Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221a.jpg" width="353">
Initial claims for unemployment insurance fell 9,000 to 349,000 last week, but the prior week&#39;s level was revised up sharply. For February, claims so far are up 28,000, or 8.6%, from the January average. The latest weekly level remained near the highest since October of 2005.
The four-week moving average of initial claims, a measure which smoothes out most of the series&#39; w/w volatility, rose again to 360,500 (+9.2% y/y), the highest level since Summer of 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221b.jpg" width="353">
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 48,000 and reversed a 48,000 decline during the prior week. That decline was much deeper than reported initially. Insured unemployment stood at its highest level since Summer 2005. The figure provides some indication of workers&#39; ability to find employment.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 2.1% for the third consecutive week.
Minutes to the January meeting of the Federal Open Market Committee can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080220a.htm"> here</a>.
Recent Trends in Economic Volatility: Conference Summary from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-06.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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/16/08</th>
<th scope="col">02/09/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;349</td>
<td>358</td>
<td>4.8%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,784</td>
<td>11.5%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance fell 9,000 to 349,000 last week, but the prior week's level was revised up sharply. For February, claims so far are up 28,000, or 8.6%, from the January average. The latest weekly level [...]

U.S. Weekly Initial Claims for Jobless Insurance Down, Revisions Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221f.jpg" align="left" border="0" height="265" width="353">
For January, the Conference Board reported that the composite
index of leading economic indicators fell 0.1% after a revised 0.1%
decline during December. The latest drop matched Consensus
expectations. It was the fifth decline in the last six months and since
the series' peak last July it has fallen 2.0%.
For all of last year the leaders fell 0.4% and the
six month growth rate, calculated as the latest month's reading divided
by the average of the prior twelve months, was -4.0%, the lowest since
early 2001.
During the last ten years there has been a 59% correlation
between the y/y change in the leading indicators index and the lagged
change in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221g.jpg" align="right" border="0" height="265" width="353">
The breadth of one month gain amongst the 10 components of the
leading index rose slightly to a break even 50.0%. Over a six month
period, the breadth of gain amongst the leaders components cratered to
20%, equal to its lowest level since 2002.
Last month lower stock prices made the largest contribution to
the decline in the overall leading index.
The method of calculating the contribution to the leading
index from the spread between 10 year Treasury securities and the Fed
funds rate has been revised. A negative contribution will now occur
only when the spread inverts rather than when declining as in the past.
More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported
economic data series. Two series, orders for consumer goods and orders
for capital goods, are estimated.
The coincident indicators rose 0.1% after a 0.1% December
uptick. Over the last ten years there has been an 86% correlation
between the y/y change in the coincident indicators and real GDP
growth. Three of the four coincident series components rose very
slightly and employment fell.
The lagging index was unchanged and the ratio of coincident to
lagging indicators (a measure of economic excess) ticked up slightly
but remained near its lowest since 1991. 
Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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/BCI/BCI.HTM">Business
Cycle Indicators</a></th>
<th scope="col">January</th>
<th scope="col">December</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">Leading</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-1.5%</td>
<td>-0.4%</td>
<td>1.2%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Lowest
Since 2001 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221d.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank reported that it's Index
of General Business Conditions in the manufacturing sector fell to
-24.0 this month from -20.9 in January. The latest level was the lowest
since the recession year 2001.
The index is a diffusion index for each component or series.
It reflects the increase in activity reported less the decrease.
During the last ten years there has been a 59% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 42% correlation with q/q growth in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221e.jpg" align="right" border="0" height="265" width="353">
The decline in the overall index represented broad based
declines in each of the sub indexes except new orders and the number of
employees which ticked up. During the last ten years there has been a
75% correlation between the employment index and the three-month growth
in factory payrolls.
The business conditions index reflects a separate survey
question, not the sub indexes.
The prices paid index also fell slightly after strong up moves
during the prior five months. During the last ten years there has been
a 76% correlation between the prices paid index and the three-month
growth in the intermediate goods PPI. There has been an 85% correlation
with the change in core intermediate goods prices.
The separate index of expected business conditions in six
months fell sharply to the lowest reading since 1990. Expectations for
new orders, shipments and for the number of employees fell sharply.
Are Shocks to the Terms of Trade, Shocks to
Productivity? from the Federal Reserve Bank of Minneapolis
can be found <a href="http://www.minneapolisfed.org/research/SR/SR391.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">&nbsp;</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Feb. '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-24.0</td>
<td>-20.9</td>
<td>0.3</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>46.6</td>
<td>&nbsp;49.8</td>
<td>&nbsp;18.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
U.S. Weekly Initial Claims for
Jobless Insurance Down, Revisions Up 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221a.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance fell 9,000 to
349,000 last week, but the prior week's level was revised up sharply.
For February, claims so far are up 28,000, or 8.6%, from the January
average. The latest weekly level remained near the highest since
October of 2005.
The four-week moving average of initial claims, a measure
which smoothes out most of the series' w/w volatility, rose again to
360,500 (+9.2% y/y), the highest level since Summer of 2005.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221b.jpg" align="right" border="0" height="265" width="353">
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last ten years there has
been a (negative) 76% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 48,000 and
reversed a 48,000 decline during the prior week. That decline was much
deeper than reported initially. Insured unemployment stood at its
highest level since Summer 2005. The figure provides some indication of
workers' ability to find employment.
The continuing claims numbers lag the initial claims figures
by one week.
The insured rate of unemployment remained at 2.1% for the
third consecutive week.
Minutes to the January meeting of the Federal Open
Market Committee can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080220a.htm">
here</a>.
Recent Trends in Economic Volatility: Conference
Summary from the Federal Reserve Bank of San Francisco is
available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-06.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/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/16/08</th>
<th scope="col">02/09/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;349</td>
<td>358</td>
<td>4.8%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,784</td>
<td>11.5%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
French Inflation: Core andHeadline Rates Move Higher 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 21, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080221c.jpg" align="left" border="0" height="265" width="353">
French inflation is showing pressure. In January the Yr/Yr
HICP pace is up to 3.2% from 1.4% in the previous 12-month period. The
CPI excl food and energy rate is up to 2% from 1.4% a year ago. The
3-month CPI excl food and energy pace is a bit lower than it was over
six months, but it is still above the 2% mark. While the main CPI
categories show that 90% of them have inflation higher than it was a
year ago, 72% have higher inflation over six months that over 12-months
but only 54% have higher inflation over three months than over
6-months, Clothing and Communications inflation is cooling the fastest.
Education plus food and energy intensive categories show the most
inflation pressure. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> France
HICP and CPI details</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">HICP Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Core&nbsp;</td>
<td>--</td>
<td>0.3%</td>
<td>0.3%</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>1.4%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">CPI</td>
</tr>
<tr class="grey2">
<td class="firstcol">All</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.6%</td>
<td style="color: red;">5.4%</td>
<td style="color: red;">4.0%</td>
<td>2.9%</td>
<td>1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">CPI excl Food and Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.6%</td>
<td style="color: red;">2.8%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food</td>
<td>1.2%</td>
<td>0.6%</td>
<td>0.4%</td>
<td style="color: red;">8.8%</td>
<td style="color: red;">8.1%</td>
<td style="color: red;">4.4%</td>
<td>1.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Alcohol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.8%</td>
<td style="color: red;">7.0%</td>
<td style="color: red;">4.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-2.0%</td>
<td>0.2%</td>
<td style="color: red;">0.6%</td>
<td>0.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rent &amp; Utilities</td>
<td>0.5%</td>
<td>0.6%</td>
<td>1.1%</td>
<td style="color: red;">9.0%</td>
<td style="color: red;">6.7%</td>
<td style="color: red;">4.7%</td>
<td>3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Health Care</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.0%</td>
<td style="color: red;">0.4%</td>
<td style="color: red;">0.3%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Transport</td>
<td>0.1%</td>
<td>1.0%</td>
<td>1.9%</td>
<td style="color: red;">13.0%</td>
<td style="color: red;">7.7%</td>
<td style="color: red;">6.1%</td>
<td>0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Communication</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>0.0%</td>
<td>-2.8%</td>
<td style="color: red;">0.2%</td>
<td style="color: red;">-1.2%</td>
<td>-1.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Recreation &amp; Culture</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>0.2%</td>
<td style="color: red;">-0.6%</td>
<td>-1.6%</td>
<td style="color: red;">-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Education</td>
<td>0.5%</td>
<td>0.2%</td>
<td>0.6%</td>
<td style="color: red;">5.1%</td>
<td style="color: red;">3.4%</td>
<td style="color: red;">3.0%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.2%</td>
<td style="color: red;">3.3%</td>
<td>2.5%</td>
<td style="color: red;">2.8%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.3%</td>
<td style="color: red;">1.9%</td>
<td>1.9%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>54.5%</td>
<td>72.7%</td>
<td>90.9%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

