Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227a.jpg" align="right" border="0" height="265" width="353">
The U.S.
Bureau of Economic Analysis today reported that real GDP contracted
at a 6.2% annual rate last quarter.&nbsp; It was the largest
decline since the "credit crunch" recession of 1980 and it exceeded
Consensus expectations for a 5.4% drop.&nbsp; One month ago, the
initial report showed that GDP had declined at a 3.8% rate with
expectations for a 6.0% decline. In the interim, estimates of virtually
all the economy's components were weaker than suggested by certain "top
down" estimates from the labor market, on which the early GDP estimates
are partially based.&nbsp; So, today's figure about matches
month-ago Consensus forecasts.The largest source
of the downward revision to GDP growth came from inventory changes
which added just 0.2 percentage points to growth instead of the
originally estimate of 1.3 points. To some extent this news is somewhat
positive for the GDP&nbsp; outlook because it suggests that the
"involuntary" accumulation was smaller. Therefore fewer inventories may
need to be shed if demand remains under pressure.&nbsp; The 4Q
inventory addition to GDP growth followed three consecutive quarters of
decumulation or modest accumulation as tight control methods kept
inventories under wraps.The next two sources of downward
revision to 4Q GDP are a bit more problematic for the economic growth
outlook.&nbsp;&nbsp;<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227b.jpg" align="right" border="0" height="265" width="353">
Real
U.S. final sales to domestic purchasers contracted at a 5.7%
annual rate which was greater than the 4.9% estimated last
month.&nbsp; Again, that was the worst decline since the notably
sharp, "credit crunch" recession of 1980 when consumers pocketed their
credit cards.&nbsp; Personal consumption expenditures fell a
downwardly revised 4.3% (AR) which was somewhat greater than the
decline during 3Q.&nbsp; Spending on motor vehicles declined at a
huge 38.0% annual rate, which was quite a bit faster than the 26.6%
decline logged in 3Q.&nbsp; Spending on other durable goods also
fell sharply (-0.7% y/y) as they did during the prior
quarter.&nbsp; Real spending on clothing fell at a somewhat easier
rate (-2.7%) than during 3Q.&nbsp; Business fixed investment fell
at the same rate as estimated last month (-5.0% y/y) and the 22.2%
decline in residential investment (-19.2% y/y) was in fact slightly
less than initially indicated.&nbsp; Combined, business plus
residential investment declined for the tenth quarter out of the last
eleven (-8.8% y/y).The
government sector contributed marginally to GDP growth last quarter.
Activity rose at a 1.6% annual rate (3.3% y/y) led by a 6.7% (8.2% y/y)
rise in Federal spending.Finally, the foreign
trade sector subtracted 0.5 percentage points from GDP growth
instead of adding minimally.&nbsp; It was the first negative
contribution from trade to U.S. growth since 1Q 2007.&nbsp; Exports
fell at a deepened 23.6% rate (-1.8% y/y) as recessions intensified in
economies abroad.&nbsp; U.S. imports fell at a 16.0% rate (-7.1%
y/y) with the developing domestic recession, which was about the same
rate of decline estimated last month.Adding to the overall downward
estimate of GDP growth was an upward revision to price
inflation.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227c.jpg" align="right" border="0" height="265" width="353">
The GDP chain price index
increased at a 0.5% rate instead of falling minimally.&nbsp; The
source of the upward revision to the price index appears to have come
from inventories.&nbsp; The PCE price index fell at a 5.0% annual
rate versus a drop of 5.5% in the initial report. prices. The
residential investment chain price index fell at a 9.6% annual rate
while the business fixed investment price index rose 4.6%, about as
presented last month.The U.S. National Income &amp;
Product Account data is available in Haver's USECON
and the USNA databases.Sources of the
Great Moderation: shocks, friction, or monetary policy? from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.·
Ties that bind: bilateral trade's role in synchronizing
business cycles from the Federal Reserve Bank of Dallas can
be found <a href="http://dallasfed.org/research/eclett/2009/el0901.html">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"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '08 (Preliminary)</th>
<th scope="col">4Q '08 (Advance)</th>
<th scope="col">3Q '08</th>
<th scope="col">4Q 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">GDP</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.3</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. Bureau of Economic Analysis today reported that real GDP contracted at a 6.2% annual rate last quarter. It was the largest decline since the "credit crunch" recession of 1980 and it exceeded Consensus expectations for a 5.4% [...]

