Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113d.jpg" width="353">
Inflation was modest across four European countries as 2005 ended, according to CPI data reported today. In France, the total index rose 0.2% in December from November and 1.5% from December 2004. This was even slower than the 2.1% in 2004. France&#39;s CPI excluding energy slowed for the year by a similar amount, to 1.1% from 1.5% across 2004. The slowing is concentrated in manufactured products, for which prices fell more than in 2004, and even in services, which rose 2.8% across 2005, less than the 3.3% in 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113e.jpg" width="353">
Consumer prices also moderated in Slovakia, although it has a much more inflation-prone economy. The index was up 0.6% in December, putting the year at 3.7%, markedly less than the 6.0% in 2004. The slowing was widespread, but variable. Housing and related expenses, for instance, were up 10.8%, but this was not as much as 13.8% in 2004. Price categories that firmed did so by decreasing less than they had in 2004, including such basic items as clothing and furniture. Even transportation costs rose more slowly, 3.3% versus 5.7%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113f.jpg" width="353">
2005 inflation picked up in two other countries, however, Spain and Finland. In Spain, the total CPI rose 0.3% in the month of December and 3.8% across 2005; the yearly rate was 0.6 percentage point more than in 2004. Higher energy costs were surely an ingredient, but core inflation also rose, from 2.7% in 2004 to 3.1% last year. Finland, characterized by low CPI inflation generally, nonetheless saw its pace more than double last year to 1.0% from 0.4% in 2004. This seems to have been concentrated in alcoholic beverage prices, which fell in 2004 and then stabilized in 2005; other categories had variable price performance.
In all of these cases, large economies and small, highly developed and transitioning from socialism, inflation rates are generally restrained. &quot;Inflation&quot; is defined as &quot;generalized&quot; price increases throughout an economy, but all four of these have uneven price behavior both across categories and across time. So inflation remained well under control in Europe through 2005, a remarkable development after two years of notable energy price increases, and in those using the euro, a weakening currency for much of that time. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GZ/@GZ5/@GZ501/@GZ501.HTM">CPI (% Change)</a> ( NSA except as noted)</th>
Month/Month
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Dec 2005</td>
<td>Nov 2005</td>
<td>Oct 2005</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">France (Months SA)</td>
<td>0.2</td>
<td>-0.1</td>
<td>0.0</td>
<td>1.5</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy</td>
<td>0.3</td>
<td>0.1</td>
<td>-0.1</td>
<td>1.1</td>
<td>1.5</td>
<td>2.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.3</td>
<td>0.2</td>
<td>0.8</td>
<td>3.8</td>
<td>3.2</td>
<td>2.6</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy</td>
<td>0.4</td>
<td>0.5</td>
<td>1.0</td>
<td>3.1</td>
<td>2.7</td>
<td>2.9</td>
<td>4.3</td>
</tr>
<tr>
<td class="firstcol">Finland</td>
<td>0.1</td>
<td>-0.3</td>
<td>-0.1</td>
<td>1.0</td>
<td>0.4</td>
<td>0.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia</td>
<td>0.6</td>
<td>0.5</td>
<td>1.5</td>
<td>3.7</td>
<td>6.0</td>
<td>9.2</td>
<td>3.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation was modest across four European countries as 2005 ended, according to CPI data reported today. In France, the total index rose 0.2% in December from November and 1.5% from December 2004. This was even slower than the 2.1% in [...]

CPI Inflation Slows Further in France for December, Still Restrained in Spain, Finland and Slovakia

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113c.jpg" width="353">
Total business inventories rose 0.5% in November. The gain followed a 0.4% October increase that was revised upward and it was squarely in the 0.4-0.5% range of the last four months. The increases raised slightly the ratio of inventories-to-sales back to 1.26, the 3Q average.
A 0.4% gain in inventories had been the Consensus expectation.
Retail inventories surged 0.9% after an upwardly revised 0.4% rise during October. A 2.1% (-3.1% y/y) rise in motor vehicle inventories followed large additions during the prior three months. Excluding autos, inventories rose 0.3% following an unrevised 0.1% fall during October. Clothing inventories fell 0.4% (+4.6% y/y), offset by a 0.4% gain in furniture inventories (5.1% y/y). General merchandise inventories rose a modest 0.2% (4.8% y/y).
The 0.4% rise in wholesale inventories doubled the October increase. During the last ten years there has been a 67% correlation between the y/y change in wholesale inventories and the change in imports of nonpetroleum goods.
Factory sector inventories rose just 0.2%, held back by a 3.2% decline in petroleum refineries&#39; inventories. Less petroleum, factory inventories rose 0.3% (3.3% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.5%</td>
<td>0.4%</td>
<td>3.7%</td>
<td>7.7%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.9%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>5.7%</td>
<td>3.9%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>4.5%</td>
<td>5.9%</td>
<td>2.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>0.2%</td>
<td>5.9%</td>
<td>10.8%</td>
<td>2.0%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.8%</td>
<td>7.7%</td>
<td>-1.1%</td>
<td>-5.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total business inventories rose 0.5% in November. The gain followed a 0.4% October increase that was revised upward and it was squarely in the 0.4-0.5% range of the last four months. The increases raised slightly the ratio of [...]

