Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118a.jpg" width="353">
U.S. finished producer prices during October matched Consensus expectations and fell 2.8% following their 0.4% drop during September.
A 12.8% decline in energy prices (+5.5% y/y) was due to a 24.9% plunge in gasoline prices, but gasoline prices were still up 3.2% y/y. Additionally, home heating oil prices fell by 9.6% (+24.2% y/y). Natural gas prices fell for the third consecutive month but, again, a 5.9% gain left them still up 10.4% y/y. Residential electric power costs slipped 0.5% (+5.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118b.jpg" width="353">
Less food &amp; energy, prices rose 0.4% for the second consecutive month and that compared to a Consensus expectation for a 0.1% uptick. Core pricing indeed has firmed. The y/y gain in the core PPI of 4.4% was the strongest since late-1989. Prices of core finished consumer goods rose 0.3% last month and that was enough to lift the y/y gain to 4.6%, its strongest since 1989. Durable consumer goods prices rose 0.4% (3.0% y/y) on the strength of higher furniture prices which increased 5.4% y/y after a 1.3% gain last year. Additionally, appliance prices firmed and posted a 2.9% y/y rise following the 1.1% increase during 2007. Core nondurable goods prices also strengthened and rose 0.3% last month. Their 5.8% y/y gain was the fastest since early 1999. Prices for capital equipment also firmed. A 0.5% rise during October was the second in a row and it raised the y/y rise to 4.4%, the strongest since 1989.
Finished consumer food prices reversed their September gain and fell 0.2%. However, they still have been strong. Rising 6.6% y/y food prices about matched last year&#39;s gain which was up from a 0.7% uptick during 2006. Meat prices have been firm as have been bakery product prices. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118c.jpg" width="353">
Intermediate goods prices fell 3.9% as energy prices dropped. However, excluding food &amp; energy a 1.7% m/m fall still left these prices up 9.7% y/y which remained near the strongest since 1980.
The crude materials PPI crashed 18.6% (-1.4% y/y) due to a 24.9% drop in energy prices (-1.7% y/y). Crude food prices fell 11.1% and that was enough to lower the y/y gain to -1.3% y/y. Less food &amp; energy crude prices fell 17.0% and that pushed the y/y gain into negative territory for the first time since 2005.
This morning&#39;s testimony by Fed Chairman Ben S. Bernanke is available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20081118a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</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">Finished Goods</td>
<td>-2.8</td>
<td>-0.4</td>
<td>5.1</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4</td>
<td>0.4</td>
<td>4.4</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-3.9</td>
<td>-1.2</td>
<td>15.3</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.7</td>
<td>-0.3</td>
<td>9.7</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-18.6</td>
<td>-7.9</td>
<td>-1.4</td>
<td>12.1</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-17.0</td>
<td>-9.4</td>
<td>&nbsp;-3.1</td>
<td>15.6</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
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U.S. finished producer prices during October matched Consensus expectations and fell 2.8% following their 0.4% drop during September. A 12.8% decline in energy prices (+5.5% y/y) was due to a 24.9% plunge in gasoline prices, but [...]