U.S. 4Q GDP Revised Down To Show Sharpest Drop Since 1980

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227a.jpg" align="right" border="0" height="265" width="353">The U.S.
Bureau of Economic Analysis today reported that real GDP contracted
at a 6.2% annual rate last quarter.&nbsp; It was the largest
decline since the "credit crunch" recession of 1980 and it exceeded
Consensus expectations for a 5.4% drop.&nbsp; One month ago, the
initial report showed that GDP had declined at a 3.8% rate with
expectations for a 6.0% decline. In the interim, estimates of virtually
all the economy's components were weaker than suggested by certain "top
down" estimates from the labor market, on which the early GDP estimates
are partially based.&nbsp; So, today's figure about matches
month-ago Consensus forecasts.
The largest source
of the downward revision to GDP growth came from inventory changes
which added just 0.2 percentage points to growth instead of the
originally estimate of 1.3 points. To some extent this news is somewhat
positive for the GDP&nbsp; outlook because it suggests that the
"involuntary" accumulation was smaller. Therefore fewer inventories may
need to be shed if demand remains under pressure.&nbsp; The 4Q
inventory addition to GDP growth followed three consecutive quarters of
decumulation or modest accumulation as tight control methods kept
inventories under wraps.
The next two sources of downward
revision to 4Q GDP are a bit more problematic for the economic growth
outlook.&nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227b.jpg" align="right" border="0" height="265" width="353">Real
U.S. final sales to domestic purchasers contracted at a 5.7%
annual rate which was greater than the 4.9% estimated last
month.&nbsp; Again, that was the worst decline since the notably
sharp, "credit crunch" recession of 1980 when consumers pocketed their
credit cards.&nbsp; Personal consumption expenditures fell a
downwardly revised 4.3% (AR) which was somewhat greater than the
decline during 3Q.&nbsp; Spending on motor vehicles declined at a
huge 38.0% annual rate, which was quite a bit faster than the 26.6%
decline logged in 3Q.&nbsp; Spending on other durable goods also
fell sharply (-0.7% y/y) as they did during the prior
quarter.&nbsp; Real spending on clothing fell at a somewhat easier
rate (-2.7%) than during 3Q.&nbsp; Business fixed investment fell
at the same rate as estimated last month (-5.0% y/y) and the 22.2%
decline in residential investment (-19.2% y/y) was in fact slightly
less than initially indicated.&nbsp; Combined, business plus
residential investment declined for the tenth quarter out of the last
eleven (-8.8% y/y).
The
government sector contributed marginally to GDP growth last quarter.
Activity rose at a 1.6% annual rate (3.3% y/y) led by a 6.7% (8.2% y/y)
rise in Federal spending.
Finally, the foreign
trade sector subtracted 0.5 percentage points from GDP growth
instead of adding minimally.&nbsp; It was the first negative
contribution from trade to U.S. growth since 1Q 2007.&nbsp; Exports
fell at a deepened 23.6% rate (-1.8% y/y) as recessions intensified in
economies abroad.&nbsp; U.S. imports fell at a 16.0% rate (-7.1%
y/y) with the developing domestic recession, which was about the same
rate of decline estimated last month.
Adding to the overall downward
estimate of GDP growth was an upward revision to price
inflation.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227c.jpg" align="right" border="0" height="265" width="353">
The GDP chain price index
increased at a 0.5% rate instead of falling minimally.&nbsp; The
source of the upward revision to the price index appears to have come
from inventories.&nbsp; The PCE price index fell at a 5.0% annual
rate versus a drop of 5.5% in the initial report. prices. The
residential investment chain price index fell at a 9.6% annual rate
while the business fixed investment price index rose 4.6%, about as
presented last month.
The U.S. National Income &amp;
Product Account data is available in Haver's USECON
and the USNA databases.
Sources of the
Great Moderation: shocks, friction, or monetary policy? from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-01bk.pdf">here</a>.·
Ties that bind: bilateral trade's role in synchronizing
business cycles from the Federal Reserve Bank of Dallas can
be found <a href="http://dallasfed.org/research/eclett/2009/el0901.html">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"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2000$, % AR</a></th>
<th scope="col">4Q '08 (Preliminary)</th>
<th scope="col">4Q '08 (Advance)</th>
<th scope="col">3Q '08</th>
<th scope="col">4Q 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">GDP</td>
<td>-6.2</td>
<td>-3.8</td>
<td>-0.5</td>
<td>-0.8</td>
<td>1.3</td>
<td>2.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.2</td>
<td>1.3</td>
<td>0.8</td>
<td>0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-6.4</td>
<td>-5.1</td>
<td>-1.3</td>
<td>-0.7</td>
<td>1.4</td>
<td>2.4</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>0.1</td>
<td>1.1</td>
<td>1.4</td>
<td>1.4</td>
<td>0.6</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>-5.7</td>
<td>-4.9</td>
<td>-2.2</td>
<td>-1.7</td>
<td>0.0</td>
<td>1.8</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.5</td>
<td>-0.1</td>
<td>3.9</td>
<td>2.0</td>
<td>2.2</td>
<td>2.7</td>
<td>3.2</td>
</tr>
</tbody>
</table>

