Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407a.jpg" align="right" border="0" height="265" width="353">Regular
gasoline prices last week held firm at $2.04 per gallon, the
highest level since last November. The latest was up 42 cents from the
December low. Yesterday, the spot market price for regular gasoline
also remained firm at $1.37 per gallon. That was roughly unchanged from
the prior two weeks but up from under $1.00 at the end of last year.
The figures are reported by the U.S. Department of Energy.
Weekly
gasoline prices can be found in Haver's WEEKLY database.
Daily prices are in the DAILY database.
Crude oil <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407b.jpg" align="right" border="0" height="265" width="353">
prices backpedaled from their
earlier high as
estimates of crude oil production strengthened. The American Petroleum
Institute indicated that production rose in the latest week by 7.8%
y/y. That increase compares with a decline in crude oil production of
2.1% during all of last year. Inventories of crude oil also were
strong, as estimated by DOE's Energy Information Association.
Inventories rose 15.6% following the 9.0% increase in 2008. The
inventory and production figures lowered the price for a barrel of West
Texas Intermediate to $50.32 from the recent high of $53.09. However,
that remained up more than 50% from the December low of $32.37 per
barrel. In futures trading the May contract price for crude oil fell
back yesterday to a still firm $51.05 per barrel. Prices reached a high
of $145.66 last July.
The figures on crude oil production and
inventories are available in Haver's Weekly Oil Statistics
database.
 Gasoline demand last week fell 0.2% y/y
versus the 4.8% rate of decline seen last October. (Gasoline prices at
the time were just off their peak.) The change in demand is measured
using the latest four weeks versus the same four weeks in 2008. Demand
for all <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407c.jpg" align="right" border="0" height="265" width="353">
petroleum products was down 4.4% y/y. That
negative comparison was led by a 9.1% decline in distillate demand.
Demand for residual rose a modest 1.2%. These numbers are available in
Haver's OILWKLY database.
 The price of natural
gas continued downward with the coming end to the winter heating
season. Prices fell to $3.64 per mmbtu (-61.7% 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 $13.19/mmbtu.
The
Panic of 2008 is the title of yesterday's speech by Fed
Governor Kevin Warsh and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/warsh20090406a.htm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">04/06/09</th>
<th scope="col">03/30/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.04</td>
<td>2.05</td>
<td>-38.9%</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>50.32</td>
<td>53.09</td>
<td>-51.4%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>

U.S. Chain Store Sales Pick Up
Early This Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407d.jpg" align="left" border="0" height="265" width="353">
After a weak March, the consumer may be showing signs of
returning to the stores. The International Council of Shopping
Centers-Goldman Sachs Index indicated that sales in early April rose
0.6% after the 1.1% jump during the prior week. As a result, sales
began this month 1.2% above the March average following that month's
tepid 0.3% uptick.
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.


