Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105c.jpg" width="353">
According to the Challenger, Grey &amp; Christmas survey, layoffs jumped last to their highest level since January of 2004. The rise to 112,884 was a near-doubling from last October and the three-month level layoffs at 98,905 was its highest since early 2006.
The rise in layoffs last month was led by 17,949 cuts in financial industries and 15,692 cuts in the automotive industry. There also were 6,946 layoffs in the consumer goods sector, 6,301 in the electronics industries and 5,930 layoffs in the telecommunication businesses
During the last ten years there has been a 76% (inverse) correlation between the three-month moving average of announced job cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell 3.2% y/y.
The causes and consequences of economic restructuring: evidence from the early 21st century from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200841/200841abs.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>112,884</td>
<td>95,094</td>
<td>78.9%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
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According to the Challenger, Grey & Christmas survey, layoffs jumped last to their highest level since January of 2004. The rise to 112,884 was a near-doubling from last October and the three-month level layoffs at 98,905 was its [...]

U.S. Challenger Layoffs Highest Since 2004

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" width="353">
The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was the largest since November 2002. During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October payroll employment this Friday. Last month, the 25,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the BLS measure of private sector payrolls.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
By the ADP measure, goods producing payrolls fell by 126,000 (-3.3% y/y). The largest decline was amongst medium sized payrolls which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" width="353"> 
Employment in the manufacturing sector fell 85,000 (-3.4% y/y) It has fallen in each month since late-2005.
Employment in the service producing industry added to the weakness in the goods producing sector and payrolls fell 31,000 (+0.9% y/y). It was their first decline since 2002. Medium sized payrolls fell 26,000 (+0.7% y/y) and large service producing payrolls dropped by 16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000 (1.4% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.<div> </div>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
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</thead>
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<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>


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The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 157,000 after a revised 25,000 September decline. The latest was the third decline in as many months and it was [...]

ADP Report: Payroll Employment Off 157,000

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105d.jpg" align="left" border="0" height="265" width="353">
The Composite Index for the nonmanufacturing sector from the
Institute for Supply Management fell sharply in October. It declined to
44.4 from an unrevised 50.2 during September. The figure, which was
weaker than Consensus expectations, was the lowest in the series'
relatively brief ten year history.It rivaled the low during the 2001
recession.
The nonmanufacturing business activity sub-index also fell
sharply to 44.2 which was the lowest level since this past January.
Each figure was the lowest since the last recession. Since the series'
inception in 1997 there has been a 48% correlation between the level of
the business activity index for the nonmanufacturing sector and the Q/Q
change in real GDP for the services and the construction sectors.
The employment index fell to 41.5, a new low for the series.
Since the series' inception in 1997 there has been a 56% correlation
between the level of the ISM nonmanufacturing employment index and the
m/m change in payroll employment in the service-producing plus the
construction industries.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105e.jpg" align="right" border="0" height="265" width="353">
The new orders sub-index fell sharply to a recession level of
44.0.
Pricing power also collapsed. The reading of 53.4 was its
lowest level since 2003. Since inception ten years ago, there has been
a 60% correlation between the price index and the q/q change in the GDP
services chain price index.
Beginning with the January 2008 Nonmanufacturing <cite>Report
On Business</cite>®, the composite index is calculated as an
indicator of the overall economic condition for the non-manufacturing
sector. It is a composite index based on the diffusion indexes for four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
ISM surveys more than 370 purchasing managers in more than 62
industries including law firms, hospitals, government and retailers.
The nonmanufacturing survey dates back to July 1997.
Interpreting the Great Moderation: changes in the
volatility of economic activity at the macro and micro levels from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr334.pdf">here</a>.

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<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>44.4</td>
<td>50.2</td>
<td>53.3</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>53.4</td>
<td>70.0</td>
<td>66.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>
ADP Report: Payroll Employment Off
157,000 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105a.jpg" align="left" border="0" height="265" width="353">
The payroll processor ADP indicated in its latest National
Employment Report that October private nonfarm payrolls fell 157,000
after a revised 25,000 September decline. The latest was the third
decline in as many months and it was the largest since November 2002.
During the last three months payrolls have fallen 0.2%.
The U.S. Bureau of Labor Statistics will report on October
payroll employment this Friday. Last
month, the 25,000 worker decline in ADP's measure of private nonfarm
payrolls was accompanied by a 168,000 (-0.7% y/y) worker decline in the
BLS measure of private sector payrolls.

According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.

By the ADP measure, goods producing payrolls fell by 126,000
(-3.3% y/y). The largest decline was amongst medium sized payrolls
which fell 65,000 (-3.6% y/y) followed by a 36,000 (-2.0% y/y) drop in
small sized payrolls. Large payrolls fell 25,000 (-5.0% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105b.jpg" align="right" border="0" height="265" width="353">

Employment in the manufacturing sector fell 85,000 (-3.4% y/y)
It has fallen in each month since late-2005.
Employment in the service producing industry added to the
weakness in the goods producing sector and payrolls fell 31,000 (+0.9%
y/y). It was their first decline since 2002. Medium sized payrolls fell
26,000 (+0.7% y/y) and large service producing payrolls dropped by
16,000 (-0.3% y/y). Small service producing payrolls rose by 11,000
(1.4% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's 
USECON database;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_october_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.
<div> </div>

