Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002h.jpg" align="left" border="0" height="265" width="353">
August&#8217;s EMU PPI excluding construction rose by 0.7% following
a drop of 0.9% in July. Still the three-month growth rate (annualized)
is now positive at 0.7% the six month growth rate is at -3.9% and the
12-month growth rate is at -7.6%. Inflation is gaining a toe hold again
in EMU at the producer price level. The ECB ahs a ceiling arrangement
for the HICP only (harmonized index of consumer inflation). 
 

Even so, inflation does not appear to be cooking in any sense
of the word. For consumer goods, prices were still flat in August and,
at -0.3%, the three month growth rate for consumer goods is still close
to its six month annualized pace at -0.6%. There is no pressure there.
Capital goods prices continued to fall in August dropping by 0.1%. Over
three months, capital goods prices are falling by 0.8%; that is a
slight but only a slight improvement from dropping by 1.4% at an annual
rate over six months. There is not much inflation pressure from capital
goods prices either. 
 

Virtually all the inflation pressure in the PPI is coming from
industrial supplies or intermediate goods. Intermediate goods prices
rose by 0.4% in August. They are also up at a 1.1% annual rate over
three months and down at an annual rate of 3.6% over six months. 
 

Across EMU countries the headline PPI rose in all of the
largest of them. Ex food and energy prices rose in Germany and in
France as well. For all these price measures, the August rise is
balanced by a drop in July. 
 

Still the bottom line is that prices are on the move again.
While it does not look like the pressures are very widespread across
commodity classifications or very intense, the pressure seems quite
real and widespread cross the larger EMU nations. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Constructions</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>0.7%</td>
<td>-3.9%</td>
<td>-7.6%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-2.6%</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Cap Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-3.6%</td>
<td>-7.4%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>4.1%</td>
<td>-0.7%</td>
<td>-7.1%</td>
<td>6.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.6%</td>
<td>-6.8%</td>
<td>-9.4%</td>
<td>-7.6%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany excl Energy</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-3.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France&nbsp;</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>-2.9%</td>
<td>-8.4%</td>
<td>7.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France excl Food &amp;
Energy</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-2.6%</td>
<td>-3.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>-2.8%</td>
<td>-7.8%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>-1.7%</td>
<td>6.2%</td>
<td>1.0%</td>
<td>-6.5%</td>
<td>21.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Euro Area Harmonized PPI ex
construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

August’s EMU PPI excluding construction rose by 0.7% following a drop of 0.9% in July. Still the three-month growth rate (annualized) is now positive at 0.7% the six month growth rate is at -3.9% and the 12-month growth rate is at [...]

PPI Points Way Higher for Euro Area Inflation

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002g.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment. Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
In addition to fewer layoffs, hiring plans have picked up and were more than double last year&#39;s level. There have been strong increase in services, electronics and entertainment/leisure industries.
The Challenger figures are available 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/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</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>
<td class="firstcol">Announced Job Cuts</td>
<td>66,404</td>
<td>76,456</td>
<td>-30.2%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>25,047</td>
<td>13,100</td>
<td>162.6</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>
</body>
</html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements fell last month to the current cycle low. They dropped to 66,404, compared to a high of 241,748 cuts in February of this year. During the last [...]

