Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901d.jpg" width="353">
Consumer sentiment in late August firmed enough to limit the m/m decline for the full month to 3.2%, according to the University of Michigan. The full month reading of 82.0 compared favorably to Consensus expectations for a decline to 79.0.
During the last ten years there has been a 77% correlation between the level of consumer sentiment and the y/y change in real consumer spending and during those ten years sentiment has a 68% correlation with the change in nonfarm payrolls.
Expectations for the economy slipped 6.2% m/m. Expected 12 month business conditions and the expected change in personal finances fell sharply to the lowest levels since November.
The reading of current economic conditions rose modestly m/m by 0.3%. The current read of personal finances slipped but perceived buying conditions for large household goods rose.
Consumers&#39; opinion about gov&#39;t economic policy was unchanged m/m (-3.5% y/y) after sharp improvement during July. Expected inflation during the next year surged m/m to 4.6%, its highest level since May. The five to ten year expected rate of inflation also rose to 3.5%, its highest since May.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">August (Final)</th>
<th scope="col">August (Prelim)</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>82.0</td>
<td>78.7</td>
<td>84.7</td>
<td>-8.0%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>103.8</td>
<td>100.8</td>
<td>103.5</td>
<td>-4.1%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>68.0</td>
<td>64.5</td>
<td>72.5</td>
<td>-11.6%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
</body>
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Consumer sentiment in late August firmed enough to limit the m/m decline for the full month to 3.2%, according to the University of Michigan. The full month reading of 82.0 compared favorably to Consensus expectations for a decline to [...]

U.S. Consumer Sentiment Firmed in Late August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901c.jpg" width="353">
At 54.5, the August composite index of manufacturing sector activity from the Institute for Supply Management was about stable with the July figure of 54.7. Consensus expectations had been for a reading of 54.9.
During the last ten years there has been a 67% correlation between the ISM index and three month growth in factory sector industrial production.
A decline in the new orders index to 54.2 was offset by a rise in employment which at 54.0 was at the highest level since April.
During the last twenty years there has been a 66% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.
The production index slipped to 56.6 from 57.6 in July while the vendor deliveries (55.0) and the inventory (50.2) indexes were about stable.
The price index dropped to 73.0, its lowest level since April. During the last twenty years there has been a 91% correlation between the price index and the three month change in the PPI for intermediate goods less food &amp; energy.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>54.5</td>
<td>54.7</td>
<td>53.5</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index (NSA)</td>
<td>73.0</td>
<td>78.5</td>
<td>62.5</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
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At 54.5, the August composite index of manufacturing sector activity from the Institute for Supply Management was about stable with the July figure of 54.7. Consensus expectations had been for a reading of 54.9. During the last ten [...]

ISM Index About Stable, Prices Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901b.jpg" width="353">
In August, nonfarm payrolls rose 128,000 and about matched Consensus expectations for a 125,000 gain. For the prior month, the increase was upwardly revised up slightly to 121,000.
Year to date payrolls have risen an average 141,000 per month versus an average gain of 165,000 last year and an average 175,000 during 2004.
From the household survey the unemployment rate fell back to 4.7%, as expected, from 4.8%. Employment grew 250,000 (1.5% y/y) after the prior month&#39;s 34,000 worker decline. The labor force rose 164,000 (1.3% y/y) and the labor force participation rate remained up at 66.2% for the third straight month.
The breadth of one month gain in private payrolls rose slightly to 55.9% in August, though that remained below the April high of 64.4%. In the factory sector the one month breadth of gain fell to a less-than break even 44.6%.
Factory sector payrolls fell 11,000 for fifth the m/m decline this year. Jobs in the motor vehicle &amp; parts industries fell 6,900 (-2.3% y/y) while furniture &amp; related industry jobs also fell by 4,200 (-2.8% y/y). A 3,000 (-0.9% y/y) worker decline in nondurable goods payrolls was broad based but led by a 2,100 (-3.9% y/y) drop in apparel employment and a 3,000 worker (-1.4% y/y) drop in plastics.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901a.jpg" width="353">
Private service-producing jobs rose 101,000 (1.4% y/y) though retail trade sector jobs continued weak fell another 13,500 (-0.7% y/y). Financial sector jobs offset some of that decline with a 10,000 (2.2% y/y) gain and professional &amp; business services employment rose 26,000 (2.7% y/y). Temporary help services jobs rose 3,400 (2.8% y/y) while jobs in education &amp; health services grew 60,000 (2.2% y/y).Government sector jobs grew 17,000 (0.6% y/y).
Construction employment rose 17,000 (2.9% y/y) though the number of jobs in nonresidential construction slipped 1,600 (4.1% y/y).
Average hourly earnings rose just 0.1% after two months of 0.4% &amp; 0.5% increase, and fell short of expectations for a 0.3% rise. The increase in factory sector earnings also rose just 0.1% (1.0% y/y).
The workweek slipped and lowered the index of aggregate weekly hours worked in private industries by 0.2% after a modest 0.1% July gain. During 3Q the average level of the index is up 0.8% (AR) after a 2.6% gain during 2Q. During the last ten years there has been an 81% correlation between the y/y change in aggregate hours worked and real GDP growth.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>128,000</td>
<td>121,000</td>
<td>1.3%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-11,000</td>
<td>-23,000</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.9</td>
<td>33.7 (August &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.5%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>4.9% (August &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

