Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" width="353">
The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale gasoline price rose to $1.82 per gallon, up eight cents from the September low. Prices had reached a high in early-August of $2.03. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Running counter to gasoline prices, crude oil prices recently firmed and light sweet crude oil prices (WTI) rose to $70.86 per barrel last week, up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil rose even further to $73.27 per barrel.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" width="353">
The demand for gasoline shot up last week and posted a 3.2% rise versus one year ago. The gain was the strongest since the Fall of 2006. Demand for residual fuel oil eased, however and fell 7.3% y/y while distillate demand fell 11.0% y/y. Finally, oil remains plentiful as evidenced by a 15.0% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline have surged and are up 14.8% versus last year. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices increased again last week, ahead of the Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y) but they remained down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu. Yesterday prices increased further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.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">10/5/09</th>
<th scope="col">09/28/09</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>2.47</td>
<td>2.50</td>
<td>-29.2%</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>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
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The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale [...]

Weekly Gasoline Prices Slip While Crude Oil Prices Strengthen

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" width="353">
During September, small business&#39; optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism index rose to 88.8 during September after an August uptick. The index remained improved from the lows of this past winter but were down from last year.During the last ten years, there has been an 85% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of small businesses expecting the economy to improve slipped back to just 8. However, despite this negativism the percentage which thought that now was a good time to expand the business rose sharply to 9 which was the highest level in twelve months. Moreover, the percent reporting higher net-earnings this quarter versus last year held at -40 m/m, meaning fewer were reporting negative earnings versus last year. It was the highest level since December.
The recent improvement in business&#39; sentiment has done little, if anything, to improve hiring intentions. The percentage of firms planning to raise employment fell back into the net-layoff region. Moreover, the percentage of firms with one or more job openings held at just 8% during September, the lowest level since 1982. During the last ten years there has been a 74% correlation between the NFIB employment percentage and the six-month change in nonfarm payrolls. Also to the downside, the percentage expecting credit conditions to ease slipped to the lowest level since May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" width="353">
On the pricing front conditions eased. The percentage of firms actually raising prices slipped to -21 (indicating deflation) and remained near the record low. During the last ten years there has been a 69% correlation between the six-month change in the producer price index and the level of the NFIB price index.The percentage of firms planning to raise prices also slipped a net 6 though that remained up from the March low of zero. Worker compensation improved modestly.
The largest, single most important problems seen by business were poor sales (32%), taxes (24%, its highest level since 2007), government requirements (11%), insurance cost &amp; availability (8%), competition from large businesses (6%) and inflation (4%).
About 24 million small businesses exist in the United States. Small business creates 80% of all new jobs in America and the NFIB figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></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">Small Business Optimism Index (SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
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During September, small business' optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism [...]