Challenger Layoffs Fall Further To Cycle Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002a.jpg" width="353">
Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the &quot;Cash-for-Clunkers&quot; sales program. Sales last month fell 34.6% m/m to 9.22M units according to the Autodata Corporation. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). September sales were weaker than the expected 9.6M sales rate and were at their lowest since February.
Sales of domestically made vehicles fell by more than one-third from August to 6.62M units and they were down 29.7% y/y. Sales of fuel efficient cars fell nearly 40% m/m while light truck sales posted a 29% m/m decline that left them down one-third versus last September. Year-to-date, sales of domestic vehicles overall were down 13.1% following last year&#39;s 35.8% drop from December-to-December.
Imported light vehicles similarly fell with the end of the government&#39;s sales program. A 36.5% m/m decline to 2.60 units more than reversed the August increase. Sales of imported autos fell a hard 36.3% while sales of imported light trucks also fell by more than one-third m/m. Year-to-date, sales of imported vehicles were slightly below last year&#39;s average.
Overall, import&#39;s share of the U.S. light vehicle market slipped to 28.2% last month from 29.0% in August. It reached 26.5% during all of last year. (Imported vehicles are those produced outside the United States.) Imports&#39; share of the U.S. car market totaled 35.3%, versus 34.3% last year while the share of the light truck market was 19.7%, up slightly from 18.3% last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002b.jpg" width="353">
The U.S. vehicle sales figures can be found in Haver&#39;s USECON database.
Regulatory reform is yesterday&#39;s House testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091001a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Sept. Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.22</td>
<td>14.09</td>
<td>11.24</td>
<td>-26.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.02</td>
<td>8.05</td>
<td>6.20</td>
<td>-20.3</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.25</td>
<td>5.26</td>
<td>4.11</td>
<td>-23.8</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.77</td>
<td>2.78</td>
<td>2.09</td>
<td>-12.9</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.20</td>
<td>6.05</td>
<td>5.04</td>
<td>-33.0</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>3.37</td>
<td>4.75</td>
<td>4.06</td>
<td>-34.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>0.83</td>
<td>1.31</td>
<td>0.98</td>
<td>-26.1</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>


</html>

Payback time came last month for vehicle sales that were pulled forward by price discounts. U.S. unit sales of light vehicles during September fell sharply with the end of the "Cash-for-Clunkers" sales program. Sales last month fell [...]

U.S. Vehicle Sales Payback August Strength

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002c.jpg" align="right" border="0" height="265" width="353">
For September, the employment figures from the Bureau of Labor
Statistics were uniformly weak. Payrolls fell a more-than-expected
263,000. Hours worked fell again. The unemployment rate rose to 9.8%,
the highest since 1983. All in all, they suggest that the rate of
decline in the job market has slowed, but an upturn still is not
evident.
Nonfarm payrolls fell 263,000 during September. That exceeded
expectations for a 180,000 decline and while the August shortfall was
lessened, July's was deepened. So far during this recession employment
has fallen by a total of 7.2 million, by far the record for a 21-month
period. In percentage terms, jobs are down 5.2% since the 2007 peak,
also a record. If there is good news, it's that the decline in payroll
declines moderated to an average 256,000 over the last three months
versus a peak rate of 701,000 this past winter.
The length of the average workweek fell back to the cycle low
of 33.0 hours. Combined with the decline in payrolls that was enough to
pull 3Q aggregate hours worked (employment times hours) down at a 3.0%
annual rate after a 7.8% decline during 2Q. Productivity needs to rise
more than that if real GDP is going to rise as is widely expected.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002d.jpg" align="right" border="0" height="265" width="353">
The increase in the unemployment rate to 9.8% from 9.7% was
as-expected and it left the rate at the highest level since 1983. The
rate's cycle low of 4.4% occurred in October 2006. The official
unemployment rate pales, however, in comparison to the rate which
includes "marginally attached workers" and those who are working
part-time for economic reasons. It rose to 17.0%. Including
"discouraged workers" the unemployment rate stood at 10.2%.
The increase in the overall jobless rate was due to a 785,000
(-4.3% y/y) decline in household employment. That was shallower than
the worst monthly declines of this past winter but worse than those of
the last several months. It was accompanied by a sharp 571,000 (-0.4%
y/y) decline in the labor force reflecting the discouraged workers.
Also from the household survey, the median duration of unemployment
jumped m/m to 17.3 weeks, just below this cycle's high reached in June.
The ranks of the long-term unemployed rose to 5.438 million (166.4%
y/y), an historic high. By educational attainment, those with a high
school diploma but no college saw employment fall 5.2% y/y while those
with a bachelor's degree or higher experienced a 0.7% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002e.jpg" align="right" border="0" height="265" width="353">
From the payroll survey, the quickening in the rate of job
loss last month was due to a faster 94,000 (-3.1% y/y) decline in
private service payrolls. Declines were broad-based notably in retail
trade, educational services, and professional &amp; tech services.
Also, in the government sector employment fell a sharp 53,000 (-0.6%
y/y as budgets shrank with lower tax revenues. The number of local
gov't jobs led the decline with a 37,000 (-0.9% y/y) drop. Jobs with
the federal government fell 5,000 (+1.9% y/y) for the third decline in
the last four months. Manufacturing sector jobs fell 51,000 last month
after a 66,000 July decline. These shortfalls compare to average
monthly declines of 131,000 this year. Construction jobs fell 64,000
and they fell an average 89,000 each month this year.
The breath of the decline in payroll employment extended to
14.9% of industries during the last twelve months while it rose to
28.0% during the last three months.
Average hourly earnings ticked up just 0.1% during September.
That pulled the y/y gain down to 2.5% which was its weakest since
late-2004, down from 4.2% reached during 2007. Earnings in the factory
sector actually have improved recently and rose 0.7% (2.8% y/y). Growth
in durable sector's earnings rose 0.7% and the y/y rate quickened to
3.7%. Earnings in the private service sector rose just 0.5% (2.7% y/y)
while construction sector earnings fell 1.4% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002f.jpg" align="right" border="0" height="265" width="353">
The Labor Department offered a preliminary look at the
benchmark revision to the payroll data to be issued in February, 2010.
The revised data show that the level of payroll employment as of March
of 2009 will be lowered by 824,000, or 0.6%, from current published
numbers.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Fed Policy in the Financial Crisis: Arresting
the Adverse Feedback Loop from the Federal Reserve Bank
of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0907.pdf">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">Employment:
000s</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">Payroll Employment</td>
<td>-263</td>
<td>-201</td>
<td>-304</td>
<td>-4.2%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-216</td>
<td>-276</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-51</td>
<td>-66</td>
<td>-41</td>
<td>-12.0%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-64</td>
<td>-60</td>
<td>-69</td>
<td>-15.3%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-147</td>
<td>-69</td>
<td>-188</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.1</td>
<td>33.1</td>
<td>33.6 (Sept. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.8%</td>
<td>9.7%</td>
<td>9.4%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