In August, nonfarm payrolls rose 128,000 and about matched Consensus expectations for a 125,000 gain. For the prior month, the increase was upwardly revised up slightly to 121,000. Year to date payrolls have risen an average 141,000 [...]

U.S. Payrolls On Target

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901b.jpg" width="353">
In August, nonfarm payrolls rose 128,000 and about matched Consensus expectations for a 125,000 gain. For the prior month, the increase was upwardly revised up slightly to 121,000.
Year to date payrolls have risen an average 141,000 per month versus an average gain of 165,000 last year and an average 175,000 during 2004.
From the household survey the unemployment rate fell back to 4.7%, as expected, from 4.8%. Employment grew 250,000 (1.5% y/y) after the prior month&#39;s 34,000 worker decline. The labor force rose 164,000 (1.3% y/y) and the labor force participation rate remained up at 66.2% for the third straight month.
The breadth of one month gain in private payrolls rose slightly to 55.9% in August, though that remained below the April high of 64.4%. In the factory sector the one month breadth of gain fell to a less-than break even 44.6%.
Factory sector payrolls fell 11,000 for fifth the m/m decline this year. Jobs in the motor vehicle &amp; parts industries fell 6,900 (-2.3% y/y) while furniture &amp; related industry jobs also fell by 4,200 (-2.8% y/y). A 3,000 (-0.9% y/y) worker decline in nondurable goods payrolls was broad based but led by a 2,100 (-3.9% y/y) drop in apparel employment and a 3,000 worker (-1.4% y/y) drop in plastics.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901a.jpg" width="353">
Private service-producing jobs rose 101,000 (1.4% y/y) though retail trade sector jobs continued weak fell another 13,500 (-0.7% y/y). Financial sector jobs offset some of that decline with a 10,000 (2.2% y/y) gain and professional &amp; business services employment rose 26,000 (2.7% y/y). Temporary help services jobs rose 3,400 (2.8% y/y) while jobs in education &amp; health services grew 60,000 (2.2% y/y).Government sector jobs grew 17,000 (0.6% y/y).
Construction employment rose 17,000 (2.9% y/y) though the number of jobs in nonresidential construction slipped 1,600 (4.1% y/y).
Average hourly earnings rose just 0.1% after two months of 0.4% &amp; 0.5% increase, and fell short of expectations for a 0.3% rise. The increase in factory sector earnings also rose just 0.1% (1.0% y/y).
The workweek slipped and lowered the index of aggregate weekly hours worked in private industries by 0.2% after a modest 0.1% July gain. During 3Q the average level of the index is up 0.8% (AR) after a 2.6% gain during 2Q. During the last ten years there has been an 81% correlation between the y/y change in aggregate hours worked and real GDP growth.

<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/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>128,000</td>
<td>121,000</td>
<td>1.3%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-11,000</td>
<td>-23,000</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.9</td>
<td>33.7 (August &#39;05)</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.5%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.8%</td>
<td>4.9% (August &#39;05)</td>
<td>5.1%</td>
<td>5.5%</td>
<td>6.0%</td>
</tr>
</tbody>
</table>
ISM Index About Stable, Prices Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901c.jpg" width="353">
At 54.5, the August composite index of manufacturing sector activity from the Institute for Supply Management was about stable with the July figure of 54.7. Consensus expectations had been for a reading of 54.9.
During the last ten years there has been a 67% correlation between the ISM index and three month growth in factory sector industrial production.
A decline in the new orders index to 54.2 was offset by a rise in employment which at 54.0 was at the highest level since April.
During the last twenty years there has been a 66% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.
The production index slipped to 56.6 from 57.6 in July while the vendor deliveries (55.0) and the inventory (50.2) indexes were about stable.
The price index dropped to 73.0, its lowest level since April. During the last twenty years there has been a 91% correlation between the price index and the three month change in the PPI for intermediate goods less food &amp; energy.

