of decline of 18.5% (AR) about matches the quickest of the last few months. Factory sector output alone is off at an 18.7% annual rate during the last three months versus a full-year drop of 3.2% during 2008.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415f.jpg">
The downturn in the housing market continued to lower output of construction supplies which fell 2.7% last month and at a 30.0% annual rate during the last three. Output of consumer goods overall fell 0.4% last month and at a 12.5% rate since so far this year. Production of autos fell at a 37.3% rate while furniture output fell at a 21.9% rate so far this year after the 10.5% drop during all of 2008. Apparel output actually posted a modest March increase but it&#39;s off at a 16.5% rate so far in 2009. Production of business equipment continued lower last month by 2.4% and at a 27.6% rate for the year.
Pain has come to an area which previously was immune. Industrial production in the high-tech sector fell another 3.1% last month and at a 23.8% rate during the last three. That follows a downwardly revised 11.4% increase during all of last year. Less high tech, overall industrial production fell 1.5% during March and the annual rate of change of -18.5% was near the weakest since 1975.
Outside of the both the auto and the high tech sectors, total factory production fell 1.5% last month and the three-month annual rate of decline remained more than firm at -16.8%.
Excess capacity grew even further last month. Capacity utilization fell to 69.3%, a record low for the series which dates to 1966. Utilization in the factory sector dropped even harder to 65.8% from a peak near 80% back in 2007. The latest rate was a record low since WW II. Growth in the total productive capacity of the factory sector has slowed to 0.5% (y/y) and the growth during the last two years was revised down.
The industrial production data are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL PRODUCTION (SA, %)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output </td>
<td>-1.5</td>
<td>-1.5</td>
<td>-12.7</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-1.7</td>
<td>-0.6</td>
<td>-15.0</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Consumer Goods</td>
<td>-0.4</td>
<td>-0.7</td>
<td>-7.8</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Business Equipment</td>
<td>-2.4</td>
<td>-1.5</td>
<td>-14.4</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Construction Supplies</td>
<td>-2.7</td>
<td>-2.0</td>
<td>-21.0</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>1.9</td>
<td>-7.8</td>
<td>-2.8</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>69.3</td>
<td>70.3</td>
<td>79.8 (March &#39;08)</td>
<td>77.6</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>
</body>
</html>

In March, the year-to-year decline in U.S. industrial output of 12.7% was the result of reduced U.S. demand, inventory cutbacks and recessions abroad. To emphasize the size of that decline, it was the largest since the factory [...]

U.S. Factory Output Decline Is The Sharpest Since The Deindustrialization After WWII

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415d.jpg" align="left" border="0">
Japans economy continues to show the strains it is under as
retail spending fell again in February. The 0.2% drop is a step-up from
the 0.1% drop in January which comes on the heels of December&#8217;s 1.7%
sales collapse. As a result of this sequence of sales results, Japan&#8217;s
retail sales in 2009-Q1 are falling at a 6.6% nominal rate. Nominal
sales are off by only about 2.5% Yr/Yr (seasonally adjusted) since
retail sales in Japan only began falling consistently starting in
October of last year. Over three months sales are off at a 7.8% annual
rate; over six months the decline is at a 5.5% annual rate. 
 