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<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>-157,000</td>
<td>-26,000</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Challenger Layoffs Highest
Since 2004 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105c.jpg" align="left" border="0" height="265" width="353">
According to the Challenger, Grey &amp; Christmas survey,
layoffs jumped last to their highest level since January of 2004. The
rise to 112,884 was a near-doubling from last October and the
three-month level layoffs at 98,905 was its highest since early 2006.
The rise in layoffs last month was led by 17,949 cuts in
financial industries and 15,692 cuts in the automotive industry. There
also were 6,946 layoffs in the consumer goods sector, 6,301 in the
electronics industries and 5,930 layoffs in the telecommunication
businesses
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell 3.2%
y/y.
The causes and consequences of economic
restructuring: evidence from the early 21st century from the
Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2008/200841/200841abs.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/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>112,884</td>
<td>95,094</td>
<td>78.9%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
Services Sectors Tank in US and in
Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 5, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081105f.jpg" align="left" border="0" height="265" width="353">
The chart serves as yet another reminder as to why it has been
loopy for observers to have insisted that Europe and the US had become
disconnected economically &#8211; the so-called de-coupling argument. The MFG
sectors across countries are always closely connected because they
trade goods and compete in the same markets for the same business. The
services sectors have a lower incidence of tradable services &#8211; much
lower than for goods. Still, the overall EMU and US economies have been
on such similar cycles that their two service sector indices, with very
few exceptions, have been on the same page. 
 

The EMU in country level measures are mostly on their
respective lowest readings since May of 2000. The US measure is in its
bottom 13% of its range &#8211;also very weak. Germany&#8217;s measure is &#8216;only&#8217; in
the bottom 28% of its range. 
 

The drop in the EMU index in October is its largest m/m drop
since May 2000 when the comparisons start. 
 

We can also see that consumer confidence is very low in most
of these same places. Since the service sector provides the bulk of the
jobs, this is an expected result. 
 

However we can also use this report as a double check on the
MFG report which earlier was reported to have fallen so sharply. These
two sectors are showing the same sharp onset of weakness. That tends to
imbue the signal with a greater veracity than if the result came from
just one survey. The weak signal therefore seems to be the result of a
real weakness in the economy rather than from some quirk of the
calendar or a peculiarity of one survey. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-13</td>
<td>45.76</td>
<td>48.44</td>
<td>48.46</td>
<td>47.55</td>
<td>48.45</td>
<td>50.37</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>48.31</td>
<td>50.25</td>
<td>51.39</td>
<td>49.98</td>
<td>51.49</td>
<td>51.78</td>
<td>28.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>47.54</td>
<td>50.14</td>
<td>48.04</td>
<td>48.57</td>
<td>48.96</td>
<td>53.05</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>45.68</td>
<td>49.42</td>
<td>48.47</td>
<td>47.86</td>
<td>47.63</td>
<td>48.32</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>32.22</td>
<td>36.09</td>
<td>38.98</td>
<td>35.76</td>
<td>37.39</td>
<td>41.65</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>36.05</td>
<td>40.80</td>
<td>39.82</td>
<td>38.89</td>
<td>40.65</td>
<td>45.31</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU only</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (CIPs)</td>
<td>42.39</td>
<td>45.95</td>
<td>49.17</td>
<td>45.84</td>
<td>46.98</td>
<td>49.60</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">US NONFMG ISM</td>
<td>44.20</td>
<td>52.10</td>
<td>51.60</td>
<td>49.30</td>
<td>50.17</td>
<td>50.48</td>
<td>13.6%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey5">
<td class="firstcol">EU Index</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">EU Services</td>
<td>-10</td>
<td>-4</td>
<td>-2</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-14.92</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">EMU</td>
<td>OCT-08</td>
<td>SEP-08</td>
<td>AUG-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-6</td>
<td>0</td>
<td>1</td>
<td>-1.67</td>
<td>2.17</td>
<td>5.79</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Cons Confidence</td>
<td>-24</td>
<td>-19</td>
<td>-19</td>
<td>-20.67</td>
<td>-19.00</td>
<td>-1.11</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany-Consumer Confidence</td>
<td>-12</td>
<td>-9</td>
<td>-9</td>
<td>-10.00</td>
<td>-7.50</td>
<td>-3.83</td>
<td>34.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">France-Consumer Confidence</td>
<td>-32</td>
<td>-24</td>
<td>-23</td>
<td>-26.33</td>
<td>-23.83</td>
<td>-18.58</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ital-Consumer Confidence</td>
<td>-23</td>
<td>-22</td>
<td>-24</td>
<td>-23.00</td>
<td>-22.83</td>
<td>-22.83</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain-Consumer Confidence</td>
<td>-44</td>
<td>-39</td>
<td>-37</td>
<td>-40.00</td>
<td>-38.00</td>
<td>-29.08</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK-Consumer Confidence</td>
<td>-27</td>
<td>-23</td>
<td>-24</td>
<td>-24.67</td>
<td>-22.50</td>
<td>-15.25</td>
<td>0.0%</td>
</tr>
<tr class="grey3">
<td colspan="5" class="firstcol">percentile
is over range since May
2000</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The Composite Index for the nonmanufacturing sector from the Institute for Supply Management fell sharply in October. It declined to 44.4 from an unrevised 50.2 during September. The figure, which was weaker than Consensus [...]

