Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009c.jpg" width="353">
During September, small business optimism rose 1.0% from August after a 1.3% decline during that month. The level during September was 11% below the peak reached back in 2004, according to the National Federation of Independent Business (NFIB).
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.
The percentage of firms indicating that credit was more difficult to get rose to 9%, nearly double the recent low.
Financial Stability and the Federal Reserve is a speech delivered this weekend by Federal Reserve Board GovernorKevin Warsh and it is available <a href="http://www.federalreserve.gov/newsevents/speech/warsh20071005a.htm"> here</a>.
Internal Risk Models and the Estimation of Default Probabilities from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-29.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009b.jpg" width="353">
Respondents expecting the economy improved slightly to 2% and the percentage with one or more job openings was stable at 25%. During the last ten years there has been a 71% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.
The percent planning to raise capital expenditures remained at a reduced 29%, down from the 2005 average of 32%..The percentage of firms planning to raise average selling prices fell to 21%, the lowest level since late 2005. The percentage of firms actually raising prices also fell to 9%, nearly its lowest level since 2004. 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.
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">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>97.3</td>
<td>96.3</td>
<td>-2.1%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>


</html>

During September, small business optimism rose 1.0% from August after a 1.3% decline during that month. The level during September was 11% below the peak reached back in 2004, according to the National Federation of Independent [...]

Small Business Optimism Reduced by Credit Problems

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009c.jpg" width="353">
During September, small business optimism rose 1.0% from August after a 1.3% decline during that month. The level during September was 11% below the peak reached back in 2004, according to the National Federation of Independent Business (NFIB).
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.
The percentage of firms indicating that credit was more difficult to get rose to 9%, nearly double the recent low.
Financial Stability and the Federal Reserve is a speech delivered this weekend by Federal Reserve Board GovernorKevin Warsh and it is available <a href="http://www.federalreserve.gov/newsevents/speech/warsh20071005a.htm"> here</a>.
Internal Risk Models and the Estimation of Default Probabilities from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-29.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009b.jpg" width="353">
Respondents expecting the economy improved slightly to 2% and the percentage with one or more job openings was stable at 25%. During the last ten years there has been a 71% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.
The percent planning to raise capital expenditures remained at a reduced 29%, down from the 2005 average of 32%..The percentage of firms planning to raise average selling prices fell to 21%, the lowest level since late 2005. The percentage of firms actually raising prices also fell to 9%, nearly its lowest level since 2004. 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.
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">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>97.3</td>
<td>96.3</td>
<td>-2.1%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>
Weekly U.S. Chain Store Sales Roughly Unchanged: Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 9, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009a.jpg" width="353">
For the second straight week, the International Council of Shopping Centers (ICSC)-UBS reported that chain store sales showed roughly no change from the prior period. That followed declines of roughly 1.0% during each of the prior two consecutive weeks.
The average level of chain store sales during September fell 0.8% versus the August average. That average had risen 0.1% from July. Retail sales for September will be published by the Commerce Department this coming Friday.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS fell 0.8% (-0.2% y/y) after a 0.2% decline during the prior week.
Changing Productivity Trends from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-25.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">10/06/07</th>
<th scope="col">09/29/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>475.3</td>
<td>475.5</td>
<td>2.1%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
Japan's Economy Watcher’s Index Drops for Sixth Month in a Row 
by <a href="/comment/Brusca.html">Robert Brusca</a> October 9, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009d.jpg" width="353">
Economy watchers index at five year low. 
Japan&#146;s economy watcher&#146;s index fell again for the six month running and extending a drop from a local peak reached back in March of 2006. The current future and employment indexes all are trending lower.The current economy watchers index and the employment components are at their five-year lows. The future index stands in the bottom 20% of its five-year range.
Japan&#146;s economy continues to emit irregular signals despite ongoing statements of optimism from the BOJ.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th colspan=8 scope="col">Key Japanese Surveys</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Yr range*</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
</tr>
<tr>
<td class="firstcol" colspan=8>Diffusion</td>

</tr>
<tr class="odd">
<td class="firstcol">Economy Watchers</td>
<td>44.1</td>
<td>44.7</td>
<td>46.0</td>
<td>46.8</td>
<td>0.0%</td>
<td>3.8%</td>
<td>25.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>48.3</td>
<td>51.2</td>
<td>51.2</td>
<td>50.7</td>
<td>0.0%</td>
<td>4.0%</td>
<td>27.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Future</td>
<td>46.5</td>
<td>46.7</td>
<td>48.4</td>
<td>50.0</td>
<td>19.8%</td>
<td>21.4%</td>
<td>34.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">NTC MFG</td>
<td>49.6</td>
<td>49.0</td>
<td>50.4</td>
<td>51.4</td>
<td>6.7%</td>
<td>0.0%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol" colspan=8>Econ Trends (Teikoku&#39;/50 neutral/weighted diffusion)</td>

</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>44.2</td>
<td>44.5</td>
<td>44.6</td>
<td>45.2</td>
<td>55.7%</td>
<td>63.2%</td>
<td>69.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>38.3</td>
<td>37.9</td>
<td>39.2</td>
<td>39.6</td>
<td>39.6%</td>
<td>37.0%</td>
<td>52.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Wholesale</td>
<td>41.2</td>
<td>41.3</td>
<td>42.1</td>
<td>42.8</td>
<td>51.1%</td>
<td>56.6%</td>
<td>68.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>47.3</td>
<td>47.6</td>
<td>48.6</td>
<td>49.1</td>
<td>67.9%</td>
<td>74.0%</td>
<td>83.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>36.3</td>
<td>36.6</td>
<td>36.8</td>
<td>37.7</td>
<td>68.2%</td>
<td>71.9%</td>
<td>77.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol" colspan=8>100 is high; zero is low</td>

</tr>
</tbody>
</table>
August Trade in Goods: a Dip in Germany's Surplus and a Small Improvement in France's Deficit 
by <a href="/comment/Curley.html">Louise Curley</a> October 9, 2007


