Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060801a.jpg" width="353">
Personal income rose an expected 0.6% during June following an unrevised 0.4% increase in May. Earlier data reflected benchmark revision.
Wage &amp; salary disbursements jumped 0.6% (6.9% y/y) in June following an unrevised no change the prior month. Strength was led by a 0.7% (7.9% y/y increase in private service-producing industry wages. Factory sector wages rose 0.3% (5.1% y/y) after an upwardly revised no change during May while earlier figures generally were revised up.
Higher interest rates boosted interest income by 1.7% (10.1% y/y) and dividend income jumped 1.0% (11.2% y/y).
Disposable personal income increased 0.6% (5.3% y/y) after a 0.4% rise in May. Personal taxes rose 1.0% (15.4% y/y).
Adjusted for price inflation, disposable personal income rose 0.4% (1.7% y/y) after an unrevised slight decline in May. Real disposable income per capita rose 0.3% (0.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060801b.jpg" width="353">
Personal consumption again matched Consensus expectations for a 0.4% rise after an upwardly revised 0.6% May rise. Adjusted for price inflation spending rose 0.2% (2.6% y/y) for the third straight month.
The PCE chain price index rose an expected 0.2%. Less food &amp; energy prices rose 0.2% (2.4% y/y). The expected increase was the fifth in the last six months.
The personal savings rate was again negative. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/2Q06garn.pdf">here</a>.
The Anxious Index, a measure of the probability of a recession in the U.S. economy, from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/spf/anxind.html"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Personal Income</td>
<td>0.6%</td>
<td>0.4%</td>
<td>6.5%</td>
<td>5.2%</td>
<td>6.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.6%</td>
<td>6.2%</td>
<td>6.5%</td>
<td>6.6%</td>
<td>4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>-1.5%</td>
<td>-1.6%</td>
<td>-0.5% (June &#39;05)</td>
<td>-0.4%</td>
<td>2.0%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.5%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>


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Personal income rose an expected 0.6% during June following an unrevised 0.4% increase in May. Earlier data reflected benchmark revision. Wage & salary disbursements jumped 0.6% (6.9% y/y) in June following an unrevised no change the [...]

U.S. Personal Income Up 0.6% As Expected

In July, the Composite Index of factory sector activity more than recovered the prior month's decline and rose to 54.7, reported the Institute for Supply Management. Consensus expectations had been for a slight decline to 53.5. During [...]

ISM Index Recovered in July

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731c.jpg" width="353">
As Carol Stone noted last Friday, economic conditions remain positive in Japan in spite of some easing in the labor market in June. METI (The Ministry of Economics, Trade and Industry) released preliminary data today on industrial production, shipments and inventories--all showing increases in June. Industrial production increased 1.9%. shipments, 0.7% and inventories, 0.5%.
The largest contributors to the rise in industrial production were: Transport Equipment, General Machinery and Electrical Machinery. The largest contributors to the rise in Shipments were: General Machinery, Iron and Steel and Electronic Parts and Devices. Shipments of Transport Equipment, in contrast to production declined 1.06%. Total Industrial production and shipments are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731d.jpg" width="353">
Even more encouraging than the data for June are the forecasts of the changes in industrial production for the current month and the month following. Currently the forecasts are for a 2.2% increase in July and a 3.7% increase for August. As the second chart illustrates, the forecasts rarely seem to see any declines in the months ahead and generally overstate any increases. Nevertheless, they do well in forecasting direction. The correlation between the two series .78..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J7/@J7.HTM">Japan</a></th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">May 06</th>
<th scope="col">Jun 05</th>
<th scope="col">M/M</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">Industrial Production (2000=100)&nbsp;</td>
<td>105.7</td>
<td>103.7</td>
<td>100.8</td>
<td>1.93</td>
<td>4.86</td>
<td>101.6</td>
<td>100.0</td>
<td>95.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport Equipment</td>
<td>126.5</td>
<td>119.4</td>
<td>1230.3</td>
<td>5.95</td>
<td>5.15</td>
<td>121.0</td>
<td>114.8</td>
<td>107.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments (2000=100)</td>
<td>108.6</td>
<td>107.8</td>
<td>103.6</td>
<td>0.74</td>
<td>4.83</td>
<td>104.1</td>
<td>102.3</td>
<td>97.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport Equipment</td>
<td>121.9</td>
<td>123.23</td>
<td>118.0</td>
<td>-1.06</td>
<td>3.31</td>
<td>117.3</td>
<td>113.5</td>
<td>108.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories (2000=100)</td>
<td>93.9</td>
<td>93.4</td>
<td>92.3</td>
<td>0.54</td>
<td>1.73</td>
<td>92.8</td>
<td>90.0</td>
<td>91.1</td>
</tr>
</tbody>
</table>
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As Carol Stone noted last Friday, economic conditions remain positive in Japan in spite of some easing in the labor market in June. METI (The Ministry of Economics, Trade and Industry) released preliminary data today on industrial [...]