U.S. Small Business Optimism Improves Slightly Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" align="left" border="0" height="265" width="353">
During September, small business' optimism inched higher for
the second month as the severe economic weakness of early this year
passed. The National Federation of Independent Business (NFIB)
indicated their small business optimism index rose to 88.8 during
September after an August uptick. The index remained improved from the
lows of this past winter but were down from last year.During the last
ten years, there has been an 85% correlation between the level of the
NFIB index and the two-quarter change in real GDP.
The percentage of small businesses expecting the economy to
improve slipped back to just 8. However, despite this negativism the
percentage which thought that now was a good time to expand the
business rose sharply to 9 which was the highest level in twelve
months. Moreover, the percent reporting higher net-earnings this
quarter versus last year held at -40 m/m, meaning fewer were reporting
negative earnings versus last year. It was the highest level since
December.
The recent improvement in business' sentiment has done little,
if anything, to improve hiring intentions. The percentage of firms
planning to raise employment fell back into the net-layoff region.
Moreover, the percentage of firms with one or more job openings held at
just 8% during September, the lowest level since 1982. During the last
ten years there has been a 74% correlation between the NFIB employment
percentage and the six-month change in nonfarm payrolls. Also to the
downside, the percentage expecting credit conditions to ease slipped to
the lowest level since May.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" align="right" border="0" height="265" width="353">
On the pricing front conditions eased. The percentage of firms
actually raising prices slipped to -21 (indicating
deflation) and remained near the record low. During the last ten years
there has been a 69% correlation between the six-month change in the
producer price index and the level of the NFIB price index.The
percentage of firms planning to raise prices also
slipped a net 6 though that remained up from the March low of zero.
Worker compensation improved modestly.
The largest, single most important problems seen by business
were poor sales (32%), taxes (24%, its highest level since 2007),
government requirements (11%), insurance cost &amp; availability
(8%), competition from large businesses (6%) and inflation (4%).
About 24 million small businesses exist in the United States.
Small business creates 80% of all new jobs in America and the NFIB
figures can be found in Haver's SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></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">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
 Weekly Gasoline Prices Slip While
Crude Oil Prices Strengthen 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" align="left" border="0" height="265" width="353">
The pump price for regular gasoline fell
again last week to $2.47 per gallon, the lowest level since mid-July.
However, these prices remain up from the December low of $1.61.
Recently, prices reversed the trend and the wholesale gasoline price
rose to $1.82 per gallon, up eight cents from the September low. Prices
had reached a high in early-August of $2.03. The figures are reported
by the U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Running counter to gasoline prices, crude oil
prices recently firmed and light sweet crude oil prices (WTI) rose to
$70.86 per barrel last week, up from the December low of $32.37.
Yesterday, the spot market price for light sweet crude oil rose even
further to $73.27 per barrel.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" align="right" border="0" height="265" width="353">
The demand for gasoline shot up last week and posted a 3.2%
rise versus one year ago. The gain was the strongest since the Fall of
2006. Demand for residual fuel oil eased, however and fell 7.3% y/y
while distillate demand fell 11.0% y/y. Finally, oil remains plentiful
as evidenced by a 15.0% y/y rise in inventories of crude oil &amp;
petroleum products. Inventories of gasoline have surged and are up
14.8% versus last year. The figures on crude oil production and
inventories are available in Haver's OILWKLY database.
Natural gas prices increased again last week, ahead of the
Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y)
but they remained down by three-quarters from the high reached in
early-July of last year of $13.19/mmbtu. Yesterday prices increased
further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups
from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.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">10/5/09</th>
<th scope="col">09/28/09</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>2.47</td>
<td>2.50</td>
<td>-29.2%</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>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 German Financial Experts A Little
Less Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> October 13, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013f.jpg" align="right" border="0" height="265" width="353">The German financial
community lowered slightly its expectations for
the economic outlook.&nbsp; The ZEW indicator of economic
expectations declined slightly in October to 56.0% from 57.7% in
September.&nbsp; This is still well above the long term average of
26.7%.&nbsp; Their assessment of current conditions was, however,
slightly less pessimistic in October, -72.2%, than it was in September
-74.0%. The decline in optimism was the second decline this
year.&nbsp; In July, the excess of optimists in regard to the
outlook declined to 39.5% from 44.5% in June, a more substantial
decline than the present one.&nbsp; The indicators of current
conditions and expectations are shown in the first chart. There survey
was conducted between September 28 and October 12.&nbsp; 288
institutional investors and analysts
participated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013e.jpg" align="right" border="0" height="265" width="353">A number
of factors could
account for the caution about the outlook expressed by the participants
in the survey.&nbsp; The economic news from Germany in recent weeks
has been mixed.&nbsp; Industrial Production and New Orders
continued to be positive, but exports declined in August and retail
trade has shown little strength as seen in the second chart. (Exports
have been expressed as an index for comparability.)
The
Press has highlighted the decline in expectations, but ZEW's President,
Wolfgang Franz, down played the decline. According to him,&nbsp;
"The assessment of the financial market experts reflects the prevalent
view.&nbsp; The economy will improve only gradually."&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
ZEW INDICATORS (Percent Balance) </th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Current Conditions</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>91.6</td>
<td>-89.4</td>
</tr>
<tr class="odd">
<td class="firstcol"> Expectations</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports&nbsp;
(2005=100)</td>
<td>--</td>
<td>--</td>
<td>102.9</td>
<td>104.5</td>
<td>102.8</td>
<td>96.6</td>
<td>96.2</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade&nbsp;
(2005=100)&nbsp;</td>
<td>--</td>
<td>--</td>
<td>98.2</td>
<td>100.0</td>
<td>99.3</td>
<td>100.1</td>
<td>101.2</td>
<td>99.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New
Orders&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>91.3</td>
<td>89.7</td>
<td>87.9</td>
<td>84.4</td>
<td>81.3</td>
<td>91.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>64.3</td>
<td>92.7</td>
<td>93.7</td>
<td>92.8</td>
<td>88.7</td>
<td>91.3</td>
</tr>
</tbody>
</table>