During the last ten years there has been a 64% correlation
between the year-to-year growth in chain store sales and the growth in
general merchandise sales. These weekly figures are
available in Haver's SURVEYW database.
The outlook for sales continued cautiously optimistic. The
leading indicator of sales has been moving sideways since early
February.
<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">04/03/09</th>
<th scope="col">03/27/09</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>489.5</td>
<td>486.5</td>
<td>-0.3%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings Tick
Higher In February But Remain Off By One-Third Y/Y 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407e.jpg" align="left" border="0" height="265" width="353">
For February, the Bureau of Labor Statistics reported in its
Job Openings &amp; Labor Turnover Survey (JOLTS) that job
availability made up just a piece of the January decline. The 2.9% rise
in the number of job opening followed a 9.4% January falloff and
openings remained off by roughly one-third from the year ago level. The
latest level remained near the record low for the series which dates
back to December 2000.
The job openings rate also rose modestly
in February to 2.2% versus a downwardly revised 2.1% rate in January.
These rates were down from more than a 3% rate in 2007. The
job openings rate is the number of job openings on the last business
day of the month as a percent of total employment plus job openings.
The actual number of job openings in the construction sector
fell by 81% from the year ago level and factory sector job openings
fell 50%, as did leisure &amp; hospitality jobs
which also were off by 50%. Professional &amp; business services
job openings fell more than one-third year-to-year while openings in
the education &amp; health sectors also were off by nearly one
quarter. Openings in retail trade fell a slight 6% y/y. Not only were
private sector openings down but government sector job openings fell a
sharp 12% with state &amp; local off 17% as tax revenues fell.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407f.jpg" align="right" border="0" height="265" width="353">
By region, openings in the West fell the hardest, by 42%
year-to-year, while openings in the South and the Midwest were off
roughly 30%. Openings in the Northeast they were down by a more
moderate 12%.
The hires rate held steady for the third
month at 3.3% and that was near the lowest in the series' short eight
year history.The hires rate is the number of hires during the
month divided by employment.The actual number of hires fell
by 13% year-to-year with the largest declines coming in the leisure
&amp; hospitality industry (-25%) followed by the factory sector
(-23%) and the retail sector (-22%). In the professional &amp;
business services industry the decline was a more moderate 11% while
education &amp; health services jobs fell 8%. Construction sector
hires fell 2%.
The job separations rate fell slightly to
3.6%, about where it's been since early 2008. Separations
include quits, layoffs, discharges, and other separations as well as
retirements. The level of job separations fell 3.5% y/y.
The JOLTS survey dates only to December 2000 but has followed
the movement in nonfarm payrolls, though the actual correlation between
the two series is low.
A description of the Jolts survey and the latest release from
the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures 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"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.2</td>
<td>2.1</td>
<td>3.0</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,006</td>
<td>2,920</td>
<td>4,248</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.7</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,360</td>
<td>4,460</td>
<td>5,035</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>
Consumer Credit Usage Remains
Negative 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 7, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407g.jpg" align="left" border="0" height="265" width="353">
For February the Federal Reserve reported that consumer credit
outstanding fell $7.4B. As a result of the decline, which was the fifth
since July, credit growth slowed to just 1.1% year-to-year which was
the weakest since late 1992. On a three-month basis credit outstanding
has followed the decline in retail spending and fallen at a 0.8% annual
rate.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407h.jpg" align="right" border="0" height="265" width="353">
Non-revolving credit (autos &amp; other consumer
durables), which accounts for nearly two-thirds of the total, ticked up
just $0.3B in February. However, it rose at a 1.9% rate over the last
three months, a pickup from the negative growth at the end of last
year. Usage of revolving credit fell a huge $7.8B in February which was
a record. The decline lowered three-month growth to a negative 5.1%
which was near the record.
These figures are the major input to the Fed's quarterly Flow
of Funds accounts for the household sector.
Credit data are available in Haver's USECON
database. The Flow of Funds data are in Haver's FFUNDS
database.
Credit Storm Sinking
Global Trade from the Federal Reserve Bank of Atlanta can be
found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=440A110B-5056-9F12-1273B38469A2401E&amp;method=display_body">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit (m/m Chg, SAAR)</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&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-7.4B</td>
<td>&nbsp;$8.1B</td>
<td>1.1%</td>
<td>1.8%</td>
<td>5.5%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-7.8B</td>
<td>$1.9B</td>
<td>0.5%</td>
<td>2.4%</td>
<td>7.4%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$0.3B</td>
<td>$6.2B</td>
<td>1.4%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
News from Australia and New
Zealand 
by <a href="/comment/Curley.html">Louise
Curley</a> April 7, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407i.jpg" align="left" border="0" height="265" width="353">
The Bank of Australia reduced its benchmark interest rate from
3.25% to 3.00% today. This marks a 525 basis point reduction from the
8.25% rate in June, 2008. Growth in the Australian economy virtually
came to a halt in the third quarter of 2008 when GDP increased by 0.08%
and disappeared in the fourth quarter when GDP declined by 0.53%. In
February of this year, the Australian government announced a A$42
billion (3.5% of GDP) stimulus program of cash disbursements and
infrastructure spending.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407j.jpg" align="right" border="0" height="265" width="353">
NZIER (New Zealand Institute of Economic Research) published
its quarterly survey of business opinion today. The results are shown
as percent balances between those expecting improvement in the economy
over next six months and those expecting a deterioration. The overall
opinion is based on the opinions of manufacturers, builders, merchants
and those engaged in the service industries. In the latest survey, the
overall, or economy wide, balance of opinion was -65% meaning that
there were 65% more pessimists than optimists. There is a great deal of
volatility in the opinions of the participants in the survey but also a
clear down ward trend as can be seen in the first chart. In the latest
survey, there was a slightly less negative balance for the manufactures
and the merchants and a slightly more negative for the builders and
those engaged in the service industries.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090407k.jpg" align="left" border="0" height="265" width="353">
New Zealand's economy has been weaker than that of Australia
as can be seen in the second chart that shows the quarterly changes in
real GDP for the two countries. In New Zealand, GDP declined throughout
2008 and for the year as a whole was 1.0% below 2007. In Australia, GDP
did not decline until the fourth quarter and for the year 2.1% above
2007. The quarterly changes in real GDP in New Zealand and Australia
are shown in the second chart. The third chart shows the official
policy interest rates for both countries.New Zealand has, until
recently, had a higher benchmark interest rate than Australia, largely
as a result of New Zealand's large current account deficit, which has
been running between 8 and 9% of GDP for the past few years. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">AUSTRALIA
&amp; NEW ZEALAND</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 08&nbsp;</th>
<th scope="col">Q3&nbsp; 08&nbsp;</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08</th>
<th scope="col">2008 CHG%</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP % Change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Australia</td>
<td>--</td>
<td>-0.53</td>
<td>0.08</td>
<td>0.28</td>
<td>0.49</td>
<td>2.06</td>
<td>4.02</td>
</tr>
<tr>
<td class="firstcol">New Zealand</td>
<td>--</td>
<td>-0.57</td>
<td>-0.65</td>
<td>-.061</td>
<td>-.052</td>
<td>-0.97</td>
<td>3.12</td>
</tr>
<tr class="odd">
<td class="firstcol">NZIER (% Balance)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Manufacturers</td>
<td>-61</td>
<td>-67</td>
<td>-24</td>
<td>-60</td>
<td>-73</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Builders</td>
<td>-64</td>
<td>-62</td>
<td>-12</td>
<td>-56</td>
<td>-64</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Merchants</td>
<td>-62</td>
<td>-70</td>
<td>-10</td>
<td>-66</td>
<td>-60</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Service Industries</td>
<td>-66</td>
<td>-62</td>
<td>-21</td>
<td>-65</td>
<td>-62</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