More Positive Indicators for Japan: Production, Shipments and Inventories

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731a.jpg" width="353">
An acceleration in the &quot;core&quot; PCE chain price index within the 2Q GDP report rankled markets on Friday. At 2.9%, the q/q increase was a marked acceleration from the 2.0% average of the prior four quarters
Indeed, the price index for durable personal consumption indicated deflation at a slower rate and the y/y gain in service prices accelerated to 3.6% from a low of 3.1% late last year. That acceleration reflected a 5.0% surge during 4Q05.
The price index for clothing &amp; shoes was, however, the main bugger as it posted a 3.5% gain (AR) last quarter after several years of price deflation.
Several price indexes showed slower rates of growth including most business investment categories, residential investment and federal government.
Also moving moderately to the upside were the gains in the price indexes for state &amp; local government as well as exports. Continuing strong were the gains in the nonresidential investment chain price index for structures, up 10.7% (AR) last quarter and 13.3% y/y after an 11.3% surge last year.

<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/@E7/@E701/@E701.HTM">Chain Price Indexes</a></th>
<th scope="col">2Q &#39;06</th>
<th scope="col">1Q &#39;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 class="odd">
<td class="firstcol">GDP</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Personal Consumption</td>
<td>4.1%</td>
<td>2.0%</td>
<td>3.3%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less Food &amp; Energy</td>
<td>2.9%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Durables</td>
<td>-0.8%</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>-0.7%</td>
<td>-1.6%</td>
<td>-3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Nondurables</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Clothing &amp; Shoes</td>
<td>3.5%</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Services</td>
<td>3.1%</td>
<td>3.1%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Investment: Equipment &amp; Software</td>
<td>0.0%</td>
<td>0.6%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment: Residential</td>
<td>2.0%</td>
<td>3.8%</td>
<td>4.8%</td>
<td>5.1%</td>
<td>7.3%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

An acceleration in the "core" PCE chain price index within the 2Q GDP report rankled markets on Friday. At 2.9%, the q/q increase was a marked acceleration from the 2.0% average of the prior four quarters Indeed, the price index for [...]

Chicago Surveys of Factory Activity Mixed

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<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731b.jpg" width="353">
The Chicago Federal Reserve Bank&#39;s Midwest manufacturing index jumped 0.8% during June following a revised 0.1% dip in May. Improvement in the auto sector dominated the June rise. The three month growth rate remained firm at 5.8% though growth in the index peaked late last year at 9.4%.
During the last ten years there has been a 95% correlation between the y/y change in Chicago&#39;s Midwest Mfg. index and the change in US factory sector industrial production. The June Chicago Fed Midwest Manufacturing Index can be found <a href="http://www.chicagofed.org/economic_research_and_data/files/cfmmi_june2006.pdf">here</a>.
During July, the Chicago Purchasing Managers Association reported that its Business Barometer improved moderately to 57.9 from 56.5 in June. These readings are down from an average 60.4 last year and reflect weaker figures for orders and employment.
During the last ten years there has been a 65% correlation between the level of the Chicago PMI Business Barometer and y/y change in US factory sector industrial production. The July report from the Chicago Purchasing Managers Association can be found <a href="http://www.napm-chicago.org/current.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S5.htm">Federal Reserve Surveys</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June &#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">Chicago Fed Midwest Mfg. Index (2002 = 100)</td>
<td>107.0</td>
<td>106.2</td>
<td>101.2</td>
<td>102.1</td>
<td>100.4</td>
<td>97.1</td>
</tr>
</tbody>
</table>
More Readings of 2Q Price Inflation 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 31, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731a.jpg" width="353">
An acceleration in the &quot;core&quot; PCE chain price index within the 2Q GDP report rankled markets on Friday. At 2.9%, the q/q increase was a marked acceleration from the 2.0% average of the prior four quarters
Indeed, the price index for durable personal consumption indicated deflation at a slower rate and the y/y gain in service prices accelerated to 3.6% from a low of 3.1% late last year. That acceleration reflected a 5.0% surge during 4Q05.
The price index for clothing &amp; shoes was, however, the main bugger as it posted a 3.5% gain (AR) last quarter after several years of price deflation.
Several price indexes showed slower rates of growth including most business investment categories, residential investment and federal government.
Also moving moderately to the upside were the gains in the price indexes for state &amp; local government as well as exports. Continuing strong were the gains in the nonresidential investment chain price index for structures, up 10.7% (AR) last quarter and 13.3% y/y after an 11.3% surge last year.