 Michigan Consumer Sentiment
Estimate Little Changed At Lowest Since 1980 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 27, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227e.jpg" align="left" border="0" height="265" width="353">
The University of Michigan reported that its February reading
of consumer sentiment fell a sharp 8.0% month-to-month, about equal to
the mid-month read. That nearly reversed all of the gains of the prior
two months and returned the index to its lowest level since 1980. The
latest figure was down 20.5% from last February and the reading about
matched Consensus expectations. During the last ten years there has
been a 62% correlation between the level of sentiment and the
three-month change in real personal consumption expenditures.
The expectations component of consumer sentiment led the
decline in the overall February index. The 12.6% month-to-month drop
reversed all of the increases during the prior several months and the
series landed at its lowest level since 1980.
Expectations for business conditions during the next
year plunged 34.0% m/m to the lowest level since 1980. Expectations
for conditions during the next five years also fell. The expected
change in personal finances also fell back to the lowest level since
last June with a sharp 9.6% decline.
The current economic conditions index fell 1.5% after the
sharp 4.3% January decline. Buying conditions for large household goods
were viewed as having improved very slightly but the index remained
down 16.3% from a year earlier. The view of current personal finances
fell sharply and the index remained down by nearly one-half from early
2007.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227f.jpg" align="right" border="0" height="265" width="353">
The opinion of government policy, which apparently influences
economic expectations, improved to the highest level since last
January. Fourteen percent of respondents thought that a good job was
being done by government while a reduced forty-three percent thought
that a poor job was being done.
Inflation expectations for the next year fell back to 2.3%. It
was as high as 7.0% in May. The range of expectations is from slight
price deflation to a 5.2% increase in prices, though that latter figure
is half the year-ago expectation. The expected inflation rate during
the next five years worked the other way and ticked up to 3.5%.
The University of Michigan survey data is not seasonally
adjusted. The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews. The summary indexes are in Haver's USECON database
with details in the proprietary UMSCA database.
Budget of the United States Government Fiscal
Year 2010 The Budget Documents
from the Office of Management and Budget can be found <a href="http://www.whitehouse.gov/omb/budget/">here</a>.
The Shimer Puzzle and the Identification of
Productivity Shocks from the Federal Reserve Board is
available <a href="http://www.federalreserve.gov/pubs/feds/2009/200904/200904pap.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">February</th>
<th scope="col">Mid 
February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">February y/y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>56.3</td>
<td>56.2</td>
<td>61.2</td>
<td>60.1</td>
<td>-20.5%</td>
<td>63.8</td>
<td>85.6</td>
<td>87.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>65.5</td>
<td>67.1</td>
<td>66.5</td>
<td>69.5</td>
<td>-21.8</td>
<td>73.7</td>
<td>101.2</td>
<td>105.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>50.5</td>
<td>49.1</td>
<td>57.8</td>
<td>54.0</td>
<td>-19.1</td>
<td>57.3</td>
<td>75.6</td>
<td>75.9</td>
</tr>
</tbody>
</table>
 Deflation Is Back! by <a href="/comment/Brusca.html">Robert
Brusca</a> February 27, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090227d.jpg" align="left" border="0" height="265" width="353">
Deflation strikes back -- Uh, oh&#8230; Japan&#8217;s prices are falling
again. The chart of Japan&#8217;s Core CPI looks like the path of the ground
hog on ground hog&#8217;s day. In this case it is not four more weeks of
winter but another bout with deflation that is in prospect. Japan&#8217;s
quantitative easing seemed to have been successful in dispatching
Japan&#8217;s deflation as inflation began to rise in 2008. Then as oil
prices plunged, as the yen soared and as financial crisis gripped the
global economy, Japan&#8217;s recession took hold and now deflation is back.
Just today Japan issued a report of a 10% Yr/yr drop in industrial
production and with dwindling consumer spending. The downturn fuels the
deflation and deflation fuels the downturn. Japan&#8217;s economy has been
performing badly enough that the yen has reversed its course and is now
depreciating. The near 50% drop in Japan&#8217;s exports yr/yr is a clear
demonstration of how much the global economic downturn is battering
Japan. But the re-emergence of Japan&#8217;s deflation is a bad sign and an
event that will make Japan&#8217;s recovery that much more difficult. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Japan CPI
Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan-09</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>Q-to-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">All Items</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td> -5.0%</td>
<td> -3.1%</td>
<td> 0.0%</td>
<td>2.8%</td>
<td> -5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">All items less food and
energy-0.2%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-0.1%</td>
<td> -1.2%</td>
<td> -0.4%</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>-1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Allitems except fresh food</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td> -5.0%</td>
<td> -3.1%</td>
<td> 0.0%</td>
<td>3.2%</td>
<td> -4.3%</td>
</tr>
<tr>
<td colspan="9" class="firstcol">
Seasonally
Adjusted By Haver</td>
</tr>
<tr class="odd">
<td class="firstcol">Food&amp; Beverage</td>
<td>-0.5%</td>
<td>0.1%</td>
<td>0.4%</td>
<td> 0.0%</td>
<td> 0.8%</td>
<td>3.4%</td>
<td>2.0%</td>
<td> -1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">housing</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.0%</td>
<td> -0.4%</td>
<td> -0.2%</td>
<td>0.0%</td>
<td>0.0%</td>
<td> -0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing $ Persoanl</td>
<td>-1.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td> -4.2%</td>
<td> -1.8%</td>
<td> -0.9%</td>
<td>3.6%</td>
<td> -6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Education</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.8%</td>
<td> 0.6%</td>
<td> 0.7%</td>
<td>2.8%</td>
<td> 0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Medical are</td>
<td>0.6%</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>1.2%</td>
<td>0.4%</td>
<td> 0.1%</td>
<td> 0.8%</td>
<td> 3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Misc</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td> -0.8%</td>
<td> -0.4%</td>
<td> -0.1%</td>
<td>2.4%</td>
<td> -0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Reading &amp; Rec</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td> -4.9%</td>
<td> -1.9%</td>
<td>-1.3%</td>
<td> -2.0%</td>
<td> -6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport&amp;Comm</td>
<td>-1.2%</td>
<td>-2.1%</td>
<td>-2.7%</td>
<td> -21.8%</td>
<td> -16.7%</td>
<td> -6.3%</td>
<td>10.8%</td>
<td> -19.5%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. 4Q GDP Revised Down To ShowSharpest Drop Since 1980