<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009e.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009h.jpg">
The balance of trade in goods in France improved from a deficit of 3.2 billion euros in July to 2.8 billion euros in August. In Germany, the surplus on trade in goods declined to 15.3 billion euros from 16.5 billion euros in July. Since month-to-month changes in the balance of trade in goods tend to be erratic, we calculated six-month averages (using the &quot;advance functions&quot; button) to get a better idea of the trends in the two balances. On this basis, the trend in France&#39;s balance of trade in goods appears to be still toward greater deficits, while the trend in Germany suggests that the recent rise in surpluses may be decelerating, as can be seen in the first chart.
The rise in the Euro that began in late 2005 has led to a reduction in the portion of exports to the United States as can be seen in the second and third charts. These charts show the dollar value of the euro (scale inverted) and the portion of French and German exports to the United States. The relationship between the exchange rate and portion of exports appears to be closer in Germany than in France, but both show that an increase in the euro tends to dampen the portion of exports to the U. S. However, since exports to the US are a relatively small part of total exports in both countries, the impact on total exports has been small. The U. S. accounted for about 7% of total French exports in 2006. For Germany, the corresponding figure was about 9%. By far the most important buyers of French and German exports are other members of the Euro Area who are unaffected by changes in the currency. Over the past three years, between 40 and 45% of France&#39;s exports of goods and between 50 and 53% of Germany&#39;s exports of goods went to other members of the Euro Area, as shown in the fourth chart.
<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009g.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071009f.jpg">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">TRADE IN GOODS--FRANCE AND GERMANY (Billions Euros)</th>
<th scope="col">Aug 07</th>
<th scope="col">Jul&nbsp; &nbsp; 07&nbsp;</th>
<th scope="col">Aug&nbsp; 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">FRANCE Balance</td>
<td>-2.8</td>
<td>-3.2</td>
<td>-3.0</td>
<td>0.4</td>
<td>0.2</td>
<td>-27.6</td>
<td>-22.7</td>
<td>-5.0</td>
</tr>
<tr>
<td class="firstcol">Total Exports</td>
<td>34.7</td>
<td>34.0</td>
<td>32.5</td>
<td>2.0</td>
<td>6.6</td>
<td>389.6</td>
<td>357.5</td>
<td>340.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports to Euro Area</td>
<td>17.2</td>
<td>16.9</td>
<td>16.9</td>
<td>1.7</td>
<td>1.6</td>
<td>194.4</td>
<td>180.7</td>
<td>173.9</td>
</tr>
<tr>
<td class="firstcol">Exports to US</td>
<td>2.1</td>
<td>2.2</td>
<td>2.1</td>
<td>-3.2</td>
<td>-1.8</td>
<td>26.4</td>
<td>25.1</td>
<td>23.0</td>
</tr>
<tr class="odd">
<td class="firstcol">GERMANY&nbsp; Balance</td>
<td>15.3</td>
<td>16.5</td>
<td>12.1</td>
<td>-1.2</td>
<td>3.2</td>
<td>162.2</td>
<td>157.8</td>
<td>154.0</td>
</tr>
<tr>
<td class="firstcol">Total Exports&nbsp;</td>
<td>82.7</td>
<td>80.3</td>
<td>73.7</td>
<td>2.0</td>
<td>12.4</td>
<td>893.8</td>
<td>783.7</td>
<td>726.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports to Euro Area</td>
<td>22.6</td>
<td>22.1</td>
<td>21.8</td>
<td>-3.2</td>
<td>-1.8</td>
<td>254.2</td>
<td>233.8</td>
<td>225.7</td>
</tr>
<tr>
<td class="firstcol">Exports to US</td>
<td>n.a.</td>
<td>6.1</td>
<td>6.3*</td>
<td>n.a..</td>
<td>-4.0*</td>
<td>78.0</td>
<td>68.8</td>
<td>94.1</td>
</tr>

<tr>
<td class="firstcol">EXCHANGE RATE&nbsp; US$/Euro</td>
<td>1.3626</td>
<td>1.3726</td>
<td>1.2810</td>
<td>-0.7</td>
<td>6.4</td>
<td>1.2560</td>
<td>1.2447</td>
<td>1.2439</td>
</tr>
<tr class="grey1">
<td class="firstcol" colspan=9>*July 2006&nbsp;&nbsp; n.a. not available</td>

</tr>
</tbody>
</table>


</html>

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008c.jpg" width="353">
Inflation is picking up in many emerging markets. Among the highest rates of inflation being recorded are those in Eastern Europe. Latvia, for example, announced today that inflation reached 11% in September and in Ukraine, it was over 14%. Although inflation rates in other Eastern Europe countries are lower most have been rising throughout the year, as can be seen in the first chart, which shows inflation rates for the Czech Republic, Lithuania, Latvia and the Ukraine.
Inflation has generally been kept in check in the Far East. One important exception is India where inflation has been running between 6 and 8% for the last year or so. More recently, inflation in China has accelerated. From a rate of 2.2% in January of this year, inflation in China has risen to 6.7% in September. The second chart shows inflation in four of the Far East countries--China, India, South Korea and Thailand.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008b.jpg" width="353">
In Latin America where many countries experienced hyper inflation in the past, Brazil and Chile have succeeded in keeping inflation subdued. Currently, their inflation rates, though rising this year, are still below 6%. Argentina has had less success in getting its rate of inflation below that of Brazil and Chile, but its rate of inflation has continued to decline this year from 9.7% in January to 8.6% in September. The high rate of Inflation in Venezuela due, in part to the populist policies of its government, declined in September to 15.2%, from the peak of 20.4% reached in February. The third chart shows inflation in four Latin American countries--Argentina, Brazil, Chile and Venezuela. 
Among the emerging markets of the Middle East and Africa, Turkey, Egypt and Jordan have seen declines in their inflation rates during this year in contrast to the increases in other emerging markets. In South Africa, inflation has kept fairly steady between 6 and 7%. Inflation rates in these countries are shown in the fourth chart. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008d.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008e.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION RATES (%)&nbsp;</th>
<th scope="col">SEP</th>
<th scope="col">AUG&nbsp;&nbsp;</th>
<th scope="col">JUL&nbsp; &nbsp;</th>
<th scope="col">JUN&nbsp;</th>
<th scope="col">MAY&nbsp;</th>
<th scope="col">APR</th>
<th scope="col">MAR</th>
<th scope="col">FEB</th>
<th scope="col">JAN</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>2.8</td>
<td>2.4</td>
<td>2.3</td>
<td>2.5</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.5</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Lithuania</td>
<td>7.1</td>
<td>5.5</td>
<td>4.1</td>
<td>4.9</td>
<td>4.9</td>
<td>4.8</td>
<td>4.6</td>
<td>4.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Latvia</td>
<td>11.4</td>
<td>10.1</td>
<td>9.5</td>
<td>8.8</td>
<td>8.2</td>
<td>8.9</td>
<td>8.5</td>
<td>7.3</td>
<td>7.1</td>
</tr>
<tr>
<td class="firstcol"> Ukraine </td>
<td>14.4</td>
<td>14.3</td>
<td>13.5</td>
<td>12.9</td>
<td>10.7</td>
<td>10.5</td>
<td>10.1</td>
<td>9.5</td>
<td>10.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>2.1</td>
<td>1.1</td>
<td>1.2</td>
<td>1.9</td>
<td>1.9</td>
<td>1.8</td>
<td>2.0</td>
<td>2.3</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>2.3</td>
<td>2.0</td>
<td>2.5</td>
<td>2.6</td>
<td>2.4</td>
<td>2.4</td>
<td>2.2</td>
<td>2.2</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">India</td>
<td>n.a.</td>
<td>7.3</td>
<td>6.4</td>
<td>5.7</td>
<td>6.6</td>
<td>6.8</td>
<td>6.7</td>
<td>7.6</td>
<td>6.7</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>n.a</td>
<td>6.7</td>
<td>4.7</td>
<td>4.5</td>
<td>3.4</td>
<td>3.0</td>
<td>3.3</td>
<td>2.8</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Argentina</td>
<td>8.6</td>
<td>8.7</td>
<td>8.6</td>
<td>8.8</td>
<td>8.8</td>
<td>8.9</td>
<td>9.1</td>
<td>9.6</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">Brazil</td>
<td>n.a</td>
<td>4.8</td>
<td>4.2</td>
<td>4.0</td>
<td>3.6</td>
<td>3.4</td>
<td>3.3</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Chile</td>
<td>5.9</td>
<td>4.7</td>
<td>3.8</td>
<td>3.2</td>
<td>2.9</td>
<td>2.5</td>
<td>2.6</td>
<td>2.7</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Venezuela</td>
<td>15.3</td>
<td>15.9</td>
<td>17.2</td>
<td>19.4</td>
<td>19.5</td>
<td>19.4</td>
<td>18.5</td>
<td>20.4</td>
<td>18.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>7.1</td>
<td>7.4</td>
<td>6.9</td>
<td>8.6</td>
<td>9.2</td>
<td>10.7</td>
<td>10.9</td>
<td>10.2</td>
<td>9.9</td>
</tr>
<tr>
<td class="firstcol">South Africa</td>
<td>n.a</td>
<td>6.7</td>
<td>7.0</td>
<td>7.0</td>
<td>6.9</td>
<td>7.0</td>
<td>6.1</td>
<td>5.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Egypt</td>
<td>n.a</td>
<td>8.5</td>
<td>8.0</td>
<td>8.5</td>
<td>10.0</td>
<td>11.7</td>
<td>12.8</td>
<td>12.6</td>
<td>12.4</td>
</tr>
<tr>
<td class="firstcol">Jordan</td>
<td>n.a</td>
<td>3.9</td>
<td>3.7</td>
<td>3.9</td>
<td>3.6</td>
<td>5.6</td>
<td>6.7</td>
<td>8.4</td>
<td>7.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation is picking up in many emerging markets. Among the highest rates of inflation being recorded are those in Eastern Europe. Latvia, for example, announced today that inflation reached 11% in September and in Ukraine, it was [...]

