Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214c.jpg" align="left" border="0" height="265" width="353">
The U.S. foreign trade deficit in December narrowed sharply to
$58.8B from an unrevised $63.1B during November. The figure compared to
Consensus expectations for a deficit of $61.4B and it pulled the annual
deficit for 2007 to $771.6B, its lowest since 2004.
For December U.S. exports jumped 1.5%, the largest monthly
increase since July. Strong economies abroad and the lower value of the
dollar helped exports during all of last year to rise 12.2% after a
12.7% gain in 2006 and a 10.9% rise in 2005.
Exports of goods surged 1.9% in December (14.5% y/y) and for
the full year rose 12.2%. Growth in exports of foods, feeds &amp;
beverages slipped 1.7% in December but for the year this was the
strongest export category with a 27.7% rise. Exports of industrial
supplies &amp; materials also were strong last year and rose 14.3%.
During December exports of capital goods surged 5.2% to finish a year
of 7.8% growth after a 14.2% jump in 2006. Exports of civilian aircraft
rose 20.8% during all of last year while exports of computers jumped
18.3%.Nonauto consumer goods exports also were strong in December. They
rose 4.6% and were firm all year with a 12.6% increase. That was
similar to the gains during the prior three years.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214b.jpg" align="right" border="0" height="265" width="353">
U.S. exports of services slipped 0.3% in December but finished
a year of 11.8% growth. That annual gain was paced by 14.1% growth in
travel exports and a 12.1% rise in passenger fares.
Overall imports fell 1.1% in December and the annual gain of
5.9% was the weakest since 2002. Higher oil prices did raise petroleum
imports by 4.2% in December and by 9.5% for the year, however, that was
the weakest annual rise since 2002. Petroleum imports in constant
dollars fell as the per barrel price of crude petroleum rose 11.1% for
the year. That followed price gains of 23.2% in 2006 and of 36.3% in
2005. Imports of nonauto consumer goods rose 7.3% last year, the
weakest gain since 2001 and capital goods imports increased 6.3% for
the year, the weakest gain since 2003.
The U.S. trade deficit in goods with China during 2007
deepened to $25.6B from $23.3B. Imports rose 11.7% and exports rose
18.2%, the weakest rise since 2002.
The Economy and Financial Markets is
today's testimony by Fed Chairman Ben S. Bernanke and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20080214a.htm">
here</a>.
Today's speech by Treasury Secretary Henry M. Paulson, Jr., Economy
and Financial Markets, can be found <a href="http://www.ustreas.gov/press/releases/hp828.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/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">December</th>
<th scope="col">November</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">U.S. Trade Deficit</td>
<td>$58.8B</td>
<td>$63.1B</td>
<td>$60.3B 
(12/06)</td>
<td>$711.6</td>
<td>$758.5</td>
<td>$714.4B</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp;
Services</td>
<td>1.5%</td>
<td>0.5%</td>
<td>13.6%</td>
<td>12.2%</td>
<td>12.7%</td>
<td>10.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports - Goods &amp;
Services</td>
<td>-1.1%</td>
<td>2.9%</td>
<td>8.4%</td>
<td>5.9%</td>
<td>10.4%</td>
<td>12.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.2%</td>
<td>16.3%</td>
<td>52.4%</td>
<td>9.5%</td>
<td>20.1%</td>
<td>39.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>-2.8%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>4.6%</td>
<td>9.1%</td>
<td>10.3%</td>
</tr>
</tbody>
</table>
U.S. Weekly Initial Jobless
Insurance Claims Slipped, Monthly Rose 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 14, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214d.jpg" align="left" border="0" height="265" width="353">
Initial claims for jobless insurance slipped another 9,000 to
348,000 last week after the prior week's 21,000 decline. For February,
claims so far are up 26,000, or 8.0%, 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
347,250 (+5.6% y/y), the highest level since late 2005.
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 slipped 9,000
after a downwardly revised jump of 60,000 during the prior week. The
figure provides some indication of workers' ability to find employment
but here again difficulties of seasonal adjustment this time of year
are great.
The continuing claims numbers lag the initial claims figures
by one week.
The insured rate of unemployment held at 2.1% for the second
week.
Business Volatility, Job Destruction and Unemployment
from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/economics/conferences/0711/haltiwanger.pdf">here</a>.
A Minimum Wager from the Federal Reserve
Bank of Minneapolis is available <a href="http://www.minneapolisfed.org/pubs/fedgaz/07-03/wage.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">02/08/08</th>
<th scope="col">02/01/07</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;348</td>
<td>357</td>
<td>-2.2%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,761</td>
<td>8.3%</td>
<td>2,459</td>
<td>2,662</td>
<td>2,924</td>
</tr>
</tbody>
</table>
U.S. Business Inventory
Accumulation Down in 4Q Due To Autos 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 14, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214f.jpg" align="left" border="0" height="265" width="353">
The latest figures from the Commerce Department indicate that
total business inventory accumulation in December of 0.6% followed a
0.4% November rise. The three month change in inventories of 4.5% (AR)
was down from a 4.9% rate of accumulation during 3Q. The deceleration
was not, however, quite as drastic as indicated by the 1.2 percentage
point subtraction inventories made from economic growth, indicated in
the advance read of 4Q GDP. 
 