Regular gasoline prices last week held firm at $2.04 per gallon, the highest level since last November. The latest was up 42 cents from the December low. Yesterday, the spot market price for regular gasoline also remained firm at [...]

Gasoline Prices Hold Prior Weeks'Gains

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406b.jpg" align="left" border="0" height="265" width="353">
The value of retail sales excluding motor vehicles and
motorcycles in the Euro Area had risen each month since the series
began in 1995 until September of last year. (In the Euro Area, retail
sales, excluding motor vehicles and motorcycles, are reported in index
form with a base of 2005=100.) Since then, they have declined in four
of the five subsequent months. By February 2009, they were 2.7% below
February 2008<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406c.jpg" align="right" border="0" height="265" width="353">
In general, retail sales tend to show increases in year to
year growth reflecting the growing demands of an increasing population.
Even in mild recessions, retail sales tend to increase. The growth in
retail sales in the Euro Area has tended to be lower than that in
either the UK or the US, as can be seen in the first chart. In the last
four months retail sales in the Euro Area show much smaller declines in
sales relative to the US but slightly larger declines than the UK. (The
chart shows recession shading for the US.)
Good data for retail sales, like data on employment,
production and such, take time to compile and by the time they are
published, then current conditions may well have changed. Measures of
consumer and business confidence help in judging current sentiment and
they have recently shown some slight improvement. The stock markets
also reflect economic sentiment and markets around the world have
improved in the very recent past.. The second chart plots the daily
price of stocks in the Euro Area, the UK and the US on a log scale.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Retail
sales ex motor vehicles and motor cycles (2005=100)</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
<th scope="col">Dec&nbsp; 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep 08</th>
<th scope="col">Feb 09/Feb 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EURO AREA&nbsp;</td>
<td>105.97</td>
<td>106.38</td>
<td>106.10</td>
<td>106.59</td>
<td>107.36</td>
<td>108.70</td>
<td>-2.66</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>109.57</td>
<td>110.64</td>
<td>106.91</td>
<td>109.98</td>
<td>110.71</td>
<td>116.41</td>
<td>-2.14</td>
</tr>
<tr class="odd">
<td class="firstcol">United States</td>
<td>107.72</td>
<td>106.76</td>
<td>105.12</td>
<td>108.94</td>
<td>112.42</td>
<td>116.16</td>
<td>-6.04</td>
</tr>
</tbody>
</table>
</body></html>

The value of retail sales excluding motor vehicles and motorcycles in the Euro Area had risen each month since the series began in 1995 until September of last year. (In the Euro Area, retail sales, excluding motor vehicles and [...]

Retail Sales Continue To Fall In The Euro Area

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406a.jpg" align="left" border="0" height="265" width="353">
EMU inflation drops at record pace in February. EMU
inflation dropped in February after a very sharp drop in January. Over
three-months the annual pace of decline is at -12% compared to -11%
over six-months. This is a strong pace to stay in force over these two
periods. Over 12-months, inflation is off by 1.8% compared to being up
by 5.3% Yr/Yr one year ago. Thus average inflation over the past two
years is quite tame, under two percent. 
 

A job well done&#8230;but. Central banks can be
content that despite all the angst, they handled the energy price spurt
well and did manage to keep inflation at bay. Still, inflation is well
under control and last week ahead of the G-20 meeting, the ECB gave the
markets a smaller rate cut than they had anticipated. Now with the
inflation numbers still showing declines the ECB is expected to be
cutting rates again. 
 

