Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119d.jpg" align="left" border="0" height="265" width="353">
UK orders rebounded ever so slightly from last month&#8217;s extreme
weakness and still reside in the bottom 2% of their range since about
2000. Export orders have had the same response, making a token bounce
in November. Stocks of finished goods are rated as at their highest
levels indicating a problem build up with orders falling so fast. 
 

Not surprisingly output volume for the next 3-months is rated
at a net of -42 the weakest reading on record. Prices are still posted
to make gains with a net +10 reading that is still in the top 21% of
its range. So inflation pressures are proving sticky in the face of
horrific weakness. The NTC (Markit) diffusion survey for Nov is not
quite ready but its low readings essentially confirms the deteriorating
picture from the CBI. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col">UK Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-38</td>
<td>-39</td>
<td>-26</td>
<td>-13</td>
<td>-8</td>
<td>-4</td>
<td>2%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-31</td>
<td>-32</td>
<td>-25</td>
<td>-9</td>
<td>-7</td>
<td>-7</td>
<td>17%</td>
<td>3</td>
<td>-39</td>
<td>42</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>25</td>
<td>24</td>
<td>21</td>
<td>18</td>
<td>13</td>
<td>13</td>
<td>100%</td>
<td>24</td>
<td>-2</td>
<td>26</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">Looking ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-42</td>
<td>-31</td>
<td>-16</td>
<td>-13</td>
<td>-7</td>
<td>1</td>
<td>0%</td>
<td>28</td>
<td>-31</td>
<td>59</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>10</td>
<td>23</td>
<td>31</td>
<td>34</td>
<td>28</td>
<td>25</td>
<td>79%</td>
<td>34</td>
<td>-19</td>
<td>53</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">From end 2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare to CIPS MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>41.49</td>
<td>41.15</td>
<td>45.28</td>
<td>44.37</td>
<td>48.05</td>
<td>2%</td>
<td>56.3</td>
<td>41.15</td>
<td>15</td>
</tr>
</tbody>
</table>
</body></html>

UK orders rebounded ever so slightly from last month’s extreme weakness and still reside in the bottom 2% of their range since about 2000. Export orders have had the same response, making a token bounce in November. Stocks of finished [...]

UK's CBI Survey of Industry

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119c.jpg" width="353">
Housing starts fell to a record low last month. At 791,000 units (SAAR), the level was the lowest in the series&#39; history which dates back to 1959. The 4.5% decline followed a revised 3.0% September drop that was slightly shallower than reported initially. Consensus expectations had been for 780,000 starts.
Starts of single-family homes fell another 3.3% to 531,000 units, their lowest level since late-1981. Since their peak in early 2006, single-family starts are down by roughly two-thirds. Permits to build single family homes also fell 14.5% (-43.3% y/y) to 460,000, their lowest since the 1981-82 recession.
Starts began 4Q down 11.9% from the 3Q average. During the last ten years there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.
October multi-family starts fell 6.8% from September and they are down by one-third from last year.
By region, October starts of single-family units in the Northeast were unchanged m/m but down 40.6% y/y. In the Midwest starts rose 11.5% but they remained 42.9% lower than last October. In the South single-family starts fell a hard 10.5% (-40.6% y/y) to their lowest since 1990 while in the West starts ticked up 1.7% (-35.1% y/y) after a 13.9% September decline.
Today&#39;s speech Monetary Policy and Asset Prices Revisited by Fed Vice-Chairman Donald L. Kohn can be found <a href="http://www.federalreserve.gov/newsevents/speech/kohn20081119a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>791</td>
<td>828</td>
<td>854</td>
<td>-38.0%</td>
<td>1,341</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>531</td>
<td>549</td>
<td>615</td>
<td>-39.9</td>
<td>1,034</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>260</td>
<td>279</td>
<td>239</td>
<td>-33.5</td>
<td>307</td>
<td>338</td>
<td>354</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>708</td>
<td>805</td>
<td>857</td>
<td>-40.1</td>
<td>1,389</td>
<td>1,844</td>
<td>2,160</td>
</tr>
</tbody>
</table>
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Housing starts fell to a record low last month. At 791,000 units (SAAR), the level was the lowest in the series' history which dates back to 1959. The 4.5% decline followed a revised 3.0% September drop that was slightly shallower [...]