Inflation Trends in Emerging Markets

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008c.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008b.jpg">
Inflation is picking up in many emerging markets. Among the highest rates of inflation being recorded are those in Eastern Europe. Latvia, for example, announced today that inflation reached 11% in September and in Ukraine, it was over 14%. Although inflation rates in other Eastern Europe countries are lower most have been rising throughout the year, as can be seen in the first chart, which shows inflation rates for the Czech Republic, Lithuania, Latvia and the Ukraine.
Inflation has generally been kept in check in the Far East. One important exception is India where inflation has been running between 6 and 8% for the last year or so. More recently, inflation in China has accelerated. From a rate of 2.2% in January of this year, inflation in China has risen to 6.7% in September. The second chart shows inflation in four of the Far East countries--China, India, South Korea and Thailand.
In Latin America where many countries experienced hyper inflation in the past, Brazil and Chile have succeeded in keeping inflation subdued. Currently, their inflation rates, though rising this year, are still below 6%. Argentina has had less success in getting its rate of inflation below that of Brazil and Chile, but its rate of inflation has continued to decline this year from 9.7% in January to 8.6% in September. The high rate of Inflation in Venezuela due, in part to the populist policies of its government, declined in September to 15.2%, from the peak of 20.4% reached in February. The third chart shows inflation in four Latin American countries--Argentina, Brazil, Chile and Venezuela. 
Among the emerging markets of the Middle East and Africa, Turkey, Egypt and Jordan have seen declines in their inflation rates during this year in contrast to the increases in other emerging markets. In South Africa, inflation has kept fairly steady between 6 and 7%. Inflation rates in these countries are shown in the fourth chart.
<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008d.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008e.jpg">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION RATES (%)&nbsp;</th>
<th scope="col">SEP</th>
<th scope="col">AUG</th>
<th scope="col">JUL</th>
<th scope="col">JUN</th>
<th scope="col">MAY</th>
<th scope="col">APR</th>
<th scope="col">MAR</th>
<th scope="col">FEB</th>
<th scope="col">JAN</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>2.8</td>
<td>2.4</td>
<td>2.3</td>
<td>2.5</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.5</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Lithuania</td>
<td>7.1</td>
<td>5.5</td>
<td>4.1</td>
<td>4.9</td>
<td>4.9</td>
<td>4.8</td>
<td>4.6</td>
<td>4.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Latvia</td>
<td>11.4</td>
<td>10.1</td>
<td>9.5</td>
<td>8.8</td>
<td>8.2</td>
<td>8.9</td>
<td>8.5</td>
<td>7.3</td>
<td>7.1</td>
</tr>
<tr>
<td class="firstcol"> Ukraine </td>
<td>14.4</td>
<td>14.3</td>
<td>13.5</td>
<td>12.9</td>
<td>10.7</td>
<td>10.5</td>
<td>10.1</td>
<td>9.5</td>
<td>10.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>2.1</td>
<td>1.1</td>
<td>1.2</td>
<td>1.9</td>
<td>1.9</td>
<td>1.8</td>
<td>2.0</td>
<td>2.3</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>2.3</td>
<td>2.0</td>
<td>2.5</td>
<td>2.6</td>
<td>2.4</td>
<td>2.4</td>
<td>2.2</td>
<td>2.2</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">India</td>
<td>n.a.</td>
<td>7.3</td>
<td>6.4</td>
<td>5.7</td>
<td>6.6</td>
<td>6.8</td>
<td>6.7</td>
<td>7.6</td>
<td>6.7</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>n.a</td>
<td>6.7</td>
<td>4.7</td>
<td>4.5</td>
<td>3.4</td>
<td>3.0</td>
<td>3.3</td>
<td>2.8</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Argentina</td>
<td>8.6</td>
<td>8.7</td>
<td>8.6</td>
<td>8.8</td>
<td>8.8</td>
<td>8.9</td>
<td>9.1</td>
<td>9.6</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">Brazil</td>
<td>n.a</td>
<td>4.8</td>
<td>4.2</td>
<td>4.0</td>
<td>3.6</td>
<td>3.4</td>
<td>3.3</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Chile</td>
<td>5.9</td>
<td>4.7</td>
<td>3.8</td>
<td>3.2</td>
<td>2.9</td>
<td>2.5</td>
<td>2.6</td>
<td>2.7</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Venezuela</td>
<td>15.3</td>
<td>15.9</td>
<td>17.2</td>
<td>19.4</td>
<td>19.5</td>
<td>19.4</td>
<td>18.5</td>
<td>20.4</td>
<td>18.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>7.1</td>
<td>7.4</td>
<td>6.9</td>
<td>8.6</td>
<td>9.2</td>
<td>10.7</td>
<td>10.9</td>
<td>10.2</td>
<td>9.9</td>
</tr>
<tr>
<td class="firstcol">South Africa</td>
<td>n.a</td>
<td>6.7</td>
<td>7.0</td>
<td>7.0</td>
<td>6.9</td>
<td>7.0</td>
<td>6.1</td>
<td>5.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Egypt</td>
<td>n.a</td>
<td>8.5</td>
<td>8.0</td>
<td>8.5</td>
<td>10.0</td>
<td>11.7</td>
<td>12.8</td>
<td>12.6</td>
<td>12.4</td>
</tr>
<tr>
<td class="firstcol">Jordan</td>
<td>n.a</td>
<td>3.9</td>
<td>3.7</td>
<td>3.9</td>
<td>3.6</td>
<td>5.6</td>
<td>6.7</td>
<td>8.4</td>
<td>7.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Robert Brusca

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008a.jpg" width="353">
Both the chart and the table tell the story of waning German order strength. We have followed Euro-orders series closely as the euro has gained strength. What we see is that there is a clear loss in momentum. That loss is more severe if we compartmentalize German orders into a quarterly habitat. Viewed that way orders for Q3 are coming up quite weak. TWO full months into the new quarter overall German orders are falling at a 6.9% annualized rate. Foreign orders are off at a 13% annual rate. Domestic orders scratch out a feeble 0.1% gain in Q3. These are weak results. The blow is only somewhat softened by the strength that the components showed in 2007Q2 when orders rose at an annualized pace of 18.0% led by 29.3% for foreign orders and 7.3% for domestic orders.
The real question is which of the trends lies ahead? On that ground the slower one seems to have become dominant&#133; These results fall back into perspective on the Yr/Yr calculation where total order volumes are up by 4.2% on 5.1% for foreign orders and 3.2% for domestic orders. The Y/Y figures are solid, but they show that much of the earlier momentum has been lost.
Other German indicators have showed this from the IFO report to the ZEW survey to the EU indexes. Europe once rocked and now it is being rocked as financial ministers try to decide what to do.
Let&#146;s understand this as a logical outcropping of the desire to make the euro a main reserve unit. The more it comes into demand the stronger that euro will be and that more that will disrupt the export sector in EMU countries. Europe is much more export dependent than the US. So this is a problem for the euro area. While there is great prestige and some gain to being the reserve currency (segniorage: The difference between the value of money and the cost to produce it), there is also cost. Europe is too export dependent and not flexible enough for the euro to be a main reserve unit. Being a reserve currency is an honor and a challenge: you can&#146;t have one without the other.
In a two reserve currency system, when the dollar is weak, of course, past dollar hoarders want to switch into a stronger reserve unit. But unless Europe can absorb such flows it isn&#146;t going to work. To put it another way, the euro and its financial sector may be prepared to be a reserve unit but the euro area economy is not. Just look at the complications to US policy to see what Europe must be able to sustain to truly compete with the dollar. After all it is fair to argue that if certain disequilibrium conditions have been thrust onto the dollar some of those will now come to rest on the euro as it takes up more of the burden of being the reserve unit.
The US current account deficit is at about 5 &frac12;% of GDP. Blame the US if you will, but how can you ignore the consequences of its having been the reserve unit? Look at the massive reserve accumulations in Japan and in China (Hong Kong and Taiwan) and Korea. What of their obvious impacts on FX values? How can you ignore the fact that China wants to maintain a peg at an undervalued level? How can you argue that Japan has not been doing the same? The center country in reserve system is the one that is the numeraire and loses its policy independence. Every other currency pegs to it or floats against it. If some countries choose a balance of payments &#145;result&#146; (such as running persistent surpluses) the reserve country is stuck with the flip-side of those actions. I just don&#146;t see how Europe can do it. Germany and EMU already are stressed and previous little reserve shifting has occurred. What we are seeing in Europe is what happens when you are unprepared to experience your dream. The good news: the Euro is strong and has become a more important reserve unit internationally. The bad news? It&#146;s the same.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th colspan="8" scope="col">German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>1.2%</td>
<td>-6.1%</td>
<td>5.4%</td>
<td>0.6%</td>
<td style="color:red;">0.3%</td>
<td style="color:red;">4.2%</td>
<td>15.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>2.4%</td>
<td>-10.8%</td>
<td>10.0%</td>
<td>2.1%</td>
<td style="color:red;">1.1%</td>
<td style="color:red;">5.1%</td>
<td>19.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>0.4%</td>
<td style="color:red;">-1.1%</td>
<td style="color:red;">-0.5%</td>
<td style="color:red;">3.2%</td>
<td>10.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="8">Sector Sales</td>