For January, the Conference Board reported that the composite index of leading economic indicators fell 0.1% after a revised 0.1% decline during December. The latest drop matched Consensus expectations. It was the fifth decline in the [...]

U.S. Leading Economic Indicators Down

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220g.jpg" align="left" border="0" height="265" width="353">
The UK&#8217;s CBI report is a survey which reports purchaser type
survey data as net measures (net better Vs worse responses). The report
shows that output trends, while still showing expansion, have moved
substantially lower. Order trends have been hovering; they show small
net positive readings. This month the order series even ticked higher
to a net +3 from +2 in January. Output volume expected in the next
three months has improved a bit too. At +11 in February it is up from
+9 in January and +3 in December. Still, it is a reading that is still
below its 12-month average of 14. But prices are the real headline of
this report. Price pressures continue to rise. At +22 they are
accelerating and are above their 12-month average of 18. Prices for the
next 3 months stand in the 95th percentile of their range. This is
stronger than for orders or export orders where the rankings show them
in the top 79th to 88th percentile of their ranges. Output is only in
the top 30% of its range. While the BOE is cutting rates the output and
orders barometers in this report are still firm but price expectations
are pushing their limits. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK
Industrial Volume Data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>12-mo Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>2</td>
<td>2</td>
<td>8</td>
<td>-6</td>
<td>4</td>
<td>86%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-4</td>
<td>2</td>
<td>-4</td>
<td>-9</td>
<td>-3</td>
<td>87%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>7</td>
<td>14</td>
<td>14</td>
<td>14</td>
<td>9</td>
<td>32%</td>
<td>26</td>
<td>-2</td>
<td>28</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3M</td>
<td>9</td>
<td>3</td>
<td>9</td>
<td>10</td>
<td>15</td>
<td>66%</td>
<td>28</td>
<td>-28</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Averages Prices for Next 3M</td>
<td>21</td>
<td>15</td>
<td>21</td>
<td>14</td>
<td>18</td>
<td>93%</td>
<td>25</td>
<td>-30</td>
<td>55</td>
</tr>
<tr class="grey2">
<td colspan="10" class="firstcol">From end
2000</td>
</tr>
</tbody>
</table>
</body></html>

The UK’s CBI report is a survey which reports purchaser type survey data as net measures (net better Vs worse responses). The report shows that output trends, while still showing expansion, have moved substantially lower. Order trends [...]

UK Output Trends Decline as Orders Hover Showing Small Persisting Gains

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220f.jpg" align="left" border="0" height="265" width="353">
The German inflation picture remains a bit hotter than the ECB
would have liked. With headline PPI inflation up by 0.7% the core was
up by 0.4%. Over the past 12 months, headline MFG inflation is at 3.2%
the same as it was a year ago. Excluding energy MFG inflation fell to
2.4% Yr/Yr from 3% a year ago.