For September, the employment figures from the Bureau of Labor Statistics were uniformly weak. Payrolls fell a more-than-expected 263,000. Hours worked fell again. The unemployment rate rose to 9.8%, the highest since 1983. All in [...]

U.S. Payrolls Decline Again While Jobless Rate Increases

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002c.jpg" align="right" border="0" height="265" width="353">
For September, the employment figures from the Bureau of Labor
Statistics were uniformly weak. Payrolls fell a more-than-expected
263,000. Hours worked fell again. The unemployment rate rose to 9.8%,
the highest since 1983. All in all, they suggest that the rate of
decline in the job market has slowed, but an upturn still is not
evident.
Nonfarm payrolls fell 263,000 during September. That exceeded
expectations for a 180,000 decline and while the August shortfall was
lessened, July's was deepened. So far during this recession employment
has fallen by a total of 7.2 million, by far the record for a 21-month
period. In percentage terms, jobs are down 5.2% since the 2007 peak,
also a record. If there is good news, it's that the decline in payroll
declines moderated to an average 256,000 over the last three months
versus a peak rate of 701,000 this past winter.
The length of the average workweek fell back to the cycle low
of 33.0 hours. Combined with the decline in payrolls that was enough to
pull 3Q aggregate hours worked (employment times hours) down at a 3.0%
annual rate after a 7.8% decline during 2Q. Productivity needs to rise
more than that if real GDP is going to rise as is widely expected.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002d.jpg" align="right" border="0" height="265" width="353">
The increase in the unemployment rate to 9.8% from 9.7% was
as-expected and it left the rate at the highest level since 1983. The
rate's cycle low of 4.4% occurred in October 2006. The official
unemployment rate pales, however, in comparison to the rate which
includes "marginally attached workers" and those who are working
part-time for economic reasons. It rose to 17.0%. Including
"discouraged workers" the unemployment rate stood at 10.2%.
The increase in the overall jobless rate was due to a 785,000
(-4.3% y/y) decline in household employment. That was shallower than
the worst monthly declines of this past winter but worse than those of
the last several months. It was accompanied by a sharp 571,000 (-0.4%
y/y) decline in the labor force reflecting the discouraged workers.
Also from the household survey, the median duration of unemployment
jumped m/m to 17.3 weeks, just below this cycle's high reached in June.
The ranks of the long-term unemployed rose to 5.438 million (166.4%
y/y), an historic high. By educational attainment, those with a high
school diploma but no college saw employment fall 5.2% y/y while those
with a bachelor's degree or higher experienced a 0.7% decline.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002e.jpg" align="right" border="0" height="265" width="353">
From the payroll survey, the quickening in the rate of job
loss last month was due to a faster 94,000 (-3.1% y/y) decline in
private service payrolls. Declines were broad-based notably in retail
trade, educational services, and professional &amp; tech services.
Also, in the government sector employment fell a sharp 53,000 (-0.6%
y/y as budgets shrank with lower tax revenues. The number of local
gov't jobs led the decline with a 37,000 (-0.9% y/y) drop. Jobs with
the federal government fell 5,000 (+1.9% y/y) for the third decline in
the last four months. Manufacturing sector jobs fell 51,000 last month
after a 66,000 July decline. These shortfalls compare to average
monthly declines of 131,000 this year. Construction jobs fell 64,000
and they fell an average 89,000 each month this year.
The breath of the decline in payroll employment extended to
14.9% of industries during the last twelve months while it rose to
28.0% during the last three months.
Average hourly earnings ticked up just 0.1% during September.
That pulled the y/y gain down to 2.5% which was its weakest since
late-2004, down from 4.2% reached during 2007. Earnings in the factory
sector actually have improved recently and rose 0.7% (2.8% y/y). Growth
in durable sector's earnings rose 0.7% and the y/y rate quickened to
3.7%. Earnings in the private service sector rose just 0.5% (2.7% y/y)
while construction sector earnings fell 1.4% y/y.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002f.jpg" align="right" border="0" height="265" width="353">
The Labor Department offered a preliminary look at the
benchmark revision to the payroll data to be issued in February, 2010.
The revised data show that the level of payroll employment as of March
of 2009 will be lowered by 824,000, or 0.6%, from current published
numbers.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Fed Policy in the Financial Crisis: Arresting