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U.S. Small Business OptimismImproves Slightly Again

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012d.jpg" align="right" border="0" height="265" width="353">
The 8% decline in the broad trade-weighted dollar since
February of this year is having Central Bankers outside the United
States rethink the currency composition of their international reserve
holdings. A major reallocation of currencies could have serious
consequences for the U.S. Actually, this latest decline in the dollar
is from an unexpected high that resulted from the pursuits of safe
havens on the part of foreigners in the midst of the financial crisis.
As can be seen in the first chart, the long-term trend of the dollar on
a broad trade-weighted basis has been declining for the last seven or
eight years. During this time, there has been a steady shift in the
composition of total international reserves from dollars to Euros, as
can be seen in the second chart. Dollars now account for 62.8% of the
reserves of the countries reporting currency composition, compared with
72.7% in the second quarter of 2001. Meanwhile the share of euros has
gone from 17.6% to 27.5%.
Data reported by the International Monetary Fund and found in
the Haver IFS Data Base can help in monitoring this
situation, particularly, Currency Composition of Official
Foreign Exchange Reserves, which is in dollars with a
quarterly frequency and Share of National
Currencies in Total Identified Official Holding of Foreign Economies, which
is in SDRs with an annual frequency. Reserves are also found in the
individual country source data.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012e.jpg" align="right" border="0" height="265" width="353">

After declining in the third and fourth quarters of 2008 and
the first quarter of 2009, total international reserves increased by
$312 billion in the second quarter of this year to reach $6.80
trillion. Indications are that the rise has continued. Data for the
third quarter of this year are not yet available for China, but data
for some of the other large holders of reserves, namely, Japan, Russia,
India, Taiwan and Korea are available and all have been increasing. Not
all countries report the currency composition of their reserves.
Unfortunately, among those not reporting is China, the holder of the
largest reserves at $2.1 trillion. As a result, the amount of reserves
for which the currency composition is known is much smaller--$4.3
trillion at the end of June 2009. It is this smaller universe that the
data in the second chart are based.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp; Foreign
Exchange Reserves ( Billion $)</td>
<td>6801.0</td>
<td>6489.4</td>
<td>6645.1</td>
<td>6846.6</td>
<td>6901.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Allocated</td>
<td>4269.6</td>
<td>4057.9</td>
<td>4210.7</td>
<td>4360.6</td>
<td>438.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Emerging and Developing
Countries Total</td>
<td>4236.3</td>
<td>4076.3</td>
<td>4194.1</td>
<td>4440.6</td>
<td>4491.2</td>
</tr>
<tr>
<td class="firstcol">Allocated</td>
<td>2024.5</td>
<td>1946.7</td>
<td>2053.1</td>
<td>2238.1</td>
<td>2254.2</td>
</tr>
</tbody>
</table>
</body></html>

The 8% decline in the broad trade-weighted dollar since February of this year is having Central Bankers outside the United States rethink the currency composition of their international reserve holdings. A major reallocation of [...]