U.S. Business Inventory Accumulation Steady

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113b.jpg" width="353">
The Producer Price Index for Finished Goods doubled Consensus expectations for a 0.4% increase and posted a 0.9% gain in December. It was the strongest increase in four months and lifted the year to year rise to 4.9%, the strongest since 1990.
Energy prices rose a firm 3.1% (24.5% y/y) as gasoline prices reversed the prior month&#39;s decline and rose 12.3% (41.7% y/y). Home heating oil prices rose 2.7% (41.5% y/y) though residential natural gas prices slipped for the second month, down 2.7% (+29.2% y/y).
Strength in finished food prices accounted for much of last month&#39;s surprise. A 0.9% increase was the strongest since September but that lest the annual increase at 2.0%, less than half the 2004 rise.
&quot;Core&quot; producer prices rose the same 0.1% as during November and the gain was half the Consensus expectation for a 0.2% increase.
Prices of finished consumer goods less food &amp; energy rose a modest 0.1% (2.0% y/y). Durable goods prices rose 0.1% (-0.2% y/y) after two months of decline. Capital equipment prices rose for the first month in three by 0.1% (1.3% y/y).
Intermediate goods prices rose a modest 0.2% and core intermediate goods prices increased 0.3%, the slimmest increase since August.
Crude goods prices fell sharply for the second consecutive month. The 2.3% decline reflected a 5.4% (+44.8% y/y) decline in energy prices. Core crude prices also slipped marginally after the 5.4% in November. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Finished Goods</td>
<td>0.9%</td>
<td>-0.7%</td>
<td>5.7%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.7%</td>
<td>2.4%</td>
<td>1.5%</td>
<td>0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.2%</td>
<td>-1.2%</td>
<td>8.5%</td>
<td>8.0%</td>
<td>6.6%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.5%</td>
<td>4.4%</td>
<td>5.4%</td>
<td>5.7%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-2.3%</td>
<td>-1.2%</td>
<td>21.7%</td>
<td>14.5%</td>
<td>17.5%</td>
<td>25.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.0%</td>
<td>5.4%</td>
<td>4.5%</td>
<td>4.9%</td>
<td>26.6%</td>
<td>12.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Producer Price Index for Finished Goods doubled Consensus expectations for a 0.4% increase and posted a 0.9% gain in December. It was the strongest increase in four months and lifted the year to year rise to 4.9%, the strongest [...]

PPI Rise Doubled Expectations

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113a.jpg" width="353">
US retail sales rose 0.7% last month following an upwardly revised 0.8% increase in November. The increase, however, fell short of Consensus expectations for a 0.9% rise. In addition, sales less autos rose just half the expected 0.4% and the m/m decline in November was revised slightly deeper.
Discretionary spending faltered. Apparel store sales fell marginally after a downwardly revised 0.1% November decline (+7.1% y/y). General merchandise store sales also fell by 0.3% (+5.1% y/y) while sales of furniture, electronics &amp; appliances were off 0.1% (+6.3% Y/Y). Sales at building material &amp; supply dealers declined 0.6% (+9.7% y/y).
Sales at gasoline stations increased 0.9% despite a 3.2% decline in pump prices. Gas prices in January have reversed that decline and moved higher by 4.4% versus December.
Less gasoline, nonauto retail sales rose 0.1% (6.8% y/y), the weakest increase by far since July.
Sales of nonstore retailers (internet &amp; catalogue) rose 0.5% (10.6% y/y) after an upwardly revised 0.4% increase during November.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec</th>
<th scope="col">Nov</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.7%</td>
<td>0.8%</td>
<td>6.4%</td>
<td>7.6%</td>
<td>7.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>-0.4%</td>
<td>8.0%</td>
<td>8.6%</td>
<td>8.2%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

US retail sales rose 0.7% last month following an upwardly revised 0.8% increase in November. The increase, however, fell short of Consensus expectations for a 0.9% rise. In addition, sales less autos rose just half the expected 0.4% [...]