U.S. Housing Starts At Record Low in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119a.jpg" width="353">
The consumer price index (CPI-U) fell a record 1.0% last month versus September, according to the Bureau of Labor Statistics. The decline followed a roughly unchanged figure and it about matched Consensus expectations for a 0.8% decline. The latest reading lowered the three-month rate of change to 4.4% (AR).
Lower energy prices accounted for most of the decline in the total as they fell 8.6% from September. The drop was led by a record 14.2% drop in gasoline prices (+12.0% y/y) to an average of $3.05 per gallon. Prices have moved even lower this month to $2.07. Fuel oil prices fell a sharp 8.8% (+21.7% y/y), down for the third straight month. Prices for natural gas &amp; electricity fell just slightly m/m (+9.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119b.jpg" width="353">
Food &amp; beverage prices increased 0.3%, half the September rise and the weakest gain since March. For the bulk of the year, however, food prices have been quite strong. They have posted a 6.1% y/y increase, the fastest since early 1990. September prices for cereals &amp; bakery products and meats, poultry &amp; fish remained firm, each up 0.6%. Year-to-year, they have increased 12.5% y/y and 6.2% y/y, respectively.
The CPI less food &amp; energy fell 0.1%, the first decline since late 1982. Consensus expectations were for a 0.2% increase. The three-month annual rate of increase fell to 1.1% from its July high of 3.5%.
Core goods prices fell by 0.2%, the second consecutive monthly drop. The three-month rate of decline amounted to 1.9%, the weakest since late 2006. The latest decline was led again by lower prices for new &amp; used motor vehicles which were down another 0.7% (-2.3% y/y). Apparel prices also fell by a sharp 1.0% (+0.3% y/y). Apparel prices fell 0.4% last year. Prices for household furnishings &amp; operations were unchanged (+2.0% y/y). Continued strength was seen in tobacco prices which rose 0.4% (7.0% y/y).
Core services prices were unchanged, their weakest performance since 1982. The three-month growth rate eased to 2.2%, the lowest since April. Medical care services prices rose just 0.2% (3.4% y/y) while education costs remained firm and gained another 0.4% (5.9% y/y). Shelter prices were unchanged (+2.2% y/y) as the housing market remained depressed, the weakest y/y gain since mid-2005. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, ticked up 0.1% (2.3% y/y). Rents remained firm and rose by 0.4% (3.7% y/y). Public transportation prices fell for the second consecutive month. The 3.3% decline nevertheless left them up 8.4% y/y. Recreation prices ticked 0.1% higher (2.2% y/y).
The chained CPI, which adjusts for shifts in consumption patterns, fell 0.8%. Less food and energy, chained prices ticked up just 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-1.0</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.4</td>
<td>-0.2</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services less Energy</td>
<td>0.0</td>
<td>0.3</td>
<td>3.0</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-8.6</td>
<td>-1.9</td>
<td>11.6</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp; Beverages</td>
<td>0.3</td>
<td>0.6</td>
<td>6.1</td>
<td>3.9</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>-0.8</td>
<td>-0.1</td>
<td>3.3 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food &amp; Energy&nbsp;</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The consumer price index (CPI-U) fell a record 1.0% last month versus September, according to the Bureau of Labor Statistics. The decline followed a roughly unchanged figure and it about matched Consensus expectations for a 0.8% [...]