U.S. ISM Nonmanufacturing Index Fell Sharply: Recession Indicated

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" width="353">
The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the cost of $2.40 was the lowest since February of 2007. Prices have now fallen roughly $1.75 per gallon, or by forty percent, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell another sixteen cents from last week&#39;s average to $1.41. In futures trading the November contract closed down further at $1.36 per gallon.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.
The slowing of U.S. economic growth and the relatively high price for gas has reduced demand for gasoline by 4.0% y/y, according to the U.S. Department of Energy. This was the largest y/y drop since late 1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 7.8% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" width="353">
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $65.68 per barrel, down by more than one-half from the high in July of $145.66. In futures trading yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near their lowest level since October of last year. The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.

<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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the [...]

U.S. Gasoline Prices Lowest Since March '07 As Demand Falls

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" width="353">
Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward&#39;s Automotive News (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m decline in October sales pulled them more than one-third below the same month&#39;s level of last year. Sales for the year so far have averaged a 13.76M annual selling rate, down 15.0% from the first ten months of last year. The level of October vehicle sales was quite a bit weaker than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on top of their 8.3% drop during September and year-to-date, sales were down 17.0% from the first ten months of last year. Domestically made light truck sales suffered further from higher gasoline prices and they fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than during the first ten months of 2007. Sales of U.S. made cars declined a less severe 15.2% from September. As drivers continued to shift purchases to relatively fuel efficient vehicles, car sales were down 8.2% versus the first ten months of last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" width="353">
Sales of imported light vehicles were not immune to the developing recession in the U.S. Last month they fell 6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during September. The latest was the lowest level since October of 2002.Sales of imported autos actually rose m/m. The 0.3% rise to 1.95M units left them off just 3.7% from the first ten months of last year, but the latest was their lowest sales rate since January 2006. Year-to-date, sales were down 4.0% from the first ten months of 2007.Sales of imported light truck sales were not, however, immune to the effect from higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were down 17.5% from the first ten months of last year.
Import&#39;s share of the U.S. light vehicle market recovered their loss of the prior two months and rose to 27.5%. (Imported vehicles are those produced outside the U.S. and do not include vehicles with the nameplate of a foreign manufacturer produced within the U.S.)
Who really made your car? from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>


</html>

Auto showrooms were notably quiet last month as U.S. sales of light vehicles fell to 10.56 million units (AR). The figure was the lowest level since February, 1983 according to the Autodata Corporation and Ward's Automotive News [...]

Vacant Auto Showrooms; U.S. Light Vehicle Sales Lowest Since 1983

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104a.jpg" align="left" border="0" height="265" width="353">
Auto showrooms were notably quiet last month as U.S. sales of
light vehicles fell to 10.56 million units (AR). The figure was the
lowest level since February, 1983 according to the Autodata Corporation
and Ward's Automotive News (Seasonal adjustment of the figures is
provided by the U.S. Bureau of Economic Analysis). The 15.5% m/m
decline in October sales pulled them more than one-third below the same
month's level of last year. Sales for the year so far have averaged a
13.76M annual selling rate, down 15.0% from the first ten months of
last year. The level of October vehicle sales was quite a bit weaker
than Consensus expectations for sales of 12.0M.
Sales of domestically made light vehicles
fell nearly 20% m/m to 7.65M units (-36.7% y/y). The decline came on
top of their 8.3% drop during September and year-to-date, sales were
down 17.0% from the first ten months of last year. Domestically made
light truck sales suffered further from higher gasoline prices and they
fell 22.0% (-42.5% y/y). Truck sales this year were 23.2% lower than
during the first ten months of 2007. Sales of U.S. made cars declined a
less severe 15.2% from September. As drivers continued to shift
purchases to relatively fuel efficient vehicles, car sales were down
8.2% versus the first ten months of last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104b.jpg" align="right" border="0" height="265" width="353">
Sales of imported light vehicles were not
immune to the developing recession in the U.S. Last month they fell
6.1% (-26.5% y/y) to 2.91M units on top of their 10.5% decline during
September. The latest was the lowest level since October of 2002.Sales
of imported autos actually rose m/m. The 0.3% rise to 1.95M units left
them off just 3.7% from the first ten months of last year, but the
latest was their lowest sales rate since January 2006. Year-to-date,
sales were down 4.0% from the first ten months of 2007.Sales of
imported light truck sales were not, however, immune to the effect from
higher gasoline prices and they fell 14.4% m/m (-35.5% y/y). Sales were
down 17.5% from the first ten months of last year.
Import's share of the U.S. light vehicle
market recovered their loss of the prior two months and rose to 27.5%.
(Imported vehicles are those produced outside the U.S. and do not
include vehicles with the nameplate of a foreign manufacturer produced
within the U.S.)
Who really made your car? from
the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2008_255a.pdf">here</a>.
Economy in lower gear through 2008 also
from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>10.56</td>
<td>12.50</td>
<td>-34.2%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.55</td>
<td>6.19</td>
<td>-26.1</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.60</td>
<td>4.25</td>
<td>-28.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.95</td>
<td>1.94</td>
<td>-21.1</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.01</td>
<td>6.31</td>
<td>-41.3</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.05</td>
<td>5.19</td>
<td>-42.5</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>0.96</td>
<td>1.12</td>
<td>-35.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
U.S. Gasoline Prices Lowest Since
March '07 As Demand Falls 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104c.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline fell
by another twenty five cents last week. According to the U.S.
Department of Energy survey, the price decline came on top of a twenty
five cent drop during the prior week and the cost of $2.40 was the
lowest since February of 2007. Prices have now fallen roughly $1.75 per
gallon, or by forty percent, since their peak early this past July. The
latest decline was accompanied by a drop in the average price for all
grades of gasoline to $2.46 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline fell another sixteen cents from last week's average to $1.41.
In futures trading the November contract closed down further at $1.36
per gallon.
Weekly gasoline prices can be found in Haver's WEEKLY
database. Daily prices are in the DAILY
database.
The slowing of U.S. economic growth and the relatively high
price for gas has reduced demand for gasoline by
4.0% y/y, according to the U.S. Department of Energy. This was the
largest y/y drop since late 1995 (the latest four weeks versus the same
four weeks last year). The demand for all petroleum products also has
softened, falling 7.8% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104d.jpg" align="right" border="0" height="265" width="353">
These DOE figures are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude oil
fell further last week to an average $65.68 per barrel, down by more
than one-half from the high in July of $145.66. In futures trading
yesterday, the two-month price for crude oil was $64.59 per barrel.
Last week ,prices for natural gas at $6.43 per mmbtu were near
their lowest level since October of last year. The average price this
month was nearly one-half below the high for natural gas prices in
early-July of $13.19/mmbtu.