U.S. Retail Sales Light in December

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113a.jpg" width="353">
US retail sales rose 0.7% last month following an upwardly revised 0.8% increase in November. The increase, however, fell short of Consensus expectations for a 0.9% rise. In addition, sales less autos rose just half the expected 0.4% and the m/m decline in November was revised slightly deeper.
Discretionary spending faltered. Apparel store sales fell marginally after a downwardly revised 0.1% November decline (+7.1% y/y). General merchandise store sales also fell by 0.3% (+5.1% y/y) while sales of furniture, electronics &amp; appliances were off 0.1% (+6.3% Y/Y). Sales at building material &amp; supply dealers declined 0.6% (+9.7% y/y).
Sales at gasoline stations increased 0.9% despite a 3.2% decline in pump prices. Gas prices in January have reversed that decline and moved higher by 4.4% versus December.
Less gasoline, nonauto retail sales rose 0.1% (6.8% y/y), the weakest increase by far since July.
Sales of nonstore retailers (internet &amp; catalogue) rose 0.5% (10.6% y/y) after an upwardly revised 0.4% increase during November.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Dec</th>
<th scope="col">Nov</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.7%</td>
<td>0.8%</td>
<td>6.4%</td>
<td>7.6%</td>
<td>7.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>-0.4%</td>
<td>8.0%</td>
<td>8.6%</td>
<td>8.2%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
PPI Rise Doubled Expectations 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113b.jpg" width="353">
The Producer Price Index for Finished Goods doubled Consensus expectations for a 0.4% increase and posted a 0.9% gain in December. It was the strongest increase in four months and lifted the year to year rise to 4.9%, the strongest since 1990.
Energy prices rose a firm 3.1% (24.5% y/y) as gasoline prices reversed the prior month&#39;s decline and rose 12.3% (41.7% y/y). Home heating oil prices rose 2.7% (41.5% y/y) though residential natural gas prices slipped for the second month, down 2.7% (+29.2% y/y).
Strength in finished food prices accounted for much of last month&#39;s surprise. A 0.9% increase was the strongest since September but that lest the annual increase at 2.0%, less than half the 2004 rise.
&quot;Core&quot; producer prices rose the same 0.1% as during November and the gain was half the Consensus expectation for a 0.2% increase.
Prices of finished consumer goods less food &amp; energy rose a modest 0.1% (2.0% y/y). Durable goods prices rose 0.1% (-0.2% y/y) after two months of decline. Capital equipment prices rose for the first month in three by 0.1% (1.3% y/y).
Intermediate goods prices rose a modest 0.2% and core intermediate goods prices increased 0.3%, the slimmest increase since August.
Crude goods prices fell sharply for the second consecutive month. The 2.3% decline reflected a 5.4% (+44.8% y/y) decline in energy prices. Core crude prices also slipped marginally after the 5.4% in November. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Finished Goods</td>
<td>0.9%</td>
<td>-0.7%</td>
<td>5.7%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.7%</td>
<td>2.4%</td>
<td>1.5%</td>
<td>0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.2%</td>
<td>-1.2%</td>
<td>8.5%</td>
<td>8.0%</td>
<td>6.6%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.5%</td>
<td>4.4%</td>
<td>5.4%</td>
<td>5.7%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-2.3%</td>
<td>-1.2%</td>
<td>21.7%</td>
<td>14.5%</td>
<td>17.5%</td>
<td>25.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.0%</td>
<td>5.4%</td>
<td>4.5%</td>
<td>4.9%</td>
<td>26.6%</td>
<td>12.4%</td>
</tr>
</tbody>
</table>
U.S. Business Inventory Accumulation Steady 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113c.jpg" width="353">
Total business inventories rose 0.5% in November. The gain followed a 0.4% October increase that was revised upward and it was squarely in the 0.4-0.5% range of the last four months. The increases raised slightly the ratio of inventories-to-sales back to 1.26, the 3Q average.
A 0.4% gain in inventories had been the Consensus expectation.
Retail inventories surged 0.9% after an upwardly revised 0.4% rise during October. A 2.1% (-3.1% y/y) rise in motor vehicle inventories followed large additions during the prior three months. Excluding autos, inventories rose 0.3% following an unrevised 0.1% fall during October. Clothing inventories fell 0.4% (+4.6% y/y), offset by a 0.4% gain in furniture inventories (5.1% y/y). General merchandise inventories rose a modest 0.2% (4.8% y/y).
The 0.4% rise in wholesale inventories doubled the October increase. During the last ten years there has been a 67% correlation between the y/y change in wholesale inventories and the change in imports of nonpetroleum goods.
Factory sector inventories rose just 0.2%, held back by a 3.2% decline in petroleum refineries&#39; inventories. Less petroleum, factory inventories rose 0.3% (3.3% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.5%</td>
<td>0.4%</td>
<td>3.7%</td>
<td>7.7%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.9%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>5.7%</td>
<td>3.9%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>4.5%</td>
<td>5.9%</td>
<td>2.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>0.2%</td>
<td>5.9%</td>
<td>10.8%</td>
<td>2.0%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.8%</td>
<td>7.7%</td>
<td>-1.1%</td>
<td>-5.4%</td>
</tr>
</tbody>
</table>
CPI Inflation Slows Further in France for December, Still Restrained in Spain, Finland and Slovakia 
by <a href="/comment/Stone.html">Carol Stone</a> January 13, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113d.jpg" width="353">
Inflation was modest across four European countries as 2005 ended, according to CPI data reported today. In France, the total index rose 0.2% in December from November and 1.5% from December 2004. This was even slower than the 2.1% in 2004. France&#39;s CPI excluding energy slowed for the year by a similar amount, to 1.1% from 1.5% across 2004. The slowing is concentrated in manufactured products, for which prices fell more than in 2004, and even in services, which rose 2.8% across 2005, less than the 3.3% in 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113e.jpg" width="353">
Consumer prices also moderated in Slovakia, although it has a much more inflation-prone economy. The index was up 0.6% in December, putting the year at 3.7%, markedly less than the 6.0% in 2004. The slowing was widespread, but variable. Housing and related expenses, for instance, were up 10.8%, but this was not as much as 13.8% in 2004. Price categories that firmed did so by decreasing less than they had in 2004, including such basic items as clothing and furniture. Even transportation costs rose more slowly, 3.3% versus 5.7%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060113f.jpg" width="353">
2005 inflation picked up in two other countries, however, Spain and Finland. In Spain, the total CPI rose 0.3% in the month of December and 3.8% across 2005; the yearly rate was 0.6 percentage point more than in 2004. Higher energy costs were surely an ingredient, but core inflation also rose, from 2.7% in 2004 to 3.1% last year. Finland, characterized by low CPI inflation generally, nonetheless saw its pace more than double last year to 1.0% from 0.4% in 2004. This seems to have been concentrated in alcoholic beverage prices, which fell in 2004 and then stabilized in 2005; other categories had variable price performance.
In all of these cases, large economies and small, highly developed and transitioning from socialism, inflation rates are generally restrained. &quot;Inflation&quot; is defined as &quot;generalized&quot; price increases throughout an economy, but all four of these have uneven price behavior both across categories and across time. So inflation remained well under control in Europe through 2005, a remarkable development after two years of notable energy price increases, and in those using the euro, a weakening currency for much of that time. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GZ/@GZ5/@GZ501/@GZ501.HTM">CPI (% Change)</a> ( NSA except as noted)</th>
Month/Month
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Dec 2005</td>
<td>Nov 2005</td>
<td>Oct 2005</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">France (Months SA)</td>
<td>0.2</td>
<td>-0.1</td>
<td>0.0</td>
<td>1.5</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy</td>
<td>0.3</td>
<td>0.1</td>
<td>-0.1</td>
<td>1.1</td>
<td>1.5</td>
<td>2.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>0.3</td>
<td>0.2</td>
<td>0.8</td>
<td>3.8</td>
<td>3.2</td>
<td>2.6</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy</td>
<td>0.4</td>
<td>0.5</td>
<td>1.0</td>
<td>3.1</td>
<td>2.7</td>
<td>2.9</td>
<td>4.3</td>
</tr>
<tr>
<td class="firstcol">Finland</td>
<td>0.1</td>
<td>-0.3</td>
<td>-0.1</td>
<td>1.0</td>
<td>0.4</td>
<td>0.6</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia</td>
<td>0.6</td>
<td>0.5</td>
<td>1.5</td>
<td>3.7</td>
<td>6.0</td>
<td>9.2</td>
<td>3.4</td>
</tr>
</tbody>
</table>
</body>
</html>