the Adverse Feedback Loop from the Federal Reserve Bank
of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0907.pdf">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">Employment:
000s</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">Payroll Employment</td>
<td>-263</td>
<td>-201</td>
<td>-304</td>
<td>-4.2%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-216</td>
<td>-276</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-51</td>
<td>-66</td>
<td>-41</td>
<td>-12.0%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-64</td>
<td>-60</td>
<td>-69</td>
<td>-15.3%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-147</td>
<td>-69</td>
<td>-188</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.1</td>
<td>33.1</td>
<td>33.6 (Sept. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.8%</td>
<td>9.7%</td>
<td>9.4%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 U.S. Vehicle Sales Payback August
Strength 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002a.jpg" align="left" border="0" height="265" width="353">
Payback time came last month for vehicle sales that were
pulled forward by price discounts. U.S. unit sales of light
vehicles during September fell sharply with the end of the
"Cash-for-Clunkers" sales program. Sales last month fell 34.6% m/m to
9.22M units according to the Autodata Corporation. (Seasonal adjustment
of the figures is provided by the U.S. Bureau of Economic Analysis).
September sales were weaker than the expected 9.6M sales rate and were
at their lowest since February.
Sales of domestically made vehicles fell
by more than one-third from August to 6.62M units and they were down
29.7% y/y. Sales of fuel efficient cars fell nearly 40% m/m while light
truck sales posted a 29% m/m decline that left them down one-third
versus last September. Year-to-date, sales of domestic vehicles overall
were down 13.1% following last year's 35.8% drop from
December-to-December.
Imported light vehicles similarly fell with
the end of the government's sales program. A 36.5% m/m decline to 2.60
units more than reversed the August increase. Sales of imported autos
fell a hard 36.3% while sales of imported light trucks also fell by
more than one-third m/m. Year-to-date, sales of imported vehicles were
slightly below last year's average.
Overall, import's share of the U.S. light
vehicle market slipped to 28.2% last month from 29.0% in August. It
reached 26.5% during all of last year. (Imported vehicles are those
produced outside the United States.) Imports' share of the U.S. car
market totaled 35.3%, versus 34.3% last year while the share of the
light truck market was 19.7%, up slightly from 18.3% last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002b.jpg" align="right" border="0" height="265" width="353">
The U.S. vehicle sales figures can be found in Haver's
USECON database.
Regulatory reform is yesterday's House
testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20091001a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Sept. Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>9.22</td>
<td>14.09</td>
<td>11.24</td>
<td>-26.7%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>5.02</td>
<td>8.05</td>
<td>6.20</td>
<td>-20.3</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.25</td>
<td>5.26</td>
<td>4.11</td>
<td>-23.8</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.77</td>
<td>2.78</td>
<td>2.09</td>
<td>-12.9</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>4.20</td>
<td>6.05</td>
<td>5.04</td>
<td>-33.0</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>3.37</td>
<td>4.75</td>
<td>4.06</td>
<td>-34.6</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>0.83</td>
<td>1.31</td>
<td>0.98</td>
<td>-26.1</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>
 Challenger Layoffs Fall Further To
Cycle Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002g.jpg" align="left" border="0" height="265" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas
indicated that job cut announcements fell last month to the current
cycle low. They dropped to 66,404, compared to a high of 241,748 cuts
in February of this year.
During the last ten years there has been a 67% (inverse)
correlation between the three month moving average of announced job
cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
In addition to fewer layoffs, hiring plans have picked up and
were more than double last year's level. There have been strong
increase in services, electronics and entertainment/leisure industries.
The Challenger figures are available 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/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</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>
<td class="firstcol">Announced Job Cuts</td>
<td>66,404</td>
<td>76,456</td>
<td>-30.2%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>25,047</td>
<td>13,100</td>
<td>162.6</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>

