Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029a.jpg" align="right" border="0" height="265" width="353">
The U.S. economy grew last quarter at hardly a barn-burning
rate, but at least it was positive for the first time in over a year.
Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7%
decline since late-2007. The rise was fueled by upturns in domestic
demand and inventories but lessened by deterioration in the foreign
trade deficit. Consensus expectations are that economic growth will
continue in coming quarters at roughly a 3.0% rate which, by postwar
standards, would be subpar. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029b.jpg" align="right" border="0" height="265" width="353">
Domestic final demand growth was positive for just the second
quarter since 1Q'08. The upturn owed to a 3.1% gain in consumer
spending (-0.3% y/y) that was led by a 22.8% rise in durables
consumption. The Cash for Clunkers sales incentive program by
auto-makers caused motor vehicle consumption to jump at a 56.4% annual
rate, though it still was up just 1.4% from one-year earlier.
Elsewhere, personal consumption of furniture grew at a 6.4% (-5.9% y/y)
rate following a like downturn during 2Q. Spending on clothing
&amp; shoes fell at a 1.5% (-5.1% y/y) rate while services spending
gained a modest 1.8% (0.4% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029c.jpg" align="right" border="0" height="265" width="353">
In the fixed-investment side of the GDP accounts, residential
spending also grew for the first time since 1Q'06. The 23.3% rise
(-18.1% y/y) followed a 2Q decline of similar magnitude. During the
downturn, which spanned three years, residential investment fell by
more than one-half. Continuing to the downside at a 2.5% (-18.9% y/y)
rate was business investment. The decline was led by a 9.0% (-20.8%
y/y) drop in spending on structures though equipment spending rose a
modest 1.1% (-17.9% y/y). That increase was led by a gain in
transportation equipment spending (-47.2% y/y) and an upturn in
information processing equipment &amp; software (-6.4% y/y).
Government investment rose at a 2.3% rate (1.8% y/y) led by a gain in
defense spending (5.0% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029d.jpg" align="right" border="0" height="265" width="353">
Inventory accumulation made a positive contribution to GDP
growth for just the second time in two years. The modest 0.9% addition
followed subtractions of 1.4 and 2.4 percentage points during the prior
two quarters.
For the first time in a year, deterioration in the foreign
trade deficit lowered GDP growth. The 0.5 percentage point subtraction
was due to a 16.3% (-14.9% y/y) rise in real imports which outpaced the
14.7% (-11.2% y/y) gain in exports.
The GDP price deflator rose a slim 0.8%. Though the PCE price
index gained 2.8% (-0.6% y/y), the rise in the overall domestic final
sales price index was held to just 1.6% (-1.0% y/y) as the fixed
investment price index fell sharply (-2.5% y/y).
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained
2005$, % AR</a></th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '09</th>
<th scope="col">2Q 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">GDP</td>
<td>3.5</td>
<td>-0.7</td>
<td>-6.4</td>
<td>-2.3</td>
<td>0.4</td>
<td>2.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory
Effect</td>
<td>0.9</td>
<td>-1.4</td>
<td>-2.4</td>
<td>-1.2</td>
<td>-0.4</td>
<td>-0.4</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6</td>
<td>0.7</td>
<td>-4.1</td>
<td>-1.5</td>
<td>0.8</td>
<td>2.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>-0.5</td>
<td>1.7</td>
<td>2.6</td>
<td>0.9</td>
<td>-1.2</td>
<td>0.8</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.0</td>
<td>-0.9</td>
<td>-6.4</td>
<td>-2.4</td>
<td>-0.4</td>
<td>1.7</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>0.8</td>
<td>-0.0</td>
<td>1.9</td>
<td>0.7</td>
<td>2.1</td>
<td>2.9</td>
<td>3.3</td>
</tr>
</tbody>
</table>

EU Indices Jump in October 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029e.jpg" align="left" border="0" height="265" width="353">
The EU Commission indices made their eight largest advance
Since October 1988 for the EU region as a whole. This boosted the
overall index for the EU to the 46th percentile of range much closer to
its midpoint but still 14% below its average level for the same period. 
 

Surprisingly in relative terms it is the consumer that is
boosting the region the most. Consumer confidence stands at the 50%
mark of its range. Construction lags the most of all sectors, standing
in the 17th percentile of its range followed by services that languish
in the 31st percentile of their range. Both retailing and the
industrial sector are in their respective 41st percentiles. 
 

As to countries, the large countries are clustered closely
together in their respective range readings. Spain is the weakest in
the 38th percentile of its range. Compared to the UK in the 47th range
percentile; among EMU members Italy is the relative strongest in its
42nd percentile leaving a small gap between the best reading and the
worst among large countries in the e-Zone. 
 

