Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026d.jpg" align="right" border="0" height="265" width="353">
The National Association For Business Economics (NABE)
indicated in its latest Industry Survey that U.S. economic conditions
showed broad-based improvement during the last three months. That gain
was paced by improvement in unit demand and profit margins.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026e.jpg" align="right" border="0" height="265" width="353">
The net percentage of firms reporting higher demand rose to
23.4% which was the highest level in over one year. The improvement
came as 44.2% of firms indicated higher demand but only 20.8% showed
demand falling during 3Q. That was down from nearly half reporting
lower demand at the end of last year. Overall economic growth
through the end of next year is expected to average 3%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026f.jpg" align="right" border="0" height="265" width="353">
Higher net-profit margins were indicated by firms for the
first time since the fourth quarter of 2007. Thirty-six percent of
firms indicated higher margins, up from 10% during 4Q08, while a
reduced 27% reported lower margins.
While still negative, net-employment improved materially as
12% of firms reported higher employment, double the low of last
quarter, and a much-reduced 31% reported lower hiring.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026g.jpg" align="right" border="0" height="265" width="353">
With the improvement in economic conditions, NABE indicated
that pricing power improved. The net-reading of 12% was the highest
level in one year as 23% reported higher prices and a reduced 11%
reported lower prices. Rising capital spending was indicated by firms
for the first time in one year as 26% showed higher spending while a
reduced 22% reported lower spending. 
 

The NABE Industry Survey can be found in Haver's SURVEYS
database. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Nat'l
Assn. For Business Economics 3Q Industry Survey (Net Rising Index, %)</th>
<th scope="col">3Q09</th>
<th scope="col">2Q09</th>
<th scope="col">1Q09</th>
<th scope="col">4Q08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unit Demand</td>
<td>23.4</td>
<td>-5.0</td>
<td>-14.3</td>
<td>-27.5</td>
</tr>
<tr>
<td class="firstcol">Profit Margins</td>
<td>8.7</td>
<td>-17.0</td>
<td>-30.4</td>
<td>-41.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>-19.2</td>
<td>-30.0</td>
<td>-25.0</td>
<td>-29.8</td>
</tr>
<tr>
<td class="firstcol">Prices Charged</td>
<td>12.2</td>
<td>-12.9</td>
<td>-2.0</td>
<td>-9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital Spending</td>
<td>4.2</td>
<td>-23.6</td>
<td>-15.8</td>
<td>-26.0</td>
</tr>
</tbody>
</table>
</body></html>

The National Association For Business Economics (NABE) indicated in its latest Industry Survey that U.S. economic conditions showed broad-based improvement during the last three months. That gain was paced by improvement in unit [...]

National Association For Business Economics Indicates Demand, Profits and Employment Improved

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026b.jpg" align="right" border="0" height="265" width="353">The Chicago Federal Reserve
Bank indicated that while the U.S.
economy had improved, growth was still below the historic trend. For
September, the Chicago Fed National Activity Index (CFNAI) slipped m/m
after having improved sharply from the January low. The reading of
-0.90 was down from -0.56 during August yet both readings were up
sharply from the series' low of -4.13 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP but during the last ten years that
correlation has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index improved to its highest level since
June of '08.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_october2009.pdf">here</a>.
The Chicago Fed indicated that 32 of the series' individual
indicators made positive contributions to the September index while 53
made negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026c.jpg" align="right" border="0" height="265" width="353">
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index slipped during August but remained near its
lowest since late-1993. Indicators for the steel, machinery and
resource sectors improved modestly, however, that was outweighed by
deterioration in the auto sector. The Chicago Federal Reserve figures
are available in Haver's SURVEYS database.
International Perspective on the Crisis and Response is
the title of Friday's speech by Fed Vice-Chairman Donald L. Kohn and it
can be found here <a href="http://www.federalreserve.gov/newsevents/speech/kohn20091023a.htm">here</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.90</td>
<td>-0.56</td>
<td>-1.82</td>
<td>-2.01</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">3-Month Moving Average</td>
<td>-1.09</td>
<td>-1.61</td>
<td>-2.15</td>
<td>-1.42</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The Chicago Federal Reserve Bank indicated that while the U.S. economy had improved, growth was still below the historic trend. For September, the Chicago Fed National Activity Index (CFNAI) slipped m/m after having improved sharply [...]

Chicago Fed Index Dipped Last Month But Trend Level Still Rising

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026b.jpg" align="right" border="0" height="265" width="353">The Chicago Federal Reserve
Bank indicated that while the U.S.
economy had improved, growth was still below the historic trend. For
September, the Chicago Fed National Activity Index (CFNAI) slipped m/m
after having improved sharply from the January low. The reading of
-0.90 was down from -0.56 during August yet both readings were up
sharply from the series' low of -4.13 reached this past January. Since
1970 there has been a 74% correlation between the level of the index
and the q/q change in real GDP but during the last ten years that
correlation has risen to 80%.
The three-month moving average which smoothes out
some of the volatility of the index improved to its highest level since
June of '08.
An index level at or below -0.70 typically has indicated
negative U.S. economic growth. A zero value of the CFNAI indicates that
the economy is expanding at its historical trend rate of growth of
roughly 3%. The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_october2009.pdf">here</a>.
The Chicago Fed indicated that 32 of the series' individual
indicators made positive contributions to the September index while 53
made negative contributions. The CFNAI is a weighted average of 85
indicators of economic activity. The indicators reflect activity in the
following categories: production &amp; income, the labor market,
personal consumption &amp; housing, manufacturing &amp; trade
sales, and inventories &amp; orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026c.jpg" align="right" border="0" height="265" width="353">
In a separate survey, the Chicago Fed indicated that its
Midwest manufacturing index slipped during August but remained near its
lowest since late-1993. Indicators for the steel, machinery and
resource sectors improved modestly, however, that was outweighed by
deterioration in the auto sector. The Chicago Federal Reserve figures
are available in Haver's SURVEYS database.
International Perspective on the Crisis and Response is
the title of Friday's speech by Fed Vice-Chairman Donald L. Kohn and it
can be found here <a href="http://www.federalreserve.gov/newsevents/speech/kohn20091023a.htm">here</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
Fed</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.90</td>
<td>-0.56</td>
<td>-1.82</td>
<td>-2.01</td>
<td>-1.77</td>
<td>-0.35</td>
<td>0.05</td>
</tr>
<tr>
<td class="firstcol">3-Month Moving Average</td>
<td>-1.09</td>
<td>-1.61</td>
<td>-2.15</td>
<td>-1.42</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>

National Association For Business
Economics Indicates Demand, Profits and Employment Improved 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026d.jpg" align="right" border="0" height="265" width="353">
The National Association For Business Economics (NABE)
indicated in its latest Industry Survey that U.S. economic conditions
showed broad-based improvement during the last three months. That gain
was paced by improvement in unit demand and profit margins.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026e.jpg" align="right" border="0" height="265" width="353">
The net percentage of firms reporting higher demand rose to
23.4% which was the highest level in over one year. The improvement
came as 44.2% of firms indicated higher demand but only 20.8% showed
demand falling during 3Q. That was down from nearly half reporting
lower demand at the end of last year. Overall economic growth
through the end of next year is expected to average 3%.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026f.jpg" align="right" border="0" height="265" width="353">
Higher net-profit margins were indicated by firms for the
first time since the fourth quarter of 2007. Thirty-six percent of
firms indicated higher margins, up from 10% during 4Q08, while a
reduced 27% reported lower margins.
While still negative, net-employment improved materially as
12% of firms reported higher employment, double the low of last
quarter, and a much-reduced 31% reported lower hiring.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026g.jpg" align="right" border="0" height="265" width="353">
With the improvement in economic conditions, NABE indicated
that pricing power improved. The net-reading of 12% was the highest
level in one year as 23% reported higher prices and a reduced 11%
reported lower prices. Rising capital spending was indicated by firms
for the first time in one year as 26% showed higher spending while a
reduced 22% reported lower spending. 
 