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
<title></title></head>
<body>
 


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226a.jpg" align="right" border="0" height="265" width="353">&nbsp;The
recession in the U.S. factory sector entered an even more dire phase
during the last several months.&nbsp; New orders for durable goods
fell 5.2% last month after downwardly revised declines of between 4.0%
and 8.0% during four of the prior five months.&nbsp; Since July new
orders have plummeted 24.9%, a record six-month drop.&nbsp; The
latest decline doubled Consensus expectations for a 2.4% drop.
&nbsp; That
shortfall in new orders has been aptly followed by lower shipments of
durable goods.&nbsp; Off 3.7% in January, the decline followed
shortfalls of between 3.0% and 4.0% during four of the prior five
months.&nbsp; Year-to-year shipments fell 15.2% and they are down
15.9% during just the last six months.&nbsp; This extreme weakness
has brought with it a 17.5% twelve-month decline in industrial
production of durable goods.&nbsp; During the last ten years there
has been an 83% correlation between the twelve-month change in
shipments of durable goods and the change in durables industrial
production.&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226b.jpg" align="right" border="0" height="265" width="353">
&nbsp;Last month, the production cuts may finally have
succeeded in curbing inventory accumulation.&nbsp; Inventories of
manufactured durables fell 0.8%, the first monthly decline since
2003.&nbsp; But more efforts to curb the inventory buildup are to
come.&nbsp; Six-month growth still amounted to 1.3%.&nbsp; And
while that's down from the peak, it compares to outright inventory
decumulation at an 8.0% rate during the last recession. Orders for
transportation equipment led last month's decline in orders for durable
goods with a 13.5% drop which left them off 38.7%
year-to-year.&nbsp; The aircraft sector led that shortfall with a
nearly three-quarters drop in nondefense bookings.&nbsp; Orders for
motor vehicles &amp; parts fell by a lesser one-third during the
last year. Lower new orders for computers &amp; electronic
products followed closely for the top weakest spot in last month's
decline with a 5.0% drop (-13.6% y/y) which followed the 7.1% December
shortfall.&nbsp; Orders for just computers &amp; related
products were the weakest and posted a 16.0% drop and they're off by
more than one quarter during the last twelve months.&nbsp; Working
the other way were new orders for communications equipment which rose
1.2%.&nbsp; That recovered a piece of the 5.2% decline during
December and limited the year-to-year shortfall to just
2.6%.
Most other industries have been notably hard hit by
weakening demand.&nbsp; Orders for primary metals fell 4.6% last
month and they're down by more than one-third during the last
twelve.&nbsp; Machinery orders fell 2.0% last month and they're off
23.0% during the last year.&nbsp; Electrical equipment bookings
reversed all of a downwardly revised December gain with a 6.1%
flop.&nbsp; They're down by 22.1% during the last twelve
months.&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226c.jpg" align="right" border="0" height="265" width="353">&nbsp;Capital
equipment orders are very much
suffering from all this weakness in the front-end of the
economy.&nbsp; They fell 8.8% last month and are down 26.2% during
the last twelve. Orders for nondefense capital goods have been
particularly hard hit and they posted a 28.3% fall just in
January.&nbsp; Alone, aircraft orders have fallen by three-quarters
year-to-year.&nbsp; And without aircraft, nondefense capital goods
orders fell 5.4% during January and by 18.5% during the last twelve
months to their lowest level since 2004.&nbsp; During the last ten
years there has been an 80% correlation between the y/y change in
nondefense capital goods orders and the change in equipment &amp;
software spending in the GDP accounts.&nbsp; The correlation of the
GDP figure with capital goods shipments is, as one would expect, a
larger 92%.&nbsp;The durable goods figures are available in
Haver's USECON database. The U.S. Auto
Industry from the Federal Reserve Bank of Cleveland can be
found <a href="http://www.clevelandfed.org/research/trends/2009/0309/02ecoact.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">January</th>
<th scope="col">December</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">Durable Goods Orders</td>
<td>-5.2</td>
<td>-4.6</td>
<td>-23.3</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-2.5</td>
<td>-5.5</td>
<td>-17.4</td>
<td>-1.3</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-2.7</td>
<td>-10.2</td>
<td>-28.3</td>
<td>-6.7</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-5.4</td>
<td>-5.8</td>
<td>-18.5</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>