Still if we look at the rankings by queue the results are much
weaker. The range ranking positions the current reading between the
highest and lowest range values. The queue orders the various readings
by component or country depending on its application. It ranks them
presenting the result as a percentage (100 is highest). The queue
percentiles show that while the various indicators have come sharply up
from their lows and some although some are closing in on range
midpoints the ranked readings are still no where near normal. 
 

The overall EU reading that stands in the 46th percentile of
its range also stands in the 11th percentile of its queue &#8211; a terribly
low standing. The real message here is that yes there is a significant
recovery from the lows in gear but the current levels of the indices
are still well below normal. 
 

While the EU and EMU regions are making progress there is
still a very long way to go. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment</th>
</tr>
<tr>
<td class="firstcol">EU</td>
<td>Oct 
09</td>
<td>Sep 
09</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Percen 
-tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>By Queue 
Rank%</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall
Index</td>
<td>86</td>
<td>82.6</td>
<td>81</td>
<td>75</td>
<td>46.0</td>
<td>222</td>
<td>116</td>
<td>60</td>
<td>56</td>
<td>99</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-20</td>
<td>-24</td>
<td>-26</td>
<td>-30</td>
<td>41.3</td>
<td>225</td>
<td>7</td>
<td>-39</td>
<td>46</td>
<td>-8</td>
<td>10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-15</td>
<td>-17</td>
<td>-20</td>
<td>-21</td>
<td>50.0</td>
<td>188</td>
<td>2</td>
<td>-32</td>
<td>34</td>
<td>-11</td>
<td>25.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade</td>
<td>-12</td>
<td>-11</td>
<td>-12</td>
<td>-14</td>
<td>41.9</td>
<td>215</td>
<td>6</td>
<td>-25</td>
<td>31</td>
<td>-6</td>
<td>14.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-34</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>17.4</td>
<td>216</td>
<td>4</td>
<td>-42</td>
<td>46</td>
<td>-17</td>
<td>13.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-11</td>
<td>-11</td>
<td>-11</td>
<td>-19</td>
<td>31.7</td>
<td>143</td>
<td>32</td>
<td>-31</td>
<td>63</td>
<td>13</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>%m/m</td>
<td>&nbsp;</td>
<td>Oct 
09</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>4.1%</td>
<td>2.5%</td>
<td>6.3%</td>
<td>86.2</td>
<td>41.1</td>
<td>222</td>
<td>117</td>
<td>65</td>
<td>53</td>
<td>100</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>3.9%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>90.8</td>
<td>38.0</td>
<td>201</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>19.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>3.4%</td>
<td>5.9%</td>
<td>2.3%</td>
<td>91.1</td>
<td>40.9</td>
<td>187</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>100</td>
<td>25.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>4.4%</td>
<td>-1.5%</td>
<td>4.5%</td>
<td>90.0</td>
<td>42.7</td>
<td>214</td>
<td>121</td>
<td>67</td>
<td>54</td>
<td>100</td>
<td>14.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>2.4%</td>
<td>-1.5%</td>
<td>3.7%</td>
<td>82.6</td>
<td>31.9</td>
<td>220</td>
<td>117</td>
<td>67</td>
<td>50</td>
<td>99</td>
<td>12.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>3.8%</td>
<td>0.0%</td>
<td>13.1%</td>
<td>86.7</td>
<td>47.1</td>
<td>219</td>
<td>121</td>
<td>56</td>
<td>65</td>
<td>99</td>
<td>12.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Since Oct 1988</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>251</td>
<td>-Count</td>
<td>Services:</td>
<td>154</td>
<td>-Count</td>
<td colspan="4">&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment
is
an index, sector
readings are net balance diffusion measures</td>
</tr>
</thead>
</table>
 U.S. Weekly Initial Claims For
Unemployment Insurance Hold Steady 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 29, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029f.jpg" align="right" border="0" height="265" width="353">The trend
toward improvement in the job market continued this month. The Labor
Department indicated that initial claims for unemployment insurance
held roughly steady w/w at 530,000. The figures are down moderately
from an average of 549,000 claims during September and are down sharply
from the peak reached in March of 674,000 claims. The four-week moving
average of claims fell to 526,250 while the latest weekly figure was
slightly higher than Consensus expectations for 521,000 claims.
The
largest increases in initial claims during the week ending October 17
were in California (+5,774, +12.6% y/y), Puerto Rico (+685, +52.9%
y/y), Minnesota (+614, +38.8% y/y), Nevada (+366, 8.7% y/y ), and
Nebraska (+239, -1.6% y/y), while the largest decreases were in
Wisconsin (-5,681, +29.5%), New York (-4,711, +15.5% y/y), Pennsylvania
(-4,033, +28.2% y/y), Illinois (-3,870, +44.9% y/y), and Oregon
(-2,706, -16.6% y/y).
 Continuing claims for unemployment insurance
during the latest week fell 148,000 to their lowest level since
late-March. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029g.jpg" align="right" border="0" height="265" width="353">
The decline reflects the improved job market but may also
be a function of the exhaustion of benefits. Continuing claims provide
an indication of workers' ability to find employment. The four-week
average of continuing claims fell modestly to 5,960,750 and have fallen
12.0% from their peak. This series dates back to
1966.
Extended benefits for unemployment insurance
fell slightly for the first decline in seven weeks. The prior week's
level was revised up. Through early-October extended benefits averaged
551,381.
The insured rate of unemployment slipped again to 4.4%, from
an unrevised 4.5%, and matched its lowest since late-March. The rate
reached a high of 5.2% during late-June. During the last ten years,
there has been a 93% correlation between the level of the insured
unemployment rate and the overall rate of unemployment published by the
Bureau of Labor Statistics.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091029h.jpg" align="right" border="0" height="265" width="353">The lowest
insured unemployment
rates during the week ending October 9 were in North Dakota (1.1%),
South Dakota (1.1), Virginia (2.0), Wyoming (2.4), Maine (2.4), Texas
(2.6), Colorado (2.9), Minnesota (3.0), Maryland (3.1), Mississippi
(3.5), New York (3.5), Florida (3.7), and Georgia (3.8). The highest
insured unemployment rates were in Puerto Rico (6.3), Oregon (5.3),
Nevada (5.3), Pennsylvania (5.0), California (4.6), Michigan (4.6),
Wisconsin (4.8), North Carolina (4.5), South Carolina (4.5), and
Washington (4.3).
The unemployment insurance claims data is available
in Haver's WEEKLY database and the state data is in
the REGIONW database.
Birth date,
business cycles, and lifetime income from the U.S. Office of
Management and Budget is available <a href="http://www.whitehouse.gov/omb/blog/09/10/22/Birth-date-business-cycles-and-lifetime-income/">here</a>.&nbsp;
<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">10/09/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>530</td>
<td>531</td>
<td>520</td>
<td>9.3%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,797</td>
<td>5,945</td>
<td>53.6%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.4</td>
<td>4.5</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