Widespread drops, too. Inflation is falling
in Germany and in Italy at about the same pace as in EMU over the last
3 and 6 months. The UK has inflation falling fast over six months but
the pace of decline has let up over the past three-months. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr>
<td class="firstcol">Euro Area</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total ex Construction</td>
<td>-0.6%</td>
<td>-1.5%</td>
<td>-12.0%</td>
<td>-11.2%</td>
<td>-1.8%</td>
<td>5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>0.6%</td>
<td>1.7%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-0.2%</td>
<td>-0.8%</td>
<td>-5.0%</td>
<td>-3.6%</td>
<td>-0.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>-1.1%</td>
<td>-1.9%</td>
<td>-15.4%</td>
<td>-11.9%</td>
<td>-3.1%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-0.5%</td>
<td>-1.0%</td>
<td>-11.7%</td>
<td>-12.9%</td>
<td>-3.9%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>-0.7%</td>
<td>-1.4%</td>
<td>-12.5%</td>
<td>-5.9%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Gy Ex Energy</td>
<td>-0.6%</td>
<td>-0.6%</td>
<td>-6.6%</td>
<td>-5.1%</td>
<td>-0.7%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.8%</td>
<td>-0.9%</td>
<td>-12.0%</td>
<td>-13.1%</td>
<td>-3.3%</td>
<td>6.3%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-5.2%</td>
<td>-14.7%</td>
<td>2.1%</td>
<td>13.1%</td>
</tr>
</tbody>
</table>
</body></html>

EMU inflation drops at record pace in February. EMU inflation dropped in February after a very sharp drop in January. Over three-months the annual pace of decline is at -12% compared to -11% over six-months. This is a strong pace to [...]

Euro Area Inflation Is Still Dropping Fast

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406a.jpg" align="left" border="0" height="265" width="353">
EMU inflation drops at record pace in February. EMU
inflation dropped in February after a very sharp drop in January. Over
three-months the annual pace of decline is at -12% compared to -11%
over six-months. This is a strong pace to stay in force over these two
periods. Over 12-months, inflation is off by 1.8% compared to being up
by 5.3% Yr/Yr one year ago. Thus average inflation over the past two
years is quite tame, under two percent. 
 

A job well done&#8230;but. Central banks can be
content that despite all the angst, they handled the energy price spurt
well and did manage to keep inflation at bay. Still, inflation is well
under control and last week ahead of the G-20 meeting, the ECB gave the
markets a smaller rate cut than they had anticipated. Now with the
inflation numbers still showing declines the ECB is expected to be
cutting rates again. 
 

Widespread drops, too. Inflation is falling
in Germany and in Italy at about the same pace as in EMU over the last
3 and 6 months. The UK has inflation falling fast over six months but
the pace of decline has let up over the past three-months. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr>
<td class="firstcol">Euro Area</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total ex Construction</td>
<td>-0.6%</td>
<td>-1.5%</td>
<td>-12.0%</td>
<td>-11.2%</td>
<td>-1.8%</td>
<td>5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>0.6%</td>
<td>1.7%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-0.2%</td>
<td>-0.8%</td>
<td>-5.0%</td>
<td>-3.6%</td>
<td>-0.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>-1.1%</td>
<td>-1.9%</td>
<td>-15.4%</td>
<td>-11.9%</td>
<td>-3.1%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-0.5%</td>
<td>-1.0%</td>
<td>-11.7%</td>
<td>-12.9%</td>
<td>-3.9%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>-0.7%</td>
<td>-1.4%</td>
<td>-12.5%</td>
<td>-5.9%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Gy Ex Energy</td>
<td>-0.6%</td>
<td>-0.6%</td>
<td>-6.6%</td>
<td>-5.1%</td>
<td>-0.7%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.8%</td>
<td>-0.9%</td>
<td>-12.0%</td>
<td>-13.1%</td>
<td>-3.3%</td>
<td>6.3%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-5.2%</td>
<td>-14.7%</td>
<td>2.1%</td>
<td>13.1%</td>
</tr>
</tbody>
</table>
Retail Sales Continue To Fall In
The Euro Area 
by <a href="/comment/Curley.html">Louise
Curley</a> April 6, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406b.jpg" align="left" border="0" height="265" width="353">
The value of retail sales excluding motor vehicles and
motorcycles in the Euro Area had risen each month since the series
began in 1995 until September of last year. (In the Euro Area, retail
sales, excluding motor vehicles and motorcycles, are reported in index
form with a base of 2005=100.) Since then, they have declined in four
of the five subsequent months. By February 2009, they were 2.7% below
February 2008<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090406c.jpg" align="right" border="0" height="265" width="353">
In general, retail sales tend to show increases in year to
year growth reflecting the growing demands of an increasing population.
Even in mild recessions, retail sales tend to increase. The growth in
retail sales in the Euro Area has tended to be lower than that in
either the UK or the US, as can be seen in the first chart. In the last
four months retail sales in the Euro Area show much smaller declines in
sales relative to the US but slightly larger declines than the UK. (The
chart shows recession shading for the US.)
Good data for retail sales, like data on employment,
production and such, take time to compile and by the time they are
published, then current conditions may well have changed. Measures of
consumer and business confidence help in judging current sentiment and
they have recently shown some slight improvement. The stock markets
also reflect economic sentiment and markets around the world have
improved in the very recent past.. The second chart plots the daily
price of stocks in the Euro Area, the UK and the US on a log scale.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Retail
sales ex motor vehicles and motor cycles (2005=100)</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
<th scope="col">Dec&nbsp; 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep 08</th>
<th scope="col">Feb 09/Feb 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">EURO AREA&nbsp;</td>
<td>105.97</td>
<td>106.38</td>
<td>106.10</td>
<td>106.59</td>
<td>107.36</td>
<td>108.70</td>
<td>-2.66</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>109.57</td>
<td>110.64</td>
<td>106.91</td>
<td>109.98</td>
<td>110.71</td>
<td>116.41</td>
<td>-2.14</td>
</tr>
<tr class="odd">
<td class="firstcol">United States</td>
<td>107.72</td>
<td>106.76</td>
<td>105.12</td>
<td>108.94</td>
<td>112.42</td>
<td>116.16</td>
<td>-6.04</td>
</tr>
</tbody>
</table>
</body></html>