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060112f.jpg" width="353">
In December, employment in Australia rose a mere 2,100, and the unemployment rate was unchanged from November at 5.1%. Forecasts cited in one news service survey had looked for a 9,000 gain in employment and the 5.1% unemployment rate, so this report was disappointing, but only mildly so.
We last discussed Australian the labor market in September, covering August data. At that time, employment in Australia had risen continuously for a year, an extraordinary development in that economy, which generally shows more month-to-month variability. That variation appeared again immediately, as September&#39;s jobs fell by 42,400. October&#39;s fell again, as seen in the table below, but there was some gain in November before December&#39;s miniscule rise. Overall, though, 2005 put in a strong performance: the average number of people with jobs expanded 305,000, the largest annual gain since 1995.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060112g.jpg" width="353">
The job slowdown since the August peak has been accounted for almost entirely among male employees, 30,600 of whom lost jobs over the last four months. Female employees edged down only 1,300 on balance, with a decline in September and three monthly increases subsequently.
At the same time, the total unemployment rate touched a record low of 5.0% in August. The hesitation in employment over the last few months lifted the jobless rate to 5.2% in October, and it ended the year at 5.1%. The participation rate also edged off its record high of 64.8% in August, settling at 64.4% at year-end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ANZ/@A1/@A106/@A106.HTM">Australia</a></th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Dec 2004</th>
Annual Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Employment (thous)</td>
<td>10,033</td>
<td>10,031</td>
<td>10,002</td>
<td>9,822</td>
<td>9,987</td>
<td>9,682</td>
<td>9,482</td>
<td>8,989</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Monthly Change (thous/%)</td>
<td>2</td>
<td>28</td>
<td>-20</td>
<td>2.1</td>
<td>3.2</td>
<td>2.1</td>
<td>2.3</td>
<td>2.1*</td>
</tr>
<tr>
<td class="firstcol">Participation Rate (%)</td>
<td>64.4</td>
<td>64.4</td>
<td>64.3</td>
<td>63.8</td>
<td>64.4</td>
<td>63.6</td>
<td>63.6</td>
<td>63.7**</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.1</td>
<td>5.1</td>
<td>5.2</td>
<td>5.1</td>
<td>5.1</td>
<td>5.5</td>
<td>6.0</td>
<td>6.0**</td>
</tr>
</tbody>
</table>
</body>
</html>

In December, employment in Australia rose a mere 2,100, and the unemployment rate was unchanged from November at 5.1%. Forecasts cited in one news service survey had looked for a 9,000 gain in employment and the 5.1% unemployment [...]

Australian Employment Performance Hesitates at End-2005 After Potent Gains in Earlier Months

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060112c.jpg" width="353">
Initial claims for unemployment insurance increased 17,000 to 309,000 last week following a little revised 34,000 decline the week prior. Consensus expectations had been for 315,000 claims.
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell sharply to 311,500 (-7.7% y/y).
Continuing unemployment insurance claims reversed most of the prior week&#39;s decline with a 12,000 increase.
The insured rate of unemployment remained at 2.1% for the fourth week.

