Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311a.jpg" width="353">
The Bureau of Labor Statistics indicated in its January report on Job Openings &amp; Labor Turnover Survey (JOLTS) that job availability fell 7.2% from December and by more than one-third from the June 2007 peak. The latest level was a record low for the series which dates back to December 2000.
The job openings rate also fell. The January rate was down to 2.2% versus an upwardly revised 2.3% rate in December, 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 and manufacturing sectors fell by roughly two-thirds from the 2007 averages. Professional &amp; business services job openings fell by one-third year-to-year while openings in the education &amp; health sectors also were weak and they fell 7.6%. Openings in retail trade fell a slight 0.3% y/y.
By region, openings in the South, the Midwest and the West were down by roughly one third year-to-year and in the Northeast they were down by one quarter.
The hires rate held steady versus December at 3.3% which was still near the lowest in the series&#39; 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 11.9% year-to-year. The construction sector showed a 4.3% increase versus last year but elsewhere hires were quite weak. In the factory sector, hires fell 33.5% y/y and in the professional &amp; business services sector they fell 14.8%. In the leisure and hospitality sector, hires fell 18.1% y/y. Even in the educational &amp; health sector hires fell 5.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311b.jpg" width="353">
The job separations rate held steady at 3.6%, about where it&#39;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&#39;s USECON database.
Explaining trends in wages, work and occupations from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflapril2009_261.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/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;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>2.3</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>2,991</td>
<td>3,224</td>
<td>4,332</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>3.6</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,399</td>
<td>4,508</td>
<td>4,995</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>
</body>
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The Bureau of Labor Statistics indicated in its January report on Job Openings & Labor Turnover Survey (JOLTS) that job availability fell 7.2% from December and by more than one-third from the June 2007 peak. The latest level was a [...]

JOLTS: U.S. Job Openings Fall Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311c.jpg" width="353">
The total number of mortgage applications recovered last week after three consecutive weeks of decline, reported the Mortgage Bankers Association. The 11.3% increase nevertheless left applications 45.4% below the peak reached this past January when applications were boosted by the precipitous decline in interest rates to near the lows of 2003.
The index of applications to refinance a home mortgage recovered 13.3% last week and that reversed nearly all of the prior period&#39;s 15.3% decline. While these applications are down by one-half from their January high, the trend still is up due to the decline in interest rates.
Applications for a mortgage to purchase a home also rose last week. The 7.1% increase was enough to recover nearly all of the decline during the prior two weeks. The falloff in home sales continued, however, to pull purchase applications sharply lower. Since their peak early last year these applications are down nearly 50%.
The effective interest rate on a conventional 15-year mortgage fell week-to-week to 4.84%. That was near the lowest level since 2003 after which home sales surged. For a 30-year mortgage, rates held near their recent lows at 5.19%. Interest rates on 15- and 30-year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. For an adjustable 1-Year mortgage, the rate ticked up slightly week-to-week to 6.25% but the rate still was down sharply from the 7.07% peak reached this past Fall.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311d.jpg" width="353">
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage. Moreover, during the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The figures for weekly mortgage applications are available in Haver&#39;s SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
The Affordability of Homeownership to Middle-Income Americans from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q08Rappaport.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/06/09</th>
<th scope="col">02/27/09</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>723.4</td>
<td>649.7</td>
<td>7.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>253.3</td>
<td>236.4</td>
<td>-31.3%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,470.7</td>
<td>3,063.4</td>
<td>41.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications recovered last week after three consecutive weeks of decline, reported the Mortgage Bankers Association. The 11.3% increase nevertheless left applications 45.4% below the peak reached this [...]