U.S. PPI Fell Again, Core Pricing Power Strong Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118a.jpg" align="left" border="0" height="265" width="353">
U.S. finished producer prices during October matched Consensus
expectations and fell 2.8% following their 0.4% drop during September.
A 12.8% decline in energy prices (+5.5% y/y) was due to a
24.9% plunge in gasoline prices, but gasoline prices were still up 3.2%
y/y. Additionally, home heating oil prices fell by 9.6% (+24.2% y/y).
Natural gas prices fell for the third consecutive month but, again, a
5.9% gain left them still up 10.4% y/y. Residential electric power
costs slipped 0.5% (+5.8% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118b.jpg" align="right" border="0" height="265" width="353">
Less food &amp; energy, prices rose 0.4% for the second
consecutive month and that compared to a Consensus expectation for a
0.1% uptick. Core pricing indeed has firmed. The y/y gain in the core
PPI of 4.4% was the strongest since late-1989. Prices of core finished
consumer goods rose 0.3% last month and that was enough to lift the y/y
gain to 4.6%, its strongest since 1989. Durable consumer goods prices
rose 0.4% (3.0% y/y) on the strength of higher furniture prices which
increased 5.4% y/y after a 1.3% gain last year. Additionally, appliance
prices firmed and posted a 2.9% y/y rise following the 1.1% increase
during 2007. Core nondurable goods prices also strengthened and rose
0.3% last month. Their 5.8% y/y gain was the fastest since early 1999.
Prices for capital equipment also firmed. A 0.5% rise during October
was the second in a row and it raised the y/y rise to 4.4%, the
strongest since 1989.
Finished consumer food prices reversed their September gain
and fell 0.2%. However, they still have been strong. Rising 6.6% y/y
food prices about matched last year's gain which was up from a 0.7%
uptick during 2006. Meat prices have been firm as have been bakery
product prices. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118c.jpg" align="left" border="0" height="265" width="353">
Intermediate goods prices fell 3.9% as energy prices dropped.
However, excluding food &amp; energy a 1.7% m/m fall still left
these prices up 9.7% y/y which remained near the strongest
since 1980.
The crude materials PPI crashed 18.6% (-1.4% y/y) due to a
24.9% drop in energy prices (-1.7% y/y). Crude food prices fell 11.1%
and that was enough to lower the y/y gain to -1.3% y/y. Less food
&amp; energy crude prices fell 17.0% and that pushed the y/y gain
into negative territory for the first time since 2005.
This morning's testimony by Fed Chairman Ben S. Bernanke is
available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20081118a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</a> (%)</th>
<th scope="col">October</th>
<th scope="col">September</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">Finished Goods</td>
<td>-2.8</td>
<td>-0.4</td>
<td>5.1</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4</td>
<td>0.4</td>
<td>4.4</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-3.9</td>
<td>-1.2</td>
<td>15.3</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.7</td>
<td>-0.3</td>
<td>9.7</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-18.6</td>
<td>-7.9</td>
<td>-1.4</td>
<td>12.1</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-17.0</td>
<td>-9.4</td>
<td>&nbsp;-3.1</td>
<td>15.6</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Continued
Lower 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg" align="left" border="0">
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's average to $1.24. In futures
trading the November contract closed down further at $1.17 per gallon.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118d.jpg" align="right" border="0">
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.
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'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'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>
U.S. Chain Store Sales Fell Versus
Last Year 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081118f.jpg" align="left" border="0" height="265" 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'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'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's lowest level since 1996.
The chain store sales figures are available in Haver'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>
U.S. Home Builders&#8217; Survey Lower
Still 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 18, 2008


<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>
Inflation in the U.K. Declines inOctober 
by <a href="/comment/Curley.html">Louise
Curley</a> November 18, 2008