</tr>
<tr>
<td class="firstcol">Mfg/Mining</td>
<td>0.7%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>3.0%</td>
<td style="color:red;">1.5%</td>
<td style="color:red;">5.3%</td>
<td>8.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>1.5%</td>
<td style="color:red;">-1.6%</td>
<td>-0.9%</td>
<td style="color:red;">-4.5%</td>
<td style="color:red;">-2.3%</td>
<td style="color:red;">1.6%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>4.1%</td>
<td style="color:red;">-1.5%</td>
<td>1.4%</td>
<td>16.9%</td>
<td>8.1%</td>
<td style="color:red;">2.3%</td>
<td>12.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Nondurables</td>
<td>1.0%</td>
<td style="color:red;">-1.6%</td>
<td>-1.5%</td>
<td style="color:red;">-8.3%</td>
<td style="color:red;">-4.2%</td>
<td style="color:red;">1.5%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td style="color:red;">0.2%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>3.7%</td>
<td style="color:red;">1.9%</td>
<td style="color:red;">7.1%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.1%</td>
<td style="color:red;">-0.6%</td>
<td>1.1%</td>
<td>6.7%</td>
<td style="color:red;">3.3%</td>
<td style="color:red;">5.5%</td>
<td>11.8%</td>
</tr>
<tr>
<td class="firstcol">All Mfg Sales</td>
<td>0.8%</td>
<td style="color:red;">-0.2%</td>
<td>0.0%</td>
<td>2.4%</td>
<td style="color:red;">1.2%</td>
<td style="color:red;">5.0%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Both the chart and the table tell the story of waning German order strength. We have followed Euro-orders series closely as the euro has gained strength. What we see is that there is a clear loss in momentum. That loss is more severe [...]

German Orders Still Strong but Definitely Fading…

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008a.jpg" width="353">
Both the chart and the table tell the story of waning German order strength. We have followed Euro-orders series closely as the euro has gained strength. What we see is that there is a clear loss in momentum. That loss is more severe if we compartmentalize German orders into a quarterly habitat. Viewed that way orders for Q3 are coming up quite weak. TWO full months into the new quarter overall German orders are falling at a 6.9% annualized rate. Foreign orders are off at a 13% annual rate. Domestic orders scratch out a feeble 0.1% gain in Q3. These are weak results. The blow is only somewhat softened by the strength that the components showed in 2007Q2 when orders rose at an annualized pace of 18.0% led by 29.3% for foreign orders and 7.3% for domestic orders.
The real question is which of the trends lies ahead? On that ground the slower one seems to have become dominant&#133; These results fall back into perspective on the Yr/Yr calculation where total order volumes are up by 4.2% on 5.1% for foreign orders and 3.2% for domestic orders. The Y/Y figures are solid, but they show that much of the earlier momentum has been lost.
Other German indicators have showed this from the IFO report to the ZEW survey to the EU indexes. Europe once rocked and now it is being rocked as financial ministers try to decide what to do.
Let&#146;s understand this as a logical outcropping of the desire to make the euro a main reserve unit. The more it comes into demand the stronger that euro will be and that more that will disrupt the export sector in EMU countries. Europe is much more export dependent than the US. So this is a problem for the euro area. While there is great prestige and some gain to being the reserve currency (segniorage: The difference between the value of money and the cost to produce it), there is also cost. Europe is too export dependent and not flexible enough for the euro to be a main reserve unit. Being a reserve currency is an honor and a challenge: you can&#146;t have one without the other.
In a two reserve currency system, when the dollar is weak, of course, past dollar hoarders want to switch into a stronger reserve unit. But unless Europe can absorb such flows it isn&#146;t going to work. To put it another way, the euro and its financial sector may be prepared to be a reserve unit but the euro area economy is not. Just look at the complications to US policy to see what Europe must be able to sustain to truly compete with the dollar. After all it is fair to argue that if certain disequilibrium conditions have been thrust onto the dollar some of those will now come to rest on the euro as it takes up more of the burden of being the reserve unit.
The US current account deficit is at about 5 &frac12;% of GDP. Blame the US if you will, but how can you ignore the consequences of its having been the reserve unit? Look at the massive reserve accumulations in Japan and in China (Hong Kong and Taiwan) and Korea. What of their obvious impacts on FX values? How can you ignore the fact that China wants to maintain a peg at an undervalued level? How can you argue that Japan has not been doing the same? The center country in reserve system is the one that is the numeraire and loses its policy independence. Every other currency pegs to it or floats against it. If some countries choose a balance of payments &#145;result&#146; (such as running persistent surpluses) the reserve country is stuck with the flip-side of those actions. I just don&#146;t see how Europe can do it. Germany and EMU already are stressed and previous little reserve shifting has occurred. What we are seeing in Europe is what happens when you are unprepared to experience your dream. The good news: the Euro is strong and has become a more important reserve unit internationally. The bad news? It&#146;s the same.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th colspan="8" scope="col">German Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>YrAgo</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>1.2%</td>
<td>-6.1%</td>
<td>5.4%</td>
<td>0.6%</td>
<td style="color:red;">0.3%</td>
<td style="color:red;">4.2%</td>
<td>15.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign</td>
<td>2.4%</td>
<td>-10.8%</td>
<td>10.0%</td>
<td>2.1%</td>
<td style="color:red;">1.1%</td>
<td style="color:red;">5.1%</td>
<td>19.7%</td>
</tr>
<tr>
<td class="firstcol">Domestic</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>0.4%</td>
<td style="color:red;">-1.1%</td>
<td style="color:red;">-0.5%</td>
<td style="color:red;">3.2%</td>
<td>10.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="8">Sector Sales</td>