U.S. Weekly Mortgage Applications Rise

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311c.jpg" align="left" border="0" height="265" width="353">
The total number of mortgage applications recovered last week
after three consecutive weeks of decline, reported the Mortgage Bankers
Association. The 11.3% increase nevertheless left applications 45.4%
below the peak reached this past January when applications were boosted
by the precipitous decline in interest rates to near the lows of 2003.
The index of applications to refinance a home mortgage
recovered 13.3% last week and that reversed nearly all of the prior
period's 15.3% decline. While these applications are down by one-half
from their January high, the trend still is up due to the decline in
interest rates.
Applications for a mortgage to purchase a home also rose last
week. The 7.1% increase was enough to recover nearly all of the decline
during the prior two weeks. The falloff in home sales continued,
however, to pull purchase applications sharply lower. Since their peak
early last year these applications are down nearly 50%.
The effective interest rate on a conventional 15-year mortgage
fell week-to-week to 4.84%. That was near the lowest level since 2003
after which home sales surged. For a 30-year mortgage, rates held near
their recent lows at 5.19%. Interest rates on 15- and 30-year mortgages
are closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. For an adjustable 1-Year mortgage, the rate ticked up
slightly week-to-week to 6.25% but the rate still was down sharply from
the 7.07% peak reached this past Fall.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311d.jpg" align="right" border="0" height="265" width="353">
During the last ten years there has been a (negative) 79%
correlation between the level of applications for purchase and the
effective interest rate on a 30-year mortgage. Moreover, during the
last ten years there has been a 61% correlation between the y/y change
in purchase applications and the change in new plus existing single
family home sales.
The figures for weekly mortgage applications are available in
Haver's SURVEYW database.
The Mortgage Bankers Association surveys between 20 to 35 of
the top lenders in the U.S. housing industry to derive its refinance,
purchase and market indexes. The weekly survey covers roughly 50% of
all U.S. residential mortgage applications processed each week by
mortgage banks, commercial banks and thrifts. Visit the Mortgage
Bankers Association site <a href="http://www.mbaa.org">here</a>.
The Affordability of Homeownership to
Middle-Income Americans from the Federal Reserve Bank
of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q08Rappaport.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/06/09</th>
<th scope="col">02/27/09</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>723.4</td>
<td>649.7</td>
<td>7.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>253.3</td>
<td>236.4</td>
<td>-31.3%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,470.7</td>
<td>3,063.4</td>
<td>41.8%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings Fall
Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics indicated in its January report
on Job Openings &amp; Labor Turnover Survey (JOLTS) that job
availability fell 7.2% from December and by more than one-third from
the June 2007 peak. The latest level was a record low for the series
which dates back to December 2000.
The job openings rate also fell. The
January rate was down to 2.2% versus an upwardly revised 2.3% rate in
December, 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 and
manufacturing sectors fell by roughly two-thirds from the 2007 averages. Professional &amp; business
services job openings fell by one-third year-to-year while openings in
the education &amp; health sectors also were weak and they fell
7.6%. Openings in retail trade fell a slight 0.3% y/y.
By region, openings in the South, the Midwest and the West
were down by roughly one third year-to-year and in the Northeast they
were down by one quarter.
The hires rate held steady versus December
at 3.3% which was still 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
11.9% year-to-year. The construction sector showed a 4.3% increase
versus last year but elsewhere hires were quite weak. In the factory
sector, hires fell 33.5% y/y and in the professional &amp; business
services sector they fell 14.8%. In the leisure and hospitality sector,
hires fell 18.1% y/y. Even in the educational &amp; health sector
hires fell 5.0%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311b.jpg" align="right" border="0" height="265" width="353">
The job separations rate held steady at