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The U.S. economy grew last quarter at hardly a barn-burning rate, but at least it was positive for the first time in over a year. Real GDP during 3Q'09 grew at an expected 3.5% annual rate after a 3.7% decline since late-2007. The [...]

Q3 GDP Posts First Gain AfterMore-Than Year Long Recession

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028e.jpg" width="353">
The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly revised August level of 417,000 and it fell well short of Consensus expectations for a rise to 440,000 sales. Nevertheless, sales have risen by nearly one-quarter from the January low.
Home prices firmed last month, but the recovery this year has been tepid. The median price of a new single-family home rose to $204,800 from an upwardly revised August level. Nevertheless the latest figure, which was down 9.1% y/y, remained near the lowest level since October of 2003. The average price of a new home was less weak and off 1.6% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028f.jpg" width="353">
Price discounts, higher sales and much lower housing starts have combined to lower the overhang of unsold homes. A September decline dropped them by more than one-third versus last year to the lowest level since 1982 (no typo). In the West the number of homes for sale fell by nearly one-half to a record low while inventories elsewhere in the country fell by roughly one-third.
The months&#39; supply of unsold homes held steady last month at 7.5 months and was down from the high of 12.4 months in January. The figure was the lowest since January 2007.
The Global Financial Crisis and Offshore Dollar Markets from the Federal Reserve Bank of New York can be found here <a href="http://www.newyorkfed.org/newsevents/news/research/2009/rp091027.html"> 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">US New Homes</th>
<th scope="col">September</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 Sales (SAAR, 000s)</td>
<td>402</td>
<td>417</td>
<td>413</td>
<td>-7.8%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>42</td>
<td>42</td>
<td>41</td>
<td>&nbsp;68.0</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>53</td>
<td>56</td>
<td>12.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>188</td>
<td>209</td>
<td>215</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>101</td>
<td>113</td>
<td>101</td>
<td>-1.0</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>204,800</td>
<td>199,900</td>
<td>215,600</td>
<td>&nbsp;-9.1</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body>
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The recovery in the housing market stuttered last month. Sales of new single-family homes fell during September following five consecutive months of increase. The seasonally adjusted annual sales rate of 402,000 followed a downwardly [...]

U.S. New Home Sales Decline Though Prices Increase

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028d.jpg" align="left" border="0" height="265" width="353">
Last month Italian consumers felt great and Italian businesses
felt worse. In October, Italian consumers felt decidedly worse while
business sentiment advanced nicely to a 13 month high. 