<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/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>54.5</td>
<td>54.7</td>
<td>53.5</td>
<td>55.5</td>
<td>60.5</td>
<td>53.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index (NSA)</td>
<td>73.0</td>
<td>78.5</td>
<td>62.5</td>
<td>66.4</td>
<td>79.8</td>
<td>59.6</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Firmed in Late August 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901d.jpg" width="353">
Consumer sentiment in late August firmed enough to limit the m/m decline for the full month to 3.2%, according to the University of Michigan. The full month reading of 82.0 compared favorably to Consensus expectations for a decline to 79.0.
During the last ten years there has been a 77% correlation between the level of consumer sentiment and the y/y change in real consumer spending and during those ten years sentiment has a 68% correlation with the change in nonfarm payrolls.
Expectations for the economy slipped 6.2% m/m. Expected 12 month business conditions and the expected change in personal finances fell sharply to the lowest levels since November.
The reading of current economic conditions rose modestly m/m by 0.3%. The current read of personal finances slipped but perceived buying conditions for large household goods rose.
Consumers&#39; opinion about gov&#39;t economic policy was unchanged m/m (-3.5% y/y) after sharp improvement during July. Expected inflation during the next year surged m/m to 4.6%, its highest level since May. The five to ten year expected rate of inflation also rose to 3.5%, its highest since May.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">August (Final)</th>
<th scope="col">August (Prelim)</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>82.0</td>
<td>78.7</td>
<td>84.7</td>
<td>-8.0%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>103.8</td>
<td>100.8</td>
<td>103.5</td>
<td>-4.1%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>68.0</td>
<td>64.5</td>
<td>72.5</td>
<td>-11.6%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
Commodity Prices Moderate in Australia After Explosion in Metals Sector 
by <a href="/comment/Stone.html">Carol Stone</a> September 1, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901e.jpg" width="353">
The Reserve Bank of Australia reported today its commodity price index for August. The overall index fell 0.8% from July in Australian dollar terms and rose 0.7% in US dollars. From a year ago, the A$ total is up 20.7%, and 20.8% in US$.
Within the Aussie dollar measure, agricultural, or &quot;rural&quot; commodities, fell 3.4% in August but are 14.5% ahead of August 2005. Generally, those items, which include a variety of farm products such as beef, wheat and cotton, have been falling over the last three years. Non-farm products, however, have had strong prices, with gains of nearly 23% in 2004 and 43% in 2005; the August figure is showing signs of slowing, with a decline from July of 0.1%, helping to bring the year-on-year figure down to 22.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901f.jpg" width="353">
However, within the non-farm category metals prices have risen even more substantially in most of the last several months. The recent boom in metals prices is worldwide, and Australia has participated. In August, so-called &quot;base metals&quot; were up 2.2%, following 7.1% in July. June&#39;s prices fell, but that came after double-digit leaps in each April and May that totaled 27.8%. This component is up a whopping 76.2% from August 2005. The items in this index are copper, aluminum, nickel, zinc and lead.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060901g.jpg" width="353">
Most central banks don&#39;t calculate their own price indexes. Statistics bureaus tend to do that or, often for commodities, private market sources do it. We were aware that commodities are important to the Australian economy, and in browsing the Reserve Bank&#39;s website, we learned that exports constitute about 20% of that nation&#39;s national income and that &quot;primary commodities&quot; are a sizable portion of exports. So the central bank&#39;s interest in these raw materials prices is substantive regarding their effect on inflation, terms of trade and the health of the real economy. Exchange rate differentials are seen to have a quite noticeable impact on the movement of the price index, particularly with many of these items priced in US$ in world markets.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Australia</th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Aug 2005</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Commodity Price Index, A$</td>
<td>142.5</td>
<td>143.6</td>
<td>141.0</td>
<td>118.1</td>
<td>113.8</td>
<td>94.4</td>
<td>88.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-0.8</td>
<td>1.8</td>
<td>-0.7</td>
<td>20.7</td>
<td>20.6</td>
<td>6.3</td>