<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/@E7/@E701/@E701.HTM">Chain Price Indexes</a></th>
<th scope="col">2Q &#39;06</th>
<th scope="col">1Q &#39;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 class="odd">
<td class="firstcol">GDP</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Personal Consumption</td>
<td>4.1%</td>
<td>2.0%</td>
<td>3.3%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less Food &amp; Energy</td>
<td>2.9%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Durables</td>
<td>-0.8%</td>
<td>-1.0%</td>
<td>-1.5%</td>
<td>-0.7%</td>
<td>-1.6%</td>
<td>-3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Nondurables</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Clothing &amp; Shoes</td>
<td>3.5%</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Services</td>
<td>3.1%</td>
<td>3.1%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Investment: Equipment &amp; Software</td>
<td>0.0%</td>
<td>0.6%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Investment: Residential</td>
<td>2.0%</td>
<td>3.8%</td>
<td>4.8%</td>
<td>5.1%</td>
<td>7.3%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
 More Positive Indicators for Japan:  Production, Shipments and Inventories  
by <a href="/comment/Curley.html">Louise Curley</a> July 31, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731c.jpg" width="353">
As Carol Stone noted last Friday, economic conditions remain positive in Japan in spite of some easing in the labor market in June. METI (The Ministry of Economics, Trade and Industry) released preliminary data today on industrial production, shipments and inventories--all showing increases in June. Industrial production increased 1.9%. shipments, 0.7% and inventories, 0.5%.
The largest contributors to the rise in industrial production were: Transport Equipment, General Machinery and Electrical Machinery. The largest contributors to the rise in Shipments were: General Machinery, Iron and Steel and Electronic Parts and Devices. Shipments of Transport Equipment, in contrast to production declined 1.06%. Total Industrial production and shipments are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060731d.jpg" width="353">
Even more encouraging than the data for June are the forecasts of the changes in industrial production for the current month and the month following. Currently the forecasts are for a 2.2% increase in July and a 3.7% increase for August. As the second chart illustrates, the forecasts rarely seem to see any declines in the months ahead and generally overstate any increases. Nevertheless, they do well in forecasting direction. The correlation between the two series .78..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J7/@J7.HTM">Japan</a></th>
<th scope="col">Jun&nbsp; 06</th>
<th scope="col">May 06</th>
<th scope="col">Jun 05</th>
<th scope="col">M/M</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">Industrial Production (2000=100)&nbsp;</td>
<td>105.7</td>
<td>103.7</td>
<td>100.8</td>
<td>1.93</td>
<td>4.86</td>
<td>101.6</td>
<td>100.0</td>
<td>95.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport Equipment</td>
<td>126.5</td>
<td>119.4</td>
<td>1230.3</td>
<td>5.95</td>
<td>5.15</td>
<td>121.0</td>
<td>114.8</td>
<td>107.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments (2000=100)</td>
<td>108.6</td>
<td>107.8</td>
<td>103.6</td>
<td>0.74</td>
<td>4.83</td>
<td>104.1</td>
<td>102.3</td>
<td>97.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport Equipment</td>
<td>121.9</td>
<td>123.23</td>
<td>118.0</td>
<td>-1.06</td>
<td>3.31</td>
<td>117.3</td>
<td>113.5</td>
<td>108.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories (2000=100)</td>
<td>93.9</td>
<td>93.4</td>
<td>92.3</td>
<td>0.54</td>
<td>1.73</td>
<td>92.8</td>
<td>90.0</td>
<td>91.1</td>
</tr>
</tbody>
</table>
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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/060728e.jpg" width="353">
Japanese stocks rose and bonds fell after a plethora of economic data that traders deemed favorable today. June consumer prices showed an eighth straight month of year-on-year increase in the most popular measure, the total less fresh food, which was up 0.6%. Retail sales rose 0.4% from a year ago. The labor market, which we feature here, moderated somewhat, but perhaps analysts saw this as a pause in an otherwise increasingly robust picture.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060728f.jpg" width="353">
Employment fell 160,000 after advancing 270,000 in May. However, the June figure was up 0.3% from a year ago, a bit more growth than the 0.2% of May and April. The unemployment rate rose to 4.2% from May&#39;s 4.0%. The latter rate was the lowest in a little over eight years.
One of the Japanese news services, Mainichi, called our attention to the set of interesting data on job openings and placements from the Ministry of Health, Labor and Welfare. [The aggregate labor force survey is published by the Ministry of Internal Affairs and Communications.] In June, the number of people registered as needing work was 2.15 million, the smallest since late 1997; during the recent long period of economic stress in Japan, this number peaked at 2.805 million in January 2002. The other side of this coin is job openings, which totaled 2.327 million in June, compared with a cycle low of 1.174 million in May 1999. The number of openings was smaller than the number of applicants until just this past December.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060728g.jpg" width="353">
The ratio of these &quot;active&quot; openings to &quot;active&quot; applicants was 1.08 in June, suggesting that conditions are positive for employment to continue growing. Remarkably, this is the highest such value since July 1992, almost 14 years. At its worst, the relationship between applicants and openings saw at least 2 applicants for every opening; this prevailed from autumn 1998 throughout 1999. Presently, additional data on marginal changes in the labor market show how much conditions have changed: new job openings are far larger than the number of new job applicants. Their June ratio was 1.62, following May&#39;s 1.65. The last time this indicator of marginal changes in labor market conditions was this high was May of 1992. Its low was 0.80, also in May 1999.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J6/@J6.HTM">Japan: SA</a></th>
<th scope="col">June 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Apr 2006</th>
<th scope="col">June 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">Employment (millions)</td>
<td>63.75</td>
<td>63.91</td>
<td>63.64</td>
<td>63.55</td>
<td>63.57</td>
<td>63.29</td>
<td>63.15</td>
</tr>
<tr>
<td class="firstcol">Change (thous.) / Yr-to-Yr % Change*</td>
<td>-160</td>
<td>+270</td>
<td>-50</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.2%</td>
<td>4.0%</td>
<td>4.1%</td>
<td>4.2%</td>
<td>4.4%</td>
<td>4.7%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">Active Applications (thous.)</td>
<td>2,150</td>
<td>2,156</td>
<td>2,181</td>
<td>2,294</td>
<td>2,272</td>
<td>2,367</td>
<td>2,595</td>
</tr>
<tr class="odd">
<td class="firstcol">New Applications (thous.)</td>
<td>547</td>
<td>538</td>
<td>545</td>
<td>570</td>
<td>567</td>
<td>589</td>
<td>626</td>
</tr>
<tr>
<td class="firstcol">Active Openings (thous.)</td>
<td>2,327</td>
<td>2,309</td>
<td>2,266</td>
<td>2,191</td>
<td>2,167</td>
<td>1,958</td>
<td>1,672</td>
</tr>
<tr class="odd">
<td class="firstcol">New Openings (thous.)</td>
<td>884</td>
<td>889</td>
<td>839</td>
<td>863</td>
<td>831</td>
<td>761</td>
<td>673</td>
</tr>
<tr>
<td class="firstcol">Ratio: Active Openings to Applications</td>
<td>1.08</td>
<td>1.07</td>
<td>1.04</td>
<td>0.96</td>
<td>0.95</td>
<td>0.83</td>
<td>0.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Ratio: New Openings to Applications</td>
<td>1.62</td>
<td>1.65</td>
<td>1.54</td>
<td>1.51</td>
<td>1.47</td>
<td>1.29</td>
<td>1.08</td>
</tr>
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Japanese stocks rose and bonds fell after a plethora of economic data that traders deemed favorable today. June consumer prices showed an eighth straight month of year-on-year increase in the most popular measure, the total less fresh [...]