<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">01/07/06</th>
<th scope="col">12/31/05</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>309</td>
<td>292</td>
<td>-12.0%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,702</td>
<td>1.4%</td>
<td>2,665</td>
<td>2,926</td>
<td>3,531</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance increased 17,000 to 309,000 last week following a little revised 34,000 decline the week prior. Consensus expectations had been for 315,000 claims. During the last ten years there has been a [...]

Initial Claims for Unemployment Insurance Lowest Since 2000

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060112d.jpg" width="353">
The import prices fell 0.2% last month following the little revised 1.8% drop during November and contrasted with Consensus expectations for a 0.2% increase.
Nonpetroleum again were weak and posted no change versus November. The weakness, however, followed an upwardly revised 0.1% increase the prior month and sharp increases of 0.8% &amp; 0.9% during September and October. Prices for nonauto consumer goods were unchanged (0.5% y/y) though capital goods prices fell 0.1% (-1.1% y/y). Excluding another 0.1% decline in computer prices (-6.2% y/y), capital goods prices fell 0.2% (+1.2% y/y).
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.
Export prices posted a 0.1% increase following the 0.7% drop in November, revised from -0.9%.

<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/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Import - All Commodities</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>7.9%</td>
<td>7.5%</td>
<td>5.6%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-0.9%</td>
<td>-9.2%</td>
<td>42.5%</td>
<td>37.7%</td>
<td>30.5%</td>
<td>21.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.0%</td>
<td>0.1%</td>
<td>2.4%</td>
<td>2.7%</td>
<td>2.6%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>2.7%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

The import prices fell 0.2% last month following the little revised 1.8% drop during November and contrasted with Consensus expectations for a 0.2% increase. Nonpetroleum again were weak and posted no change versus November. The [...]

Import Prices Fell Again

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

Cost of transporting crude oil has soared to series high

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

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

Is recent drop in sentiment signaling softer growth ahead?

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

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

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

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

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

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


Privacy Policy

Disclaimer

Contact us

Service Health

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

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Michael J. Moran

260410L.jpg

260410M.jpg

The Consumer Price Index rose 0.9% in March, easily the sharpest monthly rise since the inflation burst in 2022. Although pronounced in magnitude, the increase was not surprising, as essentially all analysts had built in pressure from the energy sector. Energy prices jumped 10.9%, led by a surge of 21.2% in gasoline prices. Other energy components wiggled: charges for electricity services rose 0.8%, offsetting declines in the prior two months; a drop 0.9% in the price of natural gas services followed sharp increases in the prior three months.

The press report from the Bureau of Labor Statistics showed food prices as unchanged, but calculating the shift to more than one decimal point showed a marginal decline (-0.005%) The dip was almost imperceptible, but it nevertheless was a welcome rarity. The decline occurred in the food-at-home component (i.e. grocery store prices, -0.2%); prices of food away from home (i.e. at restaurants and bars) rose 0.2%.

Core prices rose 0.2 percent, softer than the expected increase of 0.3%. Only two areas posted high-side readings. Apparel prices increased 1.0% after a jump of 1.3% in February, perhaps reflecting hope for an active spring selling season. Airfares jumped 2.7%, hardly surprising in light of recent energy developments. Sharper increases are likely in coming months because of higher fuel prices. Most other core items were contained, including declines of 1.0% in medical-care commodities and 0.4% in the prices of used motor vehicles. Prices of medical-care commodities have been quiet since the middle of 2024; the latest year-over-year change totaled only 0.3%. Prices of used cars and trucks have declined for four consecutive months, leaving a year-over-year decline of 3.2%.

Although core prices were well contained in March, the outlook is uncertain because of potential passthrough from higher energy prices. At the same time, recent trends in the inflation rates for core goods and core services offer a reason to be optimistic, as both are decelerating. As shown in the left chart below, core goods prices in the past six months have been subdued, which has pulled the year-over-year change from 1.5% last fall (August to October) to 1.2% in March. Core service prices, shown in the right chart below, have registered changes of 0.3% or 0.4% in the three months before the 0.2% reading in March. However, results for October and November were restrained, and changes in the past six months in total show deceleration. The year-over-year change of 3.0% in core service prices in March reflects an advance of 3.3% in the first six months of this span (annual rate) and 2.7% in the past six months. The pattern is choppy, but it traces a decelerating trend.

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

260410N.jpg

260410O.jpg

- Gasoline prices drove the energy component higher; electricity prices also contributed.
- Food prices provided a surprise by posting a fractional decline.
- Core prices rose less than expected; both goods and services components were contained.

March CPI: Pressure in the Energy Sector (as Expected); Tame Elsewhere (Surprisingly)

Winnie Tapasanun

260410F.jpg

260410G.jpg

Total factory orders were virtually unchanged m/m in February following a flat reading in January and a 0.4% decline in December, data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected a 0.2% m/m February increase. The year-on-year growth rate eased to 3.7% in February, the lowest since October, from 4.2% in January (+3.0% in February 2025), remaining far below the April 2021 peak of 39.6%. Notably, orders for nondefense aircraft & parts plunged 28.6% m/m in February following decreases of 1.7% in January and 22.7% in December, while orders for defense aircraft & parts fell 2.1% after a 26.9% January slump and an 11.8% December jump. Factory orders excluding defense edged up 0.1% (3.6% y/y), the third m/m increase in four months, following a 0.4% January rebound. Factory orders excluding the transportation sector rose 1.2% (2.5% y/y), the strongest of four consecutive m/m gains, after a 0.5% January increase.