The U.S. Dollar and International Reserves

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012a.jpg" align="right" border="0" height="265" width="353">For
August, the Bureau of Labor Statistics reported in its Job Openings
&amp; Labor Turnover Survey (JOLTS) that job availability fell to a
new series' low in August. The 0.9% downtick in the number of
job openings followed a 4.2% July decline and openings were
off by 35.9% from last August. The series dates back to December
2000.

The actual number of job openings in the construction
sector has been rising of late and is roughly double the series' low
reached in February (-26.2% y/y) while factory sector job openings also
have been rising modestly
(-58.35 Y/Y). The level of professional &amp; business services job
openings reached a new series' low (-42.1% y/y as did education
&amp; health sectors jobs (-27.3% y/y). Openings in retail trade
have risen slightly from their April low (-28.5% y/y) while government
sector job openings reflected reduced tax revenues and fell to a new
low (-27.1% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012b.jpg" align="right" border="0" height="265" width="353">The job
openings rate remained
stable at the July series' low of 1.8%. These rates were down from more
than a 3% rate in 2007. The job openings rate is the number
of job openings on the last business day of the month as a percent of
total employment plus job openings.
The hires rate
at 3.1% has improved slightly from its May-June lows but still was near
the lowest in the series' short eight year history.&nbsp;The
hires rate is the number of hires during the month divided by
employment.&nbsp;The actual number of hires also was off
its low but was still down by 13.4% year-to-year. Leisure &amp;
hospitality industry jobs were down by 16.5% but declines have
stabilized since March. Factory sector (-12.6%) job declines also have
stabilized as they may have in the retail sector (-18.4%). In the
professional &amp; business services dustry, the hires rate also
has picked up recently -12.6% y/y while education &amp; health
services jobs are well up from their low (-2.3% y/y). The decline in
hires in the construction sector also have may have stabilized but
remain off 27.8% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012c.jpg" align="right" border="0" height="265" width="353">The job
separations rate reached
a new series' low of 3.3% with the actual number of separations off
12.7% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements.

The JOLTS survey dates only to December 2000 but has followed the
movement in nonfarm payrolls, though the actual correlation between the
two series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.
Financial market utilities and the
challenge of just-in-time liquidity from the Federal Reserve
Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflnovember2009_268a.pdf">here.</a>&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</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 class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.8</td>
<td>2.8</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,387</td>
<td>2,408</td>
<td>3,722</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.7</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,029</td>
<td>4,228</td>
<td>4,654</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>

</body></html>

For August, the Bureau of Labor Statistics reported in its Job Openings & Labor Turnover Survey (JOLTS) that job availability fell to a new series' low in August. The 0.9% downtick in the number of job openings followed a 4.2% July [...]

JOLTS: U.S. Job Openings Fell To New Low, Off One-Third From Last Year

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012a.jpg" align="right" border="0" height="265" width="353">For
August, the Bureau of Labor Statistics reported in its Job Openings
&amp; Labor Turnover Survey (JOLTS) that job availability fell to a
new series' low in August. The 0.9% downtick in the number of
job openings followed a 4.2% July decline and openings were
off by 35.9% from last August. The series dates back to December
2000.

The actual number of job openings in the construction
sector has been rising of late and is roughly double the series' low
reached in February (-26.2% y/y) while factory sector job openings also
have been rising modestly
(-58.35 Y/Y). The level of professional &amp; business services job
openings reached a new series' low (-42.1% y/y as did education
&amp; health sectors jobs (-27.3% y/y). Openings in retail trade
have risen slightly from their April low (-28.5% y/y) while government
sector job openings reflected reduced tax revenues and fell to a new
low (-27.1% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012b.jpg" align="right" border="0" height="265" width="353">The job
openings rate remained
stable at the July series' low of 1.8%. These rates were down from more
than a 3% rate in 2007. The job openings rate is the number
of job openings on the last business day of the month as a percent of
total employment plus job openings.
The hires rate
at 3.1% has improved slightly from its May-June lows but still was near
the lowest in the series' short eight year history.&nbsp;The
hires rate is the number of hires during the month divided by
employment.&nbsp;The actual number of hires also was off
its low but was still down by 13.4% year-to-year. Leisure &amp;
hospitality industry jobs were down by 16.5% but declines have
stabilized since March. Factory sector (-12.6%) job declines also have
stabilized as they may have in the retail sector (-18.4%). In the
professional &amp; business services dustry, the hires rate also
has picked up recently -12.6% y/y while education &amp; health
services jobs are well up from their low (-2.3% y/y). The decline in
hires in the construction sector also have may have stabilized but
remain off 27.8% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012c.jpg" align="right" border="0" height="265" width="353">The job
separations rate reached
a new series' low of 3.3% with the actual number of separations off
12.7% year-to-year. Separations include quits, layoffs,
discharges, and other separations as well as retirements.

