Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029a.jpg" align="left" border="0" height="265" width="353">

Readings are mostly firm, strong. 


France's service sector continues to claim strong readings.
While Euro area and French manufacturing measures have softened, the
service sector continues to post its strongest overall reading since
2000. The outlook index shows a bit more weakness, dropping by one
point in October and holding to the 87th percentile in its range. Sales
held to their second strongest reading on the period and were flat on
the month. Expected sales (next 3-months) slipped by one point and
remained in their 82nd percentile. Price expectations slipped and were
in the 30th to 40th percentiles. Employment readings showed current of
&#8216;observed' employment in only its 40th percentile but expected
employment (3-mos) was at 100%. Viva la optimism!


The service sector readings indicate that for France at least
expectations remain somewhat compartmentalized. Manufacturing
indicators have been weakening but the services survey shows no hint of
this or fear of its consequences. The same goes for the unrelenting
rise in the euro which has brought forth a good deal of negative
commentaries from French officials. There appears to have been no
spillover impact into the services sector stemming from these sorts of
concerns. Still, the upward momentum in the services index has clearly
slowed both for the climate and the outlook indicators. We may soon see
if the service sector is really this strong or if survey participants
have just been excessively optimistic. 



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="11" scope="col">France
INSEE Services Survey Jan 2000-date</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Oct 
07</td>
<td>Sep 
07</td>
<td>Aug 
07</td>
<td>Jul 
07</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr class="grey3">
<td class="firstcol">Climate Indicator</td>
<td>113</td>
<td>112</td>
<td>113</td>
<td>113</td>
<td>100.0</td>
<td>1</td>
<td>113</td>
<td>83</td>
<td>30</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Climate:
3-Mo MAV</td>
<td>113</td>
<td>113</td>
<td>112</td>
<td>111</td>
<td>100.0</td>
<td>1</td>
<td>113</td>
<td>85</td>
<td>28</td>
<td>102</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Climate:
12-Mo MAV</td>
<td>110</td>
<td>110</td>
<td>110</td>
<td>109</td>
<td>100.0</td>
<td>1</td>
<td>110</td>
<td>91</td>
<td>20</td>
<td>101</td>
</tr>
<tr>
<td class="firstcol">Outlook</td>
<td>7</td>
<td>8</td>
<td>8</td>
<td>8</td>
<td>87.9</td>
<td>11</td>
<td>11</td>
<td>-22</td>
<td>33</td>
<td>-1</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Sales</td>

</tr>
<tr>
<td class="firstcol" >&nbsp; Observed 3-mos</td>
<td>18</td>
<td>18</td>
<td>16</td>
<td>13</td>
<td>96.7</td>
<td>2</td>
<td>19</td>
<td>-11</td>
<td>30</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected 3-Mos</td>
<td>13</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>82.1</td>
<td>12</td>
<td>18</td>
<td>-10</td>
<td>28</td>
<td>7</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Sales Price</td>

</tr>
<tr>
<td class="firstcol">&nbsp; Observed over 3-Mos</td>
<td>0</td>
<td>2</td>
<td>1</td>
<td>0</td>
<td>33.3</td>
<td>34</td>
<td>8</td>
<td>-4</td>
<td>12</td>
<td>0&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected over 3-Mos</td>
<td>-1</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>40.0</td>
<td>59</td>
<td>5</td>
<td>-5</td>
<td>10</td>
<td>1</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Employment</td>

</tr>
<tr>
<td class="firstcol">&nbsp; Observed over 3-Mos</td>
<td>3</td>
<td>8</td>
<td>10</td>
<td>13</td>
<td>41.2</td>
<td>50</td>
<td>23</td>
<td>-11</td>
<td>34</td>
<td>5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected over 3-Mos</td>
<td>17</td>
<td>9</td>
<td>8</td>
<td>6</td>
<td>100.0</td>
<td>1</td>
<td>17</td>
<td>-5</td>
<td>22</td>
<td>5</td>
</tr>
</tbody>
</table>
</html>

Readings are mostly firm, strong. France's service sector continues to claim strong readings. While Euro area and French manufacturing measures have softened, the service sector continues to post its strongest overall reading since [...]

France's Service Sector Holds Its Strength

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029a.jpg" align="left" border="0" height="265" width="353">

Readings are mostly firm, strong. 


France's service sector continues to claim strong readings.
While Euro area and French manufacturing measures have softened, the
service sector continues to post its strongest overall reading since
2000. The outlook index shows a bit more weakness, dropping by one
point in October and holding to the 87th percentile in its range. Sales
held to their second strongest reading on the period and were flat on
the month. Expected sales (next 3-months) slipped by one point and
remained in their 82nd percentile. Price expectations slipped and were
in the 30th to 40th percentiles. Employment readings showed current of
&#8216;observed' employment in only its 40th percentile but expected
employment (3-mos) was at 100%. Viva la optimism!


The service sector readings indicate that for France at least
expectations remain somewhat compartmentalized. Manufacturing
indicators have been weakening but the services survey shows no hint of
this or fear of its consequences. The same goes for the unrelenting
rise in the euro which has brought forth a good deal of negative
commentaries from French officials. There appears to have been no
spillover impact into the services sector stemming from these sorts of
concerns. Still, the upward momentum in the services index has clearly
slowed both for the climate and the outlook indicators. We may soon see
if the service sector is really this strong or if survey participants
have just been excessively optimistic. 