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.
Explaining trends in wages, work and occupations from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflapril2009_261.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/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January '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>2.3</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>2,991</td>
<td>3,224</td>
<td>4,332</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>3.6</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,399</td>
<td>4,508</td>
<td>4,995</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Grows Sharply With Recession &amp; TARP 
by <a href="/comment/Moeller.html">Tom
Moeller</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311e.jpg" align="left" border="0" height="265" width="353">
The U.S. government ran a budget deficit of $192.8 billion
during February and for the first five months of this fiscal year the
deficit swelled to $764.5B. Both figures are substantially higher than
the deficits of $175.6B last February and $264.5B for the first five
months of FY08. The latest figure came in slightly below Consensus
projections for a February deficit of $203B.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311f.jpg" align="right" border="0" height="265" width="353">
Year-to-date the budget deficit is running at roughly 5.5% of
GDP. The Congressional Budget Office's recent deficit estimate of $1.2
trillion for FY09 amounts to 8.3% of GDP. It assumes that revenues will
fall 6.6% year-to-year and that outlays will increase 19.0%.
Net revenues during February fell 17.4% from February of last
year and for the first five months of FY09 they were down 11.0% y/y.
Individual income tax receipts fell 13.1 % y/y through February
reflecting higher unemployment. Corporate tax receipts mirror the
drying up of profitability and fell by nearly one-half. Growth in
employment taxes dropped to 0.9%, the least since late 2003, and
unemployment insurance tax receipts fell 9.9%. Real estate taxes fell
6.2% after 10.5% growth last year.
Swelled by TARP, U.S. government outlays surged by 32.0% from
last fiscal year's first five months. Outlays under the Government's
Troubled Asset Relief Program (TARP) amounted to $37.8B last month and
for the first four months of the program totaled $280.3B. The U.S.
Treasury has adopted the view that these TARP expenditures should be
counted like any other spending. When the banks repay the Treasury,
these funds will be counted as revenue. Accounted for in this way, TARP
causes a surge in the budget deficit when the funds are distributed to
the banks, but leads to a smaller deficit, or perhaps a surplus, when
repayments are received.
Defense spending (19% of total outlays) rose 7.1%. Medicare
expenditures (12% of outlays) increased by 10.9% and "income security"
spending (11% of outlays) jumped 21.1% after 7.5% growth last year.
Social security payments rose a steady 7.1% but net interest payments
continued to fall by more than one-quarter with lower interest rates.
The Government's financial data are available in Haver's USECON
database, with extensive detail available in the specialized GOVFIN.
The Economic Crisis and the Fiscal Crisis: 2009 and
Beyond from Alan J. Auerbach, University of California,
Berkeley, and William G. Gale, Brookings Institution, is available <a href="http://www.taxpolicycenter.org/UploadedPDF/411843_economic_crisis.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/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-192.8B</td>
<td>$-86.5B</td>
<td>$-175.6B 
(2/08)</td>
<td>-$454.8B</td>
<td>-$161.5B</td>
<td>-$248.2B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$87.3B</td>
<td>$226.1B</td>
<td>-17.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$280.1B</td>
<td>$131.3B</td>
<td>-0.4%</td>
<td>9.1%</td>
<td>2.8%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
UK Trade Picture Show More
Deterioration 
by <a href="/comment/Brusca.html">Robert
Brusca</a> March 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090311g.jpg" align="left" border="0" height="265" width="353">
In the UK both export and import flows are losing momentum
fast. Weak exports tell a tale of weakening growth in UK export
markets. Dropping imports tell of still weakening domestic demand. Both
series are quite weak and have a record of tracking one another
relatively closely. The deficit in goods and services trade widened
this month but the trends still seems to show a contraction phase is in
train (see chart). While exports fell more steeply than imports in
January, the two months of January and December taken together show
much more similar behavior. 
 