</tr>
<tr>
<td class="firstcol">Mfg/Mining</td>
<td>0.7%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>3.0%</td>
<td style="color:red;">1.5%</td>
<td style="color:red;">5.3%</td>
<td>8.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>1.5%</td>
<td style="color:red;">-1.6%</td>
<td>-0.9%</td>
<td style="color:red;">-4.5%</td>
<td style="color:red;">-2.3%</td>
<td style="color:red;">1.6%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Consumer Durables</td>
<td>4.1%</td>
<td style="color:red;">-1.5%</td>
<td>1.4%</td>
<td>16.9%</td>
<td>8.1%</td>
<td style="color:red;">2.3%</td>
<td>12.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Nondurables</td>
<td>1.0%</td>
<td style="color:red;">-1.6%</td>
<td>-1.5%</td>
<td style="color:red;">-8.3%</td>
<td style="color:red;">-4.2%</td>
<td style="color:red;">1.5%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td style="color:red;">0.2%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>3.7%</td>
<td style="color:red;">1.9%</td>
<td style="color:red;">7.1%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>1.1%</td>
<td style="color:red;">-0.6%</td>
<td>1.1%</td>
<td>6.7%</td>
<td style="color:red;">3.3%</td>
<td style="color:red;">5.5%</td>
<td>11.8%</td>
</tr>
<tr>
<td class="firstcol">All Mfg Sales</td>
<td>0.8%</td>
<td style="color:red;">-0.2%</td>
<td>0.0%</td>
<td>2.4%</td>
<td style="color:red;">1.2%</td>
<td style="color:red;">5.0%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008c.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008b.jpg">
Inflation is picking up in many emerging markets. Among the highest rates of inflation being recorded are those in Eastern Europe. Latvia, for example, announced today that inflation reached 11% in September and in Ukraine, it was over 14%. Although inflation rates in other Eastern Europe countries are lower most have been rising throughout the year, as can be seen in the first chart, which shows inflation rates for the Czech Republic, Lithuania, Latvia and the Ukraine.
Inflation has generally been kept in check in the Far East. One important exception is India where inflation has been running between 6 and 8% for the last year or so. More recently, inflation in China has accelerated. From a rate of 2.2% in January of this year, inflation in China has risen to 6.7% in September. The second chart shows inflation in four of the Far East countries--China, India, South Korea and Thailand.
In Latin America where many countries experienced hyper inflation in the past, Brazil and Chile have succeeded in keeping inflation subdued. Currently, their inflation rates, though rising this year, are still below 6%. Argentina has had less success in getting its rate of inflation below that of Brazil and Chile, but its rate of inflation has continued to decline this year from 9.7% in January to 8.6% in September. The high rate of Inflation in Venezuela due, in part to the populist policies of its government, declined in September to 15.2%, from the peak of 20.4% reached in February. The third chart shows inflation in four Latin American countries--Argentina, Brazil, Chile and Venezuela. 
Among the emerging markets of the Middle East and Africa, Turkey, Egypt and Jordan have seen declines in their inflation rates during this year in contrast to the increases in other emerging markets. In South Africa, inflation has kept fairly steady between 6 and 7%. Inflation rates in these countries are shown in the fourth chart.
<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008d.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071008e.jpg">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION RATES (%)&nbsp;</th>
<th scope="col">SEP</th>
<th scope="col">AUG</th>
<th scope="col">JUL</th>
<th scope="col">JUN</th>
<th scope="col">MAY</th>
<th scope="col">APR</th>
<th scope="col">MAR</th>
<th scope="col">FEB</th>
<th scope="col">JAN</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Czech Republic</td>
<td>2.8</td>
<td>2.4</td>
<td>2.3</td>
<td>2.5</td>
<td>2.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.5</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Lithuania</td>
<td>7.1</td>
<td>5.5</td>
<td>4.1</td>
<td>4.9</td>
<td>4.9</td>
<td>4.8</td>
<td>4.6</td>
<td>4.3</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Latvia</td>
<td>11.4</td>
<td>10.1</td>
<td>9.5</td>
<td>8.8</td>
<td>8.2</td>
<td>8.9</td>
<td>8.5</td>
<td>7.3</td>
<td>7.1</td>
</tr>
<tr>
<td class="firstcol"> Ukraine </td>
<td>14.4</td>
<td>14.3</td>
<td>13.5</td>
<td>12.9</td>
<td>10.7</td>
<td>10.5</td>
<td>10.1</td>
<td>9.5</td>
<td>10.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>2.1</td>
<td>1.1</td>
<td>1.2</td>
<td>1.9</td>
<td>1.9</td>
<td>1.8</td>
<td>2.0</td>
<td>2.3</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>2.3</td>
<td>2.0</td>
<td>2.5</td>
<td>2.6</td>
<td>2.4</td>
<td>2.4</td>
<td>2.2</td>
<td>2.2</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">India</td>
<td>n.a.</td>
<td>7.3</td>
<td>6.4</td>
<td>5.7</td>
<td>6.6</td>
<td>6.8</td>
<td>6.7</td>
<td>7.6</td>
<td>6.7</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>n.a</td>
<td>6.7</td>
<td>4.7</td>
<td>4.5</td>
<td>3.4</td>
<td>3.0</td>
<td>3.3</td>
<td>2.8</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Argentina</td>
<td>8.6</td>
<td>8.7</td>
<td>8.6</td>
<td>8.8</td>
<td>8.8</td>
<td>8.9</td>
<td>9.1</td>
<td>9.6</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">Brazil</td>
<td>n.a</td>
<td>4.8</td>
<td>4.2</td>
<td>4.0</td>
<td>3.6</td>
<td>3.4</td>
<td>3.3</td>
<td>3.1</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Chile</td>
<td>5.9</td>
<td>4.7</td>
<td>3.8</td>
<td>3.2</td>
<td>2.9</td>
<td>2.5</td>
<td>2.6</td>
<td>2.7</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Venezuela</td>
<td>15.3</td>
<td>15.9</td>
<td>17.2</td>
<td>19.4</td>
<td>19.5</td>
<td>19.4</td>
<td>18.5</td>
<td>20.4</td>
<td>18.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>7.1</td>
<td>7.4</td>
<td>6.9</td>
<td>8.6</td>
<td>9.2</td>
<td>10.7</td>
<td>10.9</td>
<td>10.2</td>
<td>9.9</td>
</tr>
<tr>
<td class="firstcol">South Africa</td>
<td>n.a</td>
<td>6.7</td>
<td>7.0</td>
<td>7.0</td>
<td>6.9</td>
<td>7.0</td>
<td>6.1</td>
<td>5.8</td>
<td>6.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Egypt</td>
<td>n.a</td>
<td>8.5</td>
<td>8.0</td>
<td>8.5</td>
<td>10.0</td>
<td>11.7</td>
<td>12.8</td>
<td>12.6</td>
<td>12.4</td>
</tr>
<tr>
<td class="firstcol">Jordan</td>
<td>n.a</td>
<td>3.9</td>
<td>3.7</td>
<td>3.9</td>
<td>3.6</td>
<td>5.6</td>
<td>6.7</td>
<td>8.4</td>
<td>7.6</td>
</tr>
</tbody>
</table>
</body>
</html>

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071005i.jpg" width="353">
Household confidence in France fails to climb to or above -10.
The chart on French consumer confidence shows that there is something around the level of -10 on the index that seems critical to the development of the direction on the index. In 1994-95 the index was about to move above +10 and eventually dipped to -30 before soaring above -10 to reach a peak of +10 in late 2000. From that peak confidence fell but once it broke below 10 in 2002 its fall accelerated. Now as confidence has tried to recover again it has once again failed to reach -10 or to climb above it. With that failure, confidence has fallen back sharply. Various line items on confidence are weak with the exception of plans to save with that indicator in the top 12 percent of its lifetime range.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" colspan=11>INSEE Household Monthly Survey</th>
</tr>
<tr>
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
<th scope="col" colspan=2>Since Jan 1990</th>
<th scope="col" colspan=4>Since Jan 1990</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Sep 07</td>
<td>Aug 07</td>
<td>Jul 07</td>
<td>Jun 07</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Household Confidence</td>
<td>-21</td>
<td>-17</td>
<td>-15</td>
<td>-13</td>
<td>27.9</td>
<td>109</td>
<td>10</td>
<td>-33</td>
<td>43</td>
<td>-17</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Living Standards</td>