The NABE Industry Survey can be found in Haver's SURVEYS
database. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Nat'l
Assn. For Business Economics 3Q Industry Survey (Net Rising Index, %)</th>
<th scope="col">3Q09</th>
<th scope="col">2Q09</th>
<th scope="col">1Q09</th>
<th scope="col">4Q08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unit Demand</td>
<td>23.4</td>
<td>-5.0</td>
<td>-14.3</td>
<td>-27.5</td>
</tr>
<tr>
<td class="firstcol">Profit Margins</td>
<td>8.7</td>
<td>-17.0</td>
<td>-30.4</td>
<td>-41.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>-19.2</td>
<td>-30.0</td>
<td>-25.0</td>
<td>-29.8</td>
</tr>
<tr>
<td class="firstcol">Prices Charged</td>
<td>12.2</td>
<td>-12.9</td>
<td>-2.0</td>
<td>-9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital Spending</td>
<td>4.2</td>
<td>-23.6</td>
<td>-15.8</td>
<td>-26.0</td>
</tr>
</tbody>
</table>
Germany&#8217;s Consumer Climate
Improves 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October
26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026h.jpg" align="left" border="0" height="265" width="353">
Germany&#8217;s GFK survey rose in October. It was a month-to-month
rise of 0.4 for the third month in a row. The economic index rose by
5.2 points its smallest rise since May but on the heels of a 10.9 point
spurt in September. Income expectations fell by 3.1 points, the first
drop in five months but after two large gains. The propensity to buy
dropped back by 10.4 points a huge drop and the largest since a drop of
15.7 in May 2008. 

Still the Climate index at +4.2 is above its average of 3.3.
All of these components are above their average values since 2002. The
&#8216;income&#8217; and &#8216;propensity to buy&#8217; percentiles are stronger for the count
percentiles than for the range percentiles; the standing among past
observations is stronger than their range standing between the highs
and lows. This means that while the current readings are still well off
peak they are in the upper part of the distribution of readings and in
the upper region of normal. 

The GFK index shows that confidence is still improving in
Germany. Germans are relatively more worried about the economy in
generally than they are impacted by expectations for income or buying
power problems. Still the fact of the matter is that German consumption
has not been very strong. And Germany&#8217;s Chancellor is out warning that
in 2011 there will be another crisis and that unemployment will rise
from current levels. I guess that Obama&#8217;s pessimistic approach to
assessing the economy is spreading abroad.

 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">
 Germany Consumer Climate Survey GFK</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol"></td>
<td> Climate</td>
<td colspan="2"> Expectations</td>
<td> Propensity to</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td> Economic</td>
<td>Income</td>
<td>Buy</td>
</tr>
<tr class="grey3">
<td class="firstcol">Oct-09</td>
<td>4.2</td>
<td>8.7</td>
<td>12.9</td>
<td>26.1</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sep-09</td>
<td>3.8</td>
<td>3.4</td>
<td>16.0</td>
<td>36.5</td>
</tr>
<tr class="grey3">
<td class="firstcol">Aug-09</td>
<td>3.4</td>
<td>-7.5</td>
<td>8.8</td>
<td>31.1</td>
</tr>
<tr class="grey3">
<td class="firstcol">Jul-09</td>
<td>3.0</td>
<td>-14.0</td>
<td>1.8</td>
<td>25.1</td>
</tr>
<tr class="grey3">
<td class="firstcol">Jun-09</td>
<td>2.7</td>
<td>-22.6</td>
<td>-3.3</td>
<td>14.5</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="5">&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Average</td>
<td>3.3</td>
<td>0.9</td>
<td>-3.8</td>
<td>-9.6</td>
</tr>
<tr class="grey3">
<td class="firstcol">Max</td>
<td>9.1</td>
<td>69.5</td>
<td>33.6</td>
<td>64.4</td>
</tr>
<tr class="grey3">
<td class="firstcol">Min</td>
<td>-3.5</td>
<td>-32.9</td>
<td>-24.5</td>
<td>-55.4</td>
</tr>
<tr class="grey3">
<td class="firstcol">% range</td>
<td>61.1%</td>
<td>40.6%</td>
<td>64.4%</td>
<td>68.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Count%</td>
<td>59.6%</td>
<td>66.0%</td>
<td>92.6%</td>
<td>87.2%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">% range is
current reading as a
percentile of Hi/Low range</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Count % is
current reading ranked as
a %-tile among all readings</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">GFK survey
dates from January 2002</td>
</tr>
</tbody>
</table>
 South Korea Reports 3Q GDP 
by <a href="/comment/Curley.html">Louise
Curley</a> October 26, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026i.jpg" align="right" border="0" height="265" width="353">South Korean
joins China and Singapore among the emerging economies of the Pacific
Rim to report third quarter GDP.&nbsp; GDP growth in the three
countries is shown in the first chart.&nbsp; The declines in the
economies of Korea and Singapore have been much more severe than those
in China.&nbsp; China has not experienced a year to year decline in
GDP, merely a deceleration of growth.&nbsp; At their low points in
the first quarter of this year, GDP in Singapore was 9.5% below the
year ago figure and GDP in Korea, 4.3% below.
Korea reported that GDP
grew 2.9% in the third quarter on a seasonally adjusted basis, compared
with 2.7% in the second quarter.&nbsp; On a seasonally unadjusted
basis, GDP was 0.6% above the year ago figure, the first positive
figure since the third quarter of 2008.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026j.jpg" align="right" border="0" height="265" width="353">A swing in
inventories from a liquidation of 4,506 million won* in the
second quarter to an accumulation of 6,486 won in the third quarter was
the main factor in the third quarter strength.&nbsp; However, this
should not be a cause of concern at this point in the business
cycle.&nbsp; The rise follows three successive quarters of big
liquidations, beginning in the fourth quarter of 2008--7,290 million
won 6,788 million won and 4,506 million wan.&nbsp; The inventory to
shipments ratio for manufacturing at the end of the second quarter was
.97 down from 1.25 at the end of 2008.&nbsp; As can be seen in the
second chart, the I/S ratio for manufacturing was somewhat below normal
at the end of the second quarter so that a build up in the third
quarter is not unexpected.
 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026k.jpg" align="right" border="0" height="265" width="353">The
performance of the other components of
GDP was generally typical of that seen in the early stages of
recovery--some increases and some retrenchments.&nbsp; The one
notable exception was a greater decline in exports of goods and
services, than that in imports of goods and services, with the result
that the balance on goods and services declined from 20.3 billion won
in the second quarter to 19.1 billion won .&nbsp; In the past,
exports have been a dynamic element in the growth of the Korean economy
and generally quick to respond to improvements in the world economy.
Private consumption increased by 3,524.7 million won in the third
quarter compared with an increase of 1,367.1, this could be an sign
that Korea is beginning to shift away from its policy of export led
growth but it is probably not too wise to base a conclusion on one
quarter's evidence. See the third chart.&nbsp; There were small
declines in construction,&nbsp; fixed investment in intangible
assets and government consumption and the change in business investment
in plant and equipment was essentially unchanged at 1,778 million won
in the third quarter, compared with a rise of 1,846 million won in the
second quarter.
*The won in all cases is the 2005
chained won.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
SOUTH KOREA</th>
<th scope="col">Q3 09</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1&nbsp; 09</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08&nbsp;</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="10"> GDP </td>
</tr>
<tr>
<td class="firstcol">Q/Q Change (SA)</td>
<td>2.93</td>
<td>2.65</td>
<td>0.12</td>
<td>-5.07</td>
<td>0.22</td>
<td>0.43</td>
<td>1.00</td>
<td>2.22</td>
<td>5.11</td>
</tr>
<tr>
<td class="firstcol">Y/Y Change&nbsp; (NSA)</td>
<td>0.58</td>
<td>-2.16</td>
<td>-425</td>
<td>-3.40</td>
<td>3.11</td>
<td>4.35</td>
<td>5.46</td>
<td>2.22</td>
<td>5.11</td>
</tr>
<tr>
<td class="firstcol">Change in New Exports (Mil.
2005 Chained Won)</td>
<td>-1263</td>
<td>3572</td>
<td>3175</td>
<td>4876</td>
<td>-1590</td>
<td>48</td>
<td>756</td>
<td>10019</td>
<td>6577</td>
</tr>
<tr>
<td class="firstcol">Change in Inventory Change "</td>
<td>6487</td>
<td>-4506</td>
<td>-6788</td>
<td>-7290</td>
<td>1396</td>
<td>467</td>
<td>2004</td>
<td>7752</td>
<td>-2815</td>
</tr>
<tr>
<td class="firstcol">Change in Private
Consumption&nbsp; "</td>
<td>3525</td>
<td>1367</td>
<td>-880</td>
<td>-3189</td>
<td>1648</td>
<td>-3364</td>
<td>-25</td>
<td>4703</td>
<td>24655</td>
</tr>
</tbody>
</table>