<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/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">11/03/08</th>
<th scope="col">10/27/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>2.40</td>
<td>2.66</td>
<td>-20.3%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>65.68</td>
<td>68.18</td>
<td>-30.4%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
Global PMI's Forecasting RecordLow
in Manufacturing Production 
by <a href="/comment/Curley.html">Louise
Curley</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104g.jpg" align="right" border="0" height="265" width="353">
After two sharp declines in September and October the global
PMI (Purchasing Managers Index) for manufacturing reached a record low
of 40.98 (50+ = expansion)in October, as can be seen in the first chart.
The PMI is a good predictor of manufacturing production. As an
example, the second chart shows the relationship between the PMI for
the Euro Area and the year-over- year changes in its manufacturing
production. The correlation, R, between the two series is .84, the R2
is .706 indicating that the PMI explains about 70% of the variation in
manufacturing production.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104e.jpg" align="right" border="0" height="265" width="353">
The Global PMI is based on the responses of 26 countries that
account for 83% of world manufacturing production. The latest figures
suggest that no country appears to be immune to the global slowdown in
manufacturing production. In the October data there is only one country
still in the expansion phase, that is, India, with an index of 52.19.
but it has been declining from a somewhat higher base than some of the
other countries. The third chart compares India with three other
emerging markets--China, Russia and Brazil.
The countries showing the lowest PMIs, and hence, the greatest
contraction, are Ireland, 39.69, Italy, 39.67 and Spain, 34.60, These
last are shown in the fourth chart. 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104h.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104f.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">PURCHASING
MANAGERS' INDEXES&nbsp;</th>
<th scope="col">Brazil</th>
<th scope="col">China</th>
<th scope="col">India&nbsp;</th>
<th scope="col">Italy</th>
<th scope="col">Ireland</th>
<th scope="col">Spain</th>
<th scope="col">Russia</th>
<th scope="col">Singapore&nbsp;</th>
<th scope="col">Japan</th>
<th scope="col">UK</th>
<th scope="col">Euro Area</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">October 2008</td>
<td>45.68</td>
<td>45.23</td>
<td>52.19</td>
<td>39.67</td>
<td>39.69</td>
<td>34.60</td>
<td>46.45</td>
<td>45.80</td>
<td>42.22</td>
<td>41.49</td>
<td>41.10</td>
</tr>
<tr>
<td colspan="12">&nbsp;</td>
</tr>
</tbody>
</table>
EMU PPI Falls Again but Year/YearPace is Still Horrific 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 4. 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081104i.jpg" align="left" border="0" height="265" width="353">
The EMU PPI fell by 0.2% in September after dropping by 0.5%
in August. WITH those two drops the three-month growth in the total
ex-construction PPI is STILL +2.5% saar. The year/year PPI is at 7.9%.
In between these the 6-month PPI has been blunted to 7.5% but its
growth rate too is still horrific. Core PPI inflation is dropping and
is &#8216;down&#8217; to 3.2%. But this report is uniformly being interpreted as
paving the way for an ECB rate cut. But of the four major EU nations we
show the core PPI trends for in the table below, only Italy is below
the ceiling for inflation that the ECB imposes on the HICP headline.
And this ECB is a SINGLE MANDATE central bank. It has an inflation
tolerance, period; it has no commitment to growth. But even with the
inflation picture this bad, the ECB is widely believed to be on the
brink of a second rate cut.
This shows us how far the ECB has come. Some European Finance
ministers continue to marginalize the risk. In Germany there is a
certain pretending in play that its banks and its economy are not hurt
by as much. But Europe&#8217;s connection to central and Eastern Europe
reinforce their sense of involvement with the stuff that is going
wrong. In addition there is the leverage and all the fancy financial
assets banks piled on their balance sheets. All of them did it.
In Europe the economic numbers are still diving. Today it is
auto registrations that look so weak. The EU Commission has cuts its
growth numbers to two marginally negative numbers over the next two
quarters. Time will tell if that forecast is overly optimistic. The
fact that the ECB is cutting rates with the inflation picture still as
poor as it is, tells a much clearer story of what Europe really fears
and how much.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> Euro
Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area-15</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total ex Construction</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>2.5%</td>
<td>7.5%</td>
<td>7.9%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>3.2%</td>
<td>3.8%</td>
<td>4.1%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.1%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.3%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.0%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>4.9%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>-0.9%</td>
<td>-2.4%</td>
<td>-0.3%</td>
<td>19.1%</td>
<td>20.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>-1.8%</td>
<td>4.5%</td>
<td>5.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>6.8%</td>
<td>9.6%</td>
<td>8.3%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Gy Ex Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>2.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>-0.5%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>5.9%</td>
<td>7.3%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">It Ex Energy</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK</td>
<td>-0.2%</td>
<td>-2.4%</td>
<td>-8.3%</td>
<td>16.2%</td>
<td>19.4%</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">UK Ex Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>3.2%</td>
<td>9.1%</td>
<td>8.2%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Euro Area 15
Harmonized PPI
excluding Construction.</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The EA 15
countries are Austria,
Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103g.jpg" width="353">
With recession on the horizon, questions have arisen as to how deep, how widespread and how long it will be. Forecasts of Gross Domestic Product for a number of countries, which may help in answering some of these questions, can be found in various Haver databases.
For the United States, Macroeconomic Advisors provides short-term quarterly and long-term annual forecasts of GDP that are updated quarterly. The most recent forecast covers the period from the third quarter of 2008 to the fourth quarter of 2010 and was updated on October 24. Oxford Economics provides quarterly and annual forecasts for ten years into the future for most countries. Their latest forecasts were issued October 16. The first chart shows the Oxford Economics annual forecasts for India and China and the second shows forecasts for Germany, Japan and the United States.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103h.jpg" width="353">
Eurostat publishes an annual series of GDP for all European Union countries as well as Croatia, Macedonia, Turkey, Norway and Switzerland. The last two years published are forecasts. For example, currently data are given for 2008 and 2009, both of which are forecasts. The latest data for these series were published on October 8. The OECD Outlook also publishes forecasts. These, however, are released only twice a year, in June and December. Sometimes the forecasts are outdated by subsequent events as at present.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">OXFORD ECONOMIC FORECASTS&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">&nbsp;2008</th>
<th scope="col">2009</th>
<th scope="col">2010&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France</td>
<td>2.11</td>
<td>0.85</td>
<td>0.11</td>
<td>1.63</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>2.39</td>
<td>1.47</td>
<td>0.16</td>
<td>1.47</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>1.36</td>
<td>-0.11</td>
<td>-018</td>
<td>0.91</td>
</tr>
<tr class="odd">
<td class="firstcol">United States</td>
<td>2.01</td>
<td>1.46</td>
<td>0.41</td>
<td>2.73</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>2.01</td>
<td>0.70</td>
<td>-0.10</td>
<td>1.10</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>11.87</td>
<td>10.03</td>
<td>8.25</td>
<td>8.00</td>
</tr>
<tr class="odd">
<td class="firstcol">India</td>
<td>9.34</td>
<td>7.80</td>
<td>6.23</td>
<td>7.56</td>
</tr>
<tr>
<td class="firstcol">EUROSTAT FORECASTS</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>--</td>
<td>1.58</td>
<td>1.37</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>--</td>
<td>1.85</td>
<td>1.54</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>--</td>
<td>0.54</td>
<td>0.76</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
</html>