Still the overall biz indicator stands only in the 37th
percentile of its long term range that is well below the mid point and
not near enough to a normal, let alone recovery, reading yet. Orders
score a -51 raw reading a figure that stand in the bottom 20th
percentile of its range. Domestic orders are relatively better off than
foreign orders as domestic orders stand in their 25th range percentile
while foreign orders stand in their 17th percentile. 

In Italy investment goods stand in lower range percentiles
than do consumer goods. Italy&#8217;s revival seems to be more on the back of
the consumer that Germany&#8217;s which seems to be relatively more on the
aback of foreign demand. Since the consumer is lagging and troubled
that is something to keep a close eye on. Foreign orders to Italian
exporters have been showing signs of weakening. For that to happen as
Italian domestic demand form consumers fades is an ominous sign.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy ISAE
Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Oct 1996</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>77.1</td>
<td>74.3</td>
<td>74.7</td>
<td>72.5</td>
<td>37.7</td>
<td>136</td>
</tr>
<tr>
<td colspan="7" class="firstcol">TOTAL INDUSTRY</td>
</tr>
<tr>
<td colspan="7" class="firstcol">&nbsp;Order books
&amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-51</td>
<td>-52</td>
<td>-51</td>
<td>-58</td>
<td>20.0</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-49</td>
<td>-49</td>
<td>-48</td>
<td>-53</td>
<td>25.9</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-55</td>
<td>-56</td>
<td>-51</td>
<td>-61</td>
<td>17.5</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>37.5</td>
<td>122</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-49</td>
<td>-47</td>
<td>-47</td>
<td>-52</td>
<td>15.5</td>
<td>141</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INTERMEDIATE</td>
</tr>
<tr>
<td colspan="7" class="firstcol"> Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-57</td>
<td>-55</td>
<td>-54</td>
<td>-60</td>
<td>21.6</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-57</td>
<td>-54</td>
<td>-53</td>
<td>-60</td>
<td>23.2</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-56</td>
<td>-59</td>
<td>-57</td>
<td>-63</td>
<td>24.5</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-7</td>
<td>-1</td>
<td>-6</td>
<td>0</td>
<td>27.6</td>
<td>126</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-52</td>
<td>-51</td>
<td>-55</td>
<td>-58</td>
<td>21.0</td>
<td>139</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INVESTMENT GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-62</td>
<td>-61</td>
<td>-63</td>
<td>-69</td>
<td>10.5</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-54</td>
<td>-55</td>
<td>-56</td>
<td>-63</td>
<td>21.0</td>
<td>137</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-66</td>
<td>-61</td>
<td>-59</td>
<td>-72</td>
<td>6.3</td>
<td>142</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>-1</td>
<td>4</td>
<td>8</td>
<td>43.2</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-61</td>
<td>-58</td>
<td>-56</td>
<td>-67</td>
<td>5.9</td>
<td>143</td>
</tr>
<tr>
<td colspan="7" class="firstcol">CONSUMER GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-36</td>
<td>-38</td>
<td>-37</td>
<td>-37</td>
<td>26.1</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-36</td>
<td>-39</td>
<td>-35</td>
<td>-37</td>
<td>29.0</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-41</td>
<td>-42</td>
<td>-36</td>
<td>-39</td>
<td>22.9</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>1</td>
<td>3</td>
<td>-1</td>
<td>38.5</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-37</td>
<td>-33</td>
<td>-31</td>
<td>-35</td>
<td>15.8</td>
<td>143</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Total number of months:</td>
<td colspan="3">148</td>
</tr>
</tbody>
</table>
</body></html>

Last month Italian consumers felt great and Italian businesses felt worse. In October, Italian consumers felt decidedly worse while business sentiment advanced nicely to a 13 month high. Still the overall biz indicator stands only in [...]