</body></html>

Chicago Fed Index Dipped LastMonth But Trend Level Still Rising

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026a.jpg" align="left" border="0" height="265" width="353">
The EMU economy continues to spin off better economic signals.
Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in
June. As a result the sequential growth rates are showing explosive
growth in orders- up at a 43% annual rate over three months - still
orders are lower Yr/Yr by over 20%. EMU MFG sales were up in August,
too, and they show sequential growth rates are improving. 
Orders rose in two of the four largest economies as Italy and
the UK took order setbacks in August. 
Italy and the UK also show dropping orders over three months.
The UK took a set back in growth as GDP dropped 0.4% Q/Q in Q3
(a 1.6% annualized rate of decline) an unexpected result that extends
the UK recession that was thought to have ended.
 Italy &#8217;s sharper drop in orders of 8.6% raises some
questions there. The UK GDP drop has brought pressure on sterling as
one might well have expected, but the weakness in Italy is another
matter as it is safely cocooned within the euro area. We do not know
how badly Italy &#8217;s orders drop will affect the economy but retail sales
have faltered recently. Consumers and businesses are seeing and
expecting totally different trends there. The hardest thing for EMU
policymakers is to have countries within the Zone moving in different
directions.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro Area
and UK Industrial Orders &amp; Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">% m/m</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
08</td>
<td>Aug 
07</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3
Mo</td>
<td>6
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>1.0%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>7.1%</td>
<td>2.3%</td>
<td>-19.6%</td>
<td>3.5%</td>
<td>5.8%</td>
<td>11.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.7%</td>
<td>4.8%</td>
<td>6.8%</td>
<td>34.6%</td>
<td>3.2%</td>
<td>-21.4%</td>
<td>2.0%</td>
<td>9.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Orders</td>
<td>2.0%</td>
<td>3.0%</td>
<td>4.2%</td>
<td>43.7%</td>
<td>20.4%</td>
<td>-21.8%</td>
<td>-2.1%</td>
<td>4.7%</td>
<td>37.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Countries:</td>
<td>Aug 09</td>
<td>Jul 09</td>
<td>Jun 09</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12-mo</td>
<td>Qtr 2 Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>1.8%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>36.9%</td>
<td>33.2%</td>
<td>-24.7%</td>
<td>-1.0%</td>
<td>6.0%</td>
<td>30.5%</td>
</tr>
<tr>
<td class="firstcol">France:</td>
<td>3.0%</td>
<td>4.1%</td>
<td>1.5%</td>
<td>39.8%</td>
<td>6.1%</td>
<td>-13.8%</td>
<td>-7.7%</td>
<td>8.1%</td>
<td>43.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-8.6%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>-19.0%</td>
<td>-18.8%</td>
<td>-29.8%</td>
<td>-3.4%</td>
<td>-1.6%</td>
<td>-34.5%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)</td>
<td>-15.6%</td>
<td>7.3%</td>
<td>3.6%</td>
<td>-22.5%</td>
<td>1.3%</td>
<td>-11.1%</td>
<td>-12.6%</td>
<td>4.3%</td>
<td>-48.8%</td>
</tr>
</tbody>
</table>


 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/0910231.gif" v:shapes="_x0000_s1026" align="left" height="258" hspace="12" width="203">
Markit PMIS are up-beat - The
goods news for EMU was that the Markit monthly look-ahead PMI reading
for October improved overall and for each of MFG and Services. The MFG
reading actually showed expansion for the first time since May of 2008.
Overall the EMU area seems to be continuing its progress despite Italy
&#8217;s troubles. 

Adding to the sense of good news in the face of the UK &#8217;s
ominous GDP drop was an improvement in Germany &#8217;s IFO index as business
climate improved along with current conditions and
expectations.
A background report from the OECD demonstrated that world
trade flows had stabilized in 2009-Q2. To
be sure it remains a day of mixed data but putting the UK &#8217;s GDP report
aside the news elsewhere was pretty upbeat. Dropping UK GDP is a big
fly in the ointment, but on the whole the signals from the UK economy
have not turned uniformly glum. Until GDP was reported, based on data
in hand, economists had expected a rise in GDP. Sometimes GDP
accounting can have this effect. While GDP is the best comprehensive
measure of how an economy is doing, around economic turning points
oddities with trade and inventories can send mixed the signals more
than they should. While we need to be wary of the UK economy&#8217;s
performance, on the whole the global economy seems to be in an upswing
and doing better. Ultimately that will help the UK too.

</body></html>

The EMU economy continues to spin off better economic signals. Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in June. As a result the sequential growth rates are showing explosive growth in orders- up at a 43% [...]

EMU Orders Continue to Rise and Cut Year/Year Drop

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&nbsp;

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023c.jpg" align="right" border="0" height="265" width="353">
The decline in home prices continued to moderate according the
U.S. House Price Index from the Federal Housing and Finance Agency
(FHFA). The Purchase Only Index for August fell 0.3% and reversed its
July increase. Nevertheless, the year-to-year decline in the nationwide
average of home prices eased to -3.6% from its worst reading of -8.8%
last November. Since their peak in early-2007 home prices nationwide
have fallen 10.7%. The FHFA uses data provided by Fannie Mae and
Freddie Mac and is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023d.jpg" align="right" border="0" height="265" width="353">

Notable monthly declines in home prices during August were
logged in the South Atlantic and the New England regions of the
country, though the y/y declines have moderated significantly.
Conversely, prices in the Mountain and in the Pacific regions recovered
m/m but remain down the most of the country's regions versus last
August. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023e.jpg" align="right" border="0" height="265" width="353">
Prices in the Middle Atlantic and in the East North Central
Regions also fell moderately during August but the y/y declines have
moderated significantly this year.
In the populous East North Central region prices slipped
another 0.6% during August but they were flat year-to-date. Prices also
slipped in the West South Central region but have risen slightly since
December.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023f.jpg" align="right" border="0" height="265" width="353">
Mideast Oil Exporters Face the Crisis Ahead from
the International Monetary Fund can be found <a href="http://blog-imfdirect.imf.org/2009/10/11/mideast-oil-exporters/">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.3</td>
<td>0.3</td>
<td>-3.6</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-1.1</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>-0.6</td>
<td>0.9</td>
<td>-2.8</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.6</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.2</td>
<td>0.1</td>
<td>1.0</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>-1.6</td>
<td>1.2</td>
<td>-5.5</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>0.4</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.0</td>
<td>-0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-0.0</td>
<td>-7.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.1</td>
<td>0.9</td>
<td>-6.5</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
</body></html>

The decline in home prices continued to moderate according the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for August fell 0.3% and reversed its July increase. Nevertheless, the [...]