<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>

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Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117i.jpg" align="left" border="0" height="265" width="353">
The Bank of France Industry Sentiment Index is pointing much
lower. At 77.14 it has fallen in October from 86.08 the month before.
This compares to its 12-month average of 97. The index is weaker than
this level only about 2 percent of the time. The latest production and
production outlook indices are at bottom-scraping levels. Foreign
orders and new industry orders are both at their
lowest level since 1987. The hiring outlook is worse only about 20% of
the time.
It is no wonder that, armed with this survey result, French
Finance Minister Christine Lagarde warned on the outlook. All of Europe
is crumbling under the strain.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Bank of France Monthly INDUSTRY Survey: SUMMARY </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>12 MO</td>
<td>Since Jan-87</td>
<td>Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>AVERAGE</td>
<td>Average</td>
<td>rank/range</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Production-Latest Month</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-23.53</td>
<td>-20.09</td>
<td>8.2</td>
<td>-2</td>
<td>7</td>
<td>0.06</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Production Outlook</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-18</td>
<td>-9</td>
<td>0</td>
<td>4</td>
<td>15</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Demand</td>
</tr>
<tr class="grey2">
<td class="firstcol">Overall Order Books</td>
<td>-22.61</td>
<td>-6.61</td>
<td>-2.17</td>
<td>10</td>
<td>4</td>
<td>22.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign Orders</td>
<td>-33.2</td>
<td>-28.65</td>
<td>-5.85</td>
<td>-3</td>
<td>8</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">New Orders</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-35.36</td>
<td>-32.17</td>
<td>-1.49</td>
<td>-3</td>
<td>8</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Stocks: Finished Goods</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>3.62</td>
<td>0.35</td>
<td>1.26</td>
<td>0</td>
<td>-2</td>
<td>80.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capacity Utilization</td>
<td>77.87</td>
<td>79.9</td>
<td>80.47</td>
<td>82</td>
<td>83</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Hiring</td>
</tr>
<tr class="grey2">
<td class="firstcol">Latest Month</td>
<td>-12.12</td>
<td>-6.62</td>
<td>-2.27</td>
<td>-3</td>
<td>-1</td>
<td>20.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Outlook</td>
<td>-16.19</td>
<td>-9.93</td>
<td>-4.2</td>
<td>-5</td>
<td>-4</td>
<td>22.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Industry Sentiment
Index</td>
<td>77.14</td>
<td>86.07</td>
<td>92.92</td>
<td>97</td>
<td>102</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body></html>

The Bank of France Industry Sentiment Index is pointing much lower. At 77.14 it has fallen in October from 86.08 the month before. This compares to its 12-month average of 97. The index is weaker than this level only about 2 percent [...]

French Prospects Drop Sharply

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117e.jpg" align="right" border="0" height="265" width="353">
The Euro Areatrade balance in September was -5,742 million
euros virtually unchanged fromthe -5,705 million euros in August. It
was, however, 8,549 million euros below the trade surplus of 2,807
million euros in September 2007. Since December 2007, the trade balance
in the Euro Area has, more often than not, been negative. The largest
deficit of 6,387 million euros was recorded in July of this year, as
can be seen in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117f.jpg" align="right" border="0" height="265" width="353">
Both high oil prices and a rising euro led to the
deterioration in the trade balance. High oil prices accounted for much
of the increasing trade deficits with Russia and OPEC earlier this
year. With the recent decline in the price of oil, the trade balance
with OPEC has become less negative. The trade balances with Russia and
OPEC are shown in the second chart.
The rising euro has dampened exports to and encouraged imports
from trading partners, leading to smaller surpluses or larger deficits.
For example, the Euro Area's trade surplus with the United States has
fallen sharply over the last year and a half, as shown in the third
chart. 
 

The price of oil and the value of the euro declined
dramatically in recent months as the global financial crisis spread to
more countries and intensified. The daily price of oil and the daily
value of the euro are shown in the fourth chart. While the decline in
the price of oil should reduce the Euro Area's imports, the effect of
the decline in the euro is less predictable. Although it should be good
for exports, falling world demand could outweigh the positive effects
of the lower euro. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117g.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117h.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">EURO
AREA 15 &nbsp;TRADE BALANCES</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug&nbsp; 08&nbsp;</th>
<th scope="col">Sep&nbsp; 07</th>
<th scope="col">M/M&nbsp; chg&nbsp;</th>
<th scope="col">Y/Y&nbsp; chg&nbsp;</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>-5742</td>
<td>-5705</td>
<td>2807</td>
<td>-36</td>
<td>-8549</td>
<td>20384</td>
<td>-13049</td>
<td>10744</td>
</tr>
<tr>
<td class="firstcol">With United States</td>
<td>4197</td>
<td>4160</td>
<td>5098</td>
<td>37</td>
<td>-901</td>
<td>63525</td>
<td>73914</td>
<td>65239</td>
</tr>
<tr class="odd">
<td class="firstcol">With Russia</td>
<td>-3729</td>
<td>-3429</td>
<td>-1891</td>
<td>-299</td>
<td>-1837</td>
<td>-30843</td>
<td>-40429</td>
<td>-32676</td>
</tr>
<tr>
<td class="firstcol">With OPEC</td>
<td>-5235</td>
<td>-6226</td>
<td>-2286</td>
<td>981</td>
<td>-2949</td>
<td>-33532</td>
<td>-48010</td>
<td>-36611</td>
</tr>
</tbody>
</table>