With recession on the horizon, questions have arisen as to how deep, how widespread and how long it will be. Forecasts of Gross Domestic Product for a number of countries, which may help in answering some of these questions, can be [...]

Economic Forecasts in Haver Analytics

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081103f.jpg" align="left" border="0" height="265" width="353">
The e-Zone economy shrank by 0.2% in 2008-Q2 and further
weakness lies ahead according to the EU Commission. The EU Commission
issued a statement warning that &#8220;In 2009, the EU economy is expected to
grind to a standstill.&#8217; The
Commission forecasts tiny GDP declines for the Zone in Q4 2008 and in
Q1 of 2009.
But the Markit PMI&#8217;s today seem to hint at the potential for
deeper declines. MFG tends to be one of the more volatile sectors in
recession so these PMIs, taken alone, overstate the case. The service
sector holds up better and service sector employment typically holds up
much better in recession in comparison to MFG. But both the Services
and the MFG PMIs for Europe have been weak. The e-Zone has not
experienced a recession since its formation. But as of September the
EMU services PMI was in the bottom 12% of its range and now the MFG
sector in EMU is the worst ever. 
Sneezing in Frankfurt -
Some might view the lack of recession since the region&#8217;s formation as
an asset for the region, but to me, it&#8217;s another sign: it points out
how poorly interconnected the various countries still are in EMU. It is
not a sign of greater resilience - far form it. Europe&#8217;s economy is
much less flexible than the US economy. One
view is that a diversified area has been put together and since we add
up GDP across the whole region it has become more stable than its
individual parts. But that is a portfolio theory argument and the parts
can only do this if they are not highly mutually correlated or less
that fully integrated. So the lack of commonality proves the point of
poor integration. Until someone can sneeze in Frankfurt and give
someone a cold in Paris, Europe is fragmented. 
The US is a much larger geographic and economic region and it
is so connected that the region &#8211; even with its differences -
experiences recessions. The resilience of EMU is yet another
manifestation of how the region is not yet fully integrated. Workers
within Europe are NOT indifferent as to whether they work in London, in
Frankfurt or in Paris, or more broadly, the UK, Germany or France.
Language and culture still separate European nations. Yet the downturn
this time has such common themes that it is dragging even the disparate
EMU into recession. That&#8217;s testament to the strength of the negative
forces this time around.
Some Structural differences Persist:
Not surprisingly, for Germany, France, Italy, Spain, Ireland and the
UK, the average country level correlation with OVERALL EMU MFG is 0.86.
For SERVICES it is a lower 0.82. Only in the UK and Ireland is the
service sector better correlated with the EMU&#8211;wide measure than is the
MFG index with its Europe-wide measure. That is probably due to the
UK&#8217;s separate use of the pound in lieu of the euro and the faster
impact on MFG flows than on services that FX rates exhibit. In the case
of Ireland, the fact that Ireland is geographically more plugged into
the UK economy and its cycles drives the rogue result. So it is basically the similarity in
MFG that binds Europe together while Services differences largely
persist across regions and tend to isolate euro-regions. This is in
keeping with the way competition has been meted out within Europe and
with the obviously more competitive nature of MFG with MFG anywhere &#8211;
at least in comparison with services. Even with wide open competition
in services, some services simply are local, like table service by a
waiter at a restaurant, plumbing and electrician services on site and
dry cleaning. Still, we know that some services that seem to be
&#8216;intrinsically local&#8217; have found ways to break down borders (ie video
rentals delivered either over the internet or by mail instead of via
the neighborhood store).
We will have to wait and see if the recession in Europe turns