Sequential growth rates show that ex energy inflation is very
sticky above 2%. Meanwhile, headline inflation has continued to build
pressures in terms of these sequential rates.

Basic goods prices rose by 0.7% in January and by 2.6% Yr/Yr.
Capital goods prices rose by 0.1% and are higher Yr/Yr by 0.7%.
Consumer goods prices rose by 0.5% in January but were up a strong 3.9%
Yr/Yr. Energy prices were by 2.1% in January and by 5.9% Yr/Yr.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Germany
PPI</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo Year Ago</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.7%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.4%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
</body></html>

The German inflation picture remains a bit hotter than the ECB would have liked. With headline PPI inflation up by 0.7% the core was up by 0.4%. Over the past 12 months, headline MFG inflation is at 3.2% the same as it was a year ago. [...]

German PPI Inflation Shows Stubbornness

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220e.jpg" align="left" border="0" height="265" width="353">
French and Italian orders have shown some consistency in
recent years in their oscillations. Currently Italy&#8217;s trends are a bit
flatter and the French trends are still a bit stronger but both saw
clear evidence of losing momentum as 2008 approaches.

Over the last three months Italy&#8217;s orders are off at a 13.1%
pace; French orders are off at a 0.3% pace for the same period. Italy&#8217;s
foreign orders are off over 12, 6 and 3 months and are showing
progressively worse results. French foreign orders are up weakly over
12 months and are lower over 6 months but have made a minor rebound in
the recent three months. So while French foreign order trends are
better than Italian trends they are still not solid&#8230;For the fourth
quarter, French orders are dropping at a 3.8% pace Q/Q while Italy&#8217;s
orders are dropping at a 3.3% annual pace. France&#8217;s foreign orders are
holding up better with a mere 4% drop annualized in Q4 compared to
Italy where the annual rate of decline for foreign orders is 15%.

The Euro Area is now showing some signs of growth erosion and
we cannot tell if it is the strong euro at work or the effects of
financial distress and lowered expectations that are having the largest
impact. But France and Italy are showing signs of wear on tear in their
respective industrial sectors.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Italy Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-5.4%</td>
<td>2.9%</td>
<td>-1.1%</td>
<td>-14.1%</td>
<td>-8.8%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-8.1%</td>
<td>3.9%</td>
<td>-5.8%</td>
<td>-34.6%</td>
<td>-23.1%</td>
<td>-0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-4.1%</td>
<td>2.5%</td>
<td>1.5%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-2.7%</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>-12.0%</td>
<td>-4.0%</td>
<td>-2.8%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">French Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-2.0%</td>
<td>-0.3%</td>
<td>2.2%</td>
<td>-0.3%</td>
<td>-7.0%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-1.0%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>2.5%</td>
<td>-9.3%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
</body></html>

French and Italian orders have shown some consistency in recent years in their oscillations. Currently Italy’s trends are a bit flatter and the French trends are still a bit stronger but both saw clear evidence of losing momentum as [...]

New Industrial Orders in December Sag in Italy and in France

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220d.jpg" width="353">
Housing starts last month did rise slightly as expected to 1.012M units, up 0.8% from December. But the gain did little to dent m/m declines of 14.8% in December and 7.5% during November. As a result housing starts remained near the lows of 1991.
Last month, all of the increase in the total was due to a 22.3% gain in starts of condos &amp; coops.
Single family starts in January fell 5.2% after like declines during each of the prior six months. The decline to .743M was to the lowest level since January 1991. Since the peak in early 2006, starts of single family homes are down 59.6%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220c.jpg" width="353">
By region, single family starts in the Northeast rose by nearly one half m/m to the highest level since last June. That rise was countered by a 20.3% (-49.1% y/y) decline in the West. Single family starts in the Midwest were stable m/m (-31.1% y/y) and in the South, single family starts fell 9.8% (-32.3% y/y).
Building permits fell 3.0% (-35.1% y/y). Single-family permits fell 4.1% (-40.3% y/y).
Liquidity, Monetary Policy, and Financial Cycles from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci14-1.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/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">January</th>
<th scope="col">December</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>1,012</td>
<td>1,004</td>
<td>-27.9%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>743</td>
<td>784</td>
<td>-33.8%</td>
<td>1,039</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>269</td>
<td>220</td>
<td>-3.9%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,048</td>
<td>1,080</td>
<td>-33.1%</td>
<td>1,371</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts last month did rise slightly as expected to 1.012M units, up 0.8% from December. But the gain did little to dent m/m declines of 14.8% in December and 7.5% during November. As a result housing starts remained near the [...]