</body></html>

The Euro Areatrade balance in September was -5,742 million euros virtually unchanged fromthe -5,705 million euros in August. It was, however, 8,549 million euros below the trade surplus of 2,807 million euros in September 2007. Since [...]

Euro Area's September Trade Deficit of 5.7 Billion Euros Shows Little Change from August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117c.jpg" width="353">
The November Empire State Index of manufacturing actor activity as reported by the Federal Reserve Bank of New York fell to -25.43 which, for the series&#39; short eight year history, was a record low. The decline was just modest versus the October level but it was down sharply from an average of -3.19 during the third quarter. A November reading of -26.1 for had been the Consensus expectation.
The figure is a diffusion index. Since the series&#39; inception in 2001 there has been a 58% correlation between its&#39; level and the three-month change in U.S. factory sector industrial production.
The index of pricing pressure also fell fell sharply to 20.48. The ten point decline from October was to the lowest level since December of 2003. Since inception in 2001 there has been an 81% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117d.jpg" width="353">
The indexes for new orders, shipments and unfilled orders each fell but the delivery times component ticked higher.
The employment index also fell during November dropping sharply to its lowest level since late 2001, negative for the fifth consecutive month. In the history of the NY employment index, there has been an 86% correlation between it and the three-month growth in overall factory sector employment.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The Empire State index of expected business conditions in six months fell to 13.02 which was its lowest since 2001. The subseries for shipments and employment jumped and the pricing series fell to its lowest level in twelve months.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">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/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">November &#39;07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-25.43</td>
<td>-24.62</td>
<td>24.05</td>
<td>17.23</td>
<td>20.24</td>
<td>15.53</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>20.48</td>
<td>31.71</td>
<td>47.37</td>
<td>35.64</td>
<td>41.88</td>
<td>44.74</td>
</tr>
</tbody>
</table>


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The November Empire State Index of manufacturing actor activity as reported by the Federal Reserve Bank of New York fell to -25.43 which, for the series' short eight year history, was a record low. The decline was just modest versus [...]