 PPI Points Way Higher for Euro
Area Inflation 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 2, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091002h.jpg" align="left" border="0" height="265" width="353">
August&#8217;s EMU PPI excluding construction rose by 0.7% following
a drop of 0.9% in July. Still the three-month growth rate (annualized)
is now positive at 0.7% the six month growth rate is at -3.9% and the
12-month growth rate is at -7.6%. Inflation is gaining a toe hold again
in EMU at the producer price level. The ECB ahs a ceiling arrangement
for the HICP only (harmonized index of consumer inflation). 
 

Even so, inflation does not appear to be cooking in any sense
of the word. For consumer goods, prices were still flat in August and,
at -0.3%, the three month growth rate for consumer goods is still close
to its six month annualized pace at -0.6%. There is no pressure there.
Capital goods prices continued to fall in August dropping by 0.1%. Over
three months, capital goods prices are falling by 0.8%; that is a
slight but only a slight improvement from dropping by 1.4% at an annual
rate over six months. There is not much inflation pressure from capital
goods prices either. 
 

Virtually all the inflation pressure in the PPI is coming from
industrial supplies or intermediate goods. Intermediate goods prices
rose by 0.4% in August. They are also up at a 1.1% annual rate over
three months and down at an annual rate of 3.6% over six months. 
 

Across EMU countries the headline PPI rose in all of the
largest of them. Ex food and energy prices rose in Germany and in
France as well. For all these price measures, the August rise is
balanced by a drop in July. 
 

Still the bottom line is that prices are on the move again.
While it does not look like the pressures are very widespread across
commodity classifications or very intense, the pressure seems quite
real and widespread cross the larger EMU nations. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Constructions</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>0.7%</td>
<td>-3.9%</td>
<td>-7.6%</td>
<td>8.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-0.6%</td>
<td>-2.6%</td>
<td>4.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Cap Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-3.6%</td>
<td>-7.4%</td>
<td>5.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-0.5%</td>
<td>4.1%</td>
<td>-0.7%</td>
<td>-7.1%</td>
<td>6.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.6%</td>
<td>-6.8%</td>
<td>-9.4%</td>
<td>-7.6%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Germany excl Energy</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-3.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France&nbsp;</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>-2.9%</td>
<td>-8.4%</td>
<td>7.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France excl Food &amp;
Energy</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-2.6%</td>
<td>-3.6%</td>
<td>3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy</td>
<td>0.9%</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>-2.8%</td>
<td>-7.8%</td>
<td>8.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK</td>
<td>2.5%</td>
<td>-1.7%</td>
<td>6.2%</td>
<td>1.0%</td>
<td>-6.5%</td>
<td>21.9%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Euro Area
Harmonized PPI ex
construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13
countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Payrolls Decline Again WhileJobless Rate Increases