U.S. CPI Fell A Record 1.0% and Core Prices Declined As Well

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119a.jpg" align="left" border="0" height="265" width="353">
The consumer price index (CPI-U) fell a
record 1.0% last month versus September, according to the Bureau of
Labor Statistics. The decline followed a roughly unchanged figure and
it about matched Consensus expectations for a 0.8% decline. The latest
reading lowered the three-month rate of change to 4.4% (AR).
Lower energy prices accounted for most of
the decline in the total as they fell 8.6% from September. The drop was
led by a record 14.2% drop in gasoline prices (+12.0% y/y) to an
average of $3.05 per gallon. Prices have moved even lower this month to
$2.07. Fuel oil prices fell a sharp 8.8% (+21.7% y/y), down for the
third straight month. Prices for natural gas &amp; electricity fell
just slightly m/m (+9.8% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119b.jpg" align="right" border="0" height="265" width="353">
Food &amp; beverage prices increased
0.3%, half the September rise and the weakest gain since March. For the
bulk of the year, however, food prices have been quite strong. They
have posted a 6.1% y/y increase, the fastest since early 1990.
September prices for cereals &amp; bakery products and meats,
poultry &amp; fish remained firm, each up 0.6%. Year-to-year, they
have increased 12.5% y/y and 6.2% y/y, respectively.
The CPI less food &amp; energy fell
0.1%, the first decline since late 1982. Consensus expectations were
for a 0.2% increase. The three-month annual rate of increase fell to
1.1% from its July high of 3.5%.
Core goods prices fell by 0.2%, the second
consecutive monthly drop. The three-month rate of decline amounted to
1.9%, the weakest since late 2006. The latest decline was led again by
lower prices for new &amp; used motor vehicles which were down
another 0.7% (-2.3% y/y). Apparel prices also fell by a sharp 1.0%
(+0.3% y/y). Apparel prices fell 0.4% last year. Prices for household
furnishings &amp; operations were unchanged (+2.0% y/y). Continued
strength was seen in tobacco prices which rose 0.4% (7.0% y/y).
Core services prices were unchanged, their
weakest performance since 1982. The three-month growth rate eased to
2.2%, the lowest since April. Medical care services prices rose just
0.2% (3.4% y/y) while education costs remained firm and gained another
0.4% (5.9% y/y). Shelter prices were unchanged (+2.2% y/y) as the
housing market remained depressed, the weakest y/y gain since mid-2005.
Owners equivalent rent of primary residence, a measure not equivalent
to other house price measures, ticked up 0.1% (2.3% y/y). Rents
remained firm and rose by 0.4% (3.7% y/y). Public transportation prices
fell for the second consecutive month. The 3.3% decline nevertheless
left them up 8.4% y/y. Recreation prices ticked 0.1% higher (2.2% y/y).
The chained CPI, which adjusts for shifts in consumption
patterns, fell 0.8%. Less food and energy, chained prices ticked up
just 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total&nbsp;</td>
<td>-1.0</td>
<td>-0.1</td>
<td>3.7</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.1</td>
<td>2.2</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.4</td>
<td>-0.2</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.0</td>
<td>0.3</td>
<td>3.0</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>-8.6</td>
<td>-1.9</td>
<td>11.6</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.3</td>
<td>0.6</td>
<td>6.1</td>
<td>3.9</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>-0.8</td>
<td>-0.1</td>
<td>3.3 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
U.S. Housing Starts At Record Low
in October 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 19, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119c.jpg" align="left" border="0" height="265" width="353">
Housing starts fell to a record low last month. At 791,000
units (SAAR), the level was the lowest in the series' history which
dates back to 1959. The 4.5% decline followed a revised 3.0% September
drop that was slightly shallower than reported initially.
Consensus expectations had been for 780,000 starts.
Starts of single-family homes fell another 3.3% to 531,000
units, their lowest level since late-1981. Since their peak in early
2006, single-family starts are down by roughly two-thirds. Permits to
build single family homes also fell 14.5% (-43.3% y/y) to 460,000,
their lowest since the 1981-82 recession.
Starts began 4Q down 11.9% from the 3Q average.
During the last ten years there has been an 84% correlation between the
q/q change in single-family starts and their contribution to quarterly
GDP growth.
October multi-family starts fell 6.8% from September and they
are down by one-third from last year.
By region, October starts of single-family units in the
Northeast were unchanged m/m but down 40.6% y/y. In the Midwest starts
rose 11.5% but they remained 42.9% lower than last October. In the
South single-family starts fell a hard 10.5% (-40.6% y/y) to their
lowest since 1990 while in the West starts ticked up 1.7% (-35.1% y/y)
after a 13.9% September decline.
Today's speech Monetary Policy and Asset Prices
Revisited by Fed Vice-Chairman Donald L. Kohn can be found <a href="http://www.federalreserve.gov/newsevents/speech/kohn20081119a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>791</td>
<td>828</td>
<td>854</td>
<td>-38.0%</td>
<td>1,341</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>531</td>
<td>549</td>
<td>615</td>
<td>-39.9</td>
<td>1,034</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>260</td>
<td>279</td>
<td>239</td>
<td>-33.5</td>
<td>307</td>
<td>338</td>
<td>354</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>708</td>
<td>805</td>
<td>857</td>
<td>-40.1</td>
<td>1,389</td>
<td>1,844</td>
<td>2,160</td>
</tr>
</tbody>
</table>
UK's CBI Survey of Industry 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 19, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081119d.jpg" align="left" border="0" height="265" width="353">
UK orders rebounded ever so slightly from last month&#8217;s extreme
weakness and still reside in the bottom 2% of their range since about
2000. Export orders have had the same response, making a token bounce
in November. Stocks of finished goods are rated as at their highest
levels indicating a problem build up with orders falling so fast. 
 