Euro Area Inflation Is StillDropping Fast

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403f.jpg" align="left" border="0">
In the Market PMI framework Europe is stabilizing as the rates
of decline in MFG and Services bottom and begin to show some
improvement. But the EU framework of surveys shows declines are still
in train. The table above shows the EMU and EU EC-Commission readings
along with the Market PMI readings. They are in conflict. The EC
readings for services are mostly on their lows while the Market figures
have risen from their respective lows. 
 

Germany, France, Italy Spain and Ireland each showed Service
sector improvement in March in the Market framework. The UK also showed
some nice improvement. All the indices are still below 50, indicating
ongoing contraction for the sector. The three-month averages are still
falling and MEU Ireland France and UK each do show current market
reading that surpass their respective three-month averages a good sign
for stability and recovery. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro-13</td>
<td>40.95</td>
<td>39.24</td>
<td>42.16</td>
<td>40.78</td>
<td>42.11</td>
<td>45.80</td>
<td>8.0%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>42.30</td>
<td>41.32</td>
<td>45.20</td>
<td>42.94</td>
<td>44.81</td>
<td>48.70</td>
<td>5.0%</td>
</tr>
<tr class="grey4">
<td class="firstcol">France</td>
<td>43.64</td>
<td>40.18</td>
<td>42.56</td>
<td>42.13</td>
<td>43.44</td>
<td>46.64</td>
<td>14.1%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Italy</td>
<td>39.10</td>
<td>37.85</td>
<td>41.10</td>
<td>39.35</td>
<td>40.58</td>
<td>44.45</td>
<td>5.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Spain</td>
<td>34.11</td>
<td>31.73</td>
<td>31.84</td>
<td>32.56</td>
<td>31.71</td>
<td>35.40</td>
<td>18.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Ireland</td>
<td>35.69</td>
<td>31.78</td>
<td>33.94</td>
<td>33.80</td>
<td>34.03</td>
<td>38.10</td>
<td>10.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="8">EU
only</td>
</tr>
<tr class="grey4">
<td class="firstcol">UK (CIPs)</td>
<td>45.47</td>
<td>43.24</td>
<td>42.48</td>
<td>43.73</td>
<td>42.31</td>
<td>45.31</td>
<td>26.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">US NONFMG ISM</td>
<td>#N/A</td>
<td>41.60</td>
<td>42.90</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Index</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Services</td>
<td>-31</td>
<td>-29</td>
<td>-28</td>
<td>-32.67</td>
<td>-29.50</td>
<td>-23.25</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">EMU</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Services</td>
<td>-25</td>
<td>-24</td>
<td>-22</td>
<td>-23.67</td>
<td>-17.83</td>
<td>-8.63</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Cons Confidence</td>
<td>-34</td>
<td>-33</td>
<td>-31</td>
<td>-32.67</td>
<td>-29.50</td>
<td>-13.50</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Consumer confidence by
country</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany-Ccon</td>
<td>-31</td>
<td>-29</td>
<td>-27</td>
<td>-29.00</td>
<td>-22.67</td>
<td>-14.08</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France-Ccon</td>
<td>-36</td>
<td>-36</td>
<td>-35</td>
<td>-35.67</td>
<td>-33.67</td>
<td>-27.33</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Ital-Ccon</td>
<td>-31</td>
<td>-28</td>
<td>-26</td>
<td>-28.33</td>
<td>-27.33</td>
<td>-25.08</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain-Ccon</td>
<td>-43</td>
<td>-48</td>
<td>-44</td>
<td>-45.00</td>
<td>-44.83</td>
<td>-39.83</td>
<td>10.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK-Ccon</td>
<td>-28</td>
<td>-32</td>
<td>-35</td>
<td>-31.67</td>
<td>-29.67</td>
<td>-24.92</td>
<td>18.4%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile
is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

In the Market PMI framework Europe is stabilizing as the rates of decline in MFG and Services bottom and begin to show some improvement. But the EU framework of surveys shows declines are still in train. The table above shows the EMU [...]