U.S. Housing Starts Remain Near 1991 Lows

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220a.jpg" width="353">
The consumer price index (CPI-U) rose 0.4% last month, the same as during an upwardly revised December increase. (New seasonal factors were introduced for the last three years.) The latest increase was slightly ahead of expectations for a 0.3% rise. It also lifted the y/y comparison to its fastest since October 2005.
Less food &amp; energy, consumer prices rose 0.3% in January. That also was ahead of expectations for a 0.2% gain and it was the quickest since June of 2006. A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/07v13n3/0712rich.pdf">here</a>.
A faster 0.7% gain in food &amp; beverage prices was the strongest since early last year. Prices for meats poultry &amp; fish surged 0.8% (5.4% y/y) and prices for fruits &amp; vegetables jumped 2.2% (6.2% y/y). Cereal &amp; bakery product prices also have been quite strong and posted a 0.6% gain (5.7% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220b.jpg" width="353">
Core services prices rose 0.4% (3.4% y/y) and that was the fastest m/m rise since 2006. Shelter prices rose the same 0.3% (3.1% y/y) as during the prior two months. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, also rose 0.3% (2.8% y/y). Medical care services prices, however, were strong. The 0.6% increase doubled the December (5.7% y/y) rise. Tuition costs also posted a strong 0.6% (5.7% y/y) rise but the increase in public transportation prices cooled to 0.4% (5.8% y/y).
Core goods prices rose 0.2% and that was the fastest increase since early 2006. It mainly reflected a 0.4% rise in apparel prices that still left them down 0.2% y/y. Medical care commodity prices also were strong and rose 0.5% (2.5% y/y) but most other goods price increases were tame. Prices for new &amp; used motor vehicles fell 0.1% (0.0% y/y) during January and prices of household furnishings &amp; operation ticked up 0.1% (-0.5% y/y) after two months of having been unchanged.
Energy prices rose just 0.7% last month, well off the double digit rates of increase during the prior four months. The gain in gasoline prices eased to only 1.2% (34.5% y/y) and the weekly data already show a slight m/m decline this month. Prices for fuel oil &amp; other fuels, however, were quite strong and rose 3.7% (34.7% y/y) but natural gas &amp; electricity prices fell 0.5% (+3.% y/y). 
The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.5% (+3.9% y/y) and the core measure rose 0.3%, its fastest gain since October. This latter measure is similar to the core PCE price index but its treatment of housing price differs
Publishing Central Bank Interest Rate Forecasts from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-02.pdf"> 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"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> </th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Jan Y/Y&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&nbsp;</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.9%</td>
<td>4.4%&nbsp;</td>
<td>2.9%</td>
<td>3.2%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.5%&nbsp;</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.2%&nbsp;</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services less Energy</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%&nbsp;</td>
<td>3.4%</td>
<td>3.4%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>0.7%</td>
<td>1.7%</td>
<td>6.9%</td>
<td>20.4%&nbsp;</td>
<td>5.6%</td>
<td>11.0%</td>
<td>17.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp; Beverages</td>
<td>0.7%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>4.9%&nbsp;</td>
<td>4.0%</td>
<td>2.3%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td>&nbsp;&nbsp;</td>
<td></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>0.5%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>3.9%</td>
<td>2.5%</td>
<td>2.9%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy&nbsp;</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.0%</td>
<td>2.2%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>


</html>

The consumer price index (CPI-U) rose 0.4% last month, the same as during an upwardly revised December increase. (New seasonal factors were introduced for the last three years.) The latest increase was slightly ahead of expectations [...]

U.S. CPI Total Stable, Core Strongest Since 2006

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220a.jpg" align="left" border="0" height="265" width="353">
The consumer price index (CPI-U) rose 0.4%
last month, the same as during an upwardly revised December increase.
(New seasonal factors were introduced for the last three years.) The
latest increase was slightly ahead of expectations for a 0.3% rise. It
also lifted the y/y comparison to its fastest since October 2005.
Less food &amp; energy, consumer prices
rose 0.3% in January. That also was ahead of expectations for a 0.2%
gain and it was the quickest since June of 2006. A Comparison
of Measures of Core Inflation from the Federal Reserve Bank
of New York can be found <a href="http://www.newyorkfed.org/research/epr/07v13n3/0712rich.pdf">here</a>.
A faster 0.7% gain in food &amp; beverage prices
was the strongest since early last year. Prices for meats poultry
&amp; fish surged 0.8% (5.4% y/y) and prices for fruits &amp;
vegetables jumped 2.2% (6.2% y/y). Cereal &amp; bakery product
prices also have been quite strong and posted a 0.6% gain (5.7% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220b.jpg" align="right" border="0" height="265" width="353">
Core services prices rose 0.4% (3.4% y/y)
and that was the fastest m/m rise since 2006. Shelter prices rose the
same 0.3% (3.1% y/y) as during the prior two months. Owners equivalent
rent of primary residence, a measure not equivalent to other house
price measures, also rose 0.3% (2.8% y/y). Medical care services
prices, however, were strong. The 0.6% increase doubled the December
(5.7% y/y) rise. Tuition costs also posted a strong 0.6% (5.7% y/y)
rise but the increase in public transportation prices cooled to 0.4%
(5.8% y/y).
Core goods prices rose 0.2% and that was
the fastest increase since early 2006. It mainly reflected a 0.4% rise
in apparel prices that still left them down 0.2% y/y. Medical care
commodity prices also were strong and rose 0.5% (2.5% y/y) but most
other goods price increases were tame. Prices for new &amp; used
motor vehicles fell 0.1% (0.0% y/y) during January and prices of
household furnishings &amp; operation ticked up 0.1% (-0.5% y/y)
after two months of having been unchanged.
Energy prices rose just 0.7% last month,
well off the double digit rates of increase during the prior four
months. The gain in gasoline prices eased to only 1.2% (34.5% y/y) and
the weekly data already show a slight m/m decline this month. Prices
for fuel oil &amp; other fuels, however, were quite strong and rose
3.7% (34.7% y/y) but natural gas &amp; electricity prices fell 0.5%
(+3.% y/y). 
The chained CPI, which adjusts for shifts
in the mix of consumer purchases rose 0.5% (+3.9% y/y) and the core
measure rose 0.3%, its fastest gain since October. This latter measure
is similar to the core PCE price index but its treatment of housing
price differs