Not surprisingly output volume for the next 3-months is rated
at a net of -42 the weakest reading on record. Prices are still posted
to make gains with a net +10 reading that is still in the top 21% of
its range. So inflation pressures are proving sticky in the face of
horrific weakness. The NTC (Markit) diffusion survey for Nov is not
quite ready but its low readings essentially confirms the deteriorating
picture from the CBI. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr> <th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-38</td>
<td>-39</td>
<td>-26</td>
<td>-13</td>
<td>-8</td>
<td>-4</td>
<td>2%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-31</td>
<td>-32</td>
<td>-25</td>
<td>-9</td>
<td>-7</td>
<td>-7</td>
<td>17%</td>
<td>3</td>
<td>-39</td>
<td>42</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>25</td>
<td>24</td>
<td>21</td>
<td>18</td>
<td>13</td>
<td>13</td>
<td>100%</td>
<td>24</td>
<td>-2</td>
<td>26</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">Looking ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-42</td>
<td>-31</td>
<td>-16</td>
<td>-13</td>
<td>-7</td>
<td>1</td>
<td>0%</td>
<td>28</td>
<td>-31</td>
<td>59</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>10</td>
<td>23</td>
<td>31</td>
<td>34</td>
<td>28</td>
<td>25</td>
<td>79%</td>
<td>34</td>
<td>-19</td>
<td>53</td>
</tr>
<tr class="grey2">
<td colspan="11" class="firstcol">From end 2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare to CIPS MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Oct 08</td>
<td>Sep 08</td>
<td>Aug 08</td>
<td>Jul 08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>41.49</td>
<td>41.15</td>
<td>45.28</td>
<td>44.37</td>
<td>48.05</td>
<td>2%</td>
<td>56.3</td>
<td>41.15</td>
<td>15</td>
</tr>
</tbody>
</table>
</body></html>