<td>-9.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Commodity Price Index, US$</td>
<td>207.7</td>
<td>206.2</td>
<td>199.5</td>
<td>171.9</td>
<td>165.6</td>
<td>132.6</td>
<td>110.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>0.7</td>
<td>3.4</td>
<td>-3.7</td>
<td>20.8</td>
<td>24.8</td>
<td>20.2</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Rural Commodities, A$</td>
<td>96.5</td>
<td>99.9</td>
<td>98.4</td>
<td>84.3</td>
<td>87.0</td>
<td>91.4</td>
<td>96.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>-3.4</td>
<td>1.5</td>
<td>0.8</td>
<td>14.5</td>
<td>-4.9</td>
<td>-4.8</td>
<td>-7.5</td>
</tr>
<tr>
<td class="firstcol">Non-Rural Commodities, A$</td>
<td>161.3</td>
<td>161.5</td>
<td>158.5</td>
<td>132.0</td>
<td>124.8</td>
<td>95.6</td>
<td>85.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>-0.1</td>
<td>1.9</td>
<td>-1.1</td>
<td>22.2</td>
<td>30.5</td>
<td>11.4</td>
<td>-10.7</td>
</tr>
<tr>
<td class="firstcol">Of which: Base Metals, A$</td>
<td>219.5</td>
<td>214.8</td>
<td>200.6</td>
<td>124.6</td>
<td>125.3</td>
<td>122.7</td>
<td>93.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % Change</td>
<td>2.2</td>
<td>7.1</td>
<td>-6.9</td>
<td>76.2</td>
<td>11.2</td>
<td>20.1</td>
<td>-4.6</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831f.jpg" width="353">
Consumers in the UK apparently reacted to the Bank of England&#39;s early August rate increase as they reported a significant increase in their concern over the the UK economic outlook in the August consumer confidence survey conducted by GfK NOP (formerly GfK Martin Hamblin). The overall consumer confidence barometer fell to -8 for August from -4 in both June and July and also -4 in August 2005. The decline hit in varying degrees both men and women, all age ranges, income brackets and regions of the UK.
However, as seen in the table below, respondents to the survey do not believe they have suffered any erosion in their personal financial condition. In fact, they feel that their current condition has improved slightly from a month ago and their assessment of the last 12 months and the coming 12 months are unchanged from July readings, at +11 and 0, respectively. Instead the deterioration has come in people&#39;s views of the macroeconomic situation. The overall economic outlook for the next 12 months is now viewed negatively by a net of 23% of the respondents, sharply worse than the 14% in July and 13% a year ago. Their view of the past year fell by about the same amount, from -28% to -35%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831g.jpg" width="353">
Obviously, it was not just a single policy move by the Bank of England that sparked the drop in confidence. The largest number of people in six years (65%) report in this survey that they have experienced higher inflation over the past 12 months and the most in three-and-a-half years (73%) report that they anticipate inflation will keep rising over the next 12 months. Expectations for rising unemployment are much lower, 36%, but they are also on an uptrend, having bottomed out early in 2005 at just 15%.
Consequently, in the quarterly survey questions for Q3, intentions to buy cars, houses or spend a significant amount of money on home improvements sank to recent lows or reversed improving trends.
The survey results were worse than forecasters expectations, which had called for an overall reading of -5. However, press reports indicate that market reactions were relatively muted in view of improving trends in this week&#39;s releases of strengthening trends in the distributive trades survey and rising home prices, as well as the concentration in this survey on the macroeconomic situation, not on personal finances.
All of these data, including series on the distributive trades survey and Nationwide home prices, are contained in Haver&#39;s UK database and the surveys are also both in our international surveys database, INTSRVYS.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Balance, Seas Adj</th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Aug 2005</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Barometer</td>
<td>-8</td>
<td>-4</td>
<td>-4</td>
<td>-4</td>
<td>-3</td>
<td>-3</td>
<td>-4</td>
</tr>
<tr>
<td class="firstcol">Financial Situation of Households: Current </td>
<td>25</td>
<td>23</td>
<td>23</td>
<td>21</td>
<td>21</td>
<td>21</td>
<td>21</td>
</tr>
<tr class="odd">
<td class="firstcol">General Economic Situation:&nbsp; Next 12 Mos.</td>
<td>-23</td>
<td>-14</td>
<td>-18</td>
<td>-13</td>
<td>-12</td>
<td>-13</td>
<td>-18</td>
</tr>
</tbody>
</table>
</body>
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Consumers in the UK apparently reacted to the Bank of England's early August rate increase as they reported a significant increase in their concern over the the UK economic outlook in the August consumer confidence survey conducted by [...]