FHFA Home Price Index Reverses Monthly Gain While Y/Y Loss Eases

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023a.jpg" width="353">
Home sales continue to recover, helped by lower prices. The National Association of Realtors reported that September sales of existing homes rose sharply to the highest level since July 2007. The 9.4% m/m increase to 5.570M units (SAAR) followed a 2.9% July decline that was little revised. Moreover, the increase in September home sales outpaced Consensus expectations for a rise to 5.35M. Total sales include sales of condos and co-ops.
Sales of existing single-family homes alone similarly increased a sharp 9.4% to 4.890M last month and were up 20.7% from the January low. (These data have a longer history than the total sales series).
Recent sales have been helped by a tax credit for first-time home buyers. The credit of up to $8,000 extends though the end of this year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
The median price of an existing home fell for the third straight month, to $174,900. Though prices were still lower than the year-ago level, they have risen 6.1% from the January low. The median price for a single-family home was $174,900 (-8.1% y/y). These price declines have sharply raised home affordability. During August, the composite index of home affordability reversed all of its July decline and rose 2.3%. It was up 26.5% from August of last year but down 10.1% from its January peak due to a limited decline in interest rates.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023b.jpg" width="353">
Perhaps due to lower prices, potential sellers put fewer homes on the market. The number of unsold homes (condos &amp; single-family) for sale fell 7.5% (-15.0% y/y) during September to near the lowest level since January 2007. Year-to-year inventories were down 15.0%. At the current sales rate there was a 7.8 months&#39; supply on the market which was near the lowest since early-2007. The latest figure was down from a high of 11.3 months early last year. For single-family homes the inventory fell 9.1% m/m (-16.7% y/y). At the current sales rate there was a 7.6 month&#39;s supply of homes on the market, the lowest since early-2007.
The data on existing home sales, prices and affordability can be found in Haver&#39;s USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
Financial Regulation and Supervision after the Crisis: The Role of the Federal Reserve is the title of this morning&#39;s speech by Fed Chairman Ben S. Bernanke and it is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20091023a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,570</td>
<td>5,090</td>
<td>9.2%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>950</td>
<td>910</td>
<td>11.8</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,250</td>
<td>1,140</td>
<td>7.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,060</td>
<td>1,890</td>
<td>10.8</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,300</td>
<td>1,150</td>
<td>5.7</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,890</td>
<td>4,470</td>
<td>7.7</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>174,900</td>
<td>177,300</td>
<td>-8.5</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
</body>
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Home sales continue to recover, helped by lower prices. The National Association of Realtors reported that September sales of existing homes rose sharply to the highest level since July 2007. The 9.4% m/m increase to 5.570M units [...]

U.S. Existing Home Sales Jump But Prices Decline Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023a.jpg" align="left" border="0" height="265" width="353">
Home sales continue to recover, helped by lower prices. The
National Association of Realtors reported that September sales of
existing homes rose sharply to the highest level since July
2007. The 9.4% m/m increase to 5.570M units (SAAR) followed a 2.9% July
decline that was little revised. Moreover, the increase in September
home sales outpaced Consensus expectations for a rise to 5.35M. Total
sales include sales of condos and co-ops.
Sales of existing single-family homes alone similarly
increased a sharp 9.4% to 4.890M last month and were up 20.7% from the
January low. (These data have a longer history than the total sales
series).
Recent sales have been helped by a tax credit for first-time
home buyers. The credit of up to $8,000 extends though the end of this
year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
The median price of an existing home fell for the third
straight month, to $174,900. Though prices were still lower than the
year-ago level, they have risen 6.1% from the January low. The median
price for a single-family home was $174,900 (-8.1% y/y). These price
declines have sharply raised home affordability. During August, the
composite index of home affordability reversed all of its July decline
and rose 2.3%. It was up 26.5% from August of last year but down 10.1%
from its January peak due to a limited decline in interest rates.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023b.jpg" align="right" border="0" height="265" width="353">
Perhaps due to lower prices, potential sellers put fewer homes
on the market. The number of unsold homes (condos &amp;
single-family) for sale fell 7.5% (-15.0% y/y) during September to near
the lowest level since January 2007. Year-to-year inventories were down
15.0%. At the current sales rate there was a 7.8 months' supply on the
market which was near the lowest since early-2007. The latest figure
was down from a high of 11.3 months early last year. For single-family
homes the inventory fell 9.1% m/m (-16.7% y/y). At the current sales
rate there was a 7.6 month's supply of homes on the market, the lowest
since early-2007.
The data on existing home sales, prices and affordability can
be found in Haver's USECON database. The regional
price, affordability and inventory data is available in the REALTOR
database.
Financial Regulation and Supervision after the
Crisis: The Role of the Federal Reserve is the title of this
morning's speech by Fed Chairman Ben S. Bernanke and it is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20091023a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Existing
Home Sales (Thous, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,570</td>
<td>5,090</td>
<td>9.2%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>950</td>
<td>910</td>
<td>11.8</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,250</td>
<td>1,140</td>
<td>7.8</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>2,060</td>
<td>1,890</td>
<td>10.8</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,300</td>
<td>1,150</td>
<td>5.7</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,890</td>
<td>4,470</td>
<td>7.7</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>174,900</td>
<td>177,300</td>
<td>-8.5</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
FHFA Home Price Index Reverses
Monthly Gain While Y/Y Loss Eases&nbsp; 
by <a href="/comment/Moeller.html">Tom
Moeller&nbsp;</a> October 23, 2009&nbsp;

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023c.jpg" align="right" border="0" height="265" width="353">
The decline in home prices continued to moderate according the
U.S. House Price Index from the Federal Housing and Finance Agency
(FHFA). The Purchase Only Index for August fell 0.3% and reversed its
July increase. Nevertheless, the year-to-year decline in the nationwide
average of home prices eased to -3.6% from its worst reading of -8.8%
last November. Since their peak in early-2007 home prices nationwide
have fallen 10.7%. The FHFA uses data provided by Fannie Mae and
Freddie Mac and is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023d.jpg" align="right" border="0" height="265" width="353">