</tr>
<tr>
<td class="firstcol">past 12 Mos</td>
<td>-50</td>
<td>-47</td>
<td>-46</td>
<td>-45</td>
<td>19.0</td>
<td>139</td>
<td>18</td>
<td>-66</td>
<td>84</td>
<td>-37</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-26</td>
<td>-17</td>
<td>-11</td>
<td>-3</td>
<td>28.1</td>
<td>115</td>
<td>15</td>
<td>-42</td>
<td>57</td>
<td>-18</td>
</tr>
<tr>
<td class="firstcol">Unemployment: Next 12</td>
<td>13</td>
<td>0</td>
<td>-8</td>
<td>-8</td>
<td>45.5</td>
<td>152</td>
<td>73</td>
<td>-37</td>
<td>110</td>
<td>30</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=11>Price Developments</td>

</tr>
<tr>
<td class="firstcol">Past 12Mo</td>
<td>9</td>
<td>5</td>
<td>1</td>
<td>-8</td>
<td>75.9</td>
<td>27</td>
<td>30</td>
<td>-57</td>
<td>87</td>
<td>-20</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-15</td>
<td>-20</td>
<td>-26</td>
<td>-28</td>
<td>49.5</td>
<td>16</td>
<td>31</td>
<td>-60</td>
<td>91</td>
<td>-34</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=11>Savings</td>

</tr>
<tr>
<td class="firstcol">Favorable to save</td>
<td>36</td>
<td>35</td>
<td>33</td>
<td>34</td>
<td>88.9</td>
<td>8</td>
<td>40</td>
<td>4</td>
<td>36</td>
<td>23</td>
</tr>
<tr>
<td class="firstcol">Ability to save Next 12</td>
<td>-6</td>
<td>-5</td>
<td>-4</td>
<td>-4</td>
<td>58.6</td>
<td>67</td>
<td>6</td>
<td>-23</td>
<td>29</td>
<td>-8</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="11">Spending</td>

</tr>
<tr>
<td class="firstcol">Favorable for major purchase</td>
<td>-8</td>
<td>-6</td>
<td>-3</td>
<td>-7</td>
<td>58.6</td>
<td>51</td>
<td>16</td>
<td>-42</td>
<td>58</td>
<td>-12</td>
</tr>
<tr class="even">
<td class="firstcol" colspan=11>Financial Situation</td>

</tr>
<tr>
<td class="firstcol">Current</td>
<td>16</td>
<td>15</td>
<td>15</td>
<td>14</td>
<td>61.9</td>
<td>39</td>
<td>24</td>
<td>3</td>
<td>21</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">Past 12 MOs</td>
<td>-15</td>
<td>-14</td>
<td>-14</td>
<td>-11</td>
<td>54.5</td>
<td>68</td>
<td>-5</td>
<td>-27</td>
<td>22</td>
<td>-16</td>
</tr>
<tr>
<td class="firstcol">Next 12-Mos</td>
<td>-4</td>
<td>-3</td>
<td>-1</td>
<td>4</td>
<td>44.4</td>
<td>159</td>
<td>11</td>
<td>-16</td>
<td>27</td>
<td>0</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Number of observations in the period 208</td>
</tr>
</tbody>
</table>
</body>
</html>

Household confidence in France fails to climb to or above -10. The chart on French consumer confidence shows that there is something around the level of -10 on the index that seems critical to the development of the direction on the [...]

French Household Confidence Takes Sharp Reversal

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071005h.jpg" width="353">
THE OECD leading economic indicators trend adjusted are showing a sharp moderation in the regional key indexes. The US is reversing sharply after embarking on a strong upturn earlier in the year. The Euro area is continuing to show waning momentum as that index works its way lower from its peak in mid-2006. Japan is sliding lower at a sharp pace that belies the optimism policy officials there embrace.
The OECD prefers to look over six-month horizons on its indicators so the table below arrays them two different ways. The six-month panel at the table bottom shows why the OECD talks of the indicators as pointing to moderation in growth. Only Europe and Japan are declining on the six-month horizon among these three main areas, yet all but the US are decelerating. The OECD area as a whole has its trend restored LEI rising with the index up by 09%.
But the three-month rate of change at the top of the table tells the story that the circumspect OECD does not want to center on. Yes, these are more volatile calculations and they could be reversed. But the shorter three-month trend tells us that all of these regions are pointing to a decline. Unless some stability sets in soon the six-month indexes will soon be reflecting this same sort of weakness and will point to DECLINES as well. On both approaches Japan looks like it is in trouble. These signals are not compatible with central banks hiking rates anytime soon.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th colspan=5 scope="col">OECD Trend-Restored Leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth Progression-SAAR</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color:red;">-1.8%</td>
<td style="color:red;">0.9%</td>
<td style="color:red;">1.3%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD 7</td>
<td style="color:red;">-2.7%</td>
<td style="color:red;">0.6%</td>
<td style="color:red;">0.7%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD.Europe</td>
<td style="color:red;">-3.0%</td>
<td style="color:red;">-0.7%</td>
<td style="color:red;">0.3%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD.Japan</td>
<td style="color:red;">-7.6%</td>
<td style="color:red;">-4.3%</td>
<td style="color:red;">-1.9%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td style="color:red;">-0.3%</td>
<td>3.1%</td>
<td style="color:red;">2.1%</td>
<td>2.2%</td>
</tr>
<tr class="grey4">
<td colspan="5" class="firstcol">Six-Month Readings at 6-Mo Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color:red;">0.9%</td>
<td>1.7%</td>
<td style="color:red;">0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD 7</td>
<td style="color:red;">0.6%</td>
<td>0.8%</td>
<td style="color:red;">-0.1%</td>
<td>4.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD.Europe</td>
<td style="color:red;">-0.7%</td>
<td style="color:red;">1.2%</td>
<td>2.4%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD.Japan</td>
<td style="color:red;">-4.3%</td>
<td>0.7%</td>
<td style="color:red;">0.2%</td>
<td>4.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td>3.1%</td>
<td>1.1%</td>
<td style="color:red;">-0.9%</td>
<td>5.4%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body>
</html>

THE OECD leading economic indicators trend adjusted are showing a sharp moderation in the regional key indexes. The US is reversing sharply after embarking on a strong upturn earlier in the year. The Euro area is continuing to show [...]

OECD Indicators Show Moderation in Growth Ahead

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

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

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


Privacy Policy

Disclaimer

Contact us

Service Health

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

London

Singapore

New York

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Winnie Tapasanun

260501A9.jpg

260501B9.jpg

The ISM U.S. manufacturing PMI held at a lower-than-expected 52.7 in April and March following a 0.2-point easing to 52.4 in February, data from the Institute for Supply Management showed. The April reading, above the 50 expansion-contraction dividing line, indicated the U.S. manufacturing sector expanded for the fourth successive month. A reading of 53.0 for April had been expected in the Action Economics Forecast Survey. The April manufacturing PMI, while above a contraction-level 48.8 in April 2025 and a low of 47.0 in October 2024, remained below a peak of 63.8 in March 2021.

The production index slipped to 53.4 in April from 55.1 in March, indicating production expanded for the sixth consecutive month but at the slowest pace since December. The index was above its recent low of 44.8 in April 2025 but below a peak of 66.5 in March 2021. In April, 28.3% (NSA) of respondents reported higher production while 13.0% reported lower production. The new orders index rebounded to 54.1 in April from 53.5 in March, signaling new orders grew for the fourth straight month following four successive months of contraction. The index remained well above a low of 41.8 in January 2023. In April, an increased 31.6% (NSA) of respondents reported higher new orders while 15.2% reported declines. The inventories index increased to 49.0 in April from 47.1 in March, marking the 12th straight month of contraction. The index was below its recent high of 52.7 in March 2025 but above a low of 43.8 in October 2024. Meanwhile, the supplier deliveries index rose to 60.6 in April from 58.9 in March, indicating slower delivery performance for the fifth consecutive month after faster deliveries in November. In April, 22.6% (NSA) of respondents reported slower delivery speeds while only 1.5% reported faster speeds.