Retail inventories fell 0.1% during December following a
revised 0.3% November decline. Inventories of motor vehicles
fell 1.6% in December and the three month change swung to -8.2% (AR)
from an 18.5% rate of accumulation during 3Q. Inventories excluding
autos rose 0.7% in December (3.2% y/y) and the rate of accumulation
last quarter nearly tripled that in 3Q. 
 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214e.jpg" align="right" border="0" height="265" width="353">
The acceleration was due to building materials which grew 0.3%
in December but rose at a 6.8% rate in 4Q versus a 1.4% rate of decline
during 3Q. Furniture inventories fell 0.5% (+4.8% y/y) after a 0.9%
November drop and the three month change fell to 2.8% (AR) from 10.4%
in 3Q. At clothing &amp; accessory stores December inventories rose
0.5% after two months of modest decline. The three month rate held
steady last quarter with 3Q at roughly unchanged. Inventories at
general merchandise stores rose 0.9% in December and recouped about
half of a November decline. For the quarter decumulation held steady
with 3Q at a 2.5% rate.
Wholesale inventories jumped 1.1% after a 0.8% November surge.
Petroleum inventories skyrocketed 9.2%, more than double the November
rise. Less petroleum wholesale inventories rose 0.9% but the three
month change fell to 5.3% (AR) from 7.4% during 3Q. During the last ten
years there has been a 59% correlation between the annual change in
wholesale inventories les petroleum and the change in merchandise
imports.
Factory inventories increased 0.8% after a firm 0.7% rise
during November. The three month growth in factory inventories
accelerated to 6.7% from 2.5% during 3Q. Some of that acceleration owed
to petroleum refineries, but excluding petroleum factory inventories
still rose 5.8% (AR), nearly triple the 3Q rise.
Business sales fell 0.5% (+6.0% y/y) due to declines in
wholesale sales and factory shipments. The decline lifted the ratio of
inventories to sales off its lowest level since early 2006.

<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">Business
Inventories</a></th>
<th scope="col">December</th>
<th scope="col">November</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>0.6%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>4.0%</td>
<td>5.8%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>3.2%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Retail excl. Autos</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>3.2%</td>
<td>3.2%</td>
<td>4.5%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>1.1%</td>
<td>0.8%</td>
<td>6.1%</td>
<td>6.1%</td>
<td>8.5%</td>
<td>7.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.8%</td>
<td>0.7%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>6.4%</td>
<td>8.9%</td>
</tr>
</tbody>
</table>
GDP Slows on a Very Broad Front by <a href="/comment/Brusca.html">Robert
Brusca</a> February 14, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080214a.jpg" align="left" border="0" height="265" width="353">
GDP growth is slowing on a broad front. German GDP is slowing
year/year for four straight quarters. For most other countries Q3
growth brought an up tick that quarter and interrupted what would have
been similar long strings of GDP deceleration. GDP growth year/year in
2007-Q4 slowed everywhere except in the Netherlands. Quarter-to-quarter
GDP growth rates slowed everywhere except Japan.

With the European releases on GDP we have no detail on GDP,
except for France. There weaker consumption and inventory reduction
brought GDP growth lower. We have seen the reduction in the growth
rates of the industrial sectors in recent months even though some of
the industrial indicators have displayed some firmer signals. The EU
sentiment indexes have marked this slowdown correctly.

The fact of the matter is that GDP here and now is slowing.
The recent rhetoric of the ECB is sounding much less certain and much
more like it is about to really keep its options open. Remember that
when the credit problems hit in the US at first the Fed did not think
that they would be so bad. Now UBS, a large Swiss bank, has just
reported larger subprime losses than expected and more exposure to
leverage type loans of the variety that have fallen into disregard.