</body></html>

The recession in the U.S. factory sector entered an even more dire phase during the last several months. New orders for durable goods fell 5.2% last month after downwardly revised declines of between 4.0% and 8.0% during four of the [...]

U.S. Durable Goods Orders Lowest in Six Years; Latest Six-Month Decline a Record

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226h.jpg" align="left" border="0" height="265" width="353">
As the COIN index had predicted earlier in the week, the Euro
area
continues to labor under downward pressure in February. The sector
indices for EU were mostly lower again in February as the EU sentiment
index was at a new all-time low, at 61. The EMU sentiment index was on
an all-time low as well. No EU sector looks to be anything other than
in bad shape. The best of the sectors (construction) was in the bottom
10 percentile of its range and it still dropped by two points in the
month of February. Retail sales did improve by one point in February to
rise to a reading of -24. 
 

Without splitting hairs, the country indices for sentiment are
all very weak as well. 
 

Looking a bit more closely at sector detail for industry, most
of
the components for this sector worsened on the month and worsened
sharply. For example order volume fell from -49 to -57. Export order
volume fell from a reading of -49 to -58. The production trend fell to
-47 from -39. Employment was trimmed slightly compared to those metrics
falling to -34 from -32. But then, employment does tend to lag other
measures. Germany, France, Italy, Spain and the UK each saw a further
deterioration in their industrial sectors in February. 
 

Consumer confidence has spilled out to its lowest level in EU
history. Its details are not reassuring. Respondents put their
financial situation in the next 12-months in about the bottom 20th of
its historic range. The economic situation in the next 12-months, too,
is assessed as the worst ever. Expectations for unemployment are the
highest in the history of the survey. All this worsens as we realize
that respondents assess the past 12-months as the worst ever (since
1990). Clearly government support/stimulus programs are climbing up a
steep slope to reassure people. 
 

Retailing is somewhat better across EU. Retail sentiment
components
are generally in the bottom 10% to 15% of their respective ranges. The
retail measure itself is in the bottom 7th percentile of its range and
rose by one point on the month. Retailing improved in three of five
major reporting EU nations, and one other country saw the sector&#8217;s
sentiment gauge unchanged in Feb. 
 

The service sector index fell by one point in EU and it fell
across
its components save for current demand holding steady at a reading of
-19. Expected demand weakened by three points and both current and
expected employment gauges fell. All services indicators were at the
bottom of their respective all-time ranges. The five largest EU
countries all had service sectors that ranked at about the bottom 20th
percentile of their historic ranges. 
 