Notable monthly declines in home prices during August were
logged in the South Atlantic and the New England regions of the
country, though the y/y declines have moderated significantly.
Conversely, prices in the Mountain and in the Pacific regions recovered
m/m but remain down the most of the country's regions versus last
August. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023e.jpg" align="right" border="0" height="265" width="353">
Prices in the Middle Atlantic and in the East North Central
Regions also fell moderately during August but the y/y declines have
moderated significantly this year.
In the populous East North Central region prices slipped
another 0.6% during August but they were flat year-to-date. Prices also
slipped in the West South Central region but have risen slightly since
December.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091023f.jpg" align="right" border="0" height="265" width="353">
Mideast Oil Exporters Face the Crisis Ahead from
the International Monetary Fund can be found <a href="http://blog-imfdirect.imf.org/2009/10/11/mideast-oil-exporters/">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.3</td>
<td>0.3</td>
<td>-3.6</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-1.1</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>-0.6</td>
<td>0.9</td>
<td>-2.8</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.6</td>
<td>-0.1</td>
<td>-3.4</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.2</td>
<td>0.1</td>
<td>1.0</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>-1.6</td>
<td>1.2</td>
<td>-5.5</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>0.4</td>
<td>-1.1</td>
<td>-0.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.0</td>
<td>-0.6</td>
<td>0.4</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-0.0</td>
<td>-7.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.1</td>
<td>0.9</td>
<td>-6.5</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
EMU Orders Continue to Rise and
Cut Year/Year Drop 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091026a.jpg" align="left" border="0" height="265" width="353">
The EMU economy continues to spin off better economic signals.
Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in
June. As a result the sequential growth rates are showing explosive
growth in orders- up at a 43% annual rate over three months - still
orders are lower Yr/Yr by over 20%. EMU MFG sales were up in August,
too, and they show sequential growth rates are improving. 
Orders rose in two of the four largest economies as Italy and
the UK took order setbacks in August. 
Italy and the UK also show dropping orders over three months.
The UK took a set back in growth as GDP dropped 0.4% Q/Q in Q3
(a 1.6% annualized rate of decline) an unexpected result that extends
the UK recession that was thought to have ended.
 Italy &#8217;s sharper drop in orders of 8.6% raises some
questions there. The UK GDP drop has brought pressure on sterling as
one might well have expected, but the weakness in Italy is another
matter as it is safely cocooned within the euro area. We do not know
how badly Italy &#8217;s orders drop will affect the economy but retail sales
have faltered recently. Consumers and businesses are seeing and
expecting totally different trends there. The hardest thing for EMU
policymakers is to have countries within the Zone moving in different
directions.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro Area
and UK Industrial Orders &amp; Sales Trends</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">% m/m</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
09</td>
<td>Aug 
08</td>
<td>Aug 
07</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3
Mo</td>
<td>6
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>12
mo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Sales</td>
<td>1.0%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>7.1%</td>
<td>2.3%</td>
<td>-19.6%</td>
<td>3.5%</td>
<td>5.8%</td>
<td>11.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate</td>
<td>-3.7%</td>
<td>4.8%</td>
<td>6.8%</td>
<td>34.6%</td>
<td>3.2%</td>
<td>-21.4%</td>
<td>2.0%</td>
<td>9.0%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Manufacturing Orders</td>
<td>2.0%</td>
<td>3.0%</td>
<td>4.2%</td>
<td>43.7%</td>
<td>20.4%</td>
<td>-21.8%</td>
<td>-2.1%</td>
<td>4.7%</td>
<td>37.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Countries:</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12-mo</td>
<td>Qtr 
2 
Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>1.8%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>36.9%</td>
<td>33.2%</td>
<td>-24.7%</td>
<td>-1.0%</td>
<td>6.0%</td>
<td>30.5%</td>
</tr>
<tr>
<td class="firstcol">France:</td>
<td>3.0%</td>
<td>4.1%</td>
<td>1.5%</td>
<td>39.8%</td>
<td>6.1%</td>
<td>-13.8%</td>
<td>-7.7%</td>
<td>8.1%</td>
<td>43.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-8.6%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>-19.0%</td>
<td>-18.8%</td>
<td>-29.8%</td>
<td>-3.4%</td>
<td>-1.6%</td>
<td>-34.5%</td>
</tr>
<tr>
<td class="firstcol">UK(EU)</td>
<td>-15.6%</td>
<td>7.3%</td>
<td>3.6%</td>
<td>-22.5%</td>
<td>1.3%</td>
<td>-11.1%</td>
<td>-12.6%</td>
<td>4.3%</td>
<td>-48.8%</td>
</tr>
</tbody>
</table>


 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/0910231.gif" v:shapes="_x0000_s1026" align="left" height="258" hspace="12" width="203">
Markit PMIS are up-beat - The
goods news for EMU was that the Markit monthly look-ahead PMI reading
for October improved overall and for each of MFG and Services. The MFG
reading actually showed expansion for the first time since May of 2008.
Overall the EMU area seems to be continuing its progress despite Italy
&#8217;s troubles. 

Adding to the sense of good news in the face of the UK &#8217;s
ominous GDP drop was an improvement in Germany &#8217;s IFO index as business
climate improved along with current conditions and
expectations.
A background report from the OECD demonstrated that world
trade flows had stabilized in 2009-Q2. To
be sure it remains a day of mixed data but putting the UK &#8217;s GDP report
aside the news elsewhere was pretty upbeat. Dropping UK GDP is a big
fly in the ointment, but on the whole the signals from the UK economy
have not turned uniformly glum. Until GDP was reported, based on data
in hand, economists had expected a rise in GDP. Sometimes GDP
accounting can have this effect. While GDP is the best comprehensive
measure of how an economy is doing, around economic turning points
oddities with trade and inventories can send mixed the signals more
than they should. While we need to be wary of the UK economy&#8217;s
performance, on the whole the global economy seems to be in an upswing
and doing better. Ultimately that will help the UK too.

</body></html>

U.S. Existing Home Sales Jump ButPrices Decline Again

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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;
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.grey5{
background-color:#b8b8b8;
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</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091022f.jpg" align="left" border="0" height="265" width="353">
The EMU surplus in trade shrank in August at exports fell a
sharp 5.8% in the month and imports skittered lower by 1.3%. While
exports are down by a heft 22.8% Yr/Yr their annual rate of decline is
cut to the 3% to 4% range over three and six months. While that is a
sharp improvement but it still is not growth. Imports are off by
26.&amp;% Yr/Yr and at a -9.7% pace over six months but over three
months imports are barely lower falling at an annualized rate of -0.8%. 
 

It is too soon to make anything of significance out of these
differences in growth rates. Italy, however, has seen its exports to
China drop with the sharpest drop in exports to Russia, the US, and
OPEC countries. Timely data on the geography of exports is spotty. But
we have seen Italy and Germany report some irregular export and export
orders figures recently. In August exports were down across the board
in EMU. Few categories show anything but continued deceleration from
6-months to three months although the progress compared to Yr/Yr rates
of growth is obvious and very strong. Imports show a clearer, steadier,
more widespread picture of growth rates that are cutting their pace of
decline. 
 

On balance trade is not the clear homerun it had appeared to
be early in the cycle. Some irregularities are cropping up in trade
flows and in measures of international export orders. 


 
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">E-zone Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; 995</td>
<td>&#8364;&#8364; 6,000</td>
<td>&#8364;&#8364; (6,370)</td>
<td>&#8364;&#8364; 1,505</td>
<td>&#8364;&#8364; (2,779)</td>
<td>&#8364;&#8364; 1,666</td>
</tr>
<tr class="grey4">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All Exp</td>
<td>-5.8%</td>
<td>4.7%</td>
<td>-2.9%</td>
<td>-3.8%</td>
<td>-22.8%</td>
<td>1.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-6.5%</td>
<td>3.4%</td>
<td>-10.4%</td>
<td>-5.0%</td>
<td>-12.2%</td>
<td>2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>-6.1%</td>
<td>6.0%</td>
<td>-3.5%</td>
<td>27.3%</td>
<td>-21.5%</td>
<td>7.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-5.8%</td>
<td>4.8%</td>
<td>-2.2%</td>
<td>-4.3%</td>
<td>-23.5%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG</td>
<td>-8.9%</td>
<td>8.2%</td>
<td>-11.8%</td>
<td>-8.6%</td>
<td>-25.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">IMPORTS</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; All IMP</td>
<td>-1.3%</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>-9.7%</td>
<td>-26.7%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food and Drinks</td>
<td>-5.1%</td>
<td>1.1%</td>
<td>-17.9%</td>
<td>-13.8%</td>
<td>-13.9%</td>
<td>8.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Raw materials</td>
<td>1.2%</td>
<td>2.1%</td>
<td>16.6%</td>
<td>-12.4%</td>
<td>-39.5%</td>
<td>8.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>-1.1%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>-9.3%</td>
<td>-26.8%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; MFG</td>
<td>-1.8%</td>
<td>0.6%</td>
<td>-10.8%</td>
<td>-12.1%</td>
<td>-23.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey3">
<td colspan="7">*Eur mlns; mo or period
average</td>
</tr>
</tbody>
</table>
</body></html>

The EMU surplus in trade shrank in August at exports fell a sharp 5.8% in the month and imports skittered lower by 1.3%. While exports are down by a heft 22.8% Yr/Yr their annual rate of decline is cut to the 3% to 4% range over three [...]