Italy's Business Sentiment Bounces Back Highest Reading Since Sept 2008

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028a.jpg" width="353">
The manufacturing sector&#39;s recovery appears intact. Durable goods orders recovered an expected 1.0% last month following declines during two of the prior three months. Moreover, the three-month rate of increase held at a firm 12.6% (AR). That increase followed a 51% rate of decline through last December. Since January orders have risen 4.1%.
Transportation equipment orders rose 1.1% last month, held back by a 0.1% (-24.1% y/y) downtick in motor vehicle &amp; parts orders and a 2.1% (-51.3% y/y) decline in nondefense aircraft orders. Excluding the volatile transportation equipment sector orders show clear improvement. With a 0.9% rise last month, orders have risen 3.3% from their January low and have increased at a 5.9% rate during the last three months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028b.jpg" width="353">
Higher orders for primary metals have led the improvement in durables bookings. The 0.3% increase last month followed strong gains during the prior three months and the three-month rate of increase rose to 24.5%. Orders for fabricated metals also have been quite strong. Following this strength is the electrical equipment sector. Though orders fell during the last two months, the three-month rate of increase held at a firm 6.5%. Also showing improvement has been orders for computers &amp; related equipment. The weak 0.4% rise last month failed to make up large declines during the prior two months, but since their April low, orders have risen 9.6%.
The capital goods sector also has improved. New orders for nondefense capital goods rose 2.5% and they rose 2.0% excluding aircraft &amp; parts. These latest increases build on strength developed this summer and orders have risen 8.1% from the April low.
Shipments of durable goods are now reflecting the improvement in orders. With a 0.8% rise last month, the three-month rate of increase improved to 6.6% and shipments are now 2.4% higher than the May low. The improvement has been paced by gains in shipments of metals but the machinery and electrical equipment sectors continue to lag.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028c.jpg" width="353">
Inventories of durable manufactured goods continued lower and posted a 1.0% decline which was the ninth consecutive monthly drop totaling 11.2%. The shedding of inventory has been broad-based led by a 21.0% decline this year in the metals area, a 20.5% drop in computer inventories, a 16.2% drop in motor vehicles and an 11.9% in electrical equipment.
The durable goods figures are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM" style="COLOR: #000000">NAICS Classification </a>(%)</th>
<th scope="col">September</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">Durable Goods Orders</td>
<td>1.0</td>
<td>-2.6</td>
<td>4.8</td>
<td>-19.6</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.9</td>
<td>-0.4</td>
<td>0.9</td>
<td>-16.9</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>2.5</td>
<td>-7.7</td>
<td>7.0</td>
<td>-21.0</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.0</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-16.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The manufacturing sector's recovery appears intact. Durable goods orders recovered an expected 1.0% last month following declines during two of the prior three months. Moreover, the three-month rate of increase held at a firm 12.6% [...]

U.S. Durable Goods Orders Rise, Continuing Firm Uptrend

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028a.jpg" align="left" border="0" height="265" width="353">
The manufacturing sector's recovery appears intact. Durable
goods orders recovered an expected 1.0% last month following declines
during two of the prior three months. Moreover, the three-month rate of
increase held at a firm 12.6% (AR). That increase followed a 51% rate
of decline through last December. Since January orders have risen 4.1%.
Transportation equipment orders rose 1.1% last month, held
back by a 0.1% (-24.1% y/y) downtick in motor vehicle &amp; parts
orders and a 2.1% (-51.3% y/y) decline in nondefense aircraft orders.
Excluding the volatile transportation equipment sector orders show
clear improvement. With a 0.9% rise last month, orders have risen 3.3%
from their January low and have increased at a 5.9% rate during the
last three months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028b.jpg" align="right" border="0" height="265" width="353">
Higher orders for primary metals have led the improvement in
durables bookings. The 0.3% increase last month followed strong gains
during the prior three months and the three-month rate of increase rose
to 24.5%. Orders for fabricated metals also have been quite strong.
Following this strength is the electrical equipment sector. Though
orders fell during the last two months, the three-month rate of
increase held at a firm 6.5%. Also showing improvement has been orders
for computers &amp; related equipment. The weak 0.4% rise last
month failed to make up large declines during the prior two months, but
since their April low, orders have risen 9.6%.
The capital goods sector also has improved. New orders for
nondefense capital goods rose 2.5% and they rose 2.0% excluding
aircraft &amp; parts. These latest increases build on strength
developed this summer and orders have risen 8.1% from the April low.
Shipments of durable goods are now reflecting the improvement
in orders. With a 0.8% rise last month, the three-month rate of
increase improved to 6.6% and shipments are now 2.4% higher than the
May low. The improvement has been paced by gains in shipments of metals
but the machinery and electrical equipment sectors continue to lag.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028c.jpg" align="left" border="0" height="265" width="353">
Inventories of durable manufactured goods continued lower and
posted a 1.0% decline which was the ninth consecutive monthly drop
totaling 11.2%. The shedding of inventory has been broad-based led by a
21.0% decline this year in the metals area, a 20.5% drop in computer
inventories, a 16.2% drop in motor vehicles and an 11.9% in electrical
equipment.
The durable goods figures are available in Haver's USECON
database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM" style="color: rgb(0, 0, 0);">NAICS Classification
</a>(%)</th>
<th scope="col">September</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">Durable Goods Orders</td>
<td>1.0</td>
<td>-2.6</td>
<td>4.8</td>
<td>-19.6</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>0.9</td>
<td>-0.4</td>
<td>0.9</td>
<td>-16.9</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>2.5</td>
<td>-7.7</td>
<td>7.0</td>
<td>-21.0</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.0</td>
<td>-0.8</td>
<td>-1.3</td>
<td>-16.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
Italy's Business Sentiment Bounces
Back Highest
Reading Since Sept 2008 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 28, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028d.jpg" align="left" border="0" height="265" width="353">
Last month Italian consumers felt great and Italian businesses
felt worse. In October, Italian consumers felt decidedly worse while
business sentiment advanced nicely to a 13 month high. 