Market Services PMIs Turn Higher In March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403d.jpg" width="353">
The service sector remains under pressure. The March Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) slipped further to 40.8 from an unrevised February reading of 41.6. Consensus expectations were for a reading of 42.0. For the quarter as a whole, the index edged up to 41.8 from the low of 40.7 during 4Q &#39;08. A level of the ISM index below 50 indicates declining activity. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index in the nonmanufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
Despite the decline in the overall index, the business activity index improved last month. The employment index, however, offset that rise with a decline to near the cycle low. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403e.jpg" width="353">
Pricing power fell back again after February improvement. Since its inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report On Business</cite>&reg;, the composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indices for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm.">here</a>.
ISM surveys more than 370 purchasing managers in more than 62 industries including law firms, hospitals, government and retailers. The nonmanufacturing survey dates back to July 1997.
Credit Market Competition and the Nature of Firms from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr366.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">March &#39;08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>40.8</td>
<td>41.6</td>
<td>49.9</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>41.5</td>
<td>46.5</td>
<td>75.5</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>


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The service sector remains under pressure. The March Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) slipped further to 40.8 from an unrevised February reading of 41.6. Consensus [...]

U.S. ISM Nonmanufacturing Index Falls Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403a.jpg" align="right" border="0" height="265" width="353">The March
employment figures showed that there was little, if any, diminution in
the pace of job loss. Nonfarm payrolls fell an
expected 663,000 following their unrevised 651,000 worker drop during
February. The loss of employment spread across industries. The Bureau
of Labor Statistics indicated, furthermore, that the number of payroll
jobs lost during this recession so far totals 5.1 million, the record
for a 15-month period. Even after accounting for the labor force's
larger size, that's a huge number. In percentage terms, jobs are down
3.7% since the 2007 peak, close to a record. 
The weakness in payrolls
also was associated with a jump in the unemployment rate to
an expected 8.5%, the highest level since November of 1983. The
unemployment rate reached its recent low of 4.4% in October of 2006.
Last months' increase was fueled by an 861,000 drop in household
employment (-3.5% y/y) and a 166,000 drop (+0.1% y/y) drop in the labor
force.
 Long-term unemployment has risen substantially.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403b.jpg" align="right" border="0" height="265" width="353">
The
average duration of unemployment rose even further in March to 20.1
weeks, up from 16.9 weeks during 2007. The number of those unemployed
for longer than 15 weeks more than doubled during the last year and
they accounted for nearly half of all those who are unemployed.
Long-term unemployment has discouraged workers. The ranks of those who
have dropped out of the labor force has grown by nearly one-quarter
during the last year to 5.8 million.
The payroll employment figures
indicate that the breadth of job loss continues to grow. Only 22.0% of
industries were hiring last month, half that of last March and down
from the 2006 peak of 24.9%. Over a six-month period, just 15.7% of
firms were hiring. The breadth of the downturn includes 126,000
construction industry jobs lost last month, bringing the total to 1.3
million since early 2007.&nbsp; Factory jobs were down another
161,000 in March, adding to the 10-year downtrend during which over 5
million jobs (29.1%) have been shed. The job market has turned so sour
that the somewhat immune service sector has suffered. It lost 353,000
jobs last month and 2.8 million (3.0%) since the peak in late 2007.
Even government sector hiring has slowed. The 81,000 rise in payrolls
last month left them up just 0.4% y/y. Hiring by local governments has
been unchanged since last year.
Fewer workers worked fewer hours last
month and the length of the average workweek fell to 33.2 hours, a
record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403c.jpg" align="right" border="0" height="265" width="353">
For the first quarter, the combination of lower employment
and fewer hours-worked brought aggregate hours down by 8.7% (AR) from
4Q' 08. That rate of decline was even faster than during 4Q and
suggests negative growth in real GDP in excess of 7% in 1Q '09.· The
weak labor market has taken a toll on average hourly earnings in
private industries. The 0.2% gains in each of the last three months
lowered the annualized rate of growth by half since last year to 2.2%.
In the construction and the goods producing sectors, growth in average
hourly earnings was negative.
 The figures referenced above
are available in Haver's USECON database.
Additional detail can be found in the LABOR and in
the EMPL databases.
Policies to Bring Us
Out of the Financial Crisis and Recession is this morning's
speech by Fed Vice Chairman Donald L. Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/speech/kohn20090403a.htm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">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">Payroll Employment</td>
<td>-663</td>
<td>-651</td>
<td>-741</td>
<td>-3.5%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-651</td>
<td>-655</td>
<td>--</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-161</td>
<td>-169</td>
<td>-262</td>
<td>-9.8%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-126</td>
<td>-107</td>
<td>-135</td>
<td>-12.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-358</td>
<td>-366</td>
<td>-336</td>
<td>-2.2%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.3</td>
<td>33.3</td>
<td>33.8 (March '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.5%</td>
<td>8.1%</td>
<td>7.6%</td>
<td>4.8% March '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>

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The March employment figures showed that there was little, if any, diminution in the pace of job loss. Nonfarm payrolls fell an expected 663,000 following their unrevised 651,000 worker drop during February. The loss of employment [...]