EMU Trade Surplus Shrinks

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

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Winnie Tapasanun

260116R23.jpg

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Industrial production (IP) rose a more-than-expected 0.4% m/m in December following a 0.4% rise in November (+0.2% initially) and a 0.3% decline in October (-0.1% previously), data from the Federal Reserve Board showed. December marked the third m/m gain in four months. A 0.1% m/m December increase had been expected in the Action Economics Forecast Survey. The year-on-year growth rate slowed to 2.0% in December, the lowest since September, from 2.5% in November; this compared with a 0.3% y/y decline in December 2024. The December IP index at 102.3 was 3.1% above a low of 99.2 in January 2024. IP rose 0.2% q/q in Q4 2025 after a 0.6% q/q gain in Q3 2025, increasing at a 0.7% annualized rate following a 2.3% Q3 annualized pace. In 2025, IP rose 1.3% after declines of 0.7% in 2024 and 0.2% in 2023.

By **industry groups**, manufacturing production grew 0.2% (2.0% y/y) in December, up for the third time in four months, following a 0.3% increase in November (0.0% initially) and a 0.6% drop in October (-0.4% previously). Durable goods production edged up 0.1% (3.1% y/y) in December, the first m/m increase since September, after a 0.1% downtick in November. Within durables, the following categories rose m/m in December, including output rises of 2.4% (3.5% y/y) in primary metals, 1.7% (1.3% y/y) in electrical equipment, appliances & components, 1.5% (17.2% y/y) in aerospace & miscellaneous transportation equipment, 0.8% (-2.2% y/y) in furniture & related products, 0.2% (4.8% y/y) in machinery, and 0.1% (7.4% y/y) in computer & electronic products. Notably, aircraft & parts production climbed 2.1% (30.0% y/y), the third m/m increase in four months, reversing a 2.1% November drop. To the downside, the following durable goods categories fell m/m in December, including drops of 2.3% (-5.5% y/y) in wood products, 1.1% (-2.8% y/y) in motor vehicles & parts, 1.1% (-1.0% y/y) in nonmetallic mineral products, 0.1% (+2.6% y/y) in fabricated metal products, and 0.1% (-3.7% y/y) in miscellaneous durables goods.

Nondurable goods production increased 0.3% (1.0% y/y) in December, the third m/m gain in four months, after a 0.8% rebound in November. The December increase reflected m/m output rises of 1.8% (2.1% y/y) in petroleum & coal products, 0.5% (1.9% y/y) in food, beverages & tobacco, and 0.3% (-0.2% y/y) in plastics & rubber products. In contrast, the following nondurable goods categories declined m/m in December, including output drops of 1.3% (-0.8% y/y) in textiles & product mills, 1.1% (-0.5% y/y) in apparel & leather goods, 0.3% (-3.1% y/y) in paper, 0.3% (-3.4% y/y) in printing & related support activities, and 0.1% (+1.6% y/y) in chemicals.

Utilities output recovered 2.6% (2.3% y/y) in December, the third m/m rise in four months, following a 0.3% decline in November (-0.4% initially), reflecting a 1.2% rebound (1.3% y/y) in electric utilities output and a 12.0% jump (8.7% y/y) in natural gas utilities output. Mining activity, however, fell 0.7% (+1.7% y/y), the third m/m slide in four months, after an unrevised 1.7% November gain.

By **market groups**, business equipment output advanced 0.8% (10.1% y/y) in December, up for the third time in four months, after a 0.3% increase in November. Consumer goods output rose 0.7% (0.7% y/y) after a 0.7% November rebound, reflecting a 0.7% decline (-3.5% y/y) in durable consumer goods and a 1.1% gain (1.8% y/y) in nondurable consumer goods. Materials production grew 0.2% (1.7% y/y), the third m/m increase in four months, after a 0.5% November rise. In contrast, construction supplies production fell 0.3% (+1.3% y/y) in December, the second m/m fall in three months, reversing a 0.3% increase in November.

In **special classifications**, factory output of selected high-tech industries increased 0.7% (10.9% y/y) in December, the third successive m/m gain, following a downwardly revised 0.5% rise in November (+1.1% initially). Manufacturing production excluding selected high-tech industries rose 0.2% (1.7% y/y) in December after a 0.3% gain in November, while manufacturing production excluding selected high-tech and motor vehicles & parts rose 0.3% (2.1% y/y) after a 0.4% increase; both measures posted their third m/m gain in four months.

Capacity utilization rose to 76.3% in December, the highest since July, from 76.1% in November (76.0% initially). The Action Economics Forecast Survey forecasted 76.0%. The December reading was 3.2 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization held at 75.6% in December and November (75.4% previously); the December rate was 2.6 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

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- December IP +0.4% (+2.0% y/y), third m/m rise in four months, led by a 2.6% gain in utilities.
- Manufacturing +0.2% (+2.0% y/y), w/ durables +0.1% and nondurables +0.3%.
- Selected high-tech +0.7%, third consecutive m/m rise; motor vehicles -1.1%, fourth straight m/m fall.
- Mining -0.7%, third m/m decline in four months.
- Key categories in market groups mostly increase.
- Capacity utilization at a five-month-high 76.3%; mfg. capacity utilization steady at 75.6%.

U.S. Industrial Production Increases in December on Utilities Rebound

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The European Monetary Union has concluded a year of weak-to-moderate growth with inflation largely toeing the line. As always, the inflation picture is more complicated than a simple statement. When we look at inflation, we look at the headline, we look at the core, to make sure that the volatile food & energy elements aren't dominating the index, and then we look across some of the main participants to see if the trend for inflation is shared broadly across the largest countries in the Monetary Union. When we apply those kinds of standards, the grading for the year is reduced. However, based on the headline alone, it was an excellent year for the ECB.

**Headline Inflation in 2025**
Headline inflation in 2025 rose by 2%, exactly on the target of the European Central Bank. It rose over six months at a 2% annual rate and then concluded the year over the last three months, rising at a 1.6% annual rate with some margin below the target set by the central bank itself.

**Country Headline Inflation Trends**
On a country basis, the performance is not nearly as good. While year-on-year results look pretty good, with Germany at 2%, France at 0.7% and Italy at 1.3%, Spain comes in at 3.1%. So the three largest monetary union economies come in at or below 2% with Spain as a rogue observation. When we look further at the sequence of inflation within the year, we see Germany at 2% over 12 months, rising to 3.1% over 6 months, rising further to 4% over 3 months. Inflation is accelerating at the end of the year even as Germany hits the target! This is something to keep an eye on. For France, the inflation rate also accelerates slightly but stays below the bar of 2% over three months, six months, and 12 months. For Italy, inflation is decelerating from 1.3% over 12 months to -0.3% over six months, and then inflation in Italy is contracting at a 1.9% annual rate over three months. Spanish inflation shows clear trouble with a 3.1% 12-month pace, rising to 4.6% at an annual rate over six months, and rising further to 5.9% at an annual rate over three months.