<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="11" scope="col">France
INSEE Services Survey Jan 2000-date</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Oct 
07</td>
<td>Sep 
07</td>
<td>Aug 
07</td>
<td>Jul 
07</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr class="grey3">
<td class="firstcol">Climate Indicator</td>
<td>113</td>
<td>112</td>
<td>113</td>
<td>113</td>
<td>100.0</td>
<td>1</td>
<td>113</td>
<td>83</td>
<td>30</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Climate:
3-Mo MAV</td>
<td>113</td>
<td>113</td>
<td>112</td>
<td>111</td>
<td>100.0</td>
<td>1</td>
<td>113</td>
<td>85</td>
<td>28</td>
<td>102</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Climate:
12-Mo MAV</td>
<td>110</td>
<td>110</td>
<td>110</td>
<td>109</td>
<td>100.0</td>
<td>1</td>
<td>110</td>
<td>91</td>
<td>20</td>
<td>101</td>
</tr>
<tr>
<td class="firstcol">Outlook</td>
<td>7</td>
<td>8</td>
<td>8</td>
<td>8</td>
<td>87.9</td>
<td>11</td>
<td>11</td>
<td>-22</td>
<td>33</td>
<td>-1</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Sales</td>

</tr>
<tr>
<td class="firstcol" >&nbsp; Observed 3-mos</td>
<td>18</td>
<td>18</td>
<td>16</td>
<td>13</td>
<td>96.7</td>
<td>2</td>
<td>19</td>
<td>-11</td>
<td>30</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected 3-Mos</td>
<td>13</td>
<td>14</td>
<td>15</td>
<td>16</td>
<td>82.1</td>
<td>12</td>
<td>18</td>
<td>-10</td>
<td>28</td>
<td>7</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Sales Price</td>

</tr>
<tr>
<td class="firstcol">&nbsp; Observed over 3-Mos</td>
<td>0</td>
<td>2</td>
<td>1</td>
<td>0</td>
<td>33.3</td>
<td>34</td>
<td>8</td>
<td>-4</td>
<td>12</td>
<td>0&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected over 3-Mos</td>
<td>-1</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>40.0</td>
<td>59</td>
<td>5</td>
<td>-5</td>
<td>10</td>
<td>1</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan=11>Employment</td>

</tr>
<tr>
<td class="firstcol">&nbsp; Observed over 3-Mos</td>
<td>3</td>
<td>8</td>
<td>10</td>
<td>13</td>
<td>41.2</td>
<td>50</td>
<td>23</td>
<td>-11</td>
<td>34</td>
<td>5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected over 3-Mos</td>
<td>17</td>
<td>9</td>
<td>8</td>
<td>6</td>
<td>100.0</td>
<td>1</td>
<td>17</td>
<td>-5</td>
<td>22</td>
<td>5</td>
</tr>
</tbody>
</table>
Japan Retail Sales Edge Back in Sept...Is Slowing Trend Still in Place? 
by <a href="/comment/Brusca.html">Robert Brusca</a> October 29, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029b.jpg" width="353">
Real retail sales surged in August but they fell in September. Still, the combination leaves retail sales net better off over the past two months. The Yr/Yr chart (real retail sales) shows that the downtrend that has been in place is blunted by these recent movements. Still retail sales in the quarter are going to be lower; they are falling at a 3.2% annual rate in Q3. The main nominal measures show distinct slowing as well. 
Japan continues to be caught in between as the central bank looks for recovery and anticipates rate hikes and as the government plans for tax hikes to address Japan&#39;s excessive fiscal situation. Yet the economy, after a few hopeful quarters, has failed to deliver on the promise of growth and failed to let either of these policy moves occur. Moreover, the backsliding on the inflation front is a clear reminder of how fragile this economy is. The ongoing weakness in the yen should be a constant reminder of Japan&#146;s weakness as export growth continues to drive growth. In short, Japan&#146;s retail sales in September are not so encouraging despite the fact that they let much of the August strength stand. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th colspan=9 scope="col">Japan Real and Nominal Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>QTR Q3 Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Total</td>
<td>-0.6%</td>
<td>3.6%</td>
<td>-2.8%</td>
<td>0.8%</td>
<td>1.6%</td>
<td>0.5%</td>
<td>0.5%</td>
<td>-3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Motor Vehicles and Parts</td>
<td>-6.5%</td>
<td>8.0%</td>
<td>-0.4%</td>
<td>2.3%</td>
<td>-1.9%</td>
<td>0.0%</td>
<td>-6.9%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>0.9%</td>
<td>1.2%</td>
<td>-1.0%</td>
<td>4.7%</td>
<td>-1.4%</td>
<td>0.4%</td>
<td>1.8%</td>
<td>-2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing footwear</td>
<td>-0.4%</td>
<td>8.7%</td>
<td>-8.3%</td>
<td>-3.1%</td>
<td>0.4%</td>
<td>-1.1%</td>
<td>-1.5%</td>
<td>-10.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Real</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">Retail Total</td>
<td>-1.5%</td>
<td>3.9%</td>
<td>-2.5%</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>-3.2%</td>
</tr>
</tbody>
</table>
U.K. Housing Market Cooling Off 
by <a href="/comment/Curley.html">Louise Curley</a> October 29, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029c.jpg" width="353">
The average price of the quality adjusted house in the UK declined 0.11% in October to 176.1 thousands of British pounds, the first decline since December, 2005. Other measures of activity in the housing market revealed in the Hometrack Housing Survey also showed weakness. The ratio of the selling price to the asking price declined to 94.3 from 94.8 in September. The average time to sell a house rose to 7.4 weeks from 6.9 and the number of viewings before a sale rose to 11.5 from 11.0. These last two indicators are shown with the house price in the first chart. The house price is on an inverted scale.
December, 2005 marked the end of a year and a half of year of almost constant year to year declines in the quarterly house prices. In spite of the price declines, which may well have resulted from rising interest rates at that time, the housing market did not collapse. Construction remained strong. Once again, there has been a period of rising interest rates that has now begun to affect the housing market. The standard average variable interest rate on mortgages is shown in the second chart together with the house price. The question now is: Will the current rise in interest rates leave the housing market as unscathed as it did in the 2004-5 period?
In one respect, that regarding housing starts, the effect is already apparent. There were only two year to year declines in England&#39;s quarterly housing starts in 2005, one of 4.6% in the first quarter and one of 0.74% in the third quarter. Contrast that with the current decline beginning in the second quarter of 2006 and continuing into the second quarter of 2007. Data for housing starts for all of Great Britain are available only through 2006, but data for England are available through the second quarter of 2007. Since the trend in activity in England largely determine the trend in activity for the whole United Kingdom, as the third chart attests, it is clear that there has already been a significant impact on actual housing starts. 