Durable goods orders fell 1.3% (+7.4% y/y) in February after a 0.4% decline in January (in line with a 1.4% m/m decrease in the advance report on April 7), marking the fourth m/m decline in five months. The February m/m fall reflected a 5.3% orders drop (+10.2% y/y) in transportation equipment following a 1.9% January decrease, alongside m/m declines of 0.5% (+2.4% y/y) in furniture & related products and 0.3% (+4.9% y/y) in electrical equipment, appliances & components. Other major durable goods orders categories rose m/m in February, led by a 2.4% gain (10.5% y/y) in primary metals, followed by increases of 1.7% (9.5% y/y) in machinery, 0.5% (5.4% y/y) in fabricated metal products, and 0.2% (7.7% y/y) in computers & electronic products.

Nondurable goods orders, which equal nondurable goods shipments, advanced 1.5% (0.1% y/y) in February, the biggest of three successive m/m gains, after a 0.5% increase in January. The February m/m rise was led by a 6.2% jump (-6.4% y/y) in petroleum & coal products, followed by gains of 5.9% (-5.8% y/y) leather & allied products, 1.2% (-2.8% y/y) in textile mills, 1.0% (1.6% y/y) in paper products, 0.9% (1.2% y/y) in plastics & rubber products, 0.6% (3.7% y/y) in beverage & tobacco products, 0.5% (3.2% y/y) in chemical products, 0.4% (3.2% y/y) in apparel, and 0.2% (0.5% y/y) in food products. To the downside, nondurable goods shipments for textile products (-1.4%; -1.5% y/y) and printing (-0.4%; -0.9% y/y) fell m/m in February following their January increases.

Total shipments rose 1.4% (3.5% y/y) in February after gains of 0.7% in January and December, registering the fourth m/m rise in five months. Excluding transportation, shipments advanced 1.4% (2.3% y/y), the fifth m/m gain in six months, after a 0.5% January increase. Shipments of durable goods industries also rose 1.4% (6.9% y/y), up for the fifth time in six months, after a 0.9% January gain. This reflected m/m increases across nearly all durable goods shipments categories, led by a 2.5% rise (10.1% y/y) in primary metals, followed by gains of 1.7% (5.5% y/y) in electrical equipment, appliances & components, 1.7% (4.0% y/y) in furniture & related products, 1.6% (9.7% y/y) in transportation equipment, 1.4% (7.6% y/y) in machinery, 1.3% (3.8% y/y) in nonmetallic mineral products, 1.0% (6.1% y/y) in computers & electronic products, 1.0% (2.5% y/y) in miscellaneous durable goods, and 0.9% (5.4% y/y) in fabricated metal products. In contrast, durable goods shipments for wood products were the only category with a monthly decline in February, easing 0.1% (-2.9% y/y) following a flat January reading.

Unfilled orders edged up 0.1% (11.1% y/y) in February, the smallest of seven consecutive m/m increases, following a 0.6% rise in January. Excluding transportation, unfilled orders grew 0.2% (1.9% y/y), up for the seventh straight month, after a 0.3% January increase. Backlogs of durable goods ticked up 0.1% (11.1% y/y) in February, led by gains of 0.5% (2.0% y/y) in machinery and 0.2% (4.9% y/y) in electrical equipment, appliances & components, partially offset by declines of 0.7% (+1.5% y/y) in furniture & related products and 0.1% (+2.3% y/y) in primary metals.

Inventories inched up 0.1% (0.8% y/y) in February, the fourth successive m/m increase, following matching 0.1% gains in January and December. Excluding transportation, inventories edged up 0.1% (1.0% y/y) after no change in January. Durable goods inventories increased 0.1% (1.8% y/y) in February after rising 0.2% for four straight months, while nondurable goods inventories were virtually unchanged (-0.8% y/y) after declining 0.3% in January and December.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

260410H.jpg

260410I.jpg

- Factory orders virtually unchanged (+3.7% y/y) in Feb. for second straight month; still 7.6% above the Jan. ’24 low.
- Durable goods orders (-1.3%), fourth m/m fall in five mths.; nondurable goods orders (+1.5%), largest of three successive m/m gains; shipments (+1.4%), fourth m/m rise in five mths.
- Transportation orders -5.3% m/m, led by a 28.6% plunge in nondefense aircraft orders.
- Unfilled orders +0.1%, smallest of seven straight m/m increases.
- Inventories +0.1%, holding within a narrow 0.1%-0.2% range for four consecutive mths.