The EU/EMU survey was uniformly weak again this month. There
is no
sign of stabilization but the rate of descent has slowed a bit in the
last few months. Since we are at all-time lows, that slowing is to be
expected. Still we don&#8217;t know if that slowing is for real, if the
slowing in the pace of the drop will reverse, or when the trend might
reverse. The forward-looking aspects of the various surveys are not
encouraging us to be optimistic. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">EU
Sectors and Country level Overall Sentiment R-SQ 
</th>
<th scope="col"> </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">EU</td>
<td>Feb 
09</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>Nov 
08</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td style="text-align: left;">w/ Overall</td>
</tr>
<tr class="grey3">
<td class="firstcol">Overall</td>
<td>61</td>
<td>63.2</td>
<td>66.6</td>
<td>73.5</td>
<td>0.0</td>
<td>220</td>
<td>116</td>
<td>61</td>
<td>55</td>
<td>99</td>
<td style="text-align: left;">1.00</td>
</tr>
<tr class="grey3">
<td class="firstcol">Industrial</td>
<td>-37</td>
<td>-33</td>
<td>-32</td>
<td>-25</td>
<td>0.0</td>
<td>220</td>
<td>7</td>
<td>-37</td>
<td>44</td>
<td>-8</td>
<td style="text-align: left;">0.88</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Confidence</td>
<td>-32</td>
<td>-31</td>
<td>-28</td>
<td>-24</td>
<td>0.0</td>
<td>220</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td style="text-align: left;">0.85</td>
</tr>
<tr class="grey3">
<td class="firstcol">Retail</td>
<td>-24</td>
<td>-25</td>
<td>-25</td>
<td>-18</td>
<td>3.2</td>
<td>218</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td style="text-align: left;">0.60</td>
</tr>
<tr class="grey3">
<td class="firstcol">Construction</td>
<td>-38</td>
<td>-36</td>
<td>-32</td>
<td>-28</td>
<td>8.9</td>
<td>206</td>
<td>3</td>
<td>-42</td>
<td>45</td>
<td>-18</td>
<td style="text-align: left;">0.44</td>
</tr>
<tr class="grey3">
<td class="firstcol">Services</td>
<td>-29</td>
<td>-28</td>
<td>-23</td>
<td>-18</td>
<td>0.0</td>
<td>145</td>
<td>32</td>
<td>-29</td>
<td>61</td>
<td>15</td>
<td style="text-align: left;">0.86</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Feb 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td style="text-align: left;">&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">EMU</td>
<td>-2.7%</td>
<td>-2.5%</td>
<td>-10.3%</td>
<td>65.4</td>
<td>0.0</td>
<td>220</td>
<td>117</td>
<td>65</td>
<td>52</td>
<td>99</td>
<td style="text-align: left;">0.95</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>-1.6%</td>
<td>-4.0%</td>
<td>-6.4%</td>
<td>73.2</td>
<td>0.0</td>
<td>220</td>
<td>121</td>
<td>73</td>
<td>48</td>
<td>99</td>
<td style="text-align: left;">0.68</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>-0.8%</td>
<td>-0.7%</td>
<td>-10.6%</td>
<td>74.2</td>
<td>4.7</td>
<td>219</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>99</td>
<td style="text-align: left;">0.81</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>-0.4%</td>
<td>-1.4%</td>
<td>-11.7%</td>
<td>71.6</td>
<td>0.0</td>
<td>220</td>
<td>121</td>
<td>72</td>
<td>50</td>
<td>100</td>
<td style="text-align: left;">0.81</td>
</tr>
<tr class="grey3">
<td class="firstcol">Spain</td>
<td>-3.2%</td>
<td>3.7%</td>
<td>-7.2%</td>
<td>67.0</td>
<td>0.6</td>
<td>219</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td style="text-align: left;">0.71</td>
</tr>
<tr class="grey3">
<td class="firstcol">Memo: UK</td>
<td>-6.3%</td>
<td>-10.9%</td>
<td>-0.6%</td>
<td>56.4</td>
<td>0.0</td>
<td>220</td>
<td>117</td>
<td>56</td>
<td>61</td>
<td>100</td>
<td style="text-align: left;">0.55</td>
</tr>
<tr class="grey1">
<td colspan="5">Since 1990 except
Services (Oct
1996)247</td>
<td>-Count</td>
<td>Services:</td>
<td>145</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td colspan="12" class="firstcol">Sentiment
is an index, sector
readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
</body></html>

As the COIN index had predicted earlier in the week, the Euro area continues to labor under downward pressure in February. The sector indices for EU were mostly lower again in February as the EU sentiment index was at a new all-time [...]