Publishing Central Bank Interest Rate Forecasts
from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-02.pdf">
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"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> </th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Jan Y/Y&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&nbsp;</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.9%</td>
<td>4.4%&nbsp;</td>
<td>2.9%</td>
<td>3.2%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.5%&nbsp;</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.2%&nbsp;</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%&nbsp;</td>
<td>3.4%</td>
<td>3.4%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>0.7%</td>
<td>1.7%</td>
<td>6.9%</td>
<td>20.4%&nbsp;</td>
<td>5.6%</td>
<td>11.0%</td>
<td>17.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.7%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>4.9%&nbsp;</td>
<td>4.0%</td>
<td>2.3%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td>&nbsp;&nbsp;</td>
<td></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>0.5%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>3.9%</td>
<td>2.5%</td>
<td>2.9%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.0%</td>
<td>2.2%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
U.S. Housing Starts Remain Near
1991 Lows 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 20, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220d.jpg" align="left" border="0" height="265" width="353">
Housing starts last month did rise slightly as expected to
1.012M units, up 0.8% from December. But the gain did little to dent
m/m declines of 14.8% in December and 7.5% during November. As a result
housing starts remained near the lows of 1991.
Last month, all of the increase in the total was due to a
22.3% gain in starts of condos &amp; coops.
Single family starts in January fell 5.2% after like declines
during each of the prior six months. The decline to .743M was to the
lowest level since January 1991. Since the peak in early
2006, starts of single family homes are down 59.6%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220c.jpg" align="right" border="0" height="265" width="353">
By region, single family starts in the Northeast rose by
nearly one half m/m to the highest level since last June. That rise was
countered by a 20.3% (-49.1% y/y) decline in the West. Single family
starts in the Midwest were stable m/m (-31.1% y/y) and in the South,
single family starts fell 9.8% (-32.3% y/y).
Building permits fell 3.0% (-35.1% y/y). Single-family permits
fell 4.1% (-40.3% y/y).
Liquidity, Monetary Policy, and Financial Cycles
from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci14-1.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/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing
Starts (000s, AR)</a></th>
<th scope="col">January</th>
<th scope="col">December</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>1,012</td>
<td>1,004</td>
<td>-27.9%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>743</td>
<td>784</td>
<td>-33.8%</td>
<td>1,039</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>269</td>
<td>220</td>
<td>-3.9%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,048</td>
<td>1,080</td>
<td>-33.1%</td>
<td>1,371</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
New Industrial Orders in
DecemberSag in Italy and in France 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 20, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220e.jpg" align="left" border="0" height="265" width="353">
French and Italian orders have shown some consistency in
recent years in their oscillations. Currently Italy&#8217;s trends are a bit
flatter and the French trends are still a bit stronger but both saw
clear evidence of losing momentum as 2008 approaches.

Over the last three months Italy&#8217;s orders are off at a 13.1%
pace; French orders are off at a 0.3% pace for the same period. Italy&#8217;s
foreign orders are off over 12, 6 and 3 months and are showing
progressively worse results. French foreign orders are up weakly over
12 months and are lower over 6 months but have made a minor rebound in
the recent three months. So while French foreign order trends are
better than Italian trends they are still not solid&#8230;For the fourth
quarter, French orders are dropping at a 3.8% pace Q/Q while Italy&#8217;s
orders are dropping at a 3.3% annual pace. France&#8217;s foreign orders are
holding up better with a mere 4% drop annualized in Q4 compared to
Italy where the annual rate of decline for foreign orders is 15%.

The Euro Area is now showing some signs of growth erosion and
we cannot tell if it is the strong euro at work or the effects of
financial distress and lowered expectations that are having the largest
impact. But France and Italy are showing signs of wear on tear in their
respective industrial sectors.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Italy
Orders</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-5.4%</td>
<td>2.9%</td>
<td>-1.1%</td>
<td>-14.1%</td>
<td>-8.8%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-8.1%</td>
<td>3.9%</td>
<td>-5.8%</td>
<td>-34.6%</td>
<td>-23.1%</td>
<td>-0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>-4.1%</td>
<td>2.5%</td>
<td>1.5%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Sales</td>
<td>-2.7%</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>-12.0%</td>
<td>-4.0%</td>
<td>-2.8%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">French
Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-2.0%</td>
<td>-0.3%</td>
<td>2.2%</td>
<td>-0.3%</td>
<td>-7.0%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>-1.0%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>2.5%</td>
<td>-9.3%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
German PPI Inflation Shows
Stubbornness 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 20, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220f.jpg" align="left" border="0" height="265" width="353">
The German inflation picture remains a bit hotter than the ECB
would have liked. With headline PPI inflation up by 0.7% the core was
up by 0.4%. Over the past 12 months, headline MFG inflation is at 3.2%
the same as it was a year ago. Excluding energy MFG inflation fell to
2.4% Yr/Yr from 3% a year ago.

Sequential growth rates show that ex energy inflation is very
sticky above 2%. Meanwhile, headline inflation has continued to build
pressures in terms of these sequential rates.