U.S. Factory Orders Flat in February on Weak Nondefense Aircraft Orders

Andrew Cates

**Positive Growth Surprises, Negative Inflation Surprises—For Now**
The global macro backdrop heading into the latest Middle East shock was, by recent standards, relatively constructive. As the chart shows, growth data had been consistently surprising to the upside, while inflation surprises have been in negative territory—an unusually benign combination suggesting resilient activity alongside easing price pressures. What is striking, however, is that—at least through March and into early April—this pattern has not yet been meaningfully dislodged. For now, the data flow still reflects a world that was stabilising rather than deteriorating. That said, this is almost certainly a lagging signal. Supply-side shocks of this nature—particularly those centred on energy—tend to work with a delay but can be highly disruptive once they feed through. The risk, therefore, is that the current “goldilocks” surprise dynamic proves short-lived as higher energy costs, supply chain frictions and rising uncertainty begin to reshape the incoming data in the weeks ahead.

260409Z1.jpg

**Monetary Policy Expectations Shift as Easing Bets Are Repriced**
How policymakers respond to the evolving situation in the Middle East will be critical in shaping both market dynamics and the broader global outlook. This chart, based on the latest April Blue Chip Financial Forecasts survey, suggests that expectations are already beginning to shift. Forecasters are now less inclined to anticipate policy easing in the period ahead—particularly in the euro area, where expectations for rate cuts have been scaled back. Similarly, some of the easing previously priced for the Federal Reserve and the Bank of England has been pared back over the next 12 months. While this is not yet a full pivot toward tightening, it does point to a more cautious policy backdrop, reflecting the risk that renewed energy-driven inflation pressures could constrain central banks’ ability to support growth.

260409Z2.jpg

**Delay, Don’t Tighten: Central Banks’ Likely Playbook**
If the previous chart highlights a shift in policy expectations, this one gives a clearer sense of the reaction function underpinning it. When asked how central banks would respond if energy-driven inflation proves more persistent, most panellists point not to renewed tightening, but to a more cautious delay in easing. In other words, the hurdle for rate cuts has risen, even if the bar for  hikes remains relatively high. This distinction matters. It suggests that policymakers are likely to treat the shock as a supply-driven inflation impulse—one that complicates the outlook but does not automatically warrant aggressive tightening. At the same time, the responses underscore a second important theme: divergence. A sizeable share of forecasters expect policy paths to vary significantly across regions, reflecting differences in energy exposure, inflation dynamics and domestic growth conditions. Taken together, the message is one of constrained flexibility. Central banks may want to support growth, but persistent energy pressures could keep them on hold for longer than previously anticipated—reinforcing the more cautious policy outlook already evident in market pricing.

260409Z3.jpg

**Markets Signal Fiscal Concern, Not Inflation Panic**
If central banks are likely to proceed cautiously, financial markets are already beginning to draw their own conclusions. This chart shows that the recent adjustment in US Treasury markets has been driven primarily by a rise in real yields rather than a meaningful increase in inflation expectations. In other words, markets are not yet pricing a loss of monetary policy credibility or a sharp unanchoring of inflation expectations. Instead, the move points more toward concerns around the broader policy mix—particularly the fiscal backdrop and the potential for increased borrowing needs in an environment of heightened geopolitical risk. This distinction is important. A rise in inflation expectations would suggest fears of central banks falling behind the curve. What we are seeing instead is a repricing of real rates, consistent with tighter financial conditions and a higher risk premium. For now, at least, markets appear to view the shock less as a classic inflation spiral and more as a development that complicates the growth outlook and places greater strain on policy frameworks—especially on the fiscal side.

260409Z4.jpg

**Electricity Prices Reflect Energy Dependence**
The initial response in electricity markets since the Middle East disruption has followed a familiar pattern. Economies with greater domestic energy capacity—such as Scandinavia and, to a lesser extent, the US—have seen relatively contained electricity prices. By contrast, those more reliant on imported energy—most notably the UK and parts of Europe—continue to face significantly higher costs

260409Z5.jpg

**Generation Capacity Determines Energy Resilience**
These price dynamics are closely linked to underlying differences in electricity generation capacity. As the sixth chart shows, countries with higher per capita electricity production—again including Scandinavia and the US—are structurally better positioned to absorb external shocks. In contrast, economies with more limited domestic generation capacity, such as the UK and Germany, are inherently more exposed to fluctuations in global energy markets. This structural divide is likely to prove increasingly important in the period ahead, influencing not just near-term inflation outcomes but also the relative resilience of growth across economies as energy costs remain volatile.

260409Z6.jpg

Amid further tentative signs of de-escalation—most notably President Trump’s decision on April 7th to step back from further escalation—financial markets have stabilised somewhat, but the macroeconomic implications of the Middle East crisis remain highly uncertain. As our charts show, the global economy entered this shock from a position of relative strength, with positive growth surprises and easing inflation pressures still evident in the data (chart 1). However, that benign backdrop now looks vulnerable. Central banks are already reassessing the outlook, with expectations for policy easing being pared back (chart 2) and a growing consensus that any response to persistent energy-driven inflation will likely involve delaying cuts rather than tightening aggressively—albeit with significant regional divergence (chart 3). Financial markets, for their part, are not yet signalling a loss of inflation control, but the rise in real yields suggests increasing concern around the broader policy mix, particularly fiscal pressures (chart 4). Finally, the adjustment to the shock is unlikely to be uniform. Structural differences in domestic energy capacity are already driving wide divergences in electricity prices, leaving more import-dependent economies exposed to higher costs and sharper trade-offs between growth and inflation (charts 5 and 6). Taken together, the message is clear: even if geopolitical tensions ease, the economic aftershocks are likely to be uneven, persistent and increasingly shaped by structural constraints.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/4qBjHX7OmdXmxVN2oRe1nB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: From Oil Shock to Policy Dilemma