The trade gap is currently 41% of exports which is not far
from its peak ratio of nearly 45% (since 1990). The deficit is also 29%
of imports which is close to its max ratio of 31%. So while the deficit
has been gradually on the decline the size of the deficit relative to
the trade flows is expanding, effectively increasing its burden. 
 

Year-over-year UK export and import values are lower by about
7% and 6% respectively. But over the recent periods we get a better
taste of what is really in train. The annualized rate drop for exports
is 38% over three months compared to 28% for imports. Over six months
it&#8217;s 31% for exports compared to 25% for imports. Obviously the
unraveling has been recent and has some on with great vigor. Sterling
has dropped during this period, something that should help the UK to
hold its trade competitiveness. However, that makes things more
difficult for exporters based in the euro-Zone, trying to penetrate the
UK market and it has been the source of some UK e-Zone tensions. 


UK Trade trends for goods
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey3">
<td class="firstcol">Balance*</td>
<td>-££ 7.75</td>
<td>-££ 7.23</td>
<td>-££ 7.61</td>
<td>-££ 7.66</td>
<td>-££ 7.72</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All Exp</td>
<td>-4.0%</td>
<td>-1.8%</td>
<td>-37.8%</td>
<td>-31.0%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-6.7%</td>
<td>0.5%</td>
<td>-24.7%</td>
<td>-13.0%</td>
<td>-5.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-6.0%</td>
<td>-12.2%</td>
<td>-68.0%</td>
<td>-58.9%</td>
<td>-34.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-14.6%</td>
<td>7.9%</td>
<td>-79.6%</td>
<td>-75.2%</td>
<td>-23.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>-0.3%</td>
<td>7.3%</td>
<td>13.5%</td>
<td>5.4%</td>
<td>8.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">All IMP</td>
<td>-1.0%</td>
<td>-3.5%</td>
<td>-27.9%</td>
<td>-25.5%</td>
<td>-5.7%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Capital gds</td>
<td>-4.8%</td>
<td>-4.8%</td>
<td>-20.1%</td>
<td>-13.9%</td>
<td>-8.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Road Vehicles</td>
<td>-0.3%</td>
<td>-11.9%</td>
<td>-70.3%</td>
<td>-57.1%</td>
<td>-43.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Basic Materials</td>
<td>-15.2%</td>
<td>-4.5%</td>
<td>-61.8%</td>
<td>-53.4%</td>
<td>-30.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Food Feed Bev &amp; Tbco</td>
<td>3.2%</td>
<td>-4.1%</td>
<td>14.4%</td>
<td>5.3%</td>
<td>10.9%</td>
</tr>
<tr class="grey2">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310k.jpg" width="353">
The latest survey of hiring intentions by 31,800 employers, performed by Manpower Inc., indicates the weakest plans since the &quot;credit crunch&quot; recession of 1980. The Manpower Index level of -1 for 2Q09 follows a string of steadily declining readings since the series&#39; peak in 2005-06. These figures are seasonally adjusted.
During the last ten years there has been a 70% correlation between the level of the Manpower Index and the quarterly change in nonfarm payroll employment.Only the overall figure is seasonally adjusted while industry detail is not.
On a not seasonally adjusted basis, the 2Q level indicates that 15% of firms intend to raise employment and 14% expected to lower the number of jobs. No change in employment is expected by 67% of firms. This is up from an average 59% who expected no change from 2006 to 2008.
Plans for the second quarter in the manufacturing sector are quite weak with a net reading of -7. This reflects 13% of employers who expect to raise employment versus 20% who expect to decrease it. In the construction industries, 16% expect to increase hiring while 20% expect to cut. In financial businesses, 12% expect higher employment while 10% expect a lower number of jobs.
Weakness in hiring plans is evenly spread across the nation&#39;s regions.
The Manpower figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Manpower Inc Employment Outlook Surey</a></th>
<th scope="col">2Q 09</th>
<th scope="col">1Q 09</th>
<th scope="col">2Q 08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Net Higher (SA, %)</td>
<td>-1</td>
<td>10</td>
<td>15</td>
<td>13</td>
<td>18</td>
<td>21</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest survey of hiring intentions by 31,800 employers, performed by Manpower Inc., indicates the weakest plans since the "credit crunch" recession of 1980. The Manpower Index level of -1 for 2Q09 follows a string of steadily [...]

Manpower Survey: 2Q09 Employment Seen As Weakest Since Credit Crunch Recession

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310f.jpg" align="left" border="0" height="265" width="353">
IP drops sharply &#8211; Record drop in France 
Industrial production continues to show steep declines in the Zone.
France reported the largest decline to day since 1990 when the INSEE
series first began. Spain&#8217;s volatile index fell by 8.4% in January.
Italy&#8217;s index dropped by 2.8%. For these three countries of the EU,
three month declines in output range from an annual pace of -45% in
Spain to -26% in France. Over the past year Spain is off by 23% while
France and the UK see IP however by about 13%. Quarter-to-date in
January of 2009 IP is falling at an annual rate drop of greater than
20% in each of these countries and as much as -35% in Spain. 
 

Europe is STILL in denial: What? Me worry? 
Despite all this and despite new warnings of slower growth and a global
decline in growth from the IMF Europe seems distant. Trichet sounds
upbeat. Weber says there is no reason for the ECBs key lending rate to
go below 1%. Europe has spurned the US request for more stimulus. The
German&#8217;s have tuned a cold shoulder to France&#8217;s idea of cutting back
the VAT tax. Yet the EU commission, that bastion of fiscal
responsibility, is issuing a warning to Germany about excess spending. 
 