Japan Labor Data Ease in June, But Conditions Remain Positive

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060728h.jpg" width="353">
Consumer sentiment late this month recovered from the decline early in July. For the full month the volatility left sentiment off just 0.2% from June at 84.7, according to the University of Michigan. Consensus expectations had been for a full month reading of 83.0.
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.
The reading of current economic conditions eased just 1.4% following a 9.3% rise during June. The index of current personal finances fell 2.7% (-9.8% y/y) and perceived buying conditions for large household goods slipped 0.6% (-8.1% y/y).
Expectations for the economy rose 0.7% led by a 1.7% (-8.3% y/y) rise in expected personal finances. Expected 12 month business conditions fell 1.1% (-22.3% y/y) but 5 year expected conditions improved.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060728i.jpg" width="353">
Consumers&#39; opinion about gov&#39;t economic policy improved a sharp 10.8% m/m (-10.9% y/y), the first monthly increase since March while expected inflation during the next year fell sharply to 3.8%, its lowest since February. The five to ten year expected rate of inflation also fell to 3.2%, its lowest in over a year.
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%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<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">July</th>
<th scope="col">July (Prelim.)</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">Consumer Sentiment</td>
<td>84.7</td>
<td>83.0</td>
<td>84.9</td>
<td>-14.0%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>103.5</td>
<td>100.8</td>
<td>105.0</td>
<td>-11.2%</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>72.5</td>
<td>71.6</td>
<td>72.0</td>
<td>-16.3%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
</tr>
</tbody>
</table>
</body>
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Consumer sentiment late this month recovered from the decline early in July. For the full month the volatility left sentiment off just 0.2% from June at 84.7, according to the University of Michigan. Consensus expectations had been [...]

U.S. Consumer Sentiment Improved in Late July

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Robert Brusca

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

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

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

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

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

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

260205C15.jpg

260205D15.jpg

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

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

Sandy Batten

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

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

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

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

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

U.S. Initial Unemployment Claims Surged in Latest Week

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

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

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

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

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

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

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

Economy in Brief

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