out to be as benign as the EU commission forecast suggests. The German
finance ministry continues to tell how much better prepared Germany is
to take this recession than other countries. Time will tell. I remain a
Euro-skeptic.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"> NTC MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>41.10</td>
<td>44.97</td>
<td>47.55</td>
<td>44.54</td>
<td>46.79</td>
<td>49.50</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>42.88</td>
<td>47.36</td>
<td>49.68</td>
<td>46.64</td>
<td>49.49</td>
<td>51.81</td>
<td>4.6%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>40.59</td>
<td>42.97</td>
<td>45.79</td>
<td>43.12</td>
<td>46.19</td>
<td>49.52</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>39.67</td>
<td>44.42</td>
<td>47.07</td>
<td>43.72</td>
<td>45.24</td>
<td>47.72</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>34.60</td>
<td>38.32</td>
<td>42.40</td>
<td>38.44</td>
<td>39.82</td>
<td>43.94</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>43.44</td>
<td>46.01</td>
<td>48.61</td>
<td>46.02</td>
<td>47.20</td>
<td>50.09</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>48.14</td>
<td>50.81</td>
<td>52.46</td>
<td>50.47</td>
<td>51.77</td>
<td>52.37</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>39.69</td>
<td>43.70</td>
<td>44.88</td>
<td>42.76</td>
<td>43.60</td>
<td>45.86</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>45.28</td>
<td>48.30</td>
<td>49.82</td>
<td>47.80</td>
<td>48.99</td>
<td>51.03</td>
<td>16.2%</td>
</tr>
<tr class="odd">
<td colspan="8">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>41.49</td>
<td>41.15</td>
<td>45.28</td>
<td>42.64</td>
<td>44.51</td>
<td>48.05</td>
<td>2.2%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">Percentile is over range since March
2000</td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body></html>

The e-Zone economy shrank by 0.2% in 2008-Q2 and further weakness lies ahead according to the EU Commission. The EU Commission issued a statement warning that “In 2009, the EU economy is expected to grind to a standstill.’ The [...]

MFG is HOW Weak? Worst Since at Least March 2000 Across Much of EMU

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

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The Producer Price Index for final demand was unchanged (2.3% y/y) in June after rising 0.3% in May, revised from 0.1%, and easing 0.3% in April, revised from a 0.2% fall, according to the Bureau of Labor Statistics (BLS). The Action Economic Forecast Survey expected a 0.2% increase in June. Producer prices excluding food, energy & trade services also were unchanged (2.5% y/y) after a 0.1% May gain, and falling 0.2% in April, which was revised from -0.1%. A 0.2% increase had been expected.

Food prices rose 0.2% (3.3% y/y) in June after holding steady in May. Finished consumer food prices rose 0.2% (3.7% y/y) after increasing in May. Energy prices for final demand rose 0.6% (-2.6% y/y) last month after falling 0.3% in May. Finished consumer energy prices rose 0.9% last month (-1.7% y/y) after a 0.6% increase.

Final demand services prices continued to hold back overall pricing pressure last month with a 0.1% dip (+2.7% y/y), following a 0.4% increase. Final demand trade services prices held steady (+2.9% y/y) after surging 1.1%, while the trade of finished goods index remained unchanged (+2.8% y/y) following a 1.2% surge. Transportation & warehousing prices fell 0.2% (+2.5% y/y) after a 0.4% gain in May. Prices for final demand services less trade, transportation, and warehousing eased 0.1% last month (+2.6% y/y) after improving 0.1% in May.

The price index for final demand goods less foods & energy increased 0.3% (2.5% y/y) in June following a 0.2% increase. Nondurable consumer goods prices less food & energy rose 0.1% (2.3% y/y) after a 0.2% increase. Durable consumer goods prices rose 0.4% (2.4% y/y) following a 0.5% rise. The private capital equipment price index improved 0.3% (3.2% y/y) for the second straight month. Government prices less food & energy rose 0.4% (2.9% y/y) after increasing 0.2% in May.

Construction costs rose 0.3% (1.6% y/y) in June after rising 0.2% in May.