Alfred E Newman meets Euroland: Europe is
not on the same page as the IMF, the World Bank, or the US. Economists
in the US are talking about the prospect of DEPRESSION. In Europe they
are &#8216;la tee da&#8217; about the downturn treating it like a minor
inconvenience, not even as the powerful recession that it clearly is,
let alone acknowledging the risk of worsening. The EU Commission is
concerned about the Mass-Trick criterion for debt to GDP and about
annual fiscal deficits as if Europe were out of sorts with its fiscal
pledges in a boom year. A boom year it is not. Europe is in denial from
the EU Commission to the ECB itself. 
 

The industrial output index is not out of touch. It is taking
noting lightly, it is taking it on the chin. And that raises some
issues for Europe if policy is not going to be responsive to its
clearly deteriorating situation. 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Main E-zone Countries and UK IP in MFG
</th></tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Jan-09</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Jan-09</td>
<td>Jan-09</td>
<td>Jan-09</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">France: IP excl Construction</td>
<td>-3.1%</td>
<td>-1.5%</td>
<td>-2.8%</td>
<td>-26.0%</td>
<td>-21.3%</td>
<td>-13.8%</td>
<td>-26.9%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-8.4%</td>
<td>3.8%</td>
<td>-9.5%</td>
<td>-45.1%</td>
<td>-38.0%</td>
<td>-23.7%</td>
<td>-34.7%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-2.8%</td>
<td>-1.9%</td>
<td>-3.0%</td>
<td>-26.8%</td>
<td>-19.9%</td>
<td>-12.8%</td>
<td>-23.2%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Mo/Mo are simple percent changes
others are at SAARs</td>
</tr>
</tbody>
</table>
</body></html>

IP drops sharply – Record drop in France Industrial production continues to show steep declines in the Zone. France reported the largest decline to day since 1990 when the INSEE series first began. Spain’s volatile index fell by 8.4% [...]

IP Drops Sharply in the Euro Area's Early Reports

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310g.jpg" align="right" border="0" height="265" width="353">Country after country has
been reporting declines in its
foreign trade. Imports are down as a result of falling incomes at home,
and exports are down as a result of falling incomes abroad. Today
France reported a 6.7% decline in exports in January from December
while Germany reported a 4.4% decline. From January 2008 to January
2009, French exports declined 21% while those in Germany declined
18.4%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310h.jpg" align="right" border="0" height="265" width="353">
Imports in France were down17.6% in January from a year ago and
imports in Germany were down 11.1% over the same period. Exports from
France and Germany are shown in the first chart and imports into France
and Germany are shown in the second chart.
Germany typically runs a substantial trade surplus. It reached
a peak of 19.34 billion euros in November 2007. With exports declining
at a faster rate than imports, the balance on trade in goods has
trended downward and in January, 2009 was only 8.3 billion euros.
France, on the other hand has been running a growing trade deficit
since early 2004. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310i.jpg" align="right" border="0" height="265" width="353">
The deficit improved in December to minus 2.95
billion euro from minus 5.67 billion in November but has worsened again
in January and is now at minus 4.55 billion euros. The balances on
trade in goods for France and Germany are shown in the third chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310j.jpg" align="right" border="0" height="265" width="353">
Automobiles and related products have been responsible for a
good part of the decline in exports in France and Germany. The fourth
chart shows exports of these products. The data only go through
December, but even by then the exports of these products were down
31.6% in Germany from a year ago and 44.4% in France. The fourth chart
shows these exports for France and Germany. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FOREIGN
TRADE (Bil Euros)</th>
<th scope="col">Jan 09</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Jan&nbsp; 08&nbsp;</th>
<th scope="col">M/M CHG&nbsp;</th>
<th scope="col">Y/Y CHG</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GERMANY</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">Exports&nbsp;</td>
<td>68.95</td>
<td>72.13</td>
<td>84.25</td>
<td>-4.41%</td>
<td>-18.35%</td>
<td>990.18</td>
<td>968.36</td>
</tr>
<tr>
<td class="firstcol">Imports&nbsp;&nbsp;</td>
<td>60.64</td>
<td>61.11</td>
<td>68.23</td>
<td>-0.77%</td>
<td>-11.12%</td>
<td>813.46</td>
<td>771.96</td>
</tr>
<tr>
<td class="firstcol">Balance</td>
<td>8.31</td>
<td>11.02</td>
<td>16.22</td>
<td>-2.71</td>
<td>-7.91</td>
<td>176.7</td>
<td>196.40</td>
</tr>
<tr class="odd">
<td class="firstcol">FRANCE</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">Exports (Bil Euros)</td>
<td>28.74</td>
<td>30.80</td>
<td>36.37</td>
<td>-6.70%</td>
<td>-20.99%</td>
<td>412.00</td>
<td>403.12</td>
</tr>
<tr>
<td class="firstcol">Imports&nbsp;&nbsp;</td>
<td>33.28</td>
<td>33.75</td>
<td>40.38</td>
<td>-1.38%</td>
<td>-17.57%</td>
<td>465.40</td>
<td>443.07</td>
</tr>
<tr>
<td class="firstcol">Balance</td>
<td>-4.55</td>
<td>-2.95</td>
<td>-4.01</td>
<td>-1.59</td>
<td>-0.54</td>
<td>-53.4</td>
<td>-39.95</td>
</tr>
</tbody>
</table>
</body></html>