EU/EMU Indices Crash Again In February

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226d.jpg" width="353">
The U.S. labor market weakened ever further as initial claims for unemployment insurance rose to their highest level since 1982. The Labor Department indicated that initial claims for unemployment insurance jumped last week 36,000 to 667,000 and the prior week&#39;s figure was revised up slightly. The latest level again surpassed Consensus expectations for 625,000 initial claims.
The Labor Department indicated that in the week ending February 14, the largest increases in claims were in New Jersey (+2,093), Virginia (+912), Rhode Island (+493), Vermont (+106), and South Dakota (+22), while the largest decreases were in California (-16,550), Kentucky (-7,741), Pennsylvania (-6,547), Illinois (-6,248), and New York (-3,955)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226e.jpg" width="353">
Extreme labor market stress was shown by a the 114,000 increase in continuing claims for unemployment insurance. That followed an upwardly revised 178,000 increase during the prior week. At 5,112,000, the level of continuing claims set yet another record. The series dates back to 1966. The four-week average of continuing claims rose 89,300 to 4,932,2500. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
Though the latest level of continuing claims was a record, the labor force has grown as well, by more than 27% over the last twenty years. Therefore, the insured rate of unemployment was not at a new record as it ticked higher to 3.8% which was the highest since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. The highest insured unemployment rates in the week ending February 7 were in Michigan (7.5 percent), Oregon (7.3), Idaho (7.0), Wisconsin (6.4), Pennsylvania (6.2), Nevada (5.9), Montana (5.7), Rhode Island (5.7), Alaska (5.6), Indiana (5.5), and New Jersey (5.5).
The unemployment insurance claim data is available in Haver&#39;s WEEKLY database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/20/09</th>
<th scope="col">02/13/09</th>
<th scope="col">02/06/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>667</td>
<td>631</td>
<td>627</td>
<td>85.8%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,112</td>
<td>4,998</td>
<td>86.3%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. labor market weakened ever further as initial claims for unemployment insurance rose to their highest level since 1982. The Labor Department indicated that initial claims for unemployment insurance jumped last week 36,000 to [...]

U.S. Initial Claims For Unemployment Insurance Highest Since 1982; Continuing Claims Another Record

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226f.jpg" width="353">
Sales of new single-family homes during January fell again, to their lowest level in the series&#39; history which dates back to 1963. They dropped 10.2% from December to 309,000 after a 9.5% December decline that was slightly shallower than reported last month. New home sales were off by half and down by three-quarters from their peak during July 2005. January sales even fell short of Consensus expectations for 325,000.
Sales declines around the country have been nothing but extreme beginning with a 59.9% twelve-month decline in the West. That is followed by the 50.9% shortfall in the Northeast. Somewhat lesser declines occurred in the South where sales fell 45.9% January-to-January and by 33.8% in the Midwest.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226g.jpg" width="353">
The median price for a new single-family home continued to fall severely. At $201,000, the figure was off 9.9% just from December&#39;s level which was upwardly revised. The 13.5% year-to-year decline represented the weakest twelve months since 1970 as homebuilders attempted to move inventory. In fact, that effort continued successful and the inventory of unsold homes is down by more than one-quarter during the last year to its lowest level since 2003. In each of the country&#39;s regions, the inventory is down by one-quarter to one-third during the last year.
The month&#39;s supply of new homes for sale, however, surged to a record 13.3 due to the abysmal sales rate.
The new home sales figures are available in Haver&#39;s USECON database.
The Affordability of Homeownership to Middle-Income Americans from the Federal Reserve Bank of Kansas City is available <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">US New Homes</th>
<th scope="col">January</th>
<th scope="col">December</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 Sales (SAAR, 000s)</td>
<td>309</td>
<td>344</td>
<td>-48.2</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>27</td>
<td>24</td>
<td>&nbsp;-50.9</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>51</td>
<td>54</td>
<td>-33.8</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>172</td>
<td>184</td>
<td>-45.9</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>59</td>
<td>82</td>
<td>-59.9</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>201,100</td>
<td>223,200</td>
<td>-13.5</td>
<td>230,117</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of new single-family homes during January fell again, to their lowest level in the series' history which dates back to 1963. They dropped 10.2% from December to 309,000 after a 9.5% December decline that was slightly shallower [...]