**Core Inflation**
For core inflation, the Monetary Union’s consolidated numbers are not yet compiled. However, for the four largest economies, we do have core or ex-energy inflation. For Germany, it's inflation excluding energy. On that basis, German inflation is 2.2% over 12 months, it rises to 2.7% over six months, then falls back to a 2% annual pace over three months All-in-all not a bad performance. For France, core inflation is below 2% over 12 months, six months, and three months. In Italy, once again, we see inflation decelerating: Italian inflation is 2% over 12 months - right on the ECB target. It falls to a 1.3% annual rate over six months and then falls further to a 0.3% annual rate over three months. For Spain, the core has another very difficult story for the Monetary Union. Inflation is 2.7% over 12 months, it rises to 3.1% over six months and stays at an annual rate of about 3% over three months. This is too high and it looks stubborn, particularly because it is the core.

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**Across the Big Four**
On balance, what we see is that the ECB grades-out well, based on headline inflation and based on its sequential performance for the European economic union as a whole. But large countries, show headline inflation building some steam particularly in the largest economy, Germany, and in Spain, the smallest of the BIG-4 economies. Inflation is once again mixed in the Monetary Union with German and Spanish inflation too high and with French and Italian inflation running either at or below the 2% mark and with Italy showing a tendency towards weaker prices for both the headline and the core. The change in prices over these various periods shows inflation gets the most help from oil prices over 12 months where Brent, measured in euros, falls by 22.6%; over six months Brent prices fall by 37% at an annual rate; and over three months Brent oil prices are unchanged, so that the headline isn't getting help at all from oil prices except through lagged effects.

**Summing Up**
Meanwhile, there are some signs of stronger growth taking root in Europe, especially in Germany with better industrial production being logged and with German industrial production looking significantly stronger than the PMI data, suggesting that perhaps PMI data are missing something about the rebound that is developing. Nonetheless, it was a good year for inflation and the ECB; however, it doesn't exactly end the year in the catbird’s seat. On the other hand, it does not end the year behind the curve. There are scattered pressures and needs among member countries which always makes monetary policy difficult. When some countries need higher interest rates and others need lower interest rates, the ECB is in a difficult spot. Clearly, Spain and Germany are experiencing different phenomenon than France and Italy. That could be the policy challenge for the year ahead.

Europe

Big Four Inflation in EMU 2025-Final

Andrew Cates

**The growth consensus for 2026** 
Consensus growth forecasts for 2026 have continued to firm over the past six months, with upward revisions most pronounced in economies that are more directly exposed to the global AI investment cycle. Taiwan stands out, reflecting its central role in advanced semiconductor manufacturing and the spillovers from sustained AI-related capex across the global tech supply chain. The US has also seen a sizeable upgrade, consistent with strong domestic investment in AI infrastructure and data-centre capacity, alongside resilient demand for high-value tech services. Elsewhere in Asia, upgrades to South Korea and, to a lesser extent, China and India point to a broader regional benefit from the AI-driven electronics and capital-goods cycle, even as underlying macro conditions remain mixed. Canada has also seen modest upward revisions, likely reflecting its close integration with US investment trends. By contrast, revisions across much of Europe and Japan have been more muted, while forecasts for Russia remain under downward pressure.

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**The next steps for central bank policy** 
Based on responses to the special questions in the latest Blue Chip survey, the chart highlights how uncertain panelists remain about the precise timing of the next policy move, even where there is broad agreement on direction. Expectations for both the Fed and the Bank of England are now loosely centred on March 2026 as the most likely window for the next easing step, but the spread of responses points to limited conviction and a high sensitivity to incoming data. By contrast, panelists continue to see the ECB as largely through its easing cycle, with a clear majority expecting any further move only later, if at all. The Bank of Japan remains the clear outlier: while further tightening is still the central expectation, views are split on timing, with panelists divided between a March move and a hike pushed beyond April 2026—highlighting ongoing uncertainty over the durability of domestic inflation and wage dynamics.

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**The UK economy and BoE policy** 
While Blue Chip panelists remain divided on the precise timing of the Bank of England’s next policy cut, the latest run of UK data is tilting market expectations toward an earlier move. Economic releases have increasingly fallen short of expectations, a pattern that has coincided with a steady decline in short-dated gilt yields. The negative surprise profile reflects a combination of weak household demand and softer labour-market indicators. This has generated downside momentum in the data, reinforcing the case—at least from a market perspective—for earlier or deeper policy easing.

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**The impact of Artificial Intelligence**
Responses to the special questions in the latest Blue Chip survey also suggest that panelists are divided over the timing of AI’s macroeconomic impact in the US. A sizeable share already reports seeing noticeable effects, consistent with the rapid pace of AI-related investment and adoption over the past year. At the same time, a similarly large group expects AI’s impact to become more evident only over the next one to three years, implying a belief that productivity and growth effects will materialise with a lag. These views are notable given that a majority of panelists continue to judge anticipated AI-related gains as being overstated in financial markets, underscoring the risk of disappointment—and potential equity market volatility—if realised outcomes fail to match elevated expectations.

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**US business formation and productivity growth**
The chart points to a renewed pick-up in US productivity growth alongside a marked step-up in business applications, a combination that has naturally fuelled interest in the role of AI. The acceleration in output per hour over the past year coincides with a surge in corporate formations, potentially reflecting both heightened investment in new technologies and the emergence of new, AI-enabled business models. That said, productivity growth has historically been highly cyclical, often strengthening late in the cycle or during periods of labour hoarding and cost discipline, before fading again. As such, while AI may be contributing at the margin, it remains too early to conclude that the recent improvement marks a durable, technology-driven shift rather than another cyclical upswing.

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**China’s export growth**
This week’s China trade data revealed that its export growth has continued to rotate away from the US and toward Europe and ASEAN, a pattern that has become more pronounced over the past year. While exports to the US have fallen sharply on a year-on-year basis, shipments to both Europe and ASEAN have held up markedly better, and in recent months have returned to positive growth. This divergence is consistent with the tightening of US trade policy toward China, including higher tariffs, expanded export controls and broader efforts to “de-risk” supply chains. By contrast, trade with Europe and ASEAN appears to be benefiting from trade diversion and re-routing, as Chinese firms redirect exports toward markets where barriers remain lower and supply-chain integration is deeper.

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The global backdrop remains unsettled, reflected in rising gold prices amid geopolitical tensions—most recently around Venezuela—and renewed political noise, including questions over Federal Reserve independence. At the same time, however, many major equity indices remain at or close to all-time highs, buoyed by optimism around AI and reinforced by a run of relatively benign US inflation readings. Against this mixed backdrop, the charts this week point to a global outlook that is becoming more differentiated rather than uniformly weaker. Blue Chip forecasts for 2026 growth have edged higher over the past six months, with upgrades concentrated in economies most exposed to the AI investment cycle, notably the US and parts of Asia (chart 1). Central bank expectations remain fluid: while panelists broadly anticipate easing by the Fed and Bank of England, conviction around timing is limited, and the Bank of Japan remains an outlier with further tightening still expected (chart 2). In the UK, that uncertainty sits alongside a deteriorating data flow, with negative economic surprises increasingly tilting market expectations toward an earlier BoE rate cut (chart 3). Turning to the US, special questions highlight a divide over whether AI is already having a noticeable macro impact or whether its effects will emerge more gradually, a tension that mirrors concerns about over-optimism in financial markets (chart4). That debate is echoed in the recent pick-up in US productivity growth and the step-change in business formation—developments that may reflect AI-related dynamics but which also warrant caution given the historically cyclical nature of productivity (chart 5). Finally, China’s trade data point to a continued re-orientation of export growth away from the US and toward Europe and ASEAN, consistent with evolving US trade policy and broader supply-chain realignment (chart 6).