 <img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029d.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071029e.jpg">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK HOMETRACK HOUSING SURVEY&nbsp;</th>
<th scope="col">Oct 07</th>
<th scope="col">Sep 07&nbsp;</th>
<th scope="col">Oct 06&nbsp;</th>
<th scope="col">M/M% Chg&nbsp;</th>
<th scope="col">Y/Y % Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Weighted Average Price (1000 GBP)</td>
<td>176.1</td>
<td>176.3</td>
<td>168.6</td>
<td>-0.11</td>
<td>4.45</td>
<td>165.7</td>
<td>161.9</td>
<td>165.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Sale&#39;s Price as % of Asking Price</td>
<td>94.3</td>
<td>94.8</td>
<td>94.9</td>
<td>-0.5*</td>
<td>-0.6*</td>
<td>94.7</td>
<td>93.3</td>
<td>95.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Time to Sell in weeks</td>
<td>7.4</td>
<td>6.9</td>
<td>6.5</td>
<td>0.5*</td>
<td>0.9*</td>
<td>6.8</td>
<td>7.8</td>
<td>5.3</td>
</tr>
<tr class="odd">
<td class="firstcol"> Average Number of Viewings per Sale </td>
<td>11.5</td>
<td>11.0</td>
<td>10.8</td>
<td>0.5*</td>
<td>0.7*</td>
<td>10.9</td>
<td>12.3</td>
<td>11.00</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Q2 07</td>
<td>Q1 07&nbsp;</td>
<td>Q2&nbsp; 06&nbsp;</td>
<td>Q/Q Chg&nbsp;</td>
<td>Y/Y Chg&nbsp;</td>
<td>2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr class="odd">
<td class="firstcol">Housing Starts in England (000)</td>
<td>39.7</td>
<td>42.8</td>
<td>47.2</td>
<td>-7.18</td>
<td>-9.92</td>
<td>178.5</td>
<td>177.0</td>
<td>176.6</td>
</tr>
<tr class="odd">
<td class="firstcol">* difference</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</html>

Carol Stone, CBE

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026f.jpg" width="353">
Spain&#39;s National Institute of Statistics reported Q3 labor force data today. Their formal term is &quot;Economically Active Population Survey&quot; or EAPS. Employment in this survey rose 143,300 from Q2 to 20.511 million workers, up 3.1% from a year ago. There were notable gains in services, up 4.2% from Q3 2006, and construction, up 4.9%. Employment in industry (mining and manufacturing) is falling off gradually and stood a 3.26 million in Q3 compared to a peak of 3.32 million in Q4 2006. That sector had shown vigorous growth from 1997 through 2003 and has been basically on a plateau since then, so the current reductions would not seem to be a sign of weakness. Construction employment, in contrast, has been growing rapidly since 1997, an average rate of 7.5%; the 4.9% in Q3 is actually the &quot;slowest&quot; since Q4 2005. The service sector, too, has shown vigor, with growth at nearly a 5% pace since 1995.
The Q3 unemployment rate was steady at 8.0%. There was a modest rise in the number of people unemployed, 32,000 from Q1 and 26,000 from a year ago. Unemployment has been restrained, however, in view of a notable advance in the number of economically active population. This rose 175,000 in Q3 and is up 3.0% from Q3 2006. The participation rate stands at a record 59.1% of the population over age 16, up 0.2% from Q2 and 0.7% from a year ago.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026g.jpg" width="353">
Since 2005, the Spanish labor force data have been distinctive in breaking out Spanish nationals and foreign nationals explicitly. Immigrant workers are important in many countries, and it is really worthwhile to have the Spanish statisticians compile this information. Foreign nationals constitute just under 14% of employment in Spain, 2.846 million of the total 20.511 million; their working numbers grew 328,400 in Q3 from the year earlier, 13.0%. They have a high participation rate, 76.2% in Q3, but one assumes that they come to Spain from their home country in order to seek out job opportunities. Not all are successful; their unemployment rate is 11.8%, higher than the year-ago 10.8%, but off from a recent high in Q1 of 12.6%. The participation rate among Spaniards is 57.0%; this is also up 0.2% from Q2. Their unemployment rate is 7.4%; their employment grew 286,500 over the last year, 1.6%. These series by citizenship group are too short still to do much for any precise econometric analysis, but the differential pattern of the two groups may already be helping describe forces on wages and factors that will affect the further expansion of Spanish industry and markets.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026h.jpg" width="353">
All of these data are in Haver&#39;s SPAIN database, as well as G10. The SPAIN database includes &quot;country-sourced&quot; data. In G10, Haver combines summary data for a number of major countries. Our analysts compile some select ratios and conduct seasonal adjustment on some series where it seems warranted. In that database, Spain&#39;s employment is seen to be up 91,600 from Q2, and the unemployment rate up 0.2% to 8.2%.</div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SPAIN: &quot;EAPS&quot; Data, NSA</th>
<th scope="col">Q3 2007</th>
<th scope="col">Q2 2007</th>
<th scope="col">Year Ago</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment, Millions</td>
<td>20.51</td>
<td>20.37</td>
<td>19.90</td>
<td>19.75</td>
<td>18.97</td>
<td>17.97</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Yr/Yr % Chg</td>
<td>3.1</td>
<td>3.4</td>
<td>3.7</td>
<td>4.1</td>
<td>5.6</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>8.0</td>
<td>8.0</td>
<td>8.2</td>
<td>8.5</td>
<td>9.1</td>
<td>11.0</td>
</tr>
<tr>
<td class="firstcol">Spanish Nationals, Millions</td>
<td>17.66</td>
<td>17.61</td>
<td>17.38</td>
<td>17.29</td>
<td>16.90</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>57.0</td>
<td>56.8</td>
<td>56.4</td>
<td>56.3</td>
<td>55.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Foreign Nationals, Millions</td>
<td>2.84</td>
<td>2.75</td>
<td>2.52</td>
<td>2.46</td>
<td>2.07</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>76.2</td>
<td>76.0</td>
<td>77.1</td>
<td>77.1</td>
<td>75.5</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
</html>

Spain's National Institute of Statistics reported Q3 labor force data today. Their formal term is "Economically Active Population Survey" or EAPS. Employment in this survey rose 143,300 from Q2 to 20.511 million workers, up 3.1% from [...]