260409A.jpg

260409B.jpg

This monthly report is always packed with information relating to the household sector. At this time, most observers will probably be most interested in price developments, and the results for February were a bit unsettling. The headline price index rose 0.4%, influenced by a jump of 0.8% in energy prices. This increase was largely anticipated and not especially troubling when viewed in isolation. Energy prices have shown little net change in the past two years, and the latest reading of the index was comfortably within the recent range of observations. However, given developments in the Middle East, energy prices undoubtedly will surge out of that recent range in the months ahead.

Core PCE prices also rose 0.4%, a touch firmer than the expected increase of 0.3%. An increase of 0.4% in core inflation is a quick pace even when viewed in Isolation, but this advance followed a similar increase in January, and the December reading almost rounded to 0.4%. These recent changes pulled the year-over-year increase in core prices to 3.0%, a full percentage point above the Federal Reserve’s target.

Nominal personal income dipped 0.1% in February, which translated to a decline of 0.4% after adjusting for inflation (almost rounding to -0.5%). The softness is striking, but a review of the detail suggests that special factors played a role. Much of the weakness reflected a decline of 1.7% in dividend income, which followed a jump of 1.9% in January. Dividend payments in the prior two years followed the same pattern, leaving one to suspect that seasonal adjustment has gone awry. Government transfer payments also declined, with the miscellaneous category accounting for most of the drop. Medicaid payments also fell, marking the fifth consecutive decline, most likely driven by the tightening of provisions included in the One Big Beautiful Bill Act.

Nominal consumer expenditures rose 0.5%, a seemingly strong result, but the change amounted to only 0.1% in real terms. The small increase followed a flat reading in January and increases of only 0.1% in November and December. Consumers spent actively in the second and third quarters of last year, but they have become cautious recently. The data in hand suggest real outlay growth of approximately 1.0% in the first quarter, slower than the average pace of 3.0% in the middle of last year and 1.9% in 2025-Q4.

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

260409C.jpg

260409D.jpg

- The energy component contributed to a high-side reading on the price index for personal consumption expenditures; the core component was firm as well.
- Consumer spending showed signs of slowing.

Personal Income, Consumption, and Prices: Higher Prices Dampen Real Gains

Sandy Batten

260409N1.jpg

260409C1.jpg

The third estimate of Q4 2025 GDP showed that real GDP growth slowed to 0.5% q/q saar versus 0.7% in the second estimate and 1.4% in the advance estimate. GDP had grown 4.4% in Q3. The more than one-month long shutdown of the federal government continued to have been a notable restraint on GDP growth in Q4, subtracting 1.0%-point from overall growth, the same as in the second estimate.

Revisions were very small across major expenditure categories. Growth of personal consumption expenditures was revised down slightly to 1.9% q/q saar from 2.0% previously. Nonresidential fixed investment increased 2.4%, up slightly from the 2.2% reported in the second estimate. The 0.5% q/q decline previously reported for residential investment was revised to a larger decline of 1.7%, subtracting 0.1%-point from overall growth versus 0.0%-point in the previous estimate. Inventories declined more than previously estimated, reducing their contribution to growth from 0.3%-point in the second estimate to 0.1%-point in today’s estimate.

260409O1.jpg

260409P1.jpg

There were slight downward revisions to the declines previously reported for both exports and imports, leaving net exports essentially unrevised. As already noted, a 16.6% q/q saar plunge in federal government spending (revised down slightly from -16.7%) accounted for most of the weakness in Q4. This included a 24.3% q/q collapse in nondefense spending, the second largest quarterly decline in nearly forty years. By contrast, state and local government spending increased 1.5%, revised up from 1.2% in the previous estimate.

Private domestic demand growth (final sales to private domestic purchasers, a favored gauge of demand by the Federal Reserve) was revised slower to 1.8% q/q saar in Q4 from 1.9% in the second estimate and 2.4% in the advance report. However, even the revised pace of growth is respectable and close to the economy’s potential growth rate.

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

260409Q1.jpg

260409S1.jpg

- Q4 GDP growth revised to 0.5% q/q saar from 0.7% in the first revision and 1.4% in the advance report.
- The shutdown of the federal government still played a critical role in the slowdown, subtracting 1.0%-point from Q4 growth.
- Domestic demand slowed further with final sales to private domestic purchasers revised down to 1.8% from 1.9% in the first revision and 2.4% in the advance report.

Economy in Brief

Jump to:

CPI Inflation Slows Further in France for December, Still Restrained in Spain, Finland and Slovakia

U.S. Business Inventory Accumulation Steady

PPI Rise Doubled Expectations

U.S. Retail Sales Light in December

U.S. Retail Sales Light in December

Australian Employment Performance Hesitates at End-2005 After Potent Gains in Earlier Months

Initial Claims for Unemployment Insurance Lowest Since 2000

Import Prices Fell Again