In addition industrial output in Japan fell by 9.4% in
February after a sharper drop of 10.1% in January. These ARE
month-to-month drops in overall industrial output. Japan&#8217;s industrial
sector is being gutted by the sharp contraction in global trade. Japan
remains an economy under a great deal of pressure. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Japan Retail Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total SA</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.7%</td>
<td>-7.8%</td>
<td>-5.5%</td>
<td>-2.5%</td>
<td>0.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Not seasonally adjusted</td>
</tr>
<tr class="odd">
<td class="firstcol">Total: Nominal</td>
<td>-1.2%</td>
<td>0.9%</td>
<td>-2.5%</td>
<td>-10.9%</td>
<td>-7.3%</td>
<td>-5.7%</td>
<td>13.0%</td>
<td>-6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-6.1%</td>
<td>3.7%</td>
<td>4.3%</td>
<td>6.1%</td>
<td>-7.7%</td>
<td>-5.4%</td>
<td>13.1%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.5%</td>
<td>-0.5%</td>
<td>-1.4%</td>
<td>-12.9%</td>
<td>-3.1%</td>
<td>-0.6%</td>
<td>8.9%</td>
<td>-9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Fabric apparel
&amp; access</td>
<td>0.0%</td>
<td>1.7%</td>
<td>-6.3%</td>
<td>-17.6%</td>
<td>-6.9%</td>
<td>-7.2%</td>
<td>8.3%</td>
<td>-5.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rest of Retail</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>-4.0%</td>
<td>-11.8%</td>
<td>-9.8%</td>
<td>-8.5%</td>
<td>16.2%</td>
<td>-7.5%</td>
</tr>
</tbody>
</table>
</body></html>

Japans economy continues to show the strains it is under as retail spending fell again in February. The 0.2% drop is a step-up from the 0.1% drop in January which comes on the heels of December’s 1.7% sales collapse. As a result of [...]

Japan's Retail Sales Drop

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415a.jpg" align="right" border="0" height="265" width="353">
Last month,
the consumer price index published by the Bureau of Labor Statistics
slipped 0.1%. The big news, however, was not the rare negative sign in
front of the monthly figure but the negative sign in front of the
twelve month change. It was the first time since August 1955 that the
figure was negative. (Negative prints a few months ago reflected the
effects of seasonal adjustment factors.) The latest slip in the CPI
contrasts with Consensus expectations for a 0.2% March rise. Leading that decline in prices was a reversal of earlier strength in
energy &amp; food costs. In contrast, "core" pricing recently
picked up a bit. The CPI less food &amp; energy rose 0.2% in each
of the last three months and these increases actually were stronger
than the -0.0% and 0.1% changes during the last four months of 2008.
That pickup was enough to stabilize the twelve month change near 1.8%
after its deceleration from a high of 2.9% back in September of
2006. Lower energy prices in March were
led by a 4.0% decline gasoline prices (-39.3% y/y) which reversed just
half of the February increase. Even weaker last month were fuel oil
prices which fell 7.7%. That was the eighth consecutive monthly drop
and it lowered prices by nearly one-third during the last twelve.
Similarly, prices for natural gas &amp; electricity have fallen in
all but one of the last eight months though they still were 2.6% higher
than last March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415b.jpg" align="right" border="0" height="265" width="353">
Moderation of earlier gains in food &amp;
beverage prices also has played a role in the overall CPI deceleration.
Prices slipped another 0.1% last month and the annual gain of 4.3% is
down from a peak of 6.1% last fall. Recent weakness has been led by
lower dairy product prices (-3.1% y/y) as prices of other foods
continued higher. Core goods prices have been up
notably in recent months. The second consecutive 0.4% increase in March
reversed all of the weakness since 2006. Higher tobacco prices account
for much of that acceleration as they rose 18.1% year to year. But
there has been some modest firming of prices elsewhere. Prices for
household furnishings &amp; operations show a 1.8% y/y gain
following price deflation early last year. Prices of new &amp; used
motor vehicles also stopped declining during the last three months
though they still are down 0.8% y/y. Apparel prices are up 1.4% y/y
after modest deflation due to the weak Christmas. Gains in core
services prices continue to moderate. The 0.1% upticks
during five of the last six months pulled year-to-year change to 2.3%
which was its lowest since 1983. That moderation continues to owe
mostly to weakness in the housing market which caused March shelter
prices to be unchanged and up just 1.5% y/y. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415c.jpg" align="right" border="0" height="265" width="353">
Owners equivalent rent of
primary residence, a measure not equivalent to other house price
measures, rose 0.2% (2.1% y/y) The cost of travel fell and prices of
lodging away from home have also dropped, by 7.8% during the last year.
Other service prices rose. The increase in medical care services prices
fell back to 0.2% (3.1% y/y) while education costs rose 0.5% (5.6%
y/y).&nbsp; Public transportation prices fell hard as they did
during the prior month. The 1.0% decline was the seventh drop in a row
(-5.0% y/y). The chained CPI, which adjusts for shifts in consumption
patterns, eased to a gain of just 0.2%. The increase in chained prices
less food and energy continued firm at 0.4%. · The consumer price data
is available in Haver's USECON database while
detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-0.1</td>
<td>0.4</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>2.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-3.0</td>
<td>3.3</td>
<td>-23.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>-0.1</td>
<td>-0.1</td>
<td>4.3</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.2</td>
<td>0.6</td>
<td>-0.8 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.4</td>
<td>0.4</td>
<td>1.3</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>
</body></html>