The JOLTS survey dates only to December 2000 but has followed the
movement in nonfarm payrolls, though the actual correlation between the
two series is low.
 A description of the Jolts survey and the latest
release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's USECON
database.
Financial market utilities and the
challenge of just-in-time liquidity from the Federal Reserve
Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflnovember2009_268a.pdf">here.</a>&nbsp;&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a>
(Job Openings &amp; Labor &nbsp;Turnover Survey)</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 class="odd">
<td class="firstcol">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.8</td>
<td>1.8</td>
<td>2.8</td>
<td>2.3</td>
<td>3.1</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,387</td>
<td>2,408</td>
<td>3,722</td>
<td>3,224</td>
<td>4,382</td>
<td>4,606</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.3</td>
<td>3.3</td>
<td>3.7</td>
<td>41.1</td>
<td>46.1</td>
<td>47.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,029</td>
<td>4,228</td>
<td>4,654</td>
<td>56,486</td>
<td>63,666</td>
<td>64,879</td>
</tr>
</tbody>
</table>

 The U.S. Dollar and International
Reserves 
by <a href="/comment/Curley.html">Louise
Curley</a> October 12, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012d.jpg" align="right" border="0" height="265" width="353">The 8% decline in the broad
trade-weighted dollar since
February of this year is having Central Bankers outside the United
States rethink the currency composition of their international reserve
holdings. A major reallocation of currencies could have serious
consequences for the U.S. Actually, this latest decline in the dollar
is from an unexpected high that resulted from the pursuits of safe
havens on the part of foreigners in the midst of the financial crisis.
As can be seen in the first chart, the long-term trend of the dollar on
a broad trade-weighted basis has been declining for the last seven or
eight years. During this time, there has been a steady shift in the
composition of total international reserves from dollars to Euros, as
can be seen in the second chart. Dollars now account for 62.8% of the
reserves of the countries reporting currency composition, compared with
72.7% in the second quarter of 2001. Meanwhile the share of euros has
gone from 17.6% to 27.5%.
Data reported by the International Monetary Fund and found in
the Haver IFS Data Base can help in monitoring this
situation, particularly, Currency Composition of Official
Foreign Exchange Reserves, which is in dollars with a
quarterly frequency and Share of National
Currencies in Total Identified Official Holding of Foreign Economies, which
is in SDRs with an annual frequency. Reserves are also found in the
individual country source data.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091012e.jpg" align="right" border="0" height="265" width="353">