German unions (IG Metall) are using feisty rhetoric to justify
pay hikes even saying that ECB is wrong and that policy should be
accommodative. Professional EMU forecasters (see ECB survey) now look
for weaker growth and more inflation in the Euro Area. Eurogroup
Chairman Jean-Claude Juncker has admitted that the situation is &#8216;not
completely clear any more&#8217;. Guy Quaden, ECB council member, has said
that the economy could decelerate faster than the ECB previously
thought. All of this suggests a situation, outlook and policy in flux.


<table border="0" cellspacing="0" width="100%">
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Euro
Area and Main G-10 Country GDP Results</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Quarter over quarter</td>
<td colspan="4">Year/Year</td>
</tr>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>Q4-07</td>
<td>Q3-07</td>
<td>Q2-07</td>
<td>Q4-07</td>
<td>Q3-07</td>
<td>Q2-07</td>
<td>Q1-07</td>
</tr>
<tr>
<td class="firstcol">EMU-13</td>
<td>1.7%</td>
<td>3.1%</td>
<td>1.2%</td>
<td style="color: red;">2.3%</td>
<td>2.7%</td>
<td style="color: red;">2.5%</td>
<td style="color: red;">3.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>1.4%</td>
<td>3.2%</td>
<td>1.4%</td>
<td style="color: red;">2.1%</td>
<td>2.2%</td>
<td style="color: red;">1.3%</td>
<td style="color: red;">1.9%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>1.1%</td>
<td>2.7%</td>
<td>0.7%</td>
<td style="color: red;">1.7%</td>
<td style="color: red;">2.5%</td>
<td style="color: red;">2.6%</td>
<td style="color: red;">3.7%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>--</td>
<td>1.7%</td>
<td>0.2%</td>
<td>--</td>
<td>1.9%</td>
<td style="color: red;">1.8%</td>
<td style="color: red;">2.4%</td>
</tr>
<tr>
<td class="firstcol">The Netherlands</td>
<td>4.7%</td>
<td>7.7%</td>
<td>1.1%</td>
<td>4.3%</td>
<td>3.9%</td>
<td style="color: red;">2.4%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>2.5%</td>
<td>3.3%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">3.2%</td>
<td>3.2%</td>
<td style="color: red;">3.2%</td>
</tr>
<tr>
<td class="firstcol">US</td>
<td>0.6%</td>
<td>4.9%</td>
<td>3.8%</td>
<td style="color: red;">2.5%</td>
<td>2.8%</td>
<td>1.9%</td>
<td style="color: red;">1.5%</td>
</tr>
<tr>
<td class="firstcol">Japan</td>
<td>3.7%</td>
<td>1.3%</td>
<td>-1.4%</td>
<td style="color: red;">1.8%</td>
<td>1.9%</td>
<td style="color: red;">1.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. foreign trade deficit in December narrowed sharply to $58.8B from an unrevised $63.1B during November. The figure compared to Consensus expectations for a deficit of $61.4B and it pulled the annual deficit for 2007 to [...]

U.S. Trade Deficit Narrowed Sharply

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213e.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s consumer confidence survey did not used to be monthly.
That is why the chart shows its past as a quarterly report represented
by unconnected dots co-joined with its new form in which the dots are
connected month-to-month. Based on a full sample of observations back
to 1988 the current Consumer confidence readings are very weak. Based
on the data from 2004 onward when monthly reporting kicked in these are
the worst levels for all of the components that this report has seen.
But in its broader historic context, while overall livelihood is nearly
at an all-time low, employment is still above mid range in its 54th
percentile. Willingness to buy durable goods is weak in the bottom 25
percentile of its range. The same relative position is true of expected
income growth. People assess the value of their assets as in about the
bottom third of its historic range. 
 