Still the overall biz indicator stands only in the 37th
percentile of its long term range that is well below the mid point and
not near enough to a normal, let alone recovery, reading yet. Orders
score a -51 raw reading a figure that stand in the bottom 20th
percentile of its range. Domestic orders are relatively better off than
foreign orders as domestic orders stand in their 25th range percentile
while foreign orders stand in their 17th percentile. 

In Italy investment goods stand in lower range percentiles
than do consumer goods. Italy&#8217;s revival seems to be more on the back of
the consumer that Germany&#8217;s which seems to be relatively more on the
aback of foreign demand. Since the consumer is lagging and troubled
that is something to keep a close eye on. Foreign orders to Italian
exporters have been showing signs of weakening. For that to happen as
Italian domestic demand form consumers fades is an ominous sign.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy ISAE
Business Sentiment</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="5">&nbsp;</td>
<td colspan="2">Since Oct 1996</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-09</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Percentile</td>
<td>Rank</td>
</tr>
<tr class="odd">
<td class="firstcol">Biz Confidence</td>
<td>77.1</td>
<td>74.3</td>
<td>74.7</td>
<td>72.5</td>
<td>37.7</td>
<td>136</td>
</tr>
<tr>
<td colspan="7" class="firstcol">TOTAL
INDUSTRY</td>
</tr>
<tr>
<td colspan="7" class="firstcol">&nbsp;Order
books
&amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-51</td>
<td>-52</td>
<td>-51</td>
<td>-58</td>
<td>20.0</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-49</td>
<td>-49</td>
<td>-48</td>
<td>-53</td>
<td>25.9</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-55</td>
<td>-56</td>
<td>-51</td>
<td>-61</td>
<td>17.5</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>37.5</td>
<td>122</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-49</td>
<td>-47</td>
<td>-47</td>
<td>-52</td>
<td>15.5</td>
<td>141</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INTERMEDIATE</td>
</tr>
<tr>
<td colspan="7" class="firstcol">
Order books &amp;
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-57</td>
<td>-55</td>
<td>-54</td>
<td>-60</td>
<td>21.6</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-57</td>
<td>-54</td>
<td>-53</td>
<td>-60</td>
<td>23.2</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-56</td>
<td>-59</td>
<td>-57</td>
<td>-63</td>
<td>24.5</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-7</td>
<td>-1</td>
<td>-6</td>
<td>0</td>
<td>27.6</td>
<td>126</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-52</td>
<td>-51</td>
<td>-55</td>
<td>-58</td>
<td>21.0</td>
<td>139</td>
</tr>
<tr>
<td colspan="7" class="firstcol">INVESTMENT
GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order
books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-62</td>
<td>-61</td>
<td>-63</td>
<td>-69</td>
<td>10.5</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-54</td>
<td>-55</td>
<td>-56</td>
<td>-63</td>
<td>21.0</td>
<td>137</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-66</td>
<td>-61</td>
<td>-59</td>
<td>-72</td>
<td>6.3</td>
<td>142</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>-1</td>
<td>4</td>
<td>8</td>
<td>43.2</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-61</td>
<td>-58</td>
<td>-56</td>
<td>-67</td>
<td>5.9</td>
<td>143</td>
</tr>
<tr>
<td colspan="7" class="firstcol">CONSUMER
GOODS</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Order
books &amp; Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Total</td>
<td>-36</td>
<td>-38</td>
<td>-37</td>
<td>-37</td>
<td>26.1</td>
<td>138</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>-36</td>
<td>-39</td>
<td>-35</td>
<td>-37</td>
<td>29.0</td>
<td>139</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Foreign</td>
<td>-41</td>
<td>-42</td>
<td>-36</td>
<td>-39</td>
<td>22.9</td>
<td>140</td>
</tr>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-1</td>
<td>1</td>
<td>3</td>
<td>-1</td>
<td>38.5</td>
<td>98</td>
</tr>
<tr class="odd">
<td class="firstcol">Production</td>
<td>-37</td>
<td>-33</td>
<td>-31</td>
<td>-35</td>
<td>15.8</td>
<td>143</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Total
number of months:</td>
<td colspan="3">148</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Decline Though
Prices Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 28, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028e.jpg" align="left" border="0" height="265" width="353">
The recovery in the housing market stuttered last month. Sales
of new single-family homes fell during September following five
consecutive months of increase. The seasonally adjusted annual sales
rate of 402,000 followed a downwardly revised August level of 417,000
and it fell well short of Consensus expectations for a rise to 440,000
sales. Nevertheless, sales have risen by nearly one-quarter from the
January low.
Home prices firmed last month, but the recovery this year has
been tepid. The median price of a new single-family home rose to
$204,800 from an upwardly revised August level. Nevertheless the latest
figure, which was down 9.1% y/y, remained near the lowest level since
October of 2003. The average price of a new home was less weak and off
1.6% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091028f.jpg" align="right" border="0" height="265" width="353">
Price discounts, higher sales and much lower housing starts
have combined to lower the overhang of unsold homes. A September
decline dropped them by more than one-third versus last year to the
lowest level since 1982 (no typo). In the West the number of homes for
sale fell by nearly one-half to a record low while inventories
elsewhere in the country fell by roughly one-third.
The months' supply of unsold homes held steady last month at
7.5 months and was down from the high of 12.4 months in January. The
figure was the lowest since January 2007.
The Global Financial Crisis and Offshore Dollar
Markets from the Federal Reserve Bank of New York can be
found here <a href="http://www.newyorkfed.org/newsevents/news/research/2009/rp091027.html">
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">US
New Homes</th>
<th scope="col">September</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 Sales
(SAAR, 000s)</td>
<td>402</td>
<td>417</td>
<td>413</td>
<td>-7.8%</td>
<td>481</td>
<td>769</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>42</td>
<td>42</td>
<td>41</td>
<td>&nbsp;68.0</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>71</td>
<td>53</td>
<td>56</td>
<td>12.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>188</td>
<td>209</td>
<td>215</td>
<td>-11.1</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>101</td>
<td>113</td>
<td>101</td>
<td>-1.0</td>
<td>113</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>204,800</td>
<td>199,900</td>
<td>215,600</td>
<td>&nbsp;-9.1</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Durable Goods Orders Rise,Continuing Firm Uptrend