Prices for intermediate demand of processed goods edged 0.1% higher (1.9% y/y) in June for the second consecutive month. Processed energy goods prices improved 0.6% following a 1.9% decline while processed foods and feeds prices fell 0.3% after rising 0.7% in May.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Unchanged monthly levels extend weakness earlier this year.
- Core price gain slows y/y.
- Final demand price index is steady; services prices decline.

U.S. Producer Price & Core Price Indexes Hold Steady in June

Kathleen Stephansen, CBE

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Mortgage applications fell 10.0% (+18.4% y/y) in the week ending July 11, after rising 9.4% w/w (36.6% y/y) in the week ending July 4, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading broke the string of three consecutive w/w rises. Applications for loans to purchase a house fell 11.8% (+13.7% y/y) in the July 11 week, following a rise of 9.4% (25.4% y/y) in the July 4 week. Applications for loan refinancing dropped 7.4% (+25.2% y/y) after rising 9.2% (55.8% y/y) in the July 4 week.

The effective interest rate on a 30-year fixed-rate loan rose 5bps to 7.00% in the week ending July 11, from 6.95% in the week ending July 4; it was up from a low of 6.29% in the September 20 week but down from a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages rose 12bps to 6.32% in the latest week from 6.20% in the July 4 week; it was up from a low of 5.60% in the September 20 week. The rate on 30-year Jumbo loans rose 6bps to 6.94% in the July 11 week from 6.88% in the July 4 week; it was up from a low of 6.57% in the September 13 week. Meanwhile, the rate on a 5-year ARM edged down 4bps to 6.24% in the latest week from 6.28% in the July 4 week; it was above a low of 5.84% in the September 13 week.

The share of applications for refinancing an existing loan rose to 41.1% of total applications in the week ending July 11 up from 40.0% in the week ending July 4. The adjustable-rate mortgage (ARM) share of activity dropped to 7.1% in the July 11 week from 7.7% in the July 4 week.

The average size of a mortgage loan, down for the fourth week in five, fell 2.8% (+3.0% y/y) to $375,500 in the July 11 week, following a decline of 1.3% w/w (+4.5% y/y) to $386,400 in the July 4 week. The average size of a purchase loan edged down 0.9% (+2.9% y/y) to $428,900 in the July 11 week, after declining 2.5% (+1.8% y/y) to $432,600 in the July 4 week. The average size of a loan to refinance a mortgage dropped 5.6% (+6.1% y/y) to $299,200 in the latest week, after rising 1.1% (18.8% y/y) to $317,100 in the July 4 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Both purchase applications and refinancing loan applications fell in July 11 week.
- Effective interest rate on 30-year fixed-rate loans rose to 7.0%.
- Average loan size declines for the fourth time in five weeks.

U.S. Mortgage Applications Dropped 10.0% in the Latest Week

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The Consumer Price Index rose 0.3% in June after rising 0.1% in May and increasing 0.2% in April. A 0.3% rise had been expected in the Action Economics Forecast Survey. The 2.7% y/y increase in the headline CPI in June compared to 2.4% in May and remained below the 9.1% peak in June 2022. The CPI excluding food & energy increased 0.2% last month after a 0.1% uptick in May and a 0.2% April gain. A 0.3% rise had been expected. The 2.9% y/y June rise compared to 2.8% in May, still well below the 6.6% peak in September 2022.

Energy prices rose 0.9% (-0.8% y/y) last month after falling 1.0% in May. Gasoline prices strengthened 1.0% (-8.3% y/y) after falling 2.6% in May. Fuel oil prices rose 1.3% (-4.7% y/y) after rising 0.9% in April. Natural gas prices rose 0.5% (14.2% y/y) following a 1.0% decline, and electricity prices gained 1.0% (5.8% y/y) after rising 0.9% in May.

Food prices rose 0.3% in June (3.0% y/y) for the second consecutive month. Egg prices fell 7.4% (+27.3% y/y), the third straight month of sharp decline. Meat, poultry & fish prices rose 0.8% (+4.1% y/y) after easing 0.1%, while dairy product prices declined 0.3% (0.9% y/y) after easing 0.1% in May. Cereal & bakery product costs eased 0.2% (0.9% y/y) after a 1.1% increase while fruit & vegetable prices rose 0.9% (0.7% y/y), following a 0.3% gain. Nonalcoholic beverage prices strengthened 1.4% (4.4% y/y) in June after falling 0.3% in May.

Goods prices less food and energy rose 0.2 (0.7% y/y) in June after holding steady in May. Prices of used cars and trucks fell 0.7% (+2.8% y/y) last month, after falling 0.5% in May, while new vehicle costs weakened 0.3% (+0.2% y/y) for the second consecutive month. Apparel prices rose 0.4% in June (-0.5% y/y) and reversed the prior month’s 0.4% decline. Appliance prices surged 1.9% (0.8% y/y), after increasing 0.8%. Home furnishings prices jumped 1.0% (1.7% y/y) after rising 0.3%. Recreation	 product costs rose 0.8% (-0.8% y/y) in May, doubling the May increase. Education & communication product costs held steady last month (-3.3% y/y) after rising 0.1% in May. Medical care goods prices rose 0.1% (NSA, 0.2% y/y) after increasing 0.6% in May.