Spain Employment Up 3.1% from Year Ago; Spanish Workers and Immigrants Both Gain

Tom Moeller

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<img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026a.jpg">
The Conference Board indicated that its index of help-wanted advertising did rise slightly last month but only to 24 from 23 in August. The figures are near the record low for the series which dates back to the 1950s.
The index had shown slight improvement during the third quarter but it has since dissipated.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ads improved to 57% from a low 16% in August.
In most regions of the country the index of help-wanted advertising remained low or fell further in September with the exception of the South where moderate improvement occurred. 
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.
Recent Financial Developments and the U.S. Economic Outlook also from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-26-27.pdf"> here</a>. 

<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026b.jpg"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026c.jpg" class="small">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September 2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>24</td>
<td>23</td>
<td>29</td>
</tr>
</tbody>
</table>
</body>
</html>

The Conference Board indicated that its index of help-wanted advertising did rise slightly last month but only to 24 from 23 in August. The figures are near the record low for the series which dates back to the 1950s. The index had [...]

U.S. Help-Wanted Advertising Remained Low

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026d.jpg" width="353">
The University of Michigan&#39;s full- month reading of consumer sentiment for October fell 3.0% to 80.9. That roughly doubled the 1.7% decline reported for early October; it followed no change in September and a huge 7.7% drop in August. The decline was worse than Consensus expectations, which called for the number to be unchanged from the preliminary October figure of 82.0.
Both major sub-indexes shared in the erosion. Current conditions was lowered from its preliminary value of 98.2 to 97.6 and expectations from 71.6 to 70.1.
By income category, the added decline in overall sentiment reversed the early month pattern: families with greater than $50,000 per year in income had reported a reduction of -16.8% y/y, but it is now down &quot;only&quot; 15.1% while sentiment amongst families with income less than $50,000 per year trimmed some of its earlier m/m recovery and now shows a sizable 11.5% y/y decline.
By age group, it sentiment amongst folks in the 35-54 bracket eroded from the preliminary -17.1% y/y to -17.6%. Younger persons cut their initial assessment from +5.6% y/y to +2.3%.
Expectations about personal finances actually improved a bit from the earlier reading and are now flat with September&#39;s value; interestingly, there are now equal increases in the proportion of survey participants who expect better times ahead for themselves and in those who expect worse times. Expectations for business conditions during the next year fell for the sixth month this year out of ten. Expectations about business conditions out five years remain unattractive, with a decrease in those looking for &quot;good times&quot; and an increase in those expecting &quot;bad times&quot;.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026e.jpg" width="353">
The view of the current economic conditions improved due to a slight increase in the view of current personal finances, a conclusion that is unchanged from the preliminary October survey. However, the perspective of current buying conditions turned from up slightly m/m to down slightly.
The assessment of government policy in October recovered the declines during the prior two months. This is not because more people see government doing a &quot;good&quot; job, but that fewer people see it doing a &quot;poor&quot; job; they apparently shifted to an &quot;only fair&quot; assessment.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
Safety, Soundness, and The Evolution of U.S. Banking Industry from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq107_DeYoung.pdf"> here</a>.
Corporate Access to External Financing from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-31.pdf"> here</a>.</div>

<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/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">October (Final)</th>
<th scope="col">October (Prelim.)</th>
<th scope="col">September</th>
<th scope="col">October&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>80.9</td>
<td>82.0</td>
<td>83.4</td>
<td>-13.6% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>97.6</td>
<td>98.2</td>
<td>97.9</td>
<td>-9.0%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>70.1</td>
<td>71.6</td>
<td>74.1</td>
<td>-17.3%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's full- month reading of consumer sentiment for October fell 3.0% to 80.9. That roughly doubled the 1.7% decline reported for early October; it followed no change in September and a huge 7.7% drop in August. [...]

Michigan Consumer Sentiment Added To Decline in Early October

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026d.jpg" width="353">
The University of Michigan&#39;s full- month reading of consumer sentiment for October fell 3.0% to 80.9. That roughly doubled the 1.7% decline reported for early October; it followed no change in September and a huge 7.7% drop in August. The decline was worse than Consensus expectations, which called for the number to be unchanged from the preliminary October figure of 82.0.
Both major sub-indexes shared in the erosion. Current conditions was lowered from its preliminary value of 98.2 to 97.6 and expectations from 71.6 to 70.1.
By income category, the added decline in overall sentiment reversed the early month pattern: families with greater than $50,000 per year in income had reported a reduction of -16.8% y/y, but it is now down &quot;only&quot; 15.1% while sentiment amongst families with income less than $50,000 per year trimmed some of its earlier m/m recovery and now shows a sizable 11.5% y/y decline.
By age group, it sentiment amongst folks in the 35-54 bracket eroded from the preliminary -17.1% y/y to -17.6%. Younger persons cut their initial assessment from +5.6% y/y to +2.3%.
Expectations about personal finances actually improved a bit from the earlier reading and are now flat with September&#39;s value; interestingly, there are now equal increases in the proportion of survey participants who expect better times ahead for themselves and in those who expect worse times. Expectations for business conditions during the next year fell for the sixth month this year out of ten. Expectations about business conditions out five years remain unattractive, with a decrease in those looking for &quot;good times&quot; and an increase in those expecting &quot;bad times&quot;.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026e.jpg" width="353">
The view of the current economic conditions improved due to a slight increase in the view of current personal finances, a conclusion that is unchanged from the preliminary October survey. However, the perspective of current buying conditions turned from up slightly m/m to down slightly.
The assessment of government policy in October recovered the declines during the prior two months. This is not because more people see government doing a &quot;good&quot; job, but that fewer people see it doing a &quot;poor&quot; job; they apparently shifted to an &quot;only fair&quot; assessment.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.
Safety, Soundness, and The Evolution of U.S. Banking Industry from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq107_DeYoung.pdf"> here</a>.
Corporate Access to External Financing from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-31.pdf"> here</a>.</div>