Last month, the consumer price index published by the Bureau of Labor Statistics slipped 0.1%. The big news, however, was not the rare negative sign in front of the monthly figure but the negative sign in front of the twelve month [...]

Year-to-Year Drop In U.S. CPI Is First Since '55 Thanks To Energy & Food Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415a.jpg" align="right" border="0" height="265" width="353">Last month,
the consumer price index published by the Bureau of Labor Statistics
slipped 0.1%. The big news, however, was not the rare negative sign in
front of the monthly figure but the negative sign in front of the
twelve month change. It was the first time since August 1955 that the
figure was negative. (Negative prints a few months ago reflected the
effects of seasonal adjustment factors.) The latest slip in the CPI
contrasts with Consensus expectations for a 0.2% March rise.
 Leading that decline in prices was a reversal of earlier
strength in
energy &amp; food costs. In contrast, "core" pricing recently
picked up a bit. The CPI less food &amp; energy rose 0.2% in each
of the last three months and these increases actually were stronger
than the -0.0% and 0.1% changes during the last four months of 2008.
That pickup was enough to stabilize the twelve month change near 1.8%
after its deceleration from a high of 2.9% back in September of
2006.
 Lower energy prices in March were
led by a 4.0% decline gasoline prices (-39.3% y/y) which reversed just
half of the February increase. Even weaker last month were fuel oil
prices which fell 7.7%. That was the eighth consecutive monthly drop
and it lowered prices by nearly one-third during the last twelve.
Similarly, prices for natural gas &amp; electricity have fallen in
all but one of the last eight months though they still were 2.6% higher
than last March.
 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415b.jpg" align="right" border="0" height="265" width="353">Moderation
of earlier gains in food &amp;
beverage prices also has played a role in the overall CPI deceleration.
Prices slipped another 0.1% last month and the annual gain of 4.3% is
down from a peak of 6.1% last fall. Recent weakness has been led by
lower dairy product prices (-3.1% y/y) as prices of other foods
continued higher.
 Core goods prices have been up
notably in recent months. The second consecutive 0.4% increase in March
reversed all of the weakness since 2006. Higher tobacco prices account
for much of that acceleration as they rose 18.1% year to year. But
there has been some modest firming of prices elsewhere. Prices for
household furnishings &amp; operations show a 1.8% y/y gain
following price deflation early last year. Prices of new &amp; used
motor vehicles also stopped declining during the last three months
though they still are down 0.8% y/y. Apparel prices are up 1.4% y/y
after modest deflation due to the weak Christmas. 
 Gains in core
services prices continue to moderate. The 0.1% upticks
during five of the last six months pulled year-to-year change to 2.3%
which was its lowest since 1983. That moderation continues to owe
mostly to weakness in the housing market which caused March shelter
prices to be unchanged and up just 1.5% y/y. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415c.jpg" align="right" border="0" height="265" width="353">
Owners equivalent rent of
primary residence, a measure not equivalent to other house price
measures, rose 0.2% (2.1% y/y) The cost of travel fell and prices of
lodging away from home have also dropped, by 7.8% during the last year.
Other service prices rose. The increase in medical care services prices
fell back to 0.2% (3.1% y/y) while education costs rose 0.5% (5.6%
y/y).&nbsp; Public transportation prices fell hard as they did
during the prior month. The 1.0% decline was the seventh drop in a row
(-5.0% y/y). 
 The chained CPI, which adjusts for shifts in consumption
patterns, eased to a gain of just 0.2%. The increase in chained prices
less food and energy continued firm at 0.4%. · The consumer price data
is available in Haver's USECON database while
detailed figures can be found in the CPIDATA
database.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-0.1</td>
<td>0.4</td>
<td>-0.4</td>
<td>3.8</td>
<td>2.9</td>
<td>3.2</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.2</td>
<td>1.8</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.4</td>
<td>0.4</td>
<td>0.4</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.1</td>
<td>0.1</td>
<td>2.3</td>
<td>3.1</td>
<td>3.4</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-3.0</td>
<td>3.3</td>
<td>-23.1</td>
<td>13.5</td>
<td>5.7</td>
<td>11.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>-0.1</td>
<td>-0.1</td>
<td>4.3</td>
<td>5.4</td>
<td>3.9</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.2</td>
<td>0.6</td>
<td>-0.8 </td>
<td>3.3</td>
<td>2.5</td>
<td>2.9 </td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.4</td>
<td>0.4</td>
<td>1.3</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
</tr>
</tbody>
</table>