Clearly Japan is undergoing some difficulties. The consumer is
still very concerned about the future. While the OECD leading
indicators show Japan in an upswing of sorts, Japan&#8217;s own indicators
continue to show the economy bogged down with some conditions still
worsening. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Japan
Consumer Confidence </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Monthly</td>
<td colspan="3">Change over</td>
<td colspan="2">Percentile of range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mos</td>
<td>6-mos</td>
<td>12-Mos</td>
<td>Since 2004</td>
<td>Since 1988</td>
</tr>
<tr>
<td class="firstcol">Overall Livelihood</td>
<td>34.9</td>
<td>37.0</td>
<td>41.0</td>
<td>-7.3</td>
<td>-7.5</td>
<td>-8.6</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Income growth</td>
<td>39.6</td>
<td>40.7</td>
<td>42.2</td>
<td>-2.8</td>
<td>-2.6</td>
<td>-2.5</td>
<td>0.0</td>
<td>26.1</td>
</tr>
<tr>
<td class="firstcol">Employment</td>
<td>40.6</td>
<td>43.1</td>
<td>45.3</td>
<td>-5.8</td>
<td>-8.4</td>
<td>-8.4</td>
<td>0.0</td>
<td>59.7</td>
</tr>
<tr>
<td class="firstcol">Willing to buy Durable Goods</td>
<td>37.0</td>
<td>38.4</td>
<td>42.8</td>
<td>-8.5</td>
<td>-9.4</td>
<td>-11.9</td>
<td>0.0</td>
<td>27.3</td>
</tr>
<tr>
<td class="firstcol">Value of Assets</td>
<td>40.8</td>
<td>42.4</td>
<td>44.6</td>
<td>-3.4</td>
<td>-5.9</td>
<td>-4.7</td>
<td>0.0</td>
<td>40.1</td>
</tr>
<tr class="grey2">
<td colspan="9" class="firstcol">For
two-person households; *
Percentiles since Mar 2004 when series became monthly or full period</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s consumer confidence survey did not used to be monthly. That is why the chart shows its past as a quarterly report represented by unconnected dots co-joined with its new form in which the dots are connected month-to-month. [...]

Japan's Consumer Confidence Very Weak

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213d.jpg" align="left" border="0" height="265" width="353">
All EMU industrial sectors are seeing a considerable decline
in their rates of growth for industrial output. Capital goods has been
a strong sector in Europe and we have seen orders for capital goods
holding up especially in Germany. But on an EMU-wide basis capital
goods output is now declining over three months and its growth rate
year over year is declining as well. Consumer goods output has never
really been strong in this recovery and now it is showing signs of
decay from a low growth level. For the quarter industrial output is off
by about one percentage point. 
 

Among countries Germany is the strongest but even its growth
rates show a deceleration in IP. France (excluding construction) is
holding up a bit better than Germany, but with a weaker Yr/Yr rate of
growth. Italy&#8217;s output shows a deep year/year decline for output. Spain
shows a shallow Yr/Yr decline. The UK has been pretty flat for most of
the past year. 
 

For Q4 2007 Germany has the strongest contribution from IP at
3.4% Spain is next at 2.9% France is third at 1.1%. Italy has a
strongly negative -10.4% IP contraction in Q4. The UK has a small 0.5%
subtraction as IP sides in the fourth quarter. 
 

Despite some stirring the Zew Survey for Germany we also saw
that the Zew current conditions assessment is sliding. A pick up in
sentiment for the future hangs on some rate cuts by the Fed, the
potential for more and a US stimulus package that has just been passed
into law. But the future remains cloudy and current conditions are
still very weak, and in some cases, getting weaker. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Euro Area
and UK IP and MFG </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Dec-07</td>
<td>Dec-07</td>
<td>Dec-07</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area Detail</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>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.0%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>1.1%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>-2.3%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-0.1%</td>
<td>-7.8%</td>
<td>-4.9%</td>
<td>-4.0%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurables</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>-0.4%</td>
<td>0.8%</td>
<td>0.2%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Intermediate</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>0.6%</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.2%</td>
<td>-1.5%</td>
</tr>
<tr>
<td>Capital</td>
<td>-1.0%</td>
<td>-0.2%</td>
<td>1.0%</td>
<td>-0.7%</td>
<td>2.4%</td>
<td>2.5%</td>
<td>0.5%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Main
Euro Area Countries
and UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>105.2</td>
<td>105.2</td>
<td>105.2</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: MFG</td>
<td>1-Mo%</td>
<td>1-Mo%</td>
<td>1-Mo%</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>0.9%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>3.0%</td>
<td>6.1%</td>
<td>5.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">France: IP excl Construction</td>
<td>0.7%</td>
<td>-1.7%</td>
<td>2.0%</td>
<td>3.9%</td>
<td>3.3%</td>
<td>1.2%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>-1.7%</td>
<td>-0.8%</td>
<td>-11.5%</td>
<td>-6.7%</td>
<td>-6.4%</td>
<td>-10.8%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-1.5%</td>
<td>-6.7%</td>
<td>10.2%</td>
<td>5.5%</td>
<td>-3.3%</td>
<td>-0.3%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>-0.8%</td>
<td>0.0%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
</body></html>

All EMU industrial sectors are seeing a considerable decline in their rates of growth for industrial output. Capital goods has been a strong sector in Europe and we have seen orders for capital goods holding up especially in Germany. [...]