After declining in the third and fourth quarters of 2008 and
the first quarter of 2009, total international reserves increased by
$312 billion in the second quarter of this year to reach $6.80
trillion. Indications are that the rise has continued. Data for the
third quarter of this year are not yet available for China, but data
for some of the other large holders of reserves, namely, Japan, Russia,
India, Taiwan and Korea are available and all have been increasing. Not
all countries report the currency composition of their reserves.
Unfortunately, among those not reporting is China, the holder of the
largest reserves at $2.1 trillion. As a result, the amount of reserves
for which the currency composition is known is much smaller--$4.3
trillion at the end of June 2009. It is this smaller universe that the
data in the second chart are based.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp; Foreign
Exchange Reserves ( Billion $)</td>
<td>6801.0</td>
<td>6489.4</td>
<td>6645.1</td>
<td>6846.6</td>
<td>6901.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Allocated</td>
<td>4269.6</td>
<td>4057.9</td>
<td>4210.7</td>
<td>4360.6</td>
<td>438.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Emerging and Developing
Countries Total</td>
<td>4236.3</td>
<td>4076.3</td>
<td>4194.1</td>
<td>4440.6</td>
<td>4491.2</td>
</tr>
<tr>
<td class="firstcol">Allocated</td>
<td>2024.5</td>
<td>1946.7</td>
<td>2053.1</td>
<td>2238.1</td>
<td>2254.2</td>
</tr>
</tbody>
</table>
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Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091009d.jpg" align="left" border="0" height="265" width="353">
OECD gets upbeat - The OECD is getting much
more upbeat in its assessment of the world's leading economies. It now
contends that they may now be recovering or growing after hitting the
bottom of their respective economic recessions in 2009. Recovery is at
hand, according to leading indicators released Friday by the
Organization for Economic Cooperation and Development that is the
newest development. 
 
Good and somewhat surprising news - The OECD
trend-restored leading indicators continue to point to a recovery for
most developed economies. France and Italy - that have both posted
three or more months of an index level above the key 100 mark - are
now, in the OECD lexicon, experiencing "potential expansion." The
Composite Leading Indicator for the OECD's 30 members rose for the
sixth straight month in August to reach 99.2 from 97.7 in July that is
very close to the 100 line that it must cross to be truly on the road
to an optimistic result. "OECD composite leading indicators for August
2009 continue to point to a recovery in all major economies with CLIs
for France and Italy pointing to expansion," the OECD said. 
 
Who&#8217;d a&#8217; thunk it? Italy and France lead
- For now that is certainly a breath of fresh air. Various national
sources have been showing the same sorts of results. The surprise is
that Italy joins France as one of the recovery leaders. Italy&#8217;s
consumer confidence measures have been moving up briskly but Italy is
still having some difficulties and business confidence has recently
slipped. In contest France continues to pump out good figures as public
spending there has been effective in stopping the bleeding and turning
things around. 
 
...and the US is - Over 12-months the US is still
seeing its OECD CLI drop but over three-months the US index is rising
nearly as fast as the indicators for the e-Zone. Over six months the US
is still doing well but it is several steps behind the e-Zone reading
and others. The six month horizon is the assessment favored by the OECD. 
 
A good report card for the global economy - For now
it&#8217;s a good report card on a global economy that is making progress.
The rise up from this recession&#8217;s relatively deep pit is at a strongly
sloped gradient compared to past cycles. Despite all the pessimism
about growth and growth prospects the OECD&#8217;s CLI&#8217;s look very upbeat
indeed. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-restored leading Indicators</th>
</tr>
<tr class="grey4">
<th colspan="5" scope="col">Growth
progression SAAR</th>
</tr>
</thead>
<tbody>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3-Mos</td>
<td>6-Mos</td>
<td>12-Mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>17.4%</td>
<td>12.9%</td>
<td>-1.3%</td>
<td>-5.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>18.7%</td>
<td>13.2%</td>
<td>-2.5%</td>
<td>-5.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Euro Area</td>
<td>19.7%</td>
<td>16.2%</td>
<td>1.8%</td>
<td>-6.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>12.5%</td>
<td>6.8%</td>
<td>-8.4%</td>
<td>-4.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>19.3%</td>
<td>12.8%</td>
<td>-3.5%</td>
<td>-5.4%</td>
</tr>
<tr class="grey4">
<td colspan="5" class="firstcol">Six month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6-Mos Ago</td>
<td>12-Mos Ago</td>
<td>18-Mos Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>12.9%</td>
<td>-13.8%</td>
<td>-8.3%</td>
<td>-2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>13.2%</td>
<td>-15.9%</td>
<td>-8.4%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Euro Area</td>
<td>16.2%</td>
<td>-10.8%</td>
<td>-10.5%</td>
<td>-2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>6.8%</td>
<td>-21.5%</td>
<td>-7.1%</td>
<td>-0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>12.8%</td>
<td>-17.4%</td>
<td>-7.2%</td>
<td>-3.6%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body></html>

OECD gets upbeat - The OECD is getting much more upbeat in its assessment of the world's leading economies. It now contends that they may now be recovering or growing after hitting the bottom of their respective economic recessions in [...]