Basic goods prices rose by 0.7% in January and by 2.6% Yr/Yr.
Capital goods prices rose by 0.1% and are higher Yr/Yr by 0.7%.
Consumer goods prices rose by 0.5% in January but were up a strong 3.9%
Yr/Yr. Energy prices were by 2.1% in January and by 5.9% Yr/Yr.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Germany
PPI</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-mo Year Ago</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.7%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.4%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
UK Output Trends Decline as Orders
Hover Showing Small Persisting Gains 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 20, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080220g.jpg" align="left" border="0" height="265" width="353">
The UK&#8217;s CBI report is a survey which reports purchaser type
survey data as net measures (net better Vs worse responses). The report
shows that output trends, while still showing expansion, have moved
substantially lower. Order trends have been hovering; they show small
net positive readings. This month the order series even ticked higher
to a net +3 from +2 in January. Output volume expected in the next
three months has improved a bit too. At +11 in February it is up from
+9 in January and +3 in December. Still, it is a reading that is still
below its 12-month average of 14. But prices are the real headline of
this report. Price pressures continue to rise. At +22 they are
accelerating and are above their 12-month average of 18. Prices for the
next 3 months stand in the 95th percentile of their range. This is
stronger than for orders or export orders where the rankings show them
in the top 79th to 88th percentile of their ranges. Output is only in
the top 30% of its range. While the BOE is cutting rates the output and
orders barometers in this report are still firm but price expectations
are pushing their limits. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK
Industrial Volume Data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Reported:</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>12-mo Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>2</td>
<td>2</td>
<td>8</td>
<td>-6</td>
<td>4</td>
<td>86%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr>
<td class="firstcol">Export Orders</td>
<td>-4</td>
<td>2</td>
<td>-4</td>
<td>-9</td>
<td>-3</td>
<td>87%</td>
<td>3</td>
<td>-50</td>
<td>53</td>
</tr>
<tr>
<td class="firstcol">Stocks: Final Goods</td>
<td>7</td>
<td>14</td>
<td>14</td>
<td>14</td>
<td>9</td>
<td>32%</td>
<td>26</td>
<td>-2</td>
<td>28</td>
</tr>
<tr>
<td class="firstcol">Output Volume: Next 3M</td>
<td>9</td>
<td>3</td>
<td>9</td>
<td>10</td>
<td>15</td>
<td>66%</td>
<td>28</td>
<td>-28</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Averages Prices for Next 3M</td>
<td>21</td>
<td>15</td>
<td>21</td>
<td>14</td>
<td>18</td>
<td>93%</td>
<td>25</td>
<td>-30</td>
<td>55</td>
</tr>
<tr class="grey2">
<td colspan="10" class="firstcol">From end
2000</td>
</tr>
</tbody>
</table>
</body></html>

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

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

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Michael J. Moran

260616A.jpg

260616B.jpg

The headline index on import prices rose 1.9% in May, close to the blistering pace in April and the fourth consecutive high-side reading. This recent pressure has pulled the year-over-year change to 6.7%, a distinct shift from last year when import prices showed no change over the 12 months of 2025.

Prices of petroleum products have been the most important factor behind the recent surge, increasing 13.0% in May after an average of 17.8% in the prior two months. However, prices excluding petroleum products also have stirred this year, as they have increased more than 0.6% in each of the past five months. May posted the firmest increase in this string of brisk readings (1.3%). Prices of consumer goods had been increasing moderately in early 2026, but they jumped 0.5% in May. The changes in capital and consumer goods led to an increase of 0.8% in nonpetroleum prices in May and an average of 0.6% in the first five months of the year.

Some observers might seek to look for the effects of tariffs on import prices, but these figures would not be especially helpful in this regard, as prices are recorded before the imposition of tariffs. However, if foreign producers wished to absorb the tariff burden to remain competitive in the US market, they could reduce invoiced prices to keep post-tariff prices steady. Indeed, nonpetroleum prices softened after April of last year following the announcement of President Trump’s Liberation Day tariffs. The subsequent easing of some of the draconian tariffs and the nullification of tariffs imposed under the International Emergency Economic Powers Act might be factors leading importers to return to original prices this year. Given that the pressure on import prices ex-petroleum has been concentrated in the capital goods area, there does not seem to be a rush to return to pre-tariff pricing.

On the export side, prices rose 1.3% in May, continuing the firm pace seen in the preceding four months. Petroleum prices have played a role in this pressure, as shown by an increase of 2.4% in the industrial supply category (petroleum prices alone are not available on the export side). Food prices also have jumped this year, increasing 0.8% in May after an average of 1.2% in the prior three months. Prices of capital goods were tame in the early months of the year, but they have firmed in the past two months (0.5% in April and 0.7% in May).

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

260616C.jpg

260616D.jpg

- Petroleum products led import prices higher, but capital goods also had an influence.
- Petroleum was also a factor on the export side; some stirring in food and capital goods.

Import and Export Prices: Firm in May

Sandy Batten

260616F4.jpg

260616G4.jpg

Weighed down by further rises in longer-term interest rates, housing construction continued to languish in May. Housing starts plunged 15.4% m/m (-8.7% y/y) in May on top of a downwardly revised 8.5% monthly decline in April (previously -2.8% m/m). The level of starts plummeted to 1.177 million, the lowest since May 2020 when the economy was locked down during the COVID pandemic. The Action Economics Forecast Survey expected a 2.4% m/m decline to a level of 1.432 million units. The April/May average for starts was 1.285 million, 9.4% below the Q1 average. Residential investment has been a persistent drag on real GDP growth recently, subtracting from overall growth in each of the previous five quarters. Today’s report points to another subtraction in Q2.

Single-family starts fell 1.9% m/m (-6.7% y/y) in May on top of a downwardly revised 11.6% monthly plunge in April (previously -9.0% m/m). Multi-family starts, which had generally been trending up over the past year or so, albeit with quite a bit of volatility, plummeted 40.2% m/m (-14.2% y/y) in May following a downwardly revised 2.4% m/m decline in April (previously +10.3% m/m).

Starts fell in three of the four major geographic regions. Starts rose 3.7% m/m in the Midwest with gains in both single-family and multi-family starts. By contrast, starts fell in each of the other three regions, plunging 26.8% m/m in the Northeast, the third monthly decline in the past four months, falling 17.0% m/m in the South, also the third monthly decline in the past four months, and declining 17.2% m/m in the West, the fourth monthly decline in the past five months.

The performance of building permits is typically less volatile than that of starts. Total permits edged down 0.7% m/m (-0.2% y/y) to 1.413 million units in May following a 4.4% monthly gain in April and an 11.5% m/m fall in March. Expectations were for a 0.3% monthly increase in May. Single-family permits edged up 0.6% m/m (-1.8% y/y) in May versus a 1.6% monthly decline in April and a 3.7% m/m drop in March. By contrast, multi-family permits fell 2.8% m/m (+2.5 y/y) in May but this was after a 15.8% monthly surge in April.