IP Sinking in All Sectors

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213a.jpg" width="353">
U.S. retail sales rose 0.3% during January following an unrevised 0.4% decline during December. The gain beat expectations for a 0.2% decline.
Motor vehicle &amp; parts purchases rose 0.6% (-0.2% y/y). The rise contrasted with an earlier report of a 6.3% m/m decline in unit sales of light vehicles during January.
Excluding autos, retail sales last month barely exceeded expectations and rose 0.3%. That made up a little revised 0.3% December drop. November sales were revised down slightly.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213b.jpg" width="353">
Higher gasoline prices provided lift to retail sales with a 2.0% (23.0% y/y) gain. That, in part, reflected a 0.8% m/m rise in gas prices. Less gasoline &amp; autos, retail sales were unchanged and prior months&#39; results were taken down.
Last month, sales of building materials fell 1.7% (-4.8% y/y). Taking out these very volatile components of retail spending to perhaps gain a better sense of underlying consumer spending growth, retail sales less autos, gasoline and building materials rose 0.2% last month (3.5% y/y).
Food &amp; beverage store sales also provided lift to January sales with a 0.6% (5.7% y/y) rise. Restaurant &amp; drinking place sales fell 0.5% (+4.4% y/y).<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213c.jpg" width="353">
Sales of discretionary items generally were soft last month. Apparel store sales did rise 1.4% but that failed to fully make up a 2.3% December decline. Clothing store sales last month were 0.1% below the January level in 2007. Furniture, home furnishings &amp; appliance store sales fell 0.7% (-3.0% y/y) for the third decline in the last four months. Sales of electronics &amp; appliances dropped 1.0% after a 3.2% December slide. Sales at general merchandise stores rose 0.1% (2.4% y/y) after December&#39;s gain of 0.2%.
Sales of nonstore retailers (internet &amp; catalogue) rose 0.5% (10.6% y/y).
Housing, Credit and Consumer Expenditure from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/publicat/sympos/2007/PDF/2007.09.17.Muellbauer.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">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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.3%</td>
<td>-0.4%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>6.2%</td>
<td>6.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.3%</td>
<td>-0.3%</td>
<td>4.9%</td>
<td>4.6%</td>
<td>7.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>2.6%</td>
<td>4.3%</td>
<td>7.2%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. retail sales rose 0.3% during January following an unrevised 0.4% decline during December. The gain beat expectations for a 0.2% decline. Motor vehicle & parts purchases rose 0.6% (-0.2% y/y). The rise contrasted with an earlier [...]