On the labor front, the employment index slid to 46.4 in April from 48.7 in March, showing employment contracted for the 31st straight month and at the lowest level since December following a brief expansion in September 2023. The index was above its recent low of 44.1 in November 2025 but below a high of 49.7 in January 2025 and a high of 56.5 in March 2022. In April, 17.5% (NSA) of respondents reported higher employment while 20.2% reported less hiring.

On the pricing front, the prices paid index jumped to 84.6 (NSA) in April from 78.3 in March, indicating raw materials prices rose for the 19th consecutive month and at the fastest pace since April 2022. The index remained well above a low of 39.4 in December 2022 but below a high of 87.1 in March 2022 and a peak of 92.1 in June 2021. In April, an increased 70.3% (NSA) of respondents reported higher prices while only 1.2% reported price declines.

In other ISM series not included in the composite index, the new export orders index fell to 47.9 in April from 49.9 in March, indicating new export orders contracted for the second successive month after expanding in February and January. The index was up from a low of 40.1 in May 2025 but down from its recent high of 52.4 in January 2025 and a high of 57.1 in February 2022. The imports index decreased to 50.3 in April from 52.6 in March, suggesting imports expanded at the weakest pace in three months. The index was below its recent high of 54.9 in February but above a low of 39.9 in May 2025. The order backlog index declined to 51.4 (NSA) in April from 54.4 in March, showing backlog levels grew at the slowest pace in four months. The index was well above a low of 37.5 in May 2023 but far below a peak of 70.6 in May 2021.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

260501C9.jpg

260501D9.jpg

- ISM Mfg. PMI at 52.7 in Apr. and Mar.; fourth consecutive month of expansion.
- Production (53.4) expands for the sixth straight mth.; new orders (54.1) for the fourth successive mth.
- Employment (46.4) contracts for the 31st straight mth.; at a four-month low.
- Prices Index (84.6) highest since Apr. ’22; prices rising for the 19th consecutive mth.
- Exports (47.9) contract; imports (50.3) still grow but at a three-month low.

U.S. ISM Manufacturing PMI Steady in April; New Orders and Production Growing; Employment Contracting

Andrew Cates

**Front-End Yields Reflect Policy Reassessment**
Against a backdrop of key central bank meetings either having just taken place or imminent, short-dated government bond yields have moved decisively higher across most major economies since the escalation of the Middle East conflict, with the sharpest increase seen in the UK. The rise in 2-year yields reflects a repricing of near-term monetary policy expectations, as markets respond to the inflationary implications of higher energy prices and the growing likelihood that central banks will delay easing cycles. Moves have been most pronounced in economies where inflation is expected to be more persistent—most notably the UK—while increases have been more modest in the US and particularly Japan, where policy normalisation remains gradual. In effect, the front end of the curve is signalling a shift away from the “rate cuts soon” narrative that prevailed earlier in the year toward a more cautious, higher-for-longer policy outlook.

260430Z1.jpg

**US Recession Risks Remain Contained—For Now**
Despite the recent deterioration in the macro backdrop, real-time recession risk indicators for the US remain relatively subdued. This is notable given the combination of softer growth momentum, higher bond yields and heightened geopolitical risk. The nowcast—derived from a blend of high-frequency activity data and financial stress measures—has historically tended to move sharply when conditions turn, rather than drift higher gradually. That asymmetry is important in the current environment. While recession risks are not yet flashing red, past cycles suggest they can reprice abruptly, and arguably at present if energy-driven inflation were to feed much more forcefully into financial conditions or begin to weigh more materially on demand.

260430Z2.jpg

**Consumer Confidence Diverges: Europe and UK Slide, US Stabilises**
Consumer confidence has weakened across the major economies, but the deterioration has been more pronounced in the euro area and the UK than in the US. While sentiment in the US has recently edged up, it remains at relatively subdued levels. By contrast, confidence in Europe and the UK has fallen more sharply, reflecting greater exposure to higher energy costs and a more direct squeeze on real household incomes. This divergence is consistent with broader macro trends, suggesting that demand in Europe may prove more sensitive to the current shock, with weaker sentiment feeding more quickly into consumption.

260430Z3.jpg

**Euro area Credit Conditions Turn More Restrictive**
The latest ECB lending survey points to a clear tightening in credit conditions across the euro area, with banks raising lending standards for both firms and households while loan demand weakens. This combination—more restrictive supply alongside softer demand—is typically associated with a cooling in activity, particularly in interest-sensitive sectors. Recent evidence suggests that higher perceived risks, rising funding costs and geopolitical uncertainty are all weighing on banks’ willingness to lend, while weaker confidence and reduced investment appetite are dampening borrowing needs. The result is a tightening in financial conditions that is likely to amplify the broader slowdown already evident in survey data, reinforcing the more fragile growth dynamics now emerging across the region.

260430Z4.jpg

**An Intensifying AI Boom with Supply-Side Undercurrents**
Against the backdrop of surging AI-related investment, semiconductor prices are not just high—they are rising at an increasingly rapid pace. This chart shows a clear acceleration in both prices and export values, pointing to an intensifying boom in global chip demand. While this is in part a reflection of strong, structural demand, supply-side factors may also be playing a growing role. Although the Middle East is not a direct source of key chip-making minerals, it is central to the energy and petrochemical inputs that underpin semiconductor production. Ongoing geopolitical tensions are therefore likely feeding into higher costs and renewed frictions across supply chains. The combination of accelerating demand and tightening supply conditions suggests that semiconductor inflation could prove more persistent—and more globally consequential—than currently assumed.

260430Z5.jpg

**Labour Markets Reflect the AI Acceleration**
Our final chart this week highlights the extent to which the current AI boom is now feeding through into labour markets. This high-frequency indicator—based on the share of job listings containing AI-related keywords—shows a sharp and sustained increase since the widespread adoption of generative AI tools in late 2022. What began as a more traditional build-out in machine learning roles has evolved into a broader and more intense wave of hiring tied to generative AI capabilities, with demand accelerating markedly across multiple economies. The scale and persistence of this trend point to a structural shift rather than a cyclical upswing, reinforcing the view that AI is becoming an increasingly important driver of investment, productivity expectations and, potentially, broader macroeconomic dynamics.

260430Z6.jpg

Against a backdrop of persistent geopolitical tensions, firmer energy prices and a busy week of central bank meetings—including the Fed, ECB, BoE and BoJ—financial markets have remained notably resilient, even as the macro narrative has softened at the margin. The message from this week’s charts is one of growing tension beneath that surface calm. Front-end bond yields have moved higher, signalling a shift toward a more cautious, “higher-for-longer” policy outlook (chart 1). At the same time, real-time recession indicators for the United States suggest risks remain contained for now (chart 2). Consumer confidence data paint a more uneven picture, with sharper declines in the euro area and UK than in the US, highlighting regional vulnerabilities to the current energy shock (chart 3). The ECB’s latest bank lending survey reinforces this, pointing to tighter credit conditions and weaker demand—factors that are likely to weigh further on European growth (chart 4). By contrast, developments in the semiconductor sector underline a different dynamic: an intensifying global boom, with accelerating price pressures reflecting both strong AI-driven demand and emerging supply-side constraints linked indirectly to energy and logistics disruptions (chart 5). Finally, labour market data confirm that the AI surge is not merely a market narrative but a tangible structural shift, with hiring for AI-related roles accelerating across economies (chart 6). Taken together, these signals point to a more complex macro environment—one in which resilient markets coexist with softening growth, more persistent inflation risks and increasingly delicate policy trade-offs.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/20j2LcPyLFkPvV7NrquXuj?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tension Beneath the Surface

Michael J. Moran

260430N.jpg

260430O.jpg

Real GDP grew at an annual rate of 2.0% in the first quarter of 2026, almost identical to the expected advance of 2.1%. The latest change was comfortably within the range of recent observations and close to the economy’s potential rate of growth. The year-over-year change totaled 2.7%, but that shift reflected what might be viewed as a special factor (robust growth in the second and third quarters that offset a trade-tariff-induced drop in 2025-Q1 GDP).