U.S. Jobless Rate Reaches 8.5%; 5.1 Million Payroll Jobs Are Lost Since Cycle Peak

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403a.jpg" align="right" border="0" height="265" width="353">The March
employment figures showed that there was little, if any, diminution in
the pace of job loss. Nonfarm payrolls fell an
expected 663,000 following their unrevised 651,000 worker drop during
February. The loss of employment spread across industries. The Bureau
of Labor Statistics indicated, furthermore, that the number of payroll
jobs lost during this recession so far totals 5.1 million, the record
for a 15-month period. Even after accounting for the labor force's
larger size, that's a huge number. In percentage terms, jobs are down
3.7% since the 2007 peak, close to a record. 
The weakness in payrolls
also was associated with a jump in the unemployment rate to
an expected 8.5%, the highest level since November of 1983. The
unemployment rate reached its recent low of 4.4% in October of 2006.
Last months' increase was fueled by an 861,000 drop in household
employment (-3.5% y/y) and a 166,000 drop (+0.1% y/y) drop in the labor
force.
 Long-term unemployment has risen substantially.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403b.jpg" align="right" border="0" height="265" width="353">
The
average duration of unemployment rose even further in March to 20.1
weeks, up from 16.9 weeks during 2007. The number of those unemployed
for longer than 15 weeks more than doubled during the last year and
they accounted for nearly half of all those who are unemployed.
Long-term unemployment has discouraged workers. The ranks of those who
have dropped out of the labor force has grown by nearly one-quarter
during the last year to 5.8 million.
The payroll employment figures
indicate that the breadth of job loss continues to grow. Only 22.0% of
industries were hiring last month, half that of last March and down
from the 2006 peak of 24.9%. Over a six-month period, just 15.7% of
firms were hiring. The breadth of the downturn includes 126,000
construction industry jobs lost last month, bringing the total to 1.3
million since early 2007.&nbsp; Factory jobs were down another
161,000 in March, adding to the 10-year downtrend during which over 5
million jobs (29.1%) have been shed. The job market has turned so sour
that the somewhat immune service sector has suffered. It lost 353,000
jobs last month and 2.8 million (3.0%) since the peak in late 2007.
Even government sector hiring has slowed. The 81,000 rise in payrolls
last month left them up just 0.4% y/y. Hiring by local governments has
been unchanged since last year.
Fewer workers worked fewer hours last
month and the length of the average workweek fell to 33.2 hours, a
record low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403c.jpg" align="right" border="0" height="265" width="353">
For the first quarter, the combination of lower employment
and fewer hours-worked brought aggregate hours down by 8.7% (AR) from
4Q' 08. That rate of decline was even faster than during 4Q and
suggests negative growth in real GDP in excess of 7% in 1Q '09.· The
weak labor market has taken a toll on average hourly earnings in
private industries. The 0.2% gains in each of the last three months
lowered the annualized rate of growth by half since last year to 2.2%.
In the construction and the goods producing sectors, growth in average
hourly earnings was negative.
 The figures referenced above
are available in Haver's USECON database.
Additional detail can be found in the LABOR and in
the EMPL databases.
Policies to Bring Us
Out of the Financial Crisis and Recession is this morning's
speech by Fed Vice Chairman Donald L. Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/speech/kohn20090403a.htm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">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">Payroll Employment</td>
<td>-663</td>
<td>-651</td>
<td>-741</td>
<td>-3.5%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-651</td>
<td>-655</td>
<td>--</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-161</td>
<td>-169</td>
<td>-262</td>
<td>-9.8%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-126</td>
<td>-107</td>
<td>-135</td>
<td>-12.5%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-358</td>
<td>-366</td>
<td>-336</td>
<td>-2.2%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.2</td>
<td>33.3</td>
<td>33.3</td>
<td>33.8 (March '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>8.5%</td>
<td>8.1%</td>
<td>7.6%</td>
<td>4.8% March '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>