Carol Stone, CBE

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001m.jpg" align="right" border="0" height="265" width="353">The headline sounded so promising: construction spending rose
0.8% in August, when forecasters had looked only for a 0.2% decrease.
But the pleasure with this result was short-lived. July's amount was
revised from -0.2% to -1.1% and June's from a marginal 0.1% increase to
a 1.4% fall. Some parts of the economy are improving, but much of
construction activity continues to lag. Total outlays in August were
11.6% below a year ago.
Nonresidential projects remain the weakest. Those outlays
edged down 0.1% in August, and July was revised from -1.2% to -2.6%,
while June's figure was cut back from -2.2% to -4.0%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001o.jpg" align="right" border="0" height="265" width="353">
Over these last 3
months combined, nonresidential outlays dropped by 6.5%; the weakest
segments have been lodging, commercial and amusements, each down
12-15%; education (private structures), offices, transportation,
manufacturing and communication, down 5-8%, and health care, power and
religious construction activity have been flat to somewhat higher.
However, as Tom Moeller pointed out here a month ago, these declines
result mainly from poor business profits during the worst of the
recession; planning and building lead-times mean that recent work
reflects those discouraging business conditions from at least several
months ago or more. Now profits are improving and recovery in the
residential sector seems to be more firmly established. So the
implications for sustained turnaround in nonresidential construction
are much more positive now.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001n.jpg" residential activity remains at low level but as just noted appears be coming back single-family construction rose august improvement residual an unpublished series calculated by haver gained offset decline multifamily building produce overall sector it too however was subject to downward revisions in june july such that these three months saw only total increase and the year-ago comparison is still a sizable align="right" border="0" height="265" width="353">
Public construction was down in August by 1.1%, as federal
building activity fell 7.6%, while state and local government outlays
decreased 0.5%. Increases over previous months mean that the
year-on-year comparison still shows a gain, this of 3.3%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Construction
(%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.8</td>
<td>-1.1</td>
<td>-1.4</td>
<td>-11.6</td>
<td>-6.9</td>
<td>-1.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>1.8</td>
<td>-1.4</td>
<td>-3.2</td>
<td>-17.8</td>
<td>-11.1</td>
<td>-5.7</td>
<td>5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>4.7</td>
<td>0.6</td>
<td>-1.8</td>
<td>-26.7</td>
<td>-29.1</td>
<td>-19.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.1</td>
<td>-2.6</td>
<td>-4.0</td>
<td>-10.5</td>
<td>13.2</td>
<td>23.1</td>
<td>16.2</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-1.1</td>
<td>-0.7</td>
<td>2.2</td>
<td>3.3</td>
<td>5.6</td>
<td>13.1</td>
<td>9.3</td>
</tr>
</tbody>
</table>
</body></html>

The headline sounded so promising: construction spending rose 0.8% in August, when forecasters had looked only for a 0.2% decrease. But the pleasure with this result was short-lived. July's amount was revised from -0.2% to -1.1% and [...]

U.S. Construction Spending Gains in August, But June & July Revised Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001k.jpg" width="353">
Initial claims for jobless insurance ticked higher last week and suggested little labor market improvement since the summer. The Labor Department indicated that claims reversed the prior week&#39;s decline and rose 17,000 to 551,000, the highest since July. Nevertheless the latest was own from the March weekly peak of 674,000. The latest increase contrasted with expectations for 535,000 claims.
The largest increases in initial claims for the week ending September 19 were in California (+5,112), Texas (+3,946), Florida (+2,348), Iowa (+2,013), and Illinois (+1,945), while the largest decreases were in Kansas (-1,545), Wisconsin (-1,258), Oregon (-833), Ohio (-804), and New York (-623).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001l.jpg" width="353">
Continuing claims for unemployment insurance during the latest week fell 70,000 to their lowest level since April. The decline owes partially to the exhaustion of benefits. Continuing claims provide an indication of workers&#39; ability to find employment. The four-week average of continuing claims fell modestly to 6,154,500. The series dates back to 1966.
Extended benefits for unemployment insurance rose for the third consecutive week. Through mid-September extended benefits averaged 440,716.
The insured rate of unemployment held at 4.6% and was near the lowest level since mid-April. 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.
The highest insured unemployment rates in the week ending September 12 were in Puerto Rico (6.1 percent), Oregon (5.4), Nevada (5.3), Pennsylvania (5.3), California (4.9), Michigan (4.9), Wisconsin (4.8), New Jersey (4.7), North Carolina (4.7), Arkansas (4.6), and South Carolina (4.6).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW 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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">09/26/09</th>
<th scope="col">09/19/09</th>
<th scope="col">09/12/09</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>551</td>
<td>534</td>
<td>550</td>
<td>12.4%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,090</td>
<td>6,160</td>
<td>67.4%</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>4.6</td>
<td>4.6</td>
<td>2.7 (09/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance ticked higher last week and suggested little labor market improvement since the summer. The Labor Department indicated that claims reversed the prior week's decline and rose 17,000 to 551,000, the [...]