U.S. Empire State Index Negative Again; Prices Paid The Weakest Since 2003

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117a.jpg" width="353">
Industrial production recovered 1.3% last month after its 3.8% plummet during September when production was depressed by Hurricanes Gustav &amp; Ike. September output was also held down by a strike at Boeing. Consensus expectations had been for no change in output last month.
During each of the last two months, the Fed indicated that industrial output fell 0.7%, excluding the hurricanes (which reduced mining output by 6.1%) and the strike.
Factory output recovered a modest 0.6% after falling 3.7% during September. Output of consumer goods recovered all of its 1.2% September drop but it was still off 2.8% y/y. Production of motor vehicles &amp; parts dropped 3.5% (-18.4% y/y) but, excluding autos, output was still depressed. It recovered a modest 0.8% following the 4.0% plunge during September. Nonetheless, a 4.3% decline in factory output year-to-year compares to 2.0% growth during all of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117b.jpg" width="353">
Industrial production in the high-tech sector is in a retrenchment mode. Output there fell 0.9% during October and that was the third consecutive monthly decline. And production was up just 9.9% y/y, the weakest gain since early 2005. Less both autos and high-tech, output inched up 0.2% last month following the 3.7% September plunge (-5.6% y/y).
The industry detail further reflected recession in the factory sector. Output of furniture &amp; related products fell 2.9% last month for a 16.3% y/y decline. That was the largest y/y drop since the recession of 1975. Machinery production also reflected recession and it was down 1.7% (-6.9% y/y). A somewhat brighter spot was the 0.6% increase in electrical equipment production which left it down just 0.9% year-to-year. Apparel output, in the &quot;recession-resistant&quot; nondurables sector fell just 1.8% (-2.5% y/y. Production of chemicals recovered 5.1% after the 8.3% plunge due to the hurricanes. Reflecting the aftermath of the hurricanes was a 9.9% jump in output of petroleum &amp; coal which recovered an 8.5% plummet.
Capacity utilization recovered to 76.4% which was still near its lowest level since 2003. Utilization in the factory sector of 73.8% also was near the lowest since 2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL PRODUCTION (SA, %)</th>
<th scope="col">October</th>
<th scope="col">September</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 Output </td>
<td>1.3</td>
<td>-3.8</td>
<td>1.3</td>
<td>1.7</td>
<td>2.2</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>0.6</td>
<td>-3.7</td>
<td>0.6</td>
<td>1.7</td>
<td>2.4</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Consumer Goods</td>
<td>1.4</td>
<td>-1.2</td>
<td>-2.8</td>
<td>1.7</td>
<td>0.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Business Equipment</td>
<td>-2.2</td>
<td>-7.1</td>
<td>-8.8</td>
<td>3.3</td>
<td>10.4</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Construction Supplies</td>
<td>-1.1</td>
<td>-1.9</td>
<td>-6.9</td>
<td>-2.5</td>
<td>2.2</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.4</td>
<td>2.5</td>
<td>-0.6</td>
<td>3.3</td>
<td>-0.6</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>76.4</td>
<td>75.5</td>
<td>80.8</td>
<td>81.0</td>
<td>80.9</td>
<td>80.2</td>
</tr>
</tbody>
</table>
</body>
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Industrial production recovered 1.3% last month after its 3.8% plummet during September when production was depressed by Hurricanes Gustav & Ike. September output was also held down by a strike at Boeing. Consensus expectations had [...]