Japan's Retail Sales Drop 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> April 15, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415d.jpg" align="left" border="0">
Japans economy continues to show the strains it is under as
retail spending fell again in February. The 0.2% drop is a step-up from
the 0.1% drop in January which comes on the heels of December&#8217;s 1.7%
sales collapse. As a result of this sequence of sales results, Japan&#8217;s
retail sales in 2009-Q1 are falling at a 6.6% nominal rate. Nominal
sales are off by only about 2.5% Yr/Yr (seasonally adjusted) since
retail sales in Japan only began falling consistently starting in
October of last year. Over three months sales are off at a 7.8% annual
rate; over six months the decline is at a 5.5% annual rate. 
 

In addition industrial output in Japan fell by 9.4% in
February after a sharper drop of 10.1% in January. These ARE
month-to-month drops in overall industrial output. Japan&#8217;s industrial
sector is being gutted by the sharp contraction in global trade. Japan
remains an economy under a great deal of pressure. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Japan
Retail Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total SA</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.7%</td>
<td>-7.8%</td>
<td>-5.5%</td>
<td>-2.5%</td>
<td>0.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td colspan="9" class="firstcol">Not
seasonally adjusted</td>
</tr>
<tr class="odd">
<td class="firstcol">Total: Nominal</td>
<td>-1.2%</td>
<td>0.9%</td>
<td>-2.5%</td>
<td>-10.9%</td>
<td>-7.3%</td>
<td>-5.7%</td>
<td>13.0%</td>
<td>-6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Motor Vehicles</td>
<td>-6.1%</td>
<td>3.7%</td>
<td>4.3%</td>
<td>6.1%</td>
<td>-7.7%</td>
<td>-5.4%</td>
<td>13.1%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food&amp;
Beverage</td>
<td>-1.5%</td>
<td>-0.5%</td>
<td>-1.4%</td>
<td>-12.9%</td>
<td>-3.1%</td>
<td>-0.6%</td>
<td>8.9%</td>
<td>-9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Fabric apparel
&amp; access</td>
<td>0.0%</td>
<td>1.7%</td>
<td>-6.3%</td>
<td>-17.6%</td>
<td>-6.9%</td>
<td>-7.2%</td>
<td>8.3%</td>
<td>-5.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Rest of Retail</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>-4.0%</td>
<td>-11.8%</td>
<td>-9.8%</td>
<td>-8.5%</td>
<td>16.2%</td>
<td>-7.5%</td>
</tr>
</tbody>
</table>
U.S. Factory Output Decline Is The
Sharpest Since The Deindustrialization After WWII 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 15, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415e.jpg" align="left" border="0">
In March, the year-to-year decline in U.S. industrial
output of 12.7% was the result of reduced U.S. demand, inventory
cutbacks and recessions abroad. To emphasize the size of that decline,
it was the largest since the factory sector's wind-down following World
War II.
It's the same story as earlier for the U.S. industrial sector.
Output fell 1.5% last month, the same as an unrevised 1.5% drop during
February. For 2008 and 2007, however, production was revised weaker.