U.S. ISM Nonmanufacturing Index
Falls Again 
by <a href="/comment/Moeller.html">Tom
Moeller</a> April 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403d.jpg" align="left" border="0" height="265" width="353">
The service sector remains under pressure. The March Composite
Index for the nonmanufacturing sector from the Institute for Supply
Management (ISM) slipped further to 40.8 from an unrevised February
reading of 41.6. Consensus expectations were for a reading of 42.0. For
the quarter as a whole, the index edged up to 41.8 from the low of 40.7
during 4Q '08. A level of the ISM index below 50 indicates declining
activity. Since the series' inception in 1997 there has been a 48%
correlation between the level of the business activity index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
Despite the decline in the overall index, the business
activity index improved last month. The employment index, however,
offset that rise with a decline to near the cycle low. Since the
series' inception in 1997 there has been a 56% correlation between the
level of the ISM nonmanufacturing employment index and the m/m change
in payroll employment in the service-producing plus the construction
industries.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403e.jpg" align="right" border="0" height="265" width="353">
Pricing power fell back again after February improvement.
Since its inception ten years ago, there has been a 60% correlation
between the price index and the q/q change in the GDP services chain
price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report
On Business</cite>®, the composite index is calculated as an
indicator of the overall economic condition for the non-manufacturing
sector. It is a composite index based on the diffusion indices for four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm.">here</a>.
ISM surveys more than 370 purchasing managers in more than 62
industries including law firms, hospitals, government and retailers.
The nonmanufacturing survey dates back to July 1997.
Credit Market Competition and the Nature of Firms
from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr366.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">March</th>
<th scope="col">February</th>
<th scope="col">March '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>40.8</td>
<td>41.6</td>
<td>49.9</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>41.5</td>
<td>46.5</td>
<td>75.5</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>
Market Services PMIs Turn Higher
In March 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> April 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090403f.jpg" align="left" border="0">
In the Market PMI framework Europe is stabilizing as the rates
of decline in MFG and Services bottom and begin to show some
improvement. But the EU framework of surveys shows declines are still
in train. The table above shows the EMU and EU EC-Commission readings
along with the Market PMI readings. They are in conflict. The EC
readings for services are mostly on their lows while the Market figures
have risen from their respective lows. 
 

Germany, France, Italy Spain and Ireland each showed Service
sector improvement in March in the Market framework. The UK also showed
some nice improvement. All the indices are still below 50, indicating
ongoing contraction for the sector. The three-month averages are still
falling and MEU Ireland France and UK each do show current market
reading that surpass their respective three-month averages a good sign
for stability and recovery. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro-13</td>
<td>40.95</td>
<td>39.24</td>
<td>42.16</td>
<td>40.78</td>
<td>42.11</td>
<td>45.80</td>
<td>8.0%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Germany</td>
<td>42.30</td>
<td>41.32</td>
<td>45.20</td>
<td>42.94</td>
<td>44.81</td>
<td>48.70</td>
<td>5.0%</td>
</tr>
<tr class="grey4">
<td class="firstcol">France</td>
<td>43.64</td>
<td>40.18</td>
<td>42.56</td>
<td>42.13</td>
<td>43.44</td>
<td>46.64</td>
<td>14.1%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Italy</td>
<td>39.10</td>
<td>37.85</td>
<td>41.10</td>
<td>39.35</td>
<td>40.58</td>
<td>44.45</td>
<td>5.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Spain</td>
<td>34.11</td>
<td>31.73</td>
<td>31.84</td>
<td>32.56</td>
<td>31.71</td>
<td>35.40</td>
<td>18.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Ireland</td>
<td>35.69</td>
<td>31.78</td>
<td>33.94</td>
<td>33.80</td>
<td>34.03</td>
<td>38.10</td>
<td>10.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="8">EU
only</td>
</tr>
<tr class="grey4">
<td class="firstcol">UK (CIPs)</td>
<td>45.47</td>
<td>43.24</td>
<td>42.48</td>
<td>43.73</td>
<td>42.31</td>
<td>45.31</td>
<td>26.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">US NONFMG ISM</td>
<td>#N/A</td>
<td>41.60</td>
<td>42.90</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Index</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Services</td>
<td>-31</td>
<td>-29</td>
<td>-28</td>
<td>-32.67</td>
<td>-29.50</td>
<td>-23.25</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">EMU</td>
<td>Mar-09</td>
<td>Feb-09</td>
<td>Jan-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Services</td>
<td>-25</td>
<td>-24</td>
<td>-22</td>
<td>-23.67</td>
<td>-17.83</td>
<td>-8.63</td>
<td>0.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Cons Confidence</td>
<td>-34</td>
<td>-33</td>
<td>-31</td>
<td>-32.67</td>
<td>-29.50</td>
<td>-13.50</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany-Ccon</td>
<td>-31</td>
<td>-29</td>
<td>-27</td>
<td>-29.00</td>
<td>-22.67</td>
<td>-14.08</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France-Ccon</td>
<td>-36</td>
<td>-36</td>
<td>-35</td>
<td>-35.67</td>
<td>-33.67</td>
<td>-27.33</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Ital-Ccon</td>
<td>-31</td>
<td>-28</td>
<td>-26</td>
<td>-28.33</td>
<td>-27.33</td>
<td>-25.08</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain-Ccon</td>
<td>-43</td>
<td>-48</td>
<td>-44</td>
<td>-45.00</td>
<td>-44.83</td>
<td>-39.83</td>
<td>10.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK-Ccon</td>
<td>-28</td>
<td>-32</td>
<td>-35</td>
<td>-31.67</td>
<td>-29.67</td>
<td>-24.92</td>
<td>18.4%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile
is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Jobless Rate Reaches 8.5%;5.1 Million Payroll Jobs Are Lost Since Cycle Peak

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.

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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.

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

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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.