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027i.jpg" align="left" border="0" height="265" width="353">
Entrepreneurs in France and the Netherlands continue to shed
some of their pessimism concerning economic prospects, but they are by
no means optimistic. From the low point in February, 2009, when
pessimists in the Netherlands outweighed the optimists by 22.9%,
pessimists still outweigh the optimists by 7.8%. In France, the
indicator of business confidence is so created that its long term
average is 100 with a standard deviation of 10. The low point at 68 in
March 2009 was more than three standard deviations below the long term
average. While the indicator has moved up to 86 in October, it is still
more than one standard deviation below average. The first chart shows
the measures of business confidence in the Netherlands and in France.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027j.jpg" align="right" border="0" height="265" width="353">
Consumers in France and in Italy had become disenchanted
earlier than the business community. Confidence among consumers in both
countries reached lows in July, 2008. Since then confidence among
Italian consumers has improved sharply, if erratically. October was
another decline in the upward but erratic path of Italian consumer
confidence. The index fell to 111.7 (1980=100) from 113.6 in September.
It is, however, almost 17% above the low point. The increase in
confidence from the low point among French households has been less
dramatic than that in Italy, as can be seen in the second chart. The
excess of pessimists over optimists has declined from 47% to 35% in
October, an improvement of 12 basis points. In spite of the rise in
confidence, pessimism among consumers in France and Italy still
outweighs optimism concerning the economic outlook.

<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">&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug&nbsp; 09</th>
<th scope="col">Jul 08</th>
<th scope="col">Low&nbsp;</th>
<th scope="col">Date&nbsp;</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="10">Business Confidence</td>
</tr>
<tr>
<td class="firstcol">Netherlands (% Balance)</td>
<td>-7.8</td>
<td>-9.8</td>
<td>-9.3</td>
<td>-14.8</td>
<td>-22.9</td>
<td>2/09</td>
<td>0.4</td>
<td>7.8</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">France(Synthetic Index: Avg
=100, St Dev =10)</td>
<td>86</td>
<td>83</td>
<td>79</td>
<td>76</td>
<td>68</td>
<td>3/09</td>
<td>96</td>
<td>110</td>
<td>107</td>
</tr>
<tr class="odd">
<td colspan="10">Consumer Confidence</td>
</tr>
<tr>
<td class="firstcol">Italy (1980=100)</td>
<td>111.7</td>
<td>113.6</td>
<td>111.8</td>
<td>107.5</td>
<td>95.8</td>
<td>7/08</td>
<td>100.6</td>
<td>108.5</td>
<td>108.7</td>
</tr>
<tr>
<td class="firstcol">France (% Balance)</td>
<td>-35</td>
<td>-36</td>
<td>-37</td>
<td>-38</td>
<td>-47</td>
<td>7.08</td>
<td>-42</td>
<td>-21</td>
<td>-25</td>
</tr>
</tbody>
</table>
</body></html>

Entrepreneurs in France and the Netherlands continue to shed some of their pessimism concerning economic prospects, but they are by no means optimistic. From the low point in February, 2009, when pessimists in the Netherlands [...]