Consensus expectations had been for a 0.9% decline in March output.
And the rate of decline has picked up steam. During the last
three months, the rate of decline of 18.5% (AR) about matches the
quickest of the last few months. Factory sector output alone is off at
an 18.7% annual rate during the last three months versus a full-year
drop of 3.2% during 2008.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090415f.jpg" align="right" border="0">
The downturn in the housing market continued to lower output
of construction supplies which fell 2.7% last month and at a 30.0%
annual rate during the last three. Output of consumer goods overall
fell 0.4% last month and at a 12.5% rate since so far this year.
Production of autos fell at a 37.3% rate while furniture output fell at
a 21.9% rate so far this year after the 10.5% drop during all of 2008.
Apparel output actually posted a modest March increase but it's off at
a 16.5% rate so far in 2009. Production of business equipment continued
lower last month by 2.4% and at a 27.6% rate for the year.
Pain has come to an area which previously was immune.
Industrial production in the high-tech sector fell another 3.1% last
month and at a 23.8% rate during the last three. That follows a
downwardly revised 11.4% increase during all of last year. Less high
tech, overall industrial production fell 1.5% during March and the
annual rate of change of -18.5% was near the weakest since 1975.
Outside of the both the auto and the high tech sectors, total
factory production fell 1.5% last month and the three-month annual rate
of decline remained more than firm at -16.8%.
Excess capacity grew even further last month. Capacity
utilization fell to 69.3%, a record low for the series which dates to
1966. Utilization in the factory sector dropped even harder
to 65.8% from a peak near 80% back in 2007. The latest rate was a
record low since WW II. Growth in the total productive
capacity of the factory sector has slowed to 0.5% (y/y) and the growth
during the last two years was revised down.
The industrial production data are available in Haver's USECON
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">INDUSTRIAL
PRODUCTION (SA, %)</th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output </td>
<td>-1.5</td>
<td>-1.5</td>
<td>-12.7</td>
<td>-2.2</td>
<td>1.5</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-1.7</td>
<td>-0.6</td>
<td>-15.0</td>
<td>-3.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Consumer Goods</td>
<td>-0.4</td>
<td>-0.7</td>
<td>-7.8</td>
<td>-2.6</td>
<td>0.9</td>
<td>0.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Business Equipment</td>
<td>-2.4</td>
<td>-1.5</td>
<td>-14.4</td>
<td>-1.1</td>
<td>2.7</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Construction Supplies</td>
<td>-2.7</td>
<td>-2.0</td>
<td>-21.0</td>
<td>-6.3</td>
<td>-2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>1.9</td>
<td>-7.8</td>
<td>-2.8</td>
<td>0.3</td>
<td>3.4</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>69.3</td>
<td>70.3</td>
<td>79.8 (March '08)</td>
<td>77.6</td>
<td>80.6</td>
<td>80.9</td>
</tr>
</tbody>
</table>
</body></html>