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118j.jpg" align="left" border="0" height="265" width="353">
The November Housing Market Index (HMI) from the National
Association of Home Builders plumbed a new record low. At a single
level of 9 nearly halved the old record low of 14 reached just last
month. The index is compiled from survey questions asking builders to
rate market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to
&#8220;very low&#8221;. Numerical equivalent results over 50 indicate a predominance of &#8220;good&#8221; readings.
Since 1990, the year-to-year change in this index has had a
correlation of 72% with the year-to-year percentage change in new
single-family home sales. As a result, the latest HMI index at best
indicates a bottoming of the housing market's troubles.
The Home Builders Association indicated that its sub-index of
present sales conditions also fell to a record low of 8. That was down
from last year's average level of 27 and 2006's average of 45.
Builders&#8217; expectations for sales six months was relatively strong an held steady at a level of 19. The &#8220;traffic of prospective buyers, however, fell to a new low index reading of 7.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118k.jpg" align="right" border="0" height="265" width="353">
Each of the country's regions showed deterioration in the index as conditions in each region fell to a new low.
Not only are builders disturbed by the market for new homes, but the
appraisal of conditions for remodeling a home also reached a record low
during the third quarter.
The current market condition for remodeling of a home also is deemed poor.
The NAHB has compiled the Housing Market Index since 1985. The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s SURVEYS database.
Mortgage Innovation, Mortgage Choice, and Housing Decisions from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/11/Chambers.pdf">here</a>.
Changing the Rule: State Mortgage Foreclosure Moratoria During the Great Depression is available <a href="http://research.stlouisfed.org/publications/review/08/11/Wheelock.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/SURVEYS/@S4/@S4.HTM">Nat'l Association of Home Builders</a></th>
<th scope="col">November</th>
<th scope="col">October &nbsp;</th>
<th scope="col">November '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>9</td>
<td>14</td>
<td>19</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body></html>

The November Housing Market Index (HMI) from the National Association of Home Builders plumbed a new record low. At a single level of 9 nearly halved the old record low of 14 reached just last month. The index is compiled from survey [...]

U.S. Home Builders' Survey Lower Still

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118g.jpg" align="right" border="0" height="265" width="353">
The
United Kingdom released inflation numbers today.&nbsp; The
acceleration in inflation in the previous months came to a halt in
October.&nbsp; The official measure, the year- to- year percent
change in the consumer price index, fell to 4.5% in October from 5.2%
in September.&nbsp; &nbsp;The core index, which excludes
energy, food, alcoholic beverages and tobacco, fell to 1.9% in October
from 2.2%.&nbsp; The year- to- year change in the retail price
index, which until 2003 was the official measure of inflation, fell to
4.2% in October from 5.00% in September. The three measures of
inflation are shown in the first chart.&nbsp;Except for
the last two months, the inflation rate as measured by the CPI has been
lower than that measured by the RPI largely because of the exclusion in
the former and inclusion in the latter of mortgage interest payments
and other housing related costs.&nbsp; Until June of this year the
exclusion of these items tended to lower the CPI inflation rate, but
since then it has added to it, as can be seen in the second
chart.The declines in the various measures of inflation were
due largely to the declines in the prices of food and oil that affected
the indexes directly and declines in the prices of&nbsp; base
metals that affected the indexes indirectly.&nbsp; The declines are
likely to continue, if not intensify, as world demand continues to
fall.&nbsp; Longer term, however, the current fiscal and monetary
policies being pursued by the developed and developing nations should
help to avoid deflation such as engulfed the globe in the thirties. (
If, indeed, they do not lead eventually to a resurgence of
inflation.)&nbsp; As an illustration of the course of inflation and
deflation in the twenties and thirties of the last century, we use the
changes in the consumer price index for the United States, the series,
PCUN67, found in the Haver Analytics' USECON&nbsp;
data base.&nbsp; &nbsp;&nbsp;
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118h.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">UNITED
KINGDOM INFLATION RATES&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep&nbsp; 08&nbsp;</th>
<th scope="col">Oct&nbsp; 07&nbsp;</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y&nbsp; &nbsp;Chg</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Price Index
(Y/Y % Chg)</td>
<td>4.5</td>
<td>5.2</td>
<td>2.0</td>
<td>-0.7</td>
<td>2.5</td>
<td>2.32</td>
<td>2.33</td>
<td>2.05</td>
</tr>
<tr>
<td class="firstcol">Core CPI Index (Y/Y %
Chg)</td>
<td>1.9</td>
<td>2.2</td>
<td>1.5</td>
<td>-0.3</td>
<td>0.4</td>
<td>1.69</td>
<td>1.30</td>
<td>1.51</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Price
Index&nbsp; (Y/Y % Chg)</td>
<td>4.2</td>
<td>5.0</td>
<td>4.2</td>
<td>-0.8</td>
<td>0.0</td>
<td>4.27</td>
<td>3.19</td>
<td>2.83</td>
</tr>
</tbody>
</table>
</body></html>