<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/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">October (Final)</th>
<th scope="col">October (Prelim.)</th>
<th scope="col">September</th>
<th scope="col">October&nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>80.9</td>
<td>82.0</td>
<td>83.4</td>
<td>-13.6% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>97.6</td>
<td>98.2</td>
<td>97.9</td>
<td>-9.0%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>70.1</td>
<td>71.6</td>
<td>74.1</td>
<td>-17.3%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
U.S. Help-Wanted Advertising Remained Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 26, 2007


<img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026a.jpg">
The Conference Board indicated that its index of help-wanted advertising did rise slightly last month but only to 24 from 23 in August. The figures are near the record low for the series which dates back to the 1950s.
The index had shown slight improvement during the third quarter but it has since dissipated.
During the last ten years there has been a 57% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ads improved to 57% from a low 16% in August.
In most regions of the country the index of help-wanted advertising remained low or fell further in September with the exception of the South where moderate improvement occurred. 
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.
Recent Financial Developments and the U.S. Economic Outlook also from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2007/el2007-26-27.pdf"> here</a>. 

<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026b.jpg"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026c.jpg" class="small">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September 2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>24</td>
<td>23</td>
<td>29</td>
</tr>
</tbody>
</table>
Spain Employment Up 3.1% from Year Ago; Spanish Workers and Immigrants Both Gain 
by <a href="/comment/Stone.html">Carol Stone</a> October 26, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026f.jpg" width="353">
Spain&#39;s National Institute of Statistics reported Q3 labor force data today. Their formal term is &quot;Economically Active Population Survey&quot; or EAPS. Employment in this survey rose 143,300 from Q2 to 20.511 million workers, up 3.1% from a year ago. There were notable gains in services, up 4.2% from Q3 2006, and construction, up 4.9%. Employment in industry (mining and manufacturing) is falling off gradually and stood a 3.26 million in Q3 compared to a peak of 3.32 million in Q4 2006. That sector had shown vigorous growth from 1997 through 2003 and has been basically on a plateau since then, so the current reductions would not seem to be a sign of weakness. Construction employment, in contrast, has been growing rapidly since 1997, an average rate of 7.5%; the 4.9% in Q3 is actually the &quot;slowest&quot; since Q4 2005. The service sector, too, has shown vigor, with growth at nearly a 5% pace since 1995.
The Q3 unemployment rate was steady at 8.0%. There was a modest rise in the number of people unemployed, 32,000 from Q1 and 26,000 from a year ago. Unemployment has been restrained, however, in view of a notable advance in the number of economically active population. This rose 175,000 in Q3 and is up 3.0% from Q3 2006. The participation rate stands at a record 59.1% of the population over age 16, up 0.2% from Q2 and 0.7% from a year ago.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026g.jpg" width="353">
Since 2005, the Spanish labor force data have been distinctive in breaking out Spanish nationals and foreign nationals explicitly. Immigrant workers are important in many countries, and it is really worthwhile to have the Spanish statisticians compile this information. Foreign nationals constitute just under 14% of employment in Spain, 2.846 million of the total 20.511 million; their working numbers grew 328,400 in Q3 from the year earlier, 13.0%. They have a high participation rate, 76.2% in Q3, but one assumes that they come to Spain from their home country in order to seek out job opportunities. Not all are successful; their unemployment rate is 11.8%, higher than the year-ago 10.8%, but off from a recent high in Q1 of 12.6%. The participation rate among Spaniards is 57.0%; this is also up 0.2% from Q2. Their unemployment rate is 7.4%; their employment grew 286,500 over the last year, 1.6%. These series by citizenship group are too short still to do much for any precise econometric analysis, but the differential pattern of the two groups may already be helping describe forces on wages and factors that will affect the further expansion of Spanish industry and markets.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071026h.jpg" width="353">
All of these data are in Haver&#39;s SPAIN database, as well as G10. The SPAIN database includes &quot;country-sourced&quot; data. In G10, Haver combines summary data for a number of major countries. Our analysts compile some select ratios and conduct seasonal adjustment on some series where it seems warranted. In that database, Spain&#39;s employment is seen to be up 91,600 from Q2, and the unemployment rate up 0.2% to 8.2%.</div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SPAIN: &quot;EAPS&quot; Data, NSA</th>
<th scope="col">Q3 2007</th>
<th scope="col">Q2 2007</th>
<th scope="col">Year Ago</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment, Millions</td>
<td>20.51</td>
<td>20.37</td>
<td>19.90</td>
<td>19.75</td>
<td>18.97</td>
<td>17.97</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Yr/Yr % Chg</td>
<td>3.1</td>
<td>3.4</td>
<td>3.7</td>
<td>4.1</td>
<td>5.6</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>8.0</td>
<td>8.0</td>
<td>8.2</td>
<td>8.5</td>
<td>9.1</td>
<td>11.0</td>
</tr>
<tr>
<td class="firstcol">Spanish Nationals, Millions</td>
<td>17.66</td>
<td>17.61</td>
<td>17.38</td>
<td>17.29</td>
<td>16.90</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>57.0</td>
<td>56.8</td>
<td>56.4</td>
<td>56.3</td>
<td>55.7</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Foreign Nationals, Millions</td>
<td>2.84</td>
<td>2.75</td>
<td>2.52</td>
<td>2.46</td>
<td>2.07</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>76.2</td>
<td>76.0</td>
<td>77.1</td>
<td>77.1</td>
<td>75.5</td>
<td>--</td>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071025j.jpg" width="353">
&quot;Cost, insurance and freight&quot; is an expression to describe the value of imports. The vast majority of the time, the &quot;insurance and freight&quot; portion amounts to a statistical discrepancy, used, at least by economists, merely to distinguish definitions of each measure of imports. However, the latter item in the expression is no long a trivial matter. The Wall Street Journal on Monday and then a client query called our attention to the Baltic Exchange Freight Indexes, the world&#39;s key gauge of freight charges. These have been soaring.
On October 24, the broadest measure, the Baltic Exchange Dry Index reached 10984 (January 4, 1985 = 1000), up a whopping 20.9% just since September 24. Actually, the most recent few days have seen some moderation, but the week of October 8-12 experienced daily hikes ranging from 1.4% to 3.6% each. The index stands an incredible 177.4% ahead of a year ago.
The Baltic Dry Index is a composite of the Baltic Capesize, Baltic Panamax and Baltic Supramax Indexes. Each covers a different group of sea routes around the world, different size and weight of ship and specialization of freight. The common element in these is that all of this freight is raw materials: grain, iron ore, coal, cement and other building materials, among others. Thus, when it becomes as significant as it is presently, it becomes key because it hits at the beginning of the production chain.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071025k.jpg" width="353">
Several recent press accounts have highlighted the role of demand in China. The other day here, Louise Curley talked about the hints of some slowing in Chinese imports; their growth has tapered somewhat, particularly from neighbors Singapore and Korea. At the same time, detail reported today for September&#39;s imports show continued strength in just the raw materials that the Baltic Indexes cover. &quot;Crude materials&quot; inflows were $10.2 billion, up 36.3% from a year ago; Q3 as a whole saw 42.5% expansion. Within this category -- which excludes fuels so is not impacted by oil prices -- ferrous ores and metal scrap surged 40.9% from September 2006 to $6.2 billion; for those items, Q3 was 54.4% ahead of last year&#39;s period. The anecdotal evidence cites increasing shipments from Brazil as feeding this demand, as well as other producers. Those heavy volumes also feed the freight indexes, since ships must make longer trips and resulting port congestion means they must wait some days to unload, which also increases the cost.
The cause, some reports argue, is a shortage of ships, which, of course, have long building lead-times. By 2009, there will be a number of new freighters and container ships to bring some relief. A long time to wait.
These data are contained in Haver&#39;s BALTIC database, a proprietary database from the London-based Baltic Exchange. The Exchange is a clearinghouse of world shipping information. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 24</th>
<th scope="col">Oct 23</th>
<th scope="col">Week&nbsp;Oct 19</th>
<th scope="col">Sept</th>
<th scope="col">June</th>
<th scope="col">Dec 2006</th>
<th scope="col">Year Ago</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Baltic Exchange Dry Index, 01/04/85 =1000</td>
<td>10984</td>
<td>10944</td>
<td>10752</td>
<td>8574</td>
<td>5772</td>
<td>4336</td>
<td>3978</td>
</tr>
<tr>
<td class="firstcol">Baltic Capesize Index, 03/01/99 = 1000</td>
<td>15487</td>
<td>15514</td>
<td>15361</td>
<td>11856</td>
<td>7616</td>
<td>5858</td>
<td>5404</td>
</tr>
<tr class="odd">
<td class="firstcol">China Imports, Mil.$</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>Sept &#39;06</td>
</tr>
<tr>
<td class="firstcol">Crude Materials, Inedible</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>$10212</td>
<td>$9355</td>
<td>$7954</td>
<td>$7492</td>
</tr>
<tr class="odd">
<td class="firstcol">Ferrous Ores &amp; Metal Scrap </td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>$6234</td>
<td>$5408</td>
<td>$4483</td>
<td>$4425</td>
</tr>
</tbody>
</table>
</body>
</html>