U.S. New Home Sales Lowest Since 1963

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226a.jpg" align="right" border="0" height="265" width="353">The
recession in the U.S. factory sector entered an even more dire phase
during the last several months.&nbsp; New orders for durable goods
fell 5.2% last month after downwardly revised declines of between 4.0%
and 8.0% during four of the prior five months.&nbsp; Since July new
orders have plummeted 24.9%, a record six-month drop.&nbsp; The
latest decline doubled Consensus expectations for a 2.4% drop.
 That
shortfall in new orders has been aptly followed by lower shipments of
durable goods.&nbsp; Off 3.7% in January, the decline followed
shortfalls of between 3.0% and 4.0% during four of the prior five
months.&nbsp; Year-to-year shipments fell 15.2% and they are down
15.9% during just the last six months.&nbsp; This extreme weakness
has brought with it a 17.5% twelve-month decline in industrial
production of durable goods.&nbsp; During the last ten years there
has been an 83% correlation between the twelve-month change in
shipments of durable goods and the change in durables industrial
production.
 Last month, the production cuts may finally have
succeeded in curbing inventory accumulation.&nbsp; Inventories of
manufactured durables fell 0.8%, the first monthly decline since
2003.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226b.jpg" align="right" border="0" height="265" width="353">
But more efforts to curb the inventory buildup are to
come.&nbsp; Six-month growth still amounted to 1.3%.&nbsp; And
while that's down from the peak, it compares to outright inventory
decumulation at an 8.0% rate during the last recession.
 Orders for
transportation equipment led last month's decline in orders for durable
goods with a 13.5% drop which left them off 38.7%
year-to-year.&nbsp; The aircraft sector led that shortfall with a
nearly three-quarters drop in nondefense bookings.&nbsp; Orders for
motor vehicles &amp; parts fell by a lesser one-third during the
last year.
 Lower new orders for computers &amp; electronic
products followed closely for the top weakest spot in last month's
decline with a 5.0% drop (-13.6% y/y) which followed the 7.1% December
shortfall.&nbsp; Orders for just computers &amp; related
products were the weakest and posted a 16.0% drop and they're off by
more than one quarter during the last twelve months.&nbsp; Working
the other way were new orders for communications equipment which rose
1.2%.&nbsp; That recovered a piece of the 5.2% decline during
December and limited the year-to-year shortfall to just
2.6%.
 Most other industries have been notably hard hit by
weakening demand.&nbsp; Orders for primary metals fell 4.6% last
month and they're down by more than one-third during the last
twelve.&nbsp; Machinery orders fell 2.0% last month and they're off
23.0% during the last year.&nbsp; Electrical equipment bookings
reversed all of a downwardly revised December gain with a 6.1%
flop.&nbsp; They're down by 22.1% during the last twelve
months.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090226c.jpg" align="right" border="0" height="265" width="353">Capital
equipment orders are very much suffering from all this weakness in the
front-end of the economy. They fell 8.8% last month and are down 26.2%
during the last twelve. Orders for nondefense capital goods have been
particularly hard hit and they posted a 28.3% fall just in January.
Alone, aircraft orders have fallen by three-quarters year-to-year. And
without aircraft, nondefense capital goods orders fell 5.4% during
January and by 18.5% during the last twelve months to their lowest
level since 2004. During the last ten years there has been an 80%
correlation between the y/y change in nondefense capital goods orders
and the change in equipment &amp; software spending in the GDP
accounts. The correlation of the GDP figure with capital goods
shipments is, as one would expect, a larger 92%.
 The durable goods figures are available in
Haver's USECON database.
 The U.S. Auto
Industry from the Federal Reserve Bank of Cleveland can be
found <a href="http://www.clevelandfed.org/research/trends/2009/0309/02ecoact.cfm">here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">January</th>
<th scope="col">December</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">Durable Goods Orders</td>
<td>-5.2</td>
<td>-4.6</td>
<td>-23.3</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>-2.5</td>
<td>-5.5</td>
<td>-17.4</td>
<td>-1.3</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-2.7</td>
<td>-10.2</td>
<td>-28.3</td>
<td>-6.7</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-5.4</td>
<td>-5.8</td>
<td>-18.5</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>


</body></html>

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

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

260205Z6.jpg

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

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

260206E.jpg

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

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

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

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

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

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

260206.jpg

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

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

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

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

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

260205D15.jpg

- 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

260205A2.jpg

260205B2.jpg

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.

260205C2.jpg

260205D2.jpg

- 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

260205E.jpg

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

Jump to:

U.S. 4Q GDP Revised Down To Show Sharpest Drop Since 1980

U.S. 4Q GDP Revised Down To ShowSharpest Drop Since 1980

U.S. Durable Goods Orders Lowest in Six Years; Latest Six-Month Decline a Record

U.S. Durable Goods Orders Lowest in Six Years; Latest Six-Month Decline a Record

EU/EMU Indices Crash Again In February

U.S. Initial Claims For Unemployment Insurance Highest Since 1982; Continuing Claims Another Record

U.S. New Home Sales Lowest Since 1963

U.S. Durable Goods Orders Lowest in Six Years; Latest Six-Month Decline a Record