U.S. Retail Sales Above Expectations: Auto Sales & Gas Prices Rose

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213a.jpg" align="left" border="0" height="265" width="353">
U.S. retail sales rose 0.3% during January following an
unrevised 0.4% decline during December. The gain beat expectations for
a 0.2% decline.
Motor vehicle &amp; parts purchases rose 0.6% (-0.2% y/y).
The rise contrasted with an earlier report of a 6.3% m/m decline in
unit sales of light vehicles during January.
Excluding autos, retail sales last month barely exceeded
expectations and rose 0.3%. That made up a little revised 0.3% December
drop. November sales were revised down slightly.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213b.jpg" align="right" border="0" height="265" width="353">
Higher gasoline prices provided lift to retail sales with a
2.0% (23.0% y/y) gain. That, in part, reflected a 0.8% m/m rise in gas
prices. Less gasoline &amp; autos, retail sales were unchanged and
prior months' results were taken down.
Last month, sales of building materials fell 1.7% (-4.8% y/y).
Taking out these very volatile components of retail spending to perhaps
gain a better sense of underlying consumer spending growth, retail
sales less autos, gasoline and building materials rose 0.2% last month
(3.5% y/y).
Food &amp; beverage store sales also provided lift to
January sales with a 0.6% (5.7% y/y) rise. Restaurant &amp;
drinking place sales fell 0.5% (+4.4% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213c.jpg" align="left" border="0" height="265" width="353">
Sales of discretionary items generally were soft last month. Apparel
store sales did rise 1.4% but that failed to fully make up a
2.3% December decline. Clothing store sales last month were 0.1% below
the January level in 2007. Furniture, home furnishings
&amp; appliance store sales fell 0.7% (-3.0% y/y) for
the third decline in the last four months. Sales of electronics
&amp; appliances dropped 1.0% after a 3.2% December slide. Sales at
general merchandise stores rose 0.1% (2.4% y/y)
after December's gain of 0.2%.
Sales of nonstore retailers (internet &amp;
catalogue) rose 0.5% (10.6% y/y).
Housing, Credit and Consumer Expenditure
from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/publicat/sympos/2007/PDF/2007.09.17.Muellbauer.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">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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail
Sales &amp; Food Services</a></td>
<td>0.3%</td>
<td>-0.4%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>6.2%</td>
<td>6.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Autos</td>
<td>0.3%</td>
<td>-0.3%</td>
<td>4.9%</td>
<td>4.6%</td>
<td>7.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Less Gasoline</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>2.6%</td>
<td>4.3%</td>
<td>7.2%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
IP Sinking in All Sectors 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 13, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213d.jpg" align="left" border="0" height="265" width="353">
All EMU industrial sectors are seeing a considerable decline
in their rates of growth for industrial output. Capital goods has been
a strong sector in Europe and we have seen orders for capital goods
holding up especially in Germany. But on an EMU-wide basis capital
goods output is now declining over three months and its growth rate
year over year is declining as well. Consumer goods output has never
really been strong in this recovery and now it is showing signs of
decay from a low growth level. For the quarter industrial output is off
by about one percentage point. 
 

Among countries Germany is the strongest but even its growth
rates show a deceleration in IP. France (excluding construction) is
holding up a bit better than Germany, but with a weaker Yr/Yr rate of
growth. Italy&#8217;s output shows a deep year/year decline for output. Spain
shows a shallow Yr/Yr decline. The UK has been pretty flat for most of
the past year. 
 

For Q4 2007 Germany has the strongest contribution from IP at
3.4% Spain is next at 2.9% France is third at 1.1%. Italy has a
strongly negative -10.4% IP contraction in Q4. The UK has a small 0.5%
subtraction as IP sides in the fourth quarter. 
 

Despite some stirring the Zew Survey for Germany we also saw
that the Zew current conditions assessment is sliding. A pick up in
sentiment for the future hangs on some rate cuts by the Fed, the
potential for more and a US stimulus package that has just been passed
into law. But the future remains cloudy and current conditions are
still very weak, and in some cases, getting weaker. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Euro Area
and UK IP and MFG </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Dec-07</td>
<td>Dec-07</td>
<td>Dec-07</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area Detail</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>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.0%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>1.1%</td>
<td>-1.0%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>-2.3%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-0.1%</td>
<td>-7.8%</td>
<td>-4.9%</td>
<td>-4.0%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Consumer Nondurables</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>-0.4%</td>
<td>0.8%</td>
<td>0.2%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Intermediate</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>0.6%</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.2%</td>
<td>-1.5%</td>
</tr>
<tr>
<td>Capital</td>
<td>-1.0%</td>
<td>-0.2%</td>
<td>1.0%</td>
<td>-0.7%</td>
<td>2.4%</td>
<td>2.5%</td>
<td>0.5%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">Main
Euro Area Countries
and UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>105.2</td>
<td>105.2</td>
<td>105.2</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: MFG</td>
<td>1-Mo%</td>
<td>1-Mo%</td>
<td>1-Mo%</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>0.9%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>3.0%</td>
<td>6.1%</td>
<td>5.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">France: IP excl Construction</td>
<td>0.7%</td>
<td>-1.7%</td>
<td>2.0%</td>
<td>3.9%</td>
<td>3.3%</td>
<td>1.2%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>-1.7%</td>
<td>-0.8%</td>
<td>-11.5%</td>
<td>-6.7%</td>
<td>-6.4%</td>
<td>-10.8%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-1.5%</td>
<td>-6.7%</td>
<td>10.2%</td>
<td>5.5%</td>
<td>-3.3%</td>
<td>-0.3%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>-0.8%</td>
<td>0.0%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
Japan's Consumer Confidence
VeryWeak 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 13, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080213e.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s consumer confidence survey did not used to be monthly.
That is why the chart shows its past as a quarterly report represented
by unconnected dots co-joined with its new form in which the dots are
connected month-to-month. Based on a full sample of observations back
to 1988 the current Consumer confidence readings are very weak. Based
on the data from 2004 onward when monthly reporting kicked in these are
the worst levels for all of the components that this report has seen.
But in its broader historic context, while overall livelihood is nearly
at an all-time low, employment is still above mid range in its 54th
percentile. Willingness to buy durable goods is weak in the bottom 25
percentile of its range. The same relative position is true of expected
income growth. People assess the value of their assets as in about the
bottom third of its historic range. 
 