U.S. Industrial Production Rebounds Modestly After Hurricanes

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117a.jpg" align="left" border="0" height="265" width="353">
Industrial production recovered 1.3% last month after its 3.8%
plummet during September when production was depressed by Hurricanes
Gustav &amp; Ike. September output was also held down by a strike
at Boeing. Consensus expectations had been for no change in output last
month.
During each of the last two months, the Fed indicated that
industrial output fell 0.7%, excluding the hurricanes (which reduced
mining output by 6.1%) and the strike.
Factory output recovered a modest 0.6% after falling 3.7%
during September. Output of consumer goods recovered all of its 1.2%
September drop but it was still off 2.8% y/y. Production of motor
vehicles &amp; parts dropped 3.5% (-18.4% y/y) but, excluding
autos, output was still depressed. It recovered a modest 0.8% following
the 4.0% plunge during September. Nonetheless, a 4.3% decline in
factory output year-to-year compares to 2.0% growth during all of last
year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117b.jpg" align="right" border="0" height="265" width="353">
Industrial production in the high-tech sector is in a
retrenchment mode. Output there fell 0.9% during October and that was
the third consecutive monthly decline. And production was up just 9.9%
y/y, the weakest gain since early 2005. Less both autos and high-tech,
output inched up 0.2% last month following the 3.7% September plunge
(-5.6% y/y).
The industry detail further reflected recession in the factory
sector. Output of furniture &amp; related products fell 2.9% last
month for a 16.3% y/y decline. That was the largest y/y drop since the
recession of 1975. Machinery production also reflected recession and it
was down 1.7% (-6.9% y/y). A somewhat brighter spot was the 0.6%
increase in electrical equipment production which left it down just
0.9% year-to-year. Apparel output, in the "recession-resistant"
nondurables sector fell just 1.8% (-2.5% y/y. Production of chemicals
recovered 5.1% after the 8.3% plunge due to the hurricanes. Reflecting
the aftermath of the hurricanes was a 9.9% jump in output of petroleum
&amp; coal which recovered an 8.5% plummet.
Capacity utilization recovered to 76.4% which was still near
its lowest level since 2003. Utilization in the factory sector of 73.8%
also was near the lowest since 2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">INDUSTRIAL
PRODUCTION (SA, %)</th>
<th scope="col">October</th>
<th scope="col">September</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 Output </td>
<td>1.3</td>
<td>-3.8</td>
<td>1.3</td>
<td>1.7</td>
<td>2.2</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>0.6</td>
<td>-3.7</td>
<td>0.6</td>
<td>1.7</td>
<td>2.4</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Consumer Goods</td>
<td>1.4</td>
<td>-1.2</td>
<td>-2.8</td>
<td>1.7</td>
<td>0.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Business Equipment</td>
<td>-2.2</td>
<td>-7.1</td>
<td>-8.8</td>
<td>3.3</td>
<td>10.4</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Construction Supplies</td>
<td>-1.1</td>
<td>-1.9</td>
<td>-6.9</td>
<td>-2.5</td>
<td>2.2</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.4</td>
<td>2.5</td>
<td>-0.6</td>
<td>3.3</td>
<td>-0.6</td>
<td>2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>76.4</td>
<td>75.5</td>
<td>80.8</td>
<td>81.0</td>
<td>80.9</td>
<td>80.2</td>
</tr>
</tbody>
</table>
U.S. Empire State Index Negative
Again; Prices Paid The Weakest Since 2003 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117c.jpg" align="left" border="0" height="265" width="353">
The November Empire State Index of manufacturing actor
activity as reported by the Federal Reserve Bank of New York fell to
-25.43 which, for the series' short eight year history, was a record
low. The decline was just modest versus the October level but it was
down sharply from an average of -3.19 during the third quarter. A
November reading of -26.1 for had been the Consensus expectation.
The figure is a diffusion index. Since the series' inception
in 2001 there has been a 58% correlation between its' level and the
three-month change in U.S. factory sector industrial production.
The index of pricing pressure also fell fell sharply to 20.48.
The ten point decline from October was to the lowest level since
December of 2003. Since inception in 2001 there has been an 81%
correlation between the index of prices paid and the three-month change
in the core intermediate materials PPI.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117d.jpg" align="right" border="0" height="265" width="353">
The indexes for new orders, shipments and unfilled orders each
fell but the delivery times component ticked higher.
The employment index also fell during November dropping
sharply to its lowest level since late 2001, negative for the fifth
consecutive month. In the history of the NY employment index, there has
been an 86% correlation between it and the three-month growth in
overall factory sector employment.
Like the Philadelphia Fed Index of General Business
Conditions, the Empire State Business Conditions Index reflects answers
to an independent survey question; it is not a weighted combination of
the components.
The Empire State index of expected business
conditions in six months fell to 13.02 which was its lowest
since 2001. The subseries for shipments and employment jumped and the
pricing series fell to its lowest level in twelve months.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State conducted by the Federal Reserve Bank
of New York. Participants from across the state in a variety of
industries respond to a questionnaire and report the change in a
variety of indicators from the previous month. Respondents also state
the likely direction of these same indicators six months ahead.
For more on the Empire State Manufacturing Survey, including
methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">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/@S5/@S511/@S511.HTM">Empire
State Manufacturing Survey</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">November '07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>-25.43</td>
<td>-24.62</td>
<td>24.05</td>
<td>17.23</td>
<td>20.24</td>
<td>15.53</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>20.48</td>
<td>31.71</td>
<td>47.37</td>
<td>35.64</td>
<td>41.88</td>
<td>44.74</td>
</tr>
</tbody>
</table>
Euro Area's September TradeDeficit
of 5.7 Billion Euros Shows Little Change from August 
by <a href="/comment/Curley.html">Louise
Curley</a> November 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117e.jpg" align="right" border="0" height="265" width="353">
The Euro Areatrade balance in September was -5,742 million
euros virtually unchanged fromthe -5,705 million euros in August. It
was, however, 8,549 million euros below the trade surplus of 2,807
million euros in September 2007. Since December 2007, the trade balance
in the Euro Area has, more often than not, been negative. The largest
deficit of 6,387 million euros was recorded in July of this year, as
can be seen in the first chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117f.jpg" align="right" border="0" height="265" width="353">
Both high oil prices and a rising euro led to the
deterioration in the trade balance. High oil prices accounted for much
of the increasing trade deficits with Russia and OPEC earlier this
year. With the recent decline in the price of oil, the trade balance
with OPEC has become less negative. The trade balances with Russia and
OPEC are shown in the second chart.
The rising euro has dampened exports to and encouraged imports
from trading partners, leading to smaller surpluses or larger deficits.
For example, the Euro Area's trade surplus with the United States has
fallen sharply over the last year and a half, as shown in the third
chart. 
 