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Charts of the Week: Between Optimism and Uncertainty

Michael J. Moran

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The Bureau of Labor Statistics did not publish a report on export and import prices for October because of the government shutdown, and BLS was unable to construct statistics for October to include with the November report. The charts above have a gap in October, and the November figures are represented by a small dot.

Import prices have been remarkably stable in the past three years, as shown by the sideways movement in the level of the import price index (left chart). Focusing on percent changes (i.e. inflation rates) rather than the level of the index shows deflation in 2023 and early 2024 followed by higher prices more recently (right chart). Still, the net change in the past 12 months has totaled only 0.1% and the cumulative change in the past three years amounted to a decline of 0.4%.

A calm environment in the energy sector has helped to restrain import prices, as the price of crude oil showed little change in 2023 and 2024 and declined in 2025. Import prices excluding petroleum products have increased in recent years, but the changes have been modest: 0.9 in the past 12 months and 1.3% in the past three years.

The non-oil components of import prices have traced various patterns in recent years, but shifts have been largely offsetting. Prices of food and autos increased noticeably in 2023 and 2024, but they gave back much of those increases in 2025. Prices of capital goods were stable in 2023 and 2024, but they started to increase in 2025. Prices of consumer goods have been volatile, showing bursts of higher prices followed by discounting, leaving a modest net increase in the past three years.

The calm energy environment also seemed to play a role on the export side, as the industrial supply category showed little net change in prices over 2023 and 2024 before jumping in early 2025. Food prices followed a similar pattern, showing two years of restraint before moving higher in 2025. These two categories account for much of the upward movement in overall export prices in 2025. Prices of consumer goods also started to move higher in 2025 after little net change in the prior two years. Prices of capital goods and automobiles have traced reasonably steady upward paths.

Many observers might try to use the import component of this report to gain insight into the effect of tariffs on prices. That will be difficult because the figures from this report are pre-tariff; there will be no independent upward pressure on prices in this report because of tariffs. In fact, one should look for lower import prices in searching for a tariff effect. That is, if a foreign exporter were to absorb the tariff burden, that would be accomplished by reducing the pre-tariff price in order to keep the after-tariff price steady.

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Some exporters to the US may have made such efforts. The nearby chart shows the month-to-month change in import prices in 2025, and May and June both showed lower prices. These months were especially important because they followed the announcement by President Trump of marked increases in tariffs in April. Also, some of the downward pressure occurred in components that would be sensitive to price (autos and consumer goods). Of course, May and June might be too soon after the announcement of draconian tariffs for foreign exporters to assess and change their pricing strategy.

The chart on monthly changes ends in September because the absence of an October reading prevents the calculation of the month-to-month changes for October and November. However, the two-month change from September to November is easily calculated, and the increase of 0.4% suggests little or no effort to absorb the burden of tariffs.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

- Import prices have changed little in the past three years.
- Export prices were stable in 2023-24, but moved higher in 2025.

Import & Export Prices: Generally Modest Changes

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The Empire State Manufacturing Index of General Business Conditions rose to a higher-than-expected 7.7 in January following a 17.2-drop to -3.7 in December, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 1.0 for January had been expected in the Action Economics Forecast Survey. The positive January figure indicated that the business activity in New York State expanded for the third time in four months; it was an improvement from -7.4 in January 2025 and a low of -29.7 in January 2024, though still below a high of 16.8 in November 2024. The percentage of respondents reporting an increase in general business conditions was 34.2% in January, up from 31.7% in December; the percentage reporting a decrease was 26.5%, down from December’s 35.4%. The latest survey was conducted between January 2 and January 9.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 51.2 in January following a 4.2-point decline to the neutral-level 50.0 in December (the lowest level since September); it was slightly up from 50.7 in January 2025 and well above a low of 43.0 in January 2024. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

In the latest survey, the new orders index rose to 6.6 in January after a 10.6-point drop to -1.0 in December, marking the third m/m gain in orders in four months and a sharp improvement from a low of -30.7 in January 2024. The shipments index jumped to 16.3 in January, the highest level since November 2024, following a 16.5-point fall to -5.0 in December; it was well above a low of -21.7 in April 2024. The unfilled orders index improved to -8.2 in January after a 9.1-point decrease to -14.9 in December, indicating that unfilled orders contracted for the eighth straight month but at a less severe pace; the index reached a low of -24.2 in January 2024. The inventories index fell to -2.1 in January, the lowest level since September, after a 2.7-point decline to 4.0 in December, signaling the first inventory contraction since October. Meanwhile, the delivery times index increased to 0.0 in January from -5.9 in December, with 12.4% of respondents reporting longer delivery times and an identical 12.4% reporting shorter times, indicating that delivery times were unchanged.

On the labor front, the number of employees index fell to -9.0 in January after a 1.0-point increase to 7.5 in December, indicating that employment contracted for the first time since September and reached its lowest level since January 2024. The index remained well below a peak of 24.9 in February 2022. In January, only 7.9% of respondents reported an increase in employment while a higher 16.8% reported a decline. The average workweek index dropped to -5.4 in January from 2.5 in December, turning negative for the first time since October and hitting the lowest level since April 2025.

Inflation pressures eased in January but remained high. The prices paid index fell to 42.8 in January, the lowest level since March 2025, after a 5.9-point decrease to 44.2 in December. Although still well below a peak of 84.9 in April 2022, the index remained above a low of 25.9 in December 2024 and a low of 20.8 in December 2023. In January, 44.5% of respondents reported higher prices paid while only 1.7% reported lower prices paid. The prices received index fell to 14.4 in January, the lowest reading since January 2025, from 25.4 in December. The index was up from a low of 7.5 in December 2024 and a low of 7.7 in July 2023 but far below a high of 51.9 in March 2022. In January, 18.9% of respondents reported higher prices received while 4.4% reported lower prices received.

Firms remained fairly optimistic about the future business outlook in the latest survey. The index for future business conditions eased to 30.3 in January after rising to 33.5 in December, with 50.6% of respondents expecting business conditions to improve over the next six months. Future new orders edged down to 33.3 in January from 34.5 in December, while future shipments rose to 34.9—the highest level since March 2022—from December’s 30.7. Growth in future employment strengthened to 14.9, the highest reading since November 2024, from December’s 7.8. Capital spending plans remained positive for the third consecutive month in January, with the future capital expenditures index rising to 10.3 from December’s 6.9. Expected prices paid fell to 52.6 in January from 55.4 in December and expected prices received fell to 36.5 from 41.6, with both measures at their lowest levels since December 2024.

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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- General Business Conditions Index up 11.4 pts. to 7.7 in January.
- Positive: Shipments (16.3, highest since Nov. ’24) and new orders (6.6).
- Negative: Employment (-9.0, lowest since Jan. ’24), unfilled orders (-8.2), and inventories (-2.1, a four-month low).
- Prices paid at a 10-month-low 42.8 and prices received at a one-year-low 14.4.
- Firms fairly optimistic: Future Business Conditions Index down to a still-positive 30.3; future prices paid at a one-year-low 52.6.

Economy in Brief: 2009

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