U.S. Weekly Claims For Jobless Insurance Tick Higher

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001h.jpg" align="right" border="0" height="265" width="353">The National
Association of Purchasing Management data continued to indicate that
the recession in U.S. factory sector activity is over. Though the
September composite index slipped to 52.6 from 52.9 in August, it
remained near the highest level since June of 2007. (Any reading above
the break-even point of 50 suggests rising activity.) The latest figure
was up from the low of 32.9 hit last December but it fell short of
Consensus expectations for a reading of 54.0. The ISM data is available
in Haver's USECON database. A sharp decline in
the production component to a still firm 55.7 accounted for much of the
latest decline. During the last ten years there has been an 84%
correlation between the level of the production component of the
composite index and the three-month growth in factory sector industrial
production. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001i.jpg" align="right" border="0" height="265" width="353">
It is appropriate to correlate the ISM index level
with factory sector output growth because the ISM
index is a diffusion index. It measures growth by using all of the
positive changes in activity added to one half of the zero change in
activity measures.&nbsp; The new orders component fell
just modestly. On the up side, the export order index at 55.0 was near
the highest in over a year, suggesting that recessions abroad are
winding down. During the last ten years there has been a 53%
correlation between the index and the q/q change in real exports of
goods in the GDP accounts. The employment index also fell just
slightly. Though the 46.2 reading continued to suggest a lower level of
hiring, the index was near its highest level since last August and was
up from the February low of 26.1. During the last ten years there has
been a 90% correlation between the index level and the three-month
change in manufacturing payrolls. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091001j.jpg" align="right" border="0" height="265" width="353">
A reduced rate of inventory
liquidation seems to be behind the factory sector's recent improvement.
The inventory index jumped to 42.5 which was its highest level since
last October. The speed of supplier deliveries also points toward
improvement in activity. Slower delivery speeds are indicated by a rise
in the index to its highest level since 2005 (no typo). The separate
index of prices paid also suggests improved factory sector activity. At
63.5, the reading was near its highest level since last August and it's
up from the December low of 18.0. During the last twenty years there
has been a 79% correlation between the price index and the three-month
change in the PPI for intermediate goods.&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/SURVEYS/@S2/@S201/@S201.HTM">ISM
Mfg</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September '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">Composite Index</td>
<td>52.6</td>
<td>52.9</td>
<td>43.4</td>
<td>45.5</td>
<td>51.1</td>
<td>53.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>60.8</td>
<td>64.9</td>
<td>39.2</td>
<td>42.1</td>
<td>54.3</td>
<td>55.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment Index</td>
<td>46.2</td>
<td>46.4</td>
<td>40.9</td>
<td>43.2</td>
<td>50.5</td>
<td>51.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>63.5</td>
<td>65.0</td>
<td>53.5</td>
<td>66.5</td>
<td>64.6</td>
<td>65.0</td>
</tr>
</tbody>
</table>
</body></html>

The National Association of Purchasing Management data continued to indicate that the recession in U.S. factory sector activity is over. Though the September composite index slipped to 52.6 from 52.9 in August, it remained near the [...]

ISM Factory Index Remains Near Highest Level Since Early-2007 Suggesting Positive Growth

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

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Winnie Tapasanun

260116R23.jpg

260116S23.jpg

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.

260116T23.jpg

260116U23.jpg

- 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.

260115Z1.jpg

**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).

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Charts of the Week: Between Optimism and Uncertainty

Michael J. Moran

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

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

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

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

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

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

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

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

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

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

Import & Export Prices: Generally Modest Changes

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

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

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

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

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

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

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

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

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

Economy in Brief: 2009

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