Signs of Improvement in European Business and Consumer Confidence But No Euphoria

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027g.jpg" width="353">
Gasoline prices rose to nearly their highest level in one year. The pump price for regular gasoline increased last week to $2.67 per gallon which was roughly the highest level since October of last year. Moreover, prices remain up from the December low of $1.61. This week prices rose even further and the wholesale gasoline price moved to $2.07 from an average $2.05 last week. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Higher crude oil prices are behind the rise in gas prices and light sweet crude (WTI) rose to an average $80.35 per barrel last week, up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil leveled off and slipped to $78.68 per barrel.
Behind the increase in energy prices is an increase in the demand for gasoline. Last week, it posted a 3.4% rise versus one year ago. The gain was nearly the strongest since the fall of 2006. Demand for residual fuel oil also increased 22.8% y/y while distillate demand halved its recent decline to 11.5% y/y. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027h.jpg" width="353">
Finally, an earlier abundance of gasoline has eased somewhat. Gasoline inventories were up 5.3% y/y last week which was one-quarter of the gain last month. The gain in crude oil inventories also halved to 8.9% y/y and inventories of residual fuel oil are down 8.5% versus last year.
Natural gas prices also strengthened last week, ahead of the winter heating season, to an average of $4.70 per mmbtu (-30.2% y/y). Though they remained down by two-thirds from the high reached in early-July of last year of $13.19/mmbtu, they are more than double the low reached early last month. Yesterday prices increased further to $4.55/mmbtu.
What is Driving Energy Prices from the Federal Reserve Bank of Dallas is available <a href="http://www.dallasfed.org/sanantonio/news/events/2009/0906yucel.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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">10/26/09</th>
<th scope="col">10/19/09</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>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.67</td>
<td>2.57</td>
<td>0.7%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>80.35</td>
<td>75.74</td>
<td>17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Gasoline prices rose to nearly their highest level in one year. The pump price for regular gasoline increased last week to $2.67 per gallon which was roughly the highest level since October of last year. Moreover, prices remain up [...]

Weekly Gasoline Prices Climb Toward 12-Month High

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027e.jpg" align="right" border="0" height="265" width="353">
Earlier gains in consumer confidence have flagged with the
continued run-up in unemployment. The Conference Board indicated that
consumer confidence during October fell 10.7% from September. The
decline was the fourth in the last five months though confidence
remained nearly double this Winter's low. The Conference Board data can
be found in Haver's CBDB database.
During the last ten years there has been an 86% correlation
between the level of consumer confidence and the y/y change in real
consumer spending.
Consumers' assessment of the current economic conditions fell
again this month and remained near the historic low. It remained off by
almost two-thirds from one year earlier. Jobs were seen as hard to get
by an increased 49.6% of respondents and jobs were seen as plentiful by
3.4% which was near the series' historic low. Business conditions were
seen as good by just 7.7% and that also was near the series' low.
Consumers who thought business conditions were bad rose slightly to
47.1%. While off somewhat from its high the reading still near the
highest since 1983.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091027f.jpg" align="right" border="0" height="265" width="353">
The expectations component of confidence fell hard from
September but the index remained near the highest level since
late-2007. The percentage of respondents expecting business conditions
to improve slipped to 20.8% though that remained near the highest level
since 2004. Though down slightly m/m, an improved 16.3% of respondents
expected economic improvement to generate more jobs, more than double
the percentage at the recent low. However, that gain was not expected
to generate much more income.
Expectations for the inflation rate in twelve months held
stable at 5.3%, the lowest level since 2007 and down from last year's
high of 7.7%. Interest rates in twelve months were expected to be
higher by 49.5% of respondents, while 15.8% expected rates to fall. A
greatly increased 32.7% of respondents expected stock prices to rise.
Consumers continued to manage their spending plans cautiously.
Just 2.3% plan to buy a home during the next six months while just
23.3% plan to buy a major appliance. That's versus 30.9% back in 2007.
Only 4.4% plan to buy an automobile versus 6.0% in 2007. Just 1.4% plan
to buy a new one.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">October</th>
<th scope="col">September</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">Consumer
Confidence Index</td>
<td>47.7</td>
<td>53.4</td>
<td>22.9</td>
<td>57.9</td>
<td>103.4</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>20.7</td>
<td>23.0</td>
<td>-52.4</td>
<td>69.9</td>
<td>128.8</td>
<td>130.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>65.7</td>
<td>73.7</td>
<td>84.0</td>
<td>50.0</td>
<td>86.4</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

Earlier gains in consumer confidence have flagged with the continued run-up in unemployment. The Conference Board indicated that consumer confidence during October fell 10.7% from September. The decline was the fourth in the last five [...]

U.S. Consumer Confidence Drops Again

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

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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250430O1.jpg

Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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250430Q1.jpg

Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

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

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

250430A.jpg

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

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

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: October 2009

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