"Cost, insurance and freight" is an expression to describe the value of imports. The vast majority of the time, the "insurance and freight" portion amounts to a statistical discrepancy, used, at least by economists, merely to [...]

Freight Charges Skyrocket; Baltic Indexes Surge to Records

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071025i.jpg" width="353">
Domestic inflation is the more nettlesome here&#133; 
The less than one year in duration statistics in the table below are not as meaningful for export and import prices as they are not seasonally adjusted. But overall the trends in the table and in the chart show that inflation is in pretty good shape. Nonpetroleum inflation is keeping its head down. The reference line on the chart drawn at 2% shows that only the nonpetroleum PPI and CPI prices are edging above it. History shows us that when international prices turn lower that does not translate quickly into domestic prices becoming calm. In 2001 when import prices fell sharply it took about one year before the domestic ex-energy CPI responded. 
Of course what happens with oil prices and with food prices does matter. We focus on ex energy prices mostly to rid ourselves of the volatility, but at the same time we see that it provides coherence in the relationships among domestic and international prices of various sorts. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" colspan=8>German International and Domestic Inflation Trends</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% m/m</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">SA:</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Export Prices</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">Import Prices</td>
<td>0.6%</td>
<td>-1.3%</td>
<td>0.1%</td>
<td>-2.6%</td>
<td>3.2%</td>
<td>1.3%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">NSA</td>
<td>&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">Exp excl Petrol</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Imp excl Petrol</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-2.7%</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: SA</td>
<td>&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">CPI</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">CPI excl energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>2.0%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td>0.1%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">PPI excl Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>2.7%</td>
<td>2.5%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Domestic inflation is the more nettlesome here The less than one year in duration statistics in the table below are not as meaningful for export and import prices as they are not seasonally adjusted. But overall the trends in the [...]

Germany: Ex-Energy Inflation Trends are Turning Lower International Prices First

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) eased 0.2% (-3.6% y/y) in January to 100.7 after rising 1.5% to 100.9 in December and falling 2.9% in November to 99.4. The level of home affordability has risen 12.0% from its low of 89.9 in October 2023. It remains 43.8% below the high of 179.2 in April 2020.

The slip in affordability in January reflected a 1.6% drop (+5.0% y/y) in the median price of an existing single-family home to $402,000 which was offset by a rise in mortgage rates to 7.04% from 6.80% in December. The price decline was the sixth in the last seven months from the record $432,900 in June. The rise in mortgage rates compared to a September low of 6.26% and a 7.14% high during May. It remained increased from a December 2020 low of 2.73%. These changes raised the principal & interest payment by 0.8% (8.4% y/y) to $2,148 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a steady 24.8% of income during January. They remained up from a low of 14.0% in April 2020.