Clearly Japan is undergoing some difficulties. The consumer is
still very concerned about the future. While the OECD leading
indicators show Japan in an upswing of sorts, Japan&#8217;s own indicators
continue to show the economy bogged down with some conditions still
worsening. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">Japan
Consumer Confidence </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Monthly</td>
<td colspan="3">Change over</td>
<td colspan="2">Percentile of range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-mos</td>
<td>6-mos</td>
<td>12-Mos</td>
<td>Since 2004</td>
<td>Since 1988</td>
</tr>
<tr>
<td class="firstcol">Overall Livelihood</td>
<td>34.9</td>
<td>37.0</td>
<td>41.0</td>
<td>-7.3</td>
<td>-7.5</td>
<td>-8.6</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Income growth</td>
<td>39.6</td>
<td>40.7</td>
<td>42.2</td>
<td>-2.8</td>
<td>-2.6</td>
<td>-2.5</td>
<td>0.0</td>
<td>26.1</td>
</tr>
<tr>
<td class="firstcol">Employment</td>
<td>40.6</td>
<td>43.1</td>
<td>45.3</td>
<td>-5.8</td>
<td>-8.4</td>
<td>-8.4</td>
<td>0.0</td>
<td>59.7</td>
</tr>
<tr>
<td class="firstcol">Willing to buy Durable Goods</td>
<td>37.0</td>
<td>38.4</td>
<td>42.8</td>
<td>-8.5</td>
<td>-9.4</td>
<td>-11.9</td>
<td>0.0</td>
<td>27.3</td>
</tr>
<tr>
<td class="firstcol">Value of Assets</td>
<td>40.8</td>
<td>42.4</td>
<td>44.6</td>
<td>-3.4</td>
<td>-5.9</td>
<td>-4.7</td>
<td>0.0</td>
<td>40.1</td>
</tr>
<tr class="grey2">
<td colspan="9" class="firstcol">For
two-person households; *
Percentiles since Mar 2004 when series became monthly or full period</td>
</tr>
</tbody>
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Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212d.jpg" align="left" border="0" height="265" width="353">
The German financial community has become slightly less
pessimistic. For the first time since May of last year, the ZEW (Center
for European Economic Research, Manheim) indicator of sentiment for the
next six months rose. The rise was a mere 2.1 percentage points to
-39.5% from -41.6% in January. The measure is still at its second
lowest value it its history. The long term average for the indicator is
30.7%.
While the participants in the survey were slightly less
pessimistic about the future, they assessed the current situation much
less positively. The excess of optimists over pessimists regarding the
current situation fell 22.9 points from 56.6% to 33.7%. This was one of
the largest declines ever recorded.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212e.jpg" align="right" border="0" height="265" width="353">
The absolute values for the appraisals of expectations and
current conditions are shown in the first chart. Their month to month
changes are shown in the second chart. Both charts cover the entire
history of the indicators, so that the current values can be viewed in
their historical perspectives. The appraisal of current conditions is
slightly above its long term average while the appraisal of expectation
remains among it lowest values.
In its press release, the Center for European Economic
Research, interpreted the decline in the number of pessimists over
optimists regarding the outlook as an indication that the current
crisis is unlikely to develop into a downward spiral for the German
Economy, rather it suggests that the economy might show some recovery
by mid year. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW
INDICATORS&nbsp;&nbsp; (Percent Balance)</th>
<th scope="col">Feb 08</th>
<th scope="col">Jan 08&nbsp;</th>
<th scope="col">Feb 07&nbsp;</th>
<th scope="col">M/M&nbsp; Dif&nbsp;</th>
<th scope="col">Y/Y Dif&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Expectations Six
Months Ahead</td>
<td>-39.5</td>
<td>-41.6</td>
<td>2.9</td>
<td>2.1</td>
<td>-42.4</td>
<td>3.0</td>
<td>22.3</td>
<td>34.8</td>
</tr>
<tr>
<td class="firstcol">Current
Conditions&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>33.7</td>
<td>56.6</td>
<td>70.9</td>
<td>-22.9</td>
<td>-37.2</td>
<td>75.9</td>
<td>18.8</td>
<td>-61.8</td>
</tr>
</tbody>
</table>
</body></html>

The German financial community has become slightly less pessimistic. For the first time since May of last year, the ZEW (Center for European Economic Research, Manheim) indicator of sentiment for the next six months rose. The rise was [...]