The United Kingdom released inflation numbers today. The acceleration in inflation in the previous months came to a halt in October. The official measure, the year- to- year percent change in the consumer price index, fell to 4.5% in [...]

Inflation in the U.K. Declines in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118f.jpg" width="353">
According to the International Council of Shopping Centers-Goldman Sachs Index, a 0.3% uptick in chain store sales last week made up a piece of the prior week&#39;s 1.0% decline. Nevertheless, sales ticked down 0.1% from the year-ago level.
The latest weekly increase left sales so far in November down 0.6% from October. During all of October sales fell 1.0% from September following that month&#39;s 1.9% drop. The level of sales during the latest week remained near the lowest since December of last year.
During the last ten years there has been a 59% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
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 weekly leading indicator of chain store sales from ICSC-Goldman Sachs ticked up 0.1% but was still down 5.7% from the year-ago level and it was at it&#39;s lowest level since 1996.
The chain store sales figures are available in Haver&#39;s SURVEYW 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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/15/08</th>
<th scope="col">11/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>478.5</td>
<td>477.2</td>
<td>-0.1%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

According to the International Council of Shopping Centers-Goldman Sachs Index, a 0.3% uptick in chain store sales last week made up a piece of the prior week's 1.0% decline. Nevertheless, sales ticked down 0.1% from the year-ago level.

U.S. Chain Store Sales Fell Versus Last Year

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg">
Falling by another fifteen cents w/w to $2.07 per gallon, the retail price for a gallon of regular gasoline was at its lowest level since early 2005 according to the U.S. Department of Energy survey. Prices have now fallen $2.04 per gallon, or by more than one-half, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.13 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell eight cents from last week&#39;s average to $1.24. In futures trading the November contract closed down further at $1.17 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118e.jpg">
The U.S. Department of Energy reported that the demand for gasoline fell by 2.9% y/y. The rate of decline has bottomed out recently but the decline is still the fastest since late-1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 6.6% y/y.
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $58.64 per barrel, down 60% since the peak in July of $145.66. In futures trading yesterday, the two-month price for crude oil was even lower at $54.95 per barrel.
Last week, prices for natural gas reversed the prior week&#39;s gain and ticked down to $6.65 per mmbtu (-7.4% y/y). The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.
Signs of a Reprieve from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/energy/en0803.cfm">here</a>.
Monetary Policy Transparency and Private Sector Forecasts: Evidence from Survey Data from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/3q08Sellon.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/17/08</th>
<th scope="col">11/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.07</td>
<td>2.22</td>
<td>-33.1%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>58.64</td>
<td>64.31</td>
<td>-37.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

Falling by another fifteen cents w/w to $2.07 per gallon, the retail price for a gallon of regular gasoline was at its lowest level since early 2005 according to the U.S. Department of Energy survey. Prices have now fallen $2.04 per [...]

U.S. Gasoline Prices Continued Lower

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

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

260205Z1.jpg

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

260205Z2.jpg

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

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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

Jump to:

UK's CBI Survey of Industry

U.S. Housing Starts At Record Low in October

U.S. CPI Fell A Record 1.0% and Core Prices Declined As Well

U.S. CPI Fell A Record 1.0% and Core Prices Declined As Well

U.S. Home Builders' Survey Lower Still

Inflation in the U.K. Declines in October

U.S. Chain Store Sales Fell Versus Last Year

U.S. Gasoline Prices Continued Lower