OECD Sounds the All-Clear - Almost

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091009a.jpg" align="right" border="0" height="265" width="353">Though
oil prices have risen, the recession in the U.S. economy has prompted a
sharp cutback in the dollar amount of oil imports. That cutback helped
the international trade deficit to narrow during August to $30.7.0B
versus a little-revised July deficit of $31.9B. Consensus expectations
had been for a deeper August deficit of $33.0B.
During
August, oil imports were cutback by 5.7% m/m and have declined by more
than one-half y/y due to lower prices. Moreover, the recession part of
the story was clear: Imports of petroleum products in constant dollar
terms fell 10.4% and were down 13.8% y/y. The decline in petroleum
imports occurred despite higher crude oil prices. Prices rose to an
August average of $64.75 per barrel versus the February low of
$39.22.
 The recession's influence also was apparent in
nonoil imports which ticked lower by 0.1% but were down by 19.7% y/y.
Real non-auto consumer goods imports fell by 1.9% (-16.3% y/y).
Non-auto capital goods imports slipped 0.3% after a strong July gain
and that left them off 19.9% from last year. Real automotive vehicles
&amp; parts imports, however, were strong for the third strait
month. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091009b.jpg" align="right" border="0" height="265" width="353">
They rose 8.4% but they still were off by one-quarter from last
year.
 Reflecting the competitive value of the dollar, real
merchandise exports fell during August just 1.5% following three months
of increase. Nevertheless, recessions abroad lowered real exports by
19.5% y/y. The chained dollar value of real capital goods exports led
the August decline with a 4.2% drop (-23.9% y/y. Non-auto consumer
goods exports fell a lesser 1.4% (-11.4% y/y) while auto exports rose
for the third strait month (-28.9% y/y).
Imports of services fell
15.4% y/y as travel imports were off 7.8%, i.e., fewer U.S. residents
went abroad, and passenger fares were off 24.7%. Exports of services
fell 11.8% as travel exports fell 20.3% y/y and passenger fares fell by
one-quarter.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091009c.jpg" align="right" border="0" height="265" width="353">The
international trade data can be found in
Haver's USECON database. Detailed figures are
available in the USINT database. 
 

 Monetary Policy Research and the Financial Crisis:
Strengths and Shortcomings is today's speech by Fed Vice
Chairman Donald L. Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/speech/kohn20091009a.htm">here</a>.
In the Wake of the Crisis is yesterday's
speech
by Fed Governor Daniel K. Tarullo and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/tarullo20091008a.htm">
here</a>.&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></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">U.S. Trade Deficit</td>
<td>$30.7B</td>
<td>$31.9B</td>
<td>$60.9B (8/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>0.2%</td>
<td>2.5%</td>
<td>-20.7%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>-0.6%</td>
<td>4.9%</td>
<td>-28.6%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-5.7%</td>
<td>3.3%</td>
<td>-51.9%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>0.3%</td>
<td>6.4%</td>
<td>-24.6%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>

</body></html>

Though oil prices have risen, the recession in the U.S. economy has prompted a sharp cutback in the dollar amount of oil imports. That cutback helped the international trade deficit to narrow during August to $30.7.0B versus a little- [...]

U.S. Trade Deficit Narrows Slightly But Petroleum Imports Drop Sharply

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

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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, and 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

260116E.jpg

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.

260116.jpg

**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.

260115Z2.jpg

**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.

260115Z3.jpg

**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.

260115Z4.jpg

**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.

260115Z5.jpg

**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).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/2mhM227WWeJJ6kRv7sJMiE?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: 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.

260115L.jpg

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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