The rise in housing costs in January was accompanied by improvement in median family income. It increased 0.7% (4.5% y/y) to a record $103,850 after rising 0.3% in December and 0.4% in November.

Housing affordability was mixed m/m across the country in January. The index rose 0.4% (-5.9% y/y) to 134.2 in the Midwest. It remains the most affordable region of the country. In the South, the index eased 0.6% (-2.5% y/y) to 103.3 and the affordability index in the Northeast fell 1.9% (-8.7% y/y) to 89.9. In the West, where homes are the least affordable, the index weakened 1.8% (-5.5% y/y) to 69.8 in January.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022 (98.8).

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices ease but mortgage rates rise.
- Median income strengthens.
- Affordability weakens in most of country.

U.S. Housing Affordability Is Little Changed in January

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Yesterday, March 13, the Federal Reserve published the Financial Accounts for Q4 2024. They show, among numerous other things, that domestic nonfinancial participants in the U.S. economy had borrowings that represented 11.4% of GDP during Q4. This is down moderately from 12.3% in Q3 and produced an amount for the whole year of 2024 of 11.9% of GDP. The quarterly amounts cited here are at seasonally adjusted annual rates.

In Q4, the largest borrowing sector was the federal government, which used $2,602.9 billion, or 8.8% of GDP, up from $2,261 billion in Q3, or 7.7% of GDP.  Households borrowed $624.3 billion or 2.1% of GDP; this amount included $294.3 billion of home mortgages and $133.1 billion of consumer credit.

Nonfinancial business corporations actually paid down debt of $64.1 billion in Q4, or 0.2% of GDP. In Q1 of 2024, businesses had borrowed $698.2 billion and for the whole year, they borrowed $436.6 billion or 1.5% of GDP. State and local governments paid down $46.0 billion in Q4; for the whole year they did use $97.8 billion or 0.3% of GDP.

In addition to domestic borrowers, the foreign sector borrowed $341.3 billion in Q4, or 1.1% of GDP and up from $196.7 billion in Q3.  For all of 2024, foreign participants used $345.5 billion, or 1.2% of GDP.

The Financial Accounts data are in Haver's **FFUNDS** database. The Federal Reserve is the main source, while associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); those nonfinancial data are carried in Haver's **USNA** database as well as in **FFUNDS**. Note that revisions are common throughout the accounts with every quarterly release.

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- Nonfinancial sectors together borrowed 11.4% of GDP in Q4.
- Not surprisingly, the largest borrowing sector was the federal government.
- Households had sizable amounts of home mortgage borrowing, though this was less than in Q3.
- Businesses paid down debt in Q4.

U.S. Economic Sectors Borrowed Moderately in Q4 and for All of 2024

Andrew Cates

**Falling US growth momentum**
The latest Blue Chip Economic Indicators survey reflects a shifting global economic landscape, with the US experiencing a notable loss of momentum. After climbing above 2.0% on the back of a strong economic performance in late 2024, consensus forecasts for US growth in 2025 have now been revised downward for the first time in nearly a year. This reversal reflects weaker-than-expected economic data and emerging challenges tied to the policy shifts of the new administration. The downgrade in US growth projections also coincides with a further downward revision to an already subdued outlook for the UK and the euro area, reinforcing concerns about a sluggish global growth outlook (chart 1).

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**Global inflation expectations**
In the meantime the same survey reveals growing concerns about the inflation outlook in the US and Europe this year, and possibly reflecting the impact of US tariff policies on global price pressures. Japan’s inflation forecast for 2025 has also surged, as rising import costs and shifting trade dynamics have additionally contributed to stronger price pressures. This all stands in contrast to China with inflation expectations for this year falling below 1%, reinforcing concerns about deflation and weak demand (chart 2).

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**Global bond markets**
Recent shifts in 10-year government bond yields reflect changing market expectations. While yields have risen sharply in Germany, China, and Japan, they have fallen in the US. Germany’s increase is tied to expanded defense spending and industrial subsidies, while China’s reflects a shift toward more aggressive fiscal easing, with its deficit target rising to 4% of GDP to counter deflation and weak demand. In contrast, falling US yields signal a reassessment of growth expectations under the new administration. This divergence suggests capital may be flowing toward economies with stronger fiscal stimulus, potentially weakening the dollar, increasing borrowing costs for US businesses, and complicating efforts to revive domestic manufacturing.

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**Overseas holdings of US Securities**
Latest data show that foreign-holdings of US long-term securities have risen steadily over the past decade, with a notable acceleration in the past two years. The most recent data additionally highlights a significant increase in foreign ownership of US corporate equities, reflecting, until recently, investor confidence in US companies.

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**Industrialisation versus de-industrialisation**
Recent US policy shifts—particularly higher tariffs on Chinese imports—aim to address the long-term decline in domestic manufacturing jobs. However, their effectiveness is uncertain, given the growing role of automation and AI in reshaping industrial production. While tariffs may offer short-term relief, they are unlikely to reverse decades of global manufacturing shifts. China’s rise from a low-value agrarian economy to an industrial powerhouse has reshaped trade patterns, while US industrial employment has steadily declined, mirroring trends in other advanced economies. Meanwhile, Vietnam and other emerging markets have absorbed manufacturing capacity, benefiting from shifting supply chains. The real challenge for US policymakers is not just bringing back jobs but ensuring domestic industries stay competitive amid changing cost structures and technological advancements.

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**Global competitiveness**
Historically, China's low unit labour costs provided it with a significant advantage, fuelling its manufacturing boom and accelerating the offshoring of US industrial jobs. However, as China's wages have risen due to economic development and increased productivity, and as US unit labour costs have remained relatively stable, the gap has narrowed considerably. Yet, still high labour costs in the US – coupled with rising trade barriers and rising input costs - still pose a challenge to the effectiveness of US policies, as firms may still find it difficult to maintain competitiveness without significant productivity gains. Indeed, as suggested above, there is a real risk that firms may instead accelerate their shift toward automation or relocate production to other low-cost regions (e.g. Vietnam), undermining the broader economic rationale for these interventions. The erosion of economic goodwill, combined with rising costs and financial market instability, additionally suggest that while the strategic objectives of US policy may be clear, the long-term implications remain highly uncertain.