Services prices less energy moved up 0.3% (3.6% y/y) last month following a 0.2% May gain. Shelter prices rose 0.2% (3.8% y/y) last month after two months of 0.3% increase as owners’ equivalent rent of primary residences increased 0.3% (4.2% y/y), the same as in May. The cost of lodging away from home declined 2.9% (-2.5% y/y), the fourth straight month of decline. Rents of primary residences gained 0.2% (3.8% y/y), the same as in May. Transportation service prices moved up 0.2% (3.4% y/y) after easing 0.2% as the cost of motor vehicle insurance edged up 0.1% (6.1% y/y) in June after strengthening 0.7% in May. Public transportation costs increased 0.4% (-2.7% y/y) after falling 2.5% during May. The cost of medical services increased 0.6% (3.4% y/y) after a 0.2% increase, and the cost of recreation services rose 0.2% (3.8% y/y) after slipping 0.1% in May. Education & communication services prices rose 0.1% (1.1% y/y) for the second consecutive month.

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

**The Economic Implications of Tariff Increases** from the Federal Reserve Bank of San Francisco can be found [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/07/economic-implications-of-tariff-increases/#wp--skip-link--target).

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- Monthly increase is highest in five months. Core gain moves up minimally.
- Energy costs post solid increase.
- Both core goods and core services prices move higher.

U.S. Consumer Price Index Strengthens in June

Sandy Batten

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The Empire State Manufacturing Index of General Business Conditions jumped nearly 22 points to 5.5 in July from -16.0 in June, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of -8.5 for July had been expected by the Action Economics Forecast Survey. The unexpected positive reading in July indicated that business activity in New York State increased for the first month since February. The percentage of respondents reporting an increase in general business conditions in July rose to 32.4% from 16.9% in June while the percentage reporting a decrease fell to 26.9% from 32.9%. The July survey was conducted between July 2 and July 10.

The headline index just reflects the answer to a single question concerning the state of economic activity. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 54.7 in July, its highest reading since July 2022 and well above the critical 50 value that separates expansion from contraction, from 48.6 in June. The calculated index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

The July jump reflected meaningful increases in most component indexes. The new orders index rose to 2.0 from -14.2. The shipments index increased to 11.5 from -7.2. Unfilled orders edged up to -6.4 from -8.3. Delivery times lengthened to 8.3, the highest reading since July 2022 and possibly an early indication that trade policy uncertainty is beginning to disrupt some supply chains, from 1.8 in June. Moreover, the relatively new supply availability index fell deeper into negative territory at -11.0 versus -8.1 in June. Inventories rose markedly to 15.6 in July, the highest reading since November 2022, from 0.9 in June.

On the labor front, the index for the number of employees rose five points to 9.2, and the average workweek index rose to 4.2, the first positive reading in eight months. This marks the first time that both indexes have been positive since 2022, suggesting that both employment and hours worked increased in July. Sixteen percent of respondents reported an increase in employment, the highest since March 2023, versus 14.6% in June while only 6.9% reported a decline in employment, the lowest since June 2022, down from 9.9% in June.

The prices paid index rose nine points to 56.0, pointing to a pickup in input price increases, while the prices received index held steady at 25.7, suggesting that selling price increases remained moderate though elevated relative to normal pre-pandemic levels. Slightly more than 29% of respondents reported an increase in prices received in July, the same as in June.

Firms remained fairly optimistic about the outlook. The index for future general business conditions edged up to 24.1 from 21.2 in June, suggesting that, on the whole, businesses expect activity to increase in the months ahead. New orders and shipments are expected to increase, and supply availability is expected to be little changed. Capital spending plans jumped markedly to 9.2 in July from -7.3 in June and -6.7 in May.

The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components. The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- The first positive reading for the index since February.
- The July jump reflected widespread increases across components.
- Evidence of some nascent supply-chain problems.
- Outlook six months ahead continues to brighten.

FRBNY Empire State Manufacturing Index Jumped 22 points in July

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Retail gasoline prices for all grades held at an average $3.25 per gallon (-10.0% y/y) last week after falling from $3.29 in the last week of June. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel improved to $3.76 per gallon (-1.8% y/y) in the week of July 14 after falling to $3.74 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil increased to $67.93 per barrel (-18.1% y/y) in the week ended July 11. The decline followed the prior week’s easing to $66.25 per barrel, but prices remained above a $59.04 low in the second week of May 2025. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $66.98 per barrel. The price of European Brent crude rose to $71.77 per barrel (-17.3% y/y) in the week of July 11 after falling to $69.61 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $70.96 yesterday.

Natural gas prices eased last week to an average $3.17/mmbtu (+40.3% y/y) in the week ended July 11, after falling to an average $3.19/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $3.21 per mmbtu.

Gasoline demand declined 1.0% y/y in the four weeks ending July 4 following a 0.1% y/y easing in the prior four weeks. Demand for all petroleum products weakened 1.6% y/y in the four weeks ending July 4 after a 1.1% y/y decline in the previous four-week period. Crude oil input to refineries rose 1.1% y/y in the four weeks ending July 4 after a 1.6% y/y gain in the prior four weeks.

Gasoline inventories eased 0.1% y/y in the week ending July 4 after a 0.2% y/y gain in the prior week. Residual fuel oil inventories fell 20.5% y/y in the week of July 4, after a 20.9% y/y fall in the prior week. Crude oil inventories rose 1.3% y/y in the week of July 4 after a 0.1% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell to 25.0 days in the week of July 4 from 25.2 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil rose to 25.1 days in the week of July 4 from 24.6 days in the prior week, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices stabilize.
- Crude oil prices increase slightly.
- Natural gas prices ease.


Economy in Brief: 2008

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