Business fixed investment was the star of the show in the first quarter, registering growth of 10.4%. Outlays for information processing equipment and software were especially strong, while outlays for industrial equipment and Research & Development contributed positively as well. Outlays for structures remained decidedly soft, dropping for the ninth consecutive quarter. Building of data centers have been vigorous, but softness in offices and manufacturing facilities has dwarfed the strength in this new area.

Federal spending surged 9.4% in Q1, but the rise reflected the reopening of most federal agencies after their closure during much of the fourth quarter. Excluding this noise, support from the federal government has been softening. Nondefense outlays peaked in the fourth quarter of 2024, and they were 6.9% shy of that total in the first quarter. Defense spending also peaked in 2024-Q4 and has eased 2.4% since then. Defense spending most likely will grow in coming quarters because of the efforts in the Middle East. Orders for defense goods have already started to rise.

Consumer spending rose 1.5% in the first quarter, a bit shy of the 2.1% pace over the four quarters of last year and less than half the rates in 2023 and 2024. Consumer spending showed signs of softening in late 2025 and January of this year, but activity picked up in February and March. Firm tax refunds might have provided a boost to household spending in the latest months. Some of the tax cuts from the One Big Beautiful Bill were applied retroactively to 2025, but withholding schedules were not adjusted last year. Thus, many households are receiving larger-than-normal tax refunds.

International trade acted as a drag on economic growth in Q1, with net exports subtracting 1.3 percentage points from the GDP increase. Exports did well in the first quarter with growth of 12.9%, but imports were even stronger with a jump of 21.4%. The real trade deficit of $1.1 trillion was noticeably smaller than the shortfall of $1.4 trillion in 2025-Q1 when importers were rushing to get goods into the US before the imposition of tariffs. Still, the trade shortfall was sizeable and its effect on growth noticeable.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

260430P.jpg

260430Q.jpg

- Robust business investment led the advance; moderate support from consumers.
- Government spending jumped with the reopening of most federal agencies.
- The trade sector remained volatile, making a sizeable negative contribution in Q1.

Q1 GDP: Weathering the Challenges; Trend-Like Growth

Sandy Batten

260430A.jpg

260430B.jpg

This monthly report contains a wealth of information concerning the state of the consumer. The anticipation ahead of today’s report centered on how much the surge in energy prices since the escalation of the US-Iran conflict in early March would push up overall PCE inflation. Prices of energy goods and services jumped 11.6% m/m not annualized in March. This was the largest monthly increase since September 2005. As a result, the headline PCE price index increased 0.7% m/m (3.5% y/y versus 2.8% y/y in February), the largest monthly gain since July 2022 but in line with expectations of the Action Economics Forecast Survey.

The core index (that is, excluding food and energy prices) rose by a more modest 0.3% m/m in March, down from a 0.4% monthly increase in February and in line with expectations. However, the yearly rate rose further to 3.2% y/y in March from 3.0% in February, well above and moving away from the Fed’s 2% target. The FOMC left its fed funds rate target unchanged at yesterday’s meeting, but some committee members dissented, opposing the implied easing bias contained in the statement. Chair Powell, in his press conference, noted that a number of members have become more concerned over the inflation outlook and the possible need for a Fed response.

Nominal personal income posted a solid 0.6% m/m (3.7% y/y) increase in March following an upwardly revised unchanged reading in February (previously -0.1% m/m). The March increase was twice the 0.3% monthly gain expected by the Action Economics Forecast Survey. However, after adjusting for inflation, real personal income slipped 0.1% m/m in March on top of a 0.4% m/m decline in February.

Employee compensation continued to be a major driver of personal income in March. It rose 0.4% m/m (4.1% y/y) in March after a 0.2% monthly increase in February. In March, proprietors’ income jumped 2.8%. This outsized increase reflected payments to farmers from the federal government’s Farmer Bridge Assistance Program. Rental income rose a solid 0.7% m/m, the same gain as in February. Income from financial assets increased 0.4% m/m following a 0.9% m/m decline in February. Personal current transfer payments edged up 0.1% m/m versus a 0.3% m/m decline in February.

Nominal consumption expenditures jumped 0.9% m/m (5.7% y/y) in March following an upwardly revised 0.6% monthly gain in February (previously +0.5% m/m). Spending on goods rose 2.0% m/m (4.5% y/y) while spending on services increased 0.4% m/m (6.3% y/y). As for overall inflation, the surge in energy prices also accounted for a large portion of the March gain in nominal spending. After adjusting for overall inflation, real PCE rose a more modest 0.2% m/m following an upwardly revised 0.3% m/m increase in February (previously +0.1% m/m). Still, the solid gains in February and March provide a strong starting point for Q2. The March level is 1.5% at an annual rate above the Q1 average. For all of Q1, real PCE rose 1.6% q/q saar.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

260430C.jpg

260430D.jpg

- The PCE price index jumped 0.7%, reflecting an 11.6% m/m surge in energy prices.
- The core index was up 0.3%, in line with expectations but still well above the Fed’s target.
- Personal income increased 0.6% m/m, led by a 0.4% m/m rise in compensation.
- Personal consumption jumped 0.9% m/m with a slight upward revision to February.
- However, much of the March gain in nominal consumption also reflected the jump in energy prices.
- Real consumption rose by a more modest 0.2% m/m.

Surging Energy Prices Push Up PCE Prices and Consumption in March

Kathleen Stephansen, CBE

260430A2.jpg

260430B2.jpg

Initial claims for unemployment insurance dropped by 26,000 to 189,000 in the week ending April 25, from 215,000 in the week ending April 18, revised from 214,000. The four-week average declined by 3,500 to 207,500 in the week ending April 25, from 211,000 the April 18 week, revised from 210,750. The Action Economics/Haver Analytics Survey looked for 214,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—dropped by 23,000 to 1.785 million in the week ending April 18, from 1.808 million in the week ending April 11, revised from 1.821 million. The four-week moving average declined to 1.797 million in the latest week from 1.809 million in the April 11 week. The insured unemployment rate remained at 1.2% in the week of April 11. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending April 11, the highest unemployment rates were in New Jersey (2.51%), Washington (2.25%), Massachusetts (2.21%), Rhode Island (2.10%), and California (2.06%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas, North Carolina and Mississippi (all 0.35%), Alabama (0.36%), South Dakota (0.41%) and Tennessee (0.43%). Rates in other notable states include New York (1.96%), Illinois (1.77%), Pennsylvania (1.40%), and Texas (1.04%). These state data are not seasonally adjusted.

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

260430C2.jpg

260430D2.jpg

- New claims dropped by 26,000 to 189,000.
- Continuing claims declined by 23,000 to 1.785 million.
- The insured unemployment rate remained at 1.2%.

Economy in Brief

Jump to:

Small Business Optimism Reduced by Credit Problems

Small Business Optimism Reduced by Credit Problems

Inflation Trends in Emerging Markets

Inflation Trends in Emerging Markets

German Orders Still Strong but Definitely Fading…

German Orders Still Strong but Definitely Fading…

French Household Confidence Takes Sharp Reversal

OECD Indicators Show Moderation in Growth Ahead