Country after country has been reporting declines in its foreign trade. Imports are down as a result of falling incomes at home, and exports are down as a result of falling incomes abroad. Today France reported a 6.7% decline in [...]

Foreign Trade in France and Germany: Casualties of the Recession

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310d.jpg" width="353">
According to the National Federation of Independent Business (NFIB), small business optimism fell even further last month. The index level of 82.6 was down 1.8% month-to-month after a slightly revised 1.3% January decline. The latest level was 8.0% below the 2008 average and it was the second lowest level on record.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of firms planning to raise prices dropped to 1%, a new record low. Price discounts were evident as the percentage of firms actually raising prices fell further into negative territory, and the reading was a record low. During the last ten years there has been a 69% correlation between the y/y change in the producer price index and the level of the NFIB price index.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310e.jpg" width="353">
The percent expecting credit conditions to ease fell further and was near its lowest level since 1980. The percent expecting higher real sales in six months fell to a net negative 29%, a record low.
The percentage expecting the economy to improve fell further into negative territory. The percentage reporting that now is a good time to expand the business fell to 3% which was the second lowest reading on record. During the next 3-6 months, plans for capital spending fell slightly and was still near the lowest level since 1975.
The percentage planning to raise employment improved just slightly to a net negative 3% while the percentage of respondents with one or more job openings was stable at 11%, the least since 1992. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The largest, single most important problems seen by business were poor sales (33%), taxes (19%), government requirements (10%), insurance cost and availability (8%), competition from large businesses (6%) and inflation (6%).
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver&#39;s SURVEYS database. 
Financial Reform to Address Systemic Risk is this morning&#39;s speech by Fed Chairman Ben S. Bernanke at the Council on Foreign Relations, Washington, D.C. It is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090310a.htm">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/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (SA, 1986=100)</td>
<td>82.6</td>
<td>84.1</td>
<td>-11.1%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the National Federation of Independent Business (NFIB), small business optimism fell even further last month. The index level of 82.6 was down 1.8% month-to-month after a slightly revised 1.3% January decline. The latest [...]

U.S. Small Business Optimism Nearing All-time Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090310c.jpg" width="353">
Chain store sales ticked up 0.2% last week and began this month slightly above the February average, according to the International Council of Shopping Centers-Goldman Sachs Index. A moderate rebound in consumer spending is indicated by the 3.0% increase in the level of spending from the late-January low.
The chain store sales figures are available in Haver&#39;s SURVEYW database.
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.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The outlook for sales, however, remains cautious. The weekly leading indicator of chain store sales from ICSC-Goldman Sachs slipped another 0.2% last week and for all of February fell 2.3% from January (-4.4% y/y).
Inflation Targeting&#151;Central Bank Practice Overseas from the Federal Reserve Bank of Boston can be found <a href="http://www.bos.frb.org/economic/ppb/2008/ppb081.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">03/07/09</th>
<th scope="col">02/28/09</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>484.1</td>
<td>483.0</td>
<td>-0.9%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales ticked up 0.2% last week and began this month slightly above the February average, according to the International Council of Shopping Centers-Goldman Sachs Index. A moderate rebound in consumer spending is indicated [...]

U.S. Chain Store Sales Are Up in Early March

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.

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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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