The price of oil and the value of the euro declined
dramatically in recent months as the global financial crisis spread to
more countries and intensified. The daily price of oil and the daily
value of the euro are shown in the fourth chart. While the decline in
the price of oil should reduce the Euro Area's imports, the effect of
the decline in the euro is less predictable. Although it should be good
for exports, falling world demand could outweigh the positive effects
of the lower euro. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117g.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117h.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">EURO
AREA 15 &nbsp;TRADE BALANCES</th>
<th scope="col">Sep 08</th>
<th scope="col">Aug&nbsp; 08&nbsp;</th>
<th scope="col">Sep&nbsp; 07</th>
<th scope="col">M/M&nbsp; chg&nbsp;</th>
<th scope="col">Y/Y&nbsp; chg&nbsp;</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>-5742</td>
<td>-5705</td>
<td>2807</td>
<td>-36</td>
<td>-8549</td>
<td>20384</td>
<td>-13049</td>
<td>10744</td>
</tr>
<tr>
<td class="firstcol">With United States</td>
<td>4197</td>
<td>4160</td>
<td>5098</td>
<td>37</td>
<td>-901</td>
<td>63525</td>
<td>73914</td>
<td>65239</td>
</tr>
<tr class="odd">
<td class="firstcol">With Russia</td>
<td>-3729</td>
<td>-3429</td>
<td>-1891</td>
<td>-299</td>
<td>-1837</td>
<td>-30843</td>
<td>-40429</td>
<td>-32676</td>
</tr>
<tr>
<td class="firstcol">With OPEC</td>
<td>-5235</td>
<td>-6226</td>
<td>-2286</td>
<td>981</td>
<td>-2949</td>
<td>-33532</td>
<td>-48010</td>
<td>-36611</td>
</tr>
</tbody>
</table>

French Prospects Drop Sharply 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081117i.jpg" align="left" border="0" height="265" width="353">
The Bank of France Industry Sentiment Index is pointing much
lower. At 77.14 it has fallen in October from 86.08 the month before.
This compares to its 12-month average of 97. The index is weaker than
this level only about 2 percent of the time. The latest production and
production outlook indices are at bottom-scraping levels. Foreign
orders and new industry orders are both at their
lowest level since 1987. The hiring outlook is worse only about 20% of
the time.
It is no wonder that, armed with this survey result, French
Finance Minister Christine Lagarde warned on the outlook. All of Europe
is crumbling under the strain.