In contrast to the regional performance of starts, permits fell in the Midwest (-18.7% m/m) but rose in each of the other three major geographic regions. Permits increased 3.1% m/m in the Northeast in May on top of a 18.1% monthly jump in April. They edged up 1.6% m/m in the South and rose 5.5% m/m in the West, the first monthly gain in three months.

The housing starts and permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

260616H4.jpg

260616I4.jpg

- Housing starts plunged 15.4% m/m in May to the lowest level since May 2020 with a significant downward revision to the previously reported April decline.
- Single family starts fell 1.9% m/m while multi-family starts plummeted 40.2% m/m to their lowest level since November 2024.
- Less volatile permits slid 0.7% m/m in May with a slight rise (+0.6% m/m) in single-family permits and a 2.8% monthly drop in multi-family permits.

U.S. Housing Starts Plunged in May

260616E.jpg

The ZEW diffusion survey (an up-minus-down survey) showed mixed improvements in the economic situation and improvements for macroeconomic expectations in June. The report shows the economic situation improving in the United States and China, with the euro area taking a small step back (to -43.4 in June from -41.4 in May), while Germany also saw a step back in the economic situation (to -81.0 from -77.8). The ranking metrics show the German reading as lower only 13.8% of the time—the weakest showing among the four. The EMU ranking is at a 36.7 percentile, with the U.S. ranking close to that at a 42.5 percentile. China has a 76.2 percentile ranking over a shorter timeline.

Macro expectations show solid improvements reported in Germany, the U.S., and China. Macroeconomic rankings all are muted, with the U.S. at a 39.9 percentile standing as the strongest, followed by Germany at a 35.2 percentile standing and China at a 22.2 percentile standing.

Inflation expectations are still high across the board, ranging from a low percentile standing for the EMU, Germany, and China—from a euro area low of 78.6 to a high standing for this group at 85.7 for China. In contrast, the U.S. ranking is still high, but only at its 61.8 percentile. And all the inflation expectations readings fell in June as optimism on opening the Strait of Hormuz has been growing. 

Nonetheless, expectations for short-term rates have been rising. They rose solidly in the EMU and China, and strongly in the U.S., from 10.5 in May to 38.5 in June.

In contrast, long-term rate expectations rose across the board as well but by modest amounts. The rankings for short-term expectations are stronger for all three countries compared to the ranking on long-term rate expectations. I suppose we can understand that as expectations of anti-inflation medicine.

Stock markets are assessed as higher month-to-month in the EMU and in all three countries. China has a strong ranking for its stock market assessment at its 81st percentile. The U.S. standing is above its median at its 51.5 percentile; the euro area expectation is at its 34.2 percentile, with German stock market expectations still weak at its 23.6 percentile.

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The pending conflict-ending deal in the Middle East should be a catalyst for further improvement. While the U.S.-Iran deal is not yet announced in detail—or even signed—market reactions are clear-cut across the board; there is no sign that this deal is expected to wither so soon. But it still has issues and contentious elements, such as Iran’s nuclear ambitions and the fact that the Israel is not on board with what it regards as a too-early exit from hostilities. Israel wants regime change and warns of a more difficult future without one.

ZEW Shows Mixed Conditions and an Expectations Rebound

Winnie Tapasanun

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Industrial production (IP) increased a less-than-expected 0.1% m/m in May, the third monthly gain in four months, following an upwardly revised 0.9% rise in April (+0.7% initially) and a 0.3% decline in March (unrevised), according to data from the Federal Reserve Board. A 0.3% m/m May increase had been expected in the Action Economics Forecast Survey. The year-on-year rate accelerated to 1.7% in May, the highest since January, from 1.4% in April (0.3% in May 2025). The May IP index at 102.6 was 3.3% above a low of 99.3 in November 2024 and 3.4% above a low of 99.2 in January 2024.

By **industry groups**, manufacturing production was essentially unchanged m/m (+1.4% y/y) in May after upwardly revised gains of 0.7% in April (+0.6% initially) and 0.2% in March (+0.1% previously). Durable goods production rose 0.8% (3.2% y/y) in May, the fourth m/m rise in five months, after a 1.1% increase in April. Within durables, almost all categories rose m/m in May, led by a 2.3% gain (-2.0% y/y) in wood products, followed by increases of 1.8% (3.1% y/y) in nonmetallic mineral products, 1.3% (4.4% y/y) in primary metals, 1.2% (-1.7% y/y) in motor vehicles & parts, 1.0% (-4.5% y/y) in furniture & related products, 0.9% (10.3% y/y) in computer & electronic products, 0.8% (2.5% y/y) in fabricated metal products, 0.5% (6.9% y/y) in aerospace & miscellaneous transportation equipment, 0.5% (2.7% y/y) in electrical equipment, appliances & components, and 0.2% (4.3% y/y) in machinery. Notably, aircraft & parts production climbed 1.1% (11.7% y/y), the fourth consecutive m/m rise, after a 2.6% April gain. Meanwhile, miscellaneous durable goods were virtually unchanged m/m (+0.9% y/y) in May following a 0.8% decline in April.

Nondurable goods production slid 0.9% (-0.6% y/y) in May, the first m/m slide since January, after a 0.3% increase in April. The May output decline was led by a 3.0% drop (-1.1% y/y) in petroleum & coal products, followed by decreases of 2.4% (-4.1% y/y) in textiles & product mills, 1.6% (-2.3% y/y) in printing & related support activities, 0.8% (0.0% y/y) in chemicals, 0.8% (-3.0% y/y) in paper, 0.5% (-0.4% y/y) in food, beverages & tobacco, and 0.3% (-0.2% y/y) in plastics & rubber products. In contrast, apparel & leather goods—the only rising category—recovered 2.4% (-0.1% y/y) in May following two successive m/m declines.