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The recent financial market volatility, marked by sharp swings in bond yields and equity market repricing, reflects growing uncertainty about the trajectory of the US economy amid a rapidly shifting policy environment. The US administration’s latest tariff measures, and their conflicting objectives, have amplified uncertainty, stifled risk appetite and further ignited inflation concerns (charts 1 and 2). Markets are grappling with the inflationary impact of rising import costs, the potential supply chain disruptions caused by abrupt shifts in trade policy, and the broader implications of protectionism on corporate investment. Meanwhile, recent policy announcements from Germany and China, coupled with firming inflationary pressures in Japan, have pushed global (ex-US) bond yields sharply higher, potentially amplifying global financial instability (charts 3 and 4). These shifts could profoundly reshape global trade and investment, not just through economic fundamentals but also through a growing erosion of goodwill toward the United States. As policy unpredictability forces companies and governments to hedge against potential disruptions, trust in the stability of US economic leadership is weakening. At the same time, concerns are mounting over the effectiveness of US policy choices, particularly in relation to one of its core ambitions—reshoring manufacturing jobs (charts 5 and 6). The question remains whether these interventions will achieve their intended goals or simply accelerate automation and supply chain realignment elsewhere.

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Charts of the Week: From Blue to Red

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The Producer Price Index for final demand held steady (+3.2% y/y) during February after increasing 0.6% in January, revised from 0.4% and rising an unrevised 0.5% in December according to the Bureau of Labor Statistics (BLS). The February reading compared to a 0.2% rise expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.2% (3.3% y/y) last month after an unrevised 0.3% January increase, and an unrevised 0.4% gain in December. The PPI excluding food & energy eased 0.1% (+3.4% y/y) after rising 0.5% in January, revised from 0.3%. A 0.3% increase had been expected.

Energy prices declined 1.2% (-3.7% y/y) during February, after rising 1.8% in January. Gasoline costs fell 4.7% (-8.2% y/y) after rising 0.3% while home heating oil prices declined 9.8% (-12.2% y/y) after a 6.5% strengthening. Electric power prices rose 0.5% (0.9% y/y) in February following a 0.4% January decline and natural gas costs strengthened 1.3% (6.7% y/y) following a 3.8% surge. Diesel fuel prices declined 3.9% (-18.5% y/y) after a 10.5% jump.

Final demand food prices rose 1.7% (5.9% y/y) in February, following a 1.0% January gain. Egg prices jumped 28.1% (136.6% y/y) following a 44.0% increase. Prices for fresh and dry vegetables rose 6.0% (-16.3% y/y) after falling 22.3% in January. Beef & veal prices declined 1.8% (+9.5% y/y) after a 5.7% rise while dairy product prices rose 0.1% (5.7% y/y) after a 0.4% increase.

Final demand goods prices excluding food & energy rose 0.4% (2.1% y/y) in February following a 0.2% rise. Core finished consumer goods prices rose 0.4% (2.1% y/y) after a decline of 0.2% in January. Core nondurable goods prices strengthened 0.6% (2.3% y/y) last month after falling 0.4% in January. Durable consumer goods prices improved 0.2% (1.6% y/y), after edging 0.1% higher in January. Capital equipment prices rose 0.2% (2.5% y/y) last month following a 0.3% gain. Core government-purchased goods prices rose 0.2% (2.4% y/y) in January, after a 0.6% January increase.

Final demand services prices declined 0.2% (+3.9% y/y) last month after rising 0.6% in January. Trade services prices fell 1.0% (+4.0% y/y) last month following a 1.2% gain. Trade of finished goods prices declined 1.1% (3.6% y/y) and reversed the January rise. Prices for final demand transportation and warehousing services held steady (+2.6% y/y) in February, after strengthening 0.9% in January. Services prices less these costs rose 0.2% (4.0% y/y) last month, after a rise of 0.3% in January.

Construction costs eased 0.1% (+1.7% y/y) in February, after increasing 0.4% during January.

Prices for intermediate demand of processed goods rose 0.5% (0.3% y/y) following a 1.0% jump. Processed energy goods prices rose 0.5% last month after increasing 3.6% in January, while food prices rose 2.0% following a 0.7% January gain.

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

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- Energy prices weaken and food prices firm.
- Price gains in core goods pick up.
- Services prices decline.

U.S. PPI Is Unchanged in February; Rise in Core Index Moderates

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Initial claims for unemployment insurance were 220,000 seasonally adjusted in the week ended March 8, just slightly less than the 222,000 the week before; that earlier amount was revised marginally from 221,000 reported before. In the latest week, the Action Economics Forecast Survey had expected 230,000. In this March 8 week, the four-week moving average was 226,000.

The total number of unemployment insurance beneficiaries was 1.87 million in the week ended March 1, down from 1.897 million in the week ended February 22. The four-week moving average was 1.872 million through the March 1st week, up from 1.866 million the week before.

The insured unemployment rate, that is, the total number of beneficiaries as a percent of covered employment, remained at 1.2%, which has held since March 2023.

Economic conditions vary widely across states and territories. In the week ended February 22, the highest rates were in Rhode Island (3.37%), New Jersey (2.90%), Massachusetts (2.58%), Minnesota (2.57%) and California (2.42%). The lowest rates were in Florida (0.36%), Alabama (0.44%), Virginia (0.46%), Tennessee and North Carolina (both 0.56%) and Mississippi (0.58%). Rates in other notable states include New York (2.08%), Pennsylvania (2.03%) and Texas (1.12%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims were less than forecast.
- Total recipients of unemployment insurance also fell.
- Insured unemployment rate still 1.2%.

Economy in Brief: October 2007

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