Consumer Confidence Falls in UK with Rising Concern over Economic Outlook

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831e.jpg" width="353">
The Conference Board&#39;s Index of Help-Wanted Advertising dropped to new forty five year low of 32 in July after revised stability in June at 34.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume slipped back to 41% but remained above the May low of 27%.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;05</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>32</td>
<td>34</td>
<td>39</td>
</tr>
</tbody>
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The Conference Board's Index of Help-Wanted Advertising dropped to new forty five year low of 32 in July after revised stability in June at 34. During the last ten years there has been a 57% correlation between the level of help- [...]

Help-Wanted Advertising: How Low Can It Go?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831c.jpg" width="353">
Factory inventories rose 0.6% last month after a revised 0.9% June jump. The 8.1% annual rate of accumulation through July is double the rate of accumulation during all of last year.
Primary metals inventories again were firm and rose 1.4% (8.6% y/y) while inventories of computers &amp; electronic products jumped 1.3% (8.2% y/y). Inventories of electrical equipment surged 1.2% (10.2% y/y) and machinery inventories recovered 0.5% (4.4% y/y) after a slight June decline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831d.jpg" width="353">
Total factory orders slipped 0.6% after two months of sharp increase. Durable goods orders fell 2.5%, a decline that was little revised from the advance report of a 2.4% drop. Factory orders less transportation rose 1.1% (10.3% y/y).
Factory shipments were unchanged but less transportation rose a sharp 1.1% (9.0% y/y). Petroleum shipments surged 3.6% (18.7% y/y). Factory shipments less transportation &amp; petroleum rose a strong 0.8% (7.9% y/y).
Unfilled orders jumped again, by 1.3% last month and less the transportation sector altogether backlogs were also strong and surged 1.7% (16.0% y/y).<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.6%</td>
<td>0.9%</td>
<td>5.7%</td>
<td>4.0%</td>
<td>6.9%</td>
<td>-7.4%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-0.6%</td>
<td>1.5%</td>
<td>8.4%</td>
<td>8.5%</td>
<td>7.5%</td>
<td>0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>7.5%</td>
<td>7.1%</td>
<td>6.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.3%</td>
<td>1.7%</td>
<td>20.0%</td>
<td>16.3%</td>
<td>4.5%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
</body>
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Factory inventories rose 0.6% last month after a revised 0.9% June jump. The 8.1% annual rate of accumulation through July is double the rate of accumulation during all of last year. Primary metals inventories again were firm and rose [...]

U.S. Factory Inventories Again Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060831b.jpg" width="353">
Last week, initial claims for unemployment insurance fell 2,000 to 316,000 after an upwardly revised 4,000 increase during the prior week. Consensus expectations had been for 315,000 claims.
During the last ten years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims increased to 317,500 (0.1% y/y).
Continuing claims for unemployment insurance rose 3,000 following a deepened 18,000 decline during the prior week.
The insured rate of unemployment was steady at 1.9% where it has been since February.
U.S. maneuvers through choppy waters from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2006/c/pages/choppy_waters.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">8/26/06</th>
<th scope="col">8/19/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>316</td>
<td>318</td>
<td>-1.2%</td>
<td>332</td>
<td>343</td>
<td>403</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Continuing Claims</td>
<td>--</td>
<td>2,486</td>
<td>-4.6%</td>
<td>2,662</td>
<td>2,924</td>
<td>3,532</td>
</tr>
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Last week, initial claims for unemployment insurance fell 2,000 to 316,000 after an upwardly revised 4,000 increase during the prior week. Consensus expectations had been for 315,000 claims. During the last ten years there has been a [...]

Initial Claims for Jobless Insurance Dip

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

Robert Brusca

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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Economy in Brief

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U.S. Consumer Sentiment Firmed in Late August

ISM Index About Stable, Prices Down

U.S. Payrolls On Target

U.S. Payrolls On Target

Consumer Confidence Falls in UK with Rising Concern over Economic Outlook

Help-Wanted Advertising: How Low Can It Go?

U.S. Factory Inventories Again Firm

Initial Claims for Jobless Insurance Dip