<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Bank of
France Monthly INDUSTRY Survey: SUMMARY </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>12 MO</td>
<td>Since Jan-87</td>
<td>Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>AVERAGE</td>
<td>Average</td>
<td>rank/range</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Production-Latest
Month</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-23.53</td>
<td>-20.09</td>
<td>8.2</td>
<td>-2</td>
<td>7</td>
<td>0.06</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Production
Outlook</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-18</td>
<td>-9</td>
<td>0</td>
<td>4</td>
<td>15</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Demand</td>
</tr>
<tr class="grey2">
<td class="firstcol">Overall Order Books</td>
<td>-22.61</td>
<td>-6.61</td>
<td>-2.17</td>
<td>10</td>
<td>4</td>
<td>22.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign Orders</td>
<td>-33.2</td>
<td>-28.65</td>
<td>-5.85</td>
<td>-3</td>
<td>8</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">New
Orders</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>-35.36</td>
<td>-32.17</td>
<td>-1.49</td>
<td>-3</td>
<td>8</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Stocks:
Finished Goods</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Industry</td>
<td>3.62</td>
<td>0.35</td>
<td>1.26</td>
<td>0</td>
<td>-2</td>
<td>80.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capacity Utilization</td>
<td>77.87</td>
<td>79.9</td>
<td>80.47</td>
<td>82</td>
<td>83</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Hiring</td>
</tr>
<tr class="grey2">
<td class="firstcol">Latest Month</td>
<td>-12.12</td>
<td>-6.62</td>
<td>-2.27</td>
<td>-3</td>
<td>-1</td>
<td>20.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Outlook</td>
<td>-16.19</td>
<td>-9.93</td>
<td>-4.2</td>
<td>-5</td>
<td>-4</td>
<td>22.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Industry Sentiment
Index</td>
<td>77.14</td>
<td>86.07</td>
<td>92.92</td>
<td>97</td>
<td>102</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body></html>

<html>
<head>
<style>
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.even{
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.grey1{
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<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081114i.jpg" width="353">
During September, total business inventories reversed all of their August rise and fell 0.2%. The decline was weaker than Consensus expectations for no change. More importantly, however, it could suggest that the addition to 3Q GDP growth of 0.6 percentage points from faster inventory accumulation waned as the quarter progressed. As of September the three-month growth in inventories fell to 4.4% (AR) from roughly 6.5% during the prior two quarters.
Normally, the suggestion of less of a contribution would be a sure thing. But these are not normal times given the drop in oil prices. Lower oil prices have dramatically reduced the value of inventories held by retailers, wholesalers and manufacturers.
Retail inventories rose 0.2% in September after a 0.7% August decline. The three-month growth rate of retail inventories picked up to 3.4% from 0.1% during 2Q. Accumulation of automobiles accounted for that increase rising at a 3.5% rate last quarter versus a decline of 5.7% during 2Q. Outside of autos, retail inventories rose 0.4% during September after a 0.2% August decline. The 3.3 rate of accumulation last quarter was roughly the same as during 2Q.
The industry detail in the retail sector indicated that higher apparel inventories contributed with a 3.1% rise last quarter versus 0.2% decumulation during 2Q. Furniture inventories rose at a 7.4% rate last quarter, about the same as during 2Q, and general merchandise inventories showed virtually zero growth after a 2.0% gain during 2Q. The fastest rate of accumulation came from building materials which ran up last quarter at a 13.1% rate after slight 2Q decumulation.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081114j.jpg" width="353">
Factory inventories declined 0.7% during September and the three-month rate of accumulation fell sharply to 2.2% from a 7.4% rate during 2Q.
Wholesale inventories slipped 0.1%, largely reflecting a 3.5% decline in petroleum inventories. For the quarter wholesale inventories rose at an 8.6% rate after a 13.4% 2Q increase.
Total business sales fell 2.0% during September, about as they did in August, led lower by the drop in oil prices.
Today&#39;s speech by Fed President Ben S. Bernanke titled Policy Coordination Among Central Banks can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20081214a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">usiness Inventories</a></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>-0.2%</td>
<td>0.2%</td>
<td>5.5%</td>
<td>3.8%</td>
<td>5.9%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>3.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>4.9%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.1%</td>
<td>0.6%</td>
<td>9.7%</td>
<td>5.5%</td>
<td>8.3%</td>
<td>7.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.7%</td>
<td>0.7%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>6.4%</td>
<td>8.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

During September, total business inventories reversed all of their August rise and fell 0.2%. The decline was weaker than Consensus expectations for no change. More importantly, however, it could suggest that the addition to 3Q GDP [...]

U.S. Business Inventory Accumulation Waned

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.

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

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

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

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

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

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

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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

Economy in Brief

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