Year-to-Year Drop In U.S. CPI IsFirst Since '55 Thanks To Energy & Food Prices

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090414k.jpg" align="left" border="0" height="265" width="353">
The effect of the recession in the western industrial
countries on the export oriented countries in Asia becomes more
apparent every day. Today it is Singapore's turn. Advance estimates of
Singapore's first quarter Gross Domestic Product show a seasonally
adjusted annualrate of decline of 19.7% following a 16.4% rate of
decline in the fourth quarter of 2008. (The Advance estimates of GDP
for the first quarter of 2009 are computed largely from data for
January and February. They are intended to be an early indication of
changes in GDP and are subject to revision when more comprehensive data
become available.)
On a year over year basis, GDP declined 11.5% in the first
quarter, compared with a decline of 4.2% in the fourth quarter. The
manufacturing sector, depending heavily on foreign demand, is the worst
performing sector. It began to report year over year declines in the
second quarter of 2008, and is now reporting a year over year decline
of 29% for the first quarter of 2009. The Service industries have been
affected by the decline in tourism and in the first quarter of 2009
were 5.9% below the first quarter of 2008. Construction has been the
bright spot, showing large year over year increases as a result of a
substantial backlog of committed projects in housing and
infrastructure. The year to year changes in GDP, Manufacturing,
Construction and Services are shown in the attached chart.
The Economic Development Board of Singapore publishes data for
what they call "Production Clusters" that is, the output of firms
producing some of Singapore's more important exports. There are
clusters of Electronics, Chemicals, Biomedicals, Precision Engineering
and Transport firms. These data are produced monthly and are an
important part of the data on which the advance estimates of GDP are
based. The declines in the clusters shown below help explain the sharp
drop in manufacturing in the first quarter.
Given the sharp deterioration in Singapore's first quarter GDP
and the prospect for continued weak global demand, the Ministry of
Trade and Industry has reduced its estimate of GDP for the year 2009 to
a range of -6% to -9% from its January 21 estimate of -2% to -5%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">SINGAPORE</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
<th scope="col">2008&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">GDP&nbsp;&nbsp;
(y/y % Chg)</td>
<td>-11.5</td>
<td>-4.2</td>
<td>0.0</td>
<td>2.5</td>
<td>6.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-29.0</td>
<td>-10.7</td>
<td>-16.0</td>
<td>-5.6</td>
<td>12.6</td>
<td>-4.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>25.6</td>
<td>18.5</td>
<td>26.0</td>
<td>23.7</td>
<td>13.1</td>
<td>20.3</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Services</td>
<td>-5.9</td>
<td>-1.3</td>
<td>5.5</td>
<td>7.5</td>
<td>7.5</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol">Production
Clusters&nbsp; (y/y % Chg)</td>
<td>Feb 09</td>
<td>Jan 09</td>
<td>Dec 08</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Electronics</td>
<td>-37.26</td>
<td>-43.43</td>
<td>-35.37</td>
<td>-19.92</td>
<td>-13.40</td>
<td>-14.49</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Chemicals</td>
<td>-22.13</td>
<td>-24.35</td>
<td>-23.19</td>
<td>-20.42</td>
<td>-7.09</td>
<td>3.01</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Biomedicals</td>
<td>-27.89</td>
<td>-30.22</td>
<td>21.49</td>
<td>18.43</td>
<td>-29.72</td>
<td>43.33</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Precision Engineering</td>
<td>-21.41</td>
<td>-36.83</td>
<td>-21.69</td>
<td>-18.53</td>
<td>-12.50</td>
<td>-3.46</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Transport</td>
<td>18.34</td>
<td>6.31</td>
<td>6.42</td>
<td>7.51</td>
<td>10.62</td>
<td>10.26</td>
</tr>
</tbody>
</table>
</body></html>

The effect of the recession in the western industrial countries on the export oriented countries in Asia becomes more apparent every day. Today it is Singapore's turn. Advance estimates of Singapore's first quarter Gross Domestic [...]

Singapore's GDP To Decline 6% To 9% In 2009 Says Ministry Of Trade And Industry

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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.

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**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.

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**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.

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**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.

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**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.

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

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

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

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

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

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

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

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

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

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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

Economy in Brief

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