Mining activity advanced 1.3% (2.0% y/y) in May, the fourth m/m gain in five months, after a 0.2% increase in April (-0.1% initially). Utilities output, however, fell 0.4% (+3.1% y/y) following a 2.2% April rebound (+1.9% initially), reflecting a 1.7% drop (+1.8% y/y) in electric utilities output and an 8.5% rise (12.5% y/y) in natural gas utilities output.

By **market groups**, construction supplies production increased 1.1% (2.3% y/y) in May, up for the second time in three months, reversing a 0.3% decline in April. Business equipment output rose 0.6% (5.7% y/y), the fifth m/m rise in six months, following a 1.8% April gain. Materials production grew 0.3% (1.9% y/y), the third m/m increase in four months, after a 0.7% April rise. In contrast, consumer goods output fell 0.5% (-0.6% y/y) after a 1.2% April rebound, reflecting a 0.5% increase (-3.0% y/y) in durable consumer goods and a 0.8% decrease (+0.1% y/y) in nondurable consumer goods.

In **special classifications**, factory output of selected high-tech industries rose 1.8% (12.6% y/y) in May on top of an upwardly revised 2.2% rise in April (+1.0% initially)—marking the third straight m/m gain and the seventh in eight months. Manufacturing production excluding selected high-tech industries held steady m/m (+1.1% y/y) in May after a 0.7% increase in April, while manufacturing production excluding selected high-tech and motor vehicles & parts dipped 0.1% (+1.3% y/y) following a 0.5% April rise.

Capacity utilization inched up to 76.2% in May, the highest since July 2025, from 76.1% in April (unrevised). The result matched the forecast by the Action Economics Forecast Survey. The May reading was 3.2 percentage points below its long-run (1972–2025) average. Manufacturing capacity utilization held at 75.7% in May and April (75.8% previously), the highest since September 2025; the May rate was 2.5 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

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- May IP +0.1% (+1.7% y/y), third m/m increase in four months, led by a 1.3% gain in mining.
- Manufacturing unchanged (+1.4% y/y), w/ durables +0.8% and nondurables -0.9%.
- Selected high-tech +1.8%, third straight m/m rise; motor vehicles +1.2%, fifth gain in six mths.
- Utilities -0.4%, led by a 1.7% drop in electric utilities output.
- Key categories in market groups mostly up.
- Capacity utilization up to a 10-month-high 76.2%; mfg. capacity utilization steady at 75.7%.

U.S. Industrial Production Up Marginally in May; Manufacturing Flat

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The economy watchers survey, along with other surveys, was doing fine until about March in the wake of the Iran war and the closing of the Strait of Hormuz. With that action, the economy watchers index dove sharply from a level of 48.9 in February to 42.2 in March and slipped further to 40.8 in April. The various sector gauges for the retail sector, eating & drinking places, the service sector, and employment are all lower. The only improvement in April came from the future index, where there was some minor optimism about the potential for conditions to improve ahead. And, of course, over the weekend, there is the announcement of a U.S.-Iran deal to end the hostilities between the two countries. That is expected to be signed on Friday and then will put the war into a pause phase for the next 60 days, with the hope that the two sides can come to agreement on some of the stickier elements, including Iran's access to nuclear materials, which has yet to be hammered out.

That omission makes the announcement of this arrangement as a conflict ending deal hugely speculative. Another sticking point is that Israel is not on board and is still engaged in fighting with Hezbollah.

The Teikoku survey, another survey using diffusion indexes that describes Japanese sectors, weakened sharply in March and weakened across the board again in April. Manufacturing, retailing, wholesaling, services, and construction sectors all are posting weaker numbers in April than in March.

The percentile rankings for the economy watchers survey and the Teikoku surveys are both very weak, with the economy watchers standings in the 10th percentile range or lower; the Teikoku rankings are generally higher, around the 30th percentile or perhaps as low as the 20th percentile, as seen in construction. These are still very weak readings. All the raw diffusion readings are below 50, indicating contraction.

The sector indexes from METI on manufacturing and services, which both weakened in March, rebounded in April; in both cases, the April readings were above the February readings. Standings of these indexes based on growth rates are around the 80th percentile; at the 79th percentile for industry and at the 82.5 percentile for the tertiary or services index. Based on the value of the index itself, the tertiary index has a standing at its 98.9 percentile, which we would expect over time for an index that simply grows, as is the case for the METI indexes that are not diffusion indexes. However, the industrial index for Japan has only a 19.9 percentile standing, indicating the stress that Japan's industrial sector has been through, although the current ranking based on the growth rate shows that there is some recovery in progress. The industry level index is 6.3% below its January 2020 level, while the tertiary index is 3.1% above its January 2020 level.

The leading economic index has continued to rise during all these times. It rose in February compared to January, and it rose again in March compared to February; now in April compared to March, it was up again to 115.9, from the March reading of 115.4. Based on year-over-year growth, the leading economic index has a 95.1 percentile standing, which is relatively strong. Based on the index level, we get another strong reading at the 93.2 percentile mark. The leading index is also up 12.9% from its January 2020 level.

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The report of a deal to end the U.S. embargo of Iran and open the Strait of Hormuz without tolls is potentially a real gamechanger for the economic outlook. However, the deal still had pieces to be negotiated, and I, for one, am very wary since we know Iran wants to have nuclear access and the U.S. wants to block it. I just don’t see what a 60-day cooling period for negotiation will do. It will push the U.S. closer to midterm elections and make Trump less willing to engage in conflict with Iran, which is likely to remain intransigent on this issue of nuclear access. I view this as the eye of a hurricane, a period in which there will be calm, with the potential for a reset of confrontation down the road, say 60 days on.

Economy in Brief

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