German Financial Community a Bit Less Pessimistic About the Outlook

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212f.jpg" width="353">
The Bureau of Labor Statistics reported in the Job Openings &amp; Labor Turnover Survey (JOLTS) that the December &#39;07 job openings rate was unchanged from the prior month at 2.8%. That level was, however, down from the highs of late 2006. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The actual number of total job openings rose 0.4% m/m to 4.039 million but the number of job openings was down 8.2% last year from year end 2006. Professional &amp; business service sector openings fell 8.5%, retail trade fell 22.7% while openings in manufacturing fell 15.2% y/y.
The hires rate fell m/m to 3.3%, its lowest level since 2004. The hires rate is the number of hires during the month divided by employment.
The actual number of hires fell 0.5% (-6.5% y/y) to 4.636 million. Last year, hires in the construction industry rose 3.5% but factory sector hires were 9.3% lower.
The job separations rate in December fell to 3.1% versus 3.3% at yearend 2006. Separations include quits, layoffs, discharges, and other separations as well as retirements. The level of job separations fell 4.1% since yearend 2006.
The JOLTS survey dates only to December 2000 but has since followed the movement in nonfarm payrolls, though the actual correlation between the two series is low.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.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/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">December &#39;06</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">Job Openings, Total&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.8</td>
<td>2.8</td>
<td>3.1</td>
<td>2.8</td>
<td>3.1</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,039</td>
<td>4,024</td>
<td>4,401</td>
<td>4,039</td>
<td>4,401</td>
<td>3,880</td>
</tr>
<tr>
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.4</td>
<td>3.6</td>
<td>41.7</td>
<td>43.6</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,636</td>
<td>4,657</td>
<td>4,959</td>
<td>57,659</td>
<td>59,409</td>
<td>57,508</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
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The Bureau of Labor Statistics reported in the Job Openings & Labor Turnover Survey (JOLTS) that the December '07 job openings rate was unchanged from the prior month at 2.8%. That level was, however, down from the highs of late 2006. [...]

JOLTS: Job Openings Down in 2007

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080212c.jpg" width="353">
Small business optimism fell a sharp 3.0% last month according to the National Federation of Independent Business (NFIB). It was the largest m/m decline since December 2006 and it pulled optimism to the lowest level since during the recession of 1990.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.
Twenty two percent fewer respondents expected the economy to improve following declines during the prior three months. Only 9% reported that now is a good time to expand the business.
The percent planning to increase employment fell to its lowest level since early 2006 while the percentage with one or more job openings did recover further after November&#39;s sharp decline. During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls. The percentage of firms planning to raise employment remained depressed.
The percentage of firms planning to increase capital expenditures fell to the lowest level since 2002.
The percentage of firms expecting higher real sales in six months fell to 4%, the lowest level since 2003.
The percentage of firms actually raising prices fell sharply m/m to the lowest level since late 2006. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index. The percentage of firms planning to raise prices was stable for the third month at the highest level in a year.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">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>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>91.8</td>
<td>94.6</td>
<td>-7.2%</td>
<td>96.7</td>
<td>98.9</td>
<td>101.6</td>
</tr>
</tbody>
</table>
</body>
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Small business optimism fell a sharp 3.0% last month according to the National Federation of Independent Business (NFIB). It was the largest m/m decline since December 2006 and it pulled optimism to the lowest level since during the [...]

Small Business Optimism Lowest Since 1990

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

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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

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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.

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- 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

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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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U.S. Trade Deficit Narrowed Sharply

Japan's Consumer Confidence Very Weak

IP Sinking in All Sectors

U.S. Retail Sales Above Expectations: Auto Sales & Gas Prices Rose

U.S. Retail Sales Above Expectations: Auto Sales & Gas Prices Rose

German Financial Community a Bit Less Pessimistic About the Outlook

JOLTS: Job Openings Down in 2007

Small Business Optimism Lowest Since 1990