Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910d.jpg" width="353">
Improvement in the U.S. economy probably is behind the July deterioration in the international trade deficit to $32.0B versus a little-revised June deficit of $27.5B. Consensus expectations had been for a deficit of $27.0B. Nonoil imports reversed six months of decline with a 6.1% m/m gain, though that still left them down by one-quarter from the year-ago level. A 3.6% rise in oil imports reflected higher prices. Real petroleum imports slipped m/m and are off 10.8% y/y with the recession. For the third straight month, U.S. exports posted a strong gain. The competitive foreign exchange value of the dollar helped exports to rise by 2.2%, about as they did during May and June. The gains pared the YTD drop to 4.0%.
Adjusted for price inflation overall and for higher oil prices specifically, the trade deficit in goods deepened somewhat during July to $38.8B after having fallen to the lowest level since June 1999. It was down from the peak of $47.6B last July. Real non-auto consumer goods imports jumped 5.3% m/m but remained off 12.5% from last year. Real automotive vehicles &amp; parts imports jumped 21.3% and pared the y/y drop to 33.8%. Non-auto capital goods imports rose 4.3% but that still left them off one-quarter from last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910e.jpg" width="353">
The rise in petroleum imports was driven by higher crude oil prices. Prices rose to a July average of $62.48 per barrel versus the February low of $39.22. The recession and the rise in prices, however, prompted a decline in the volume of petroleum imports. Despite a June gain they have fallen roughly ten-percent since December.
Reflecting the competitive value of the dollar, real merchandise exports jumped 3.9% after two months of lesser increase. The chained dollar value of auto exports led the gain with a 24.7% increase (-40.9% y/y). Non-auto consumer goods exports rose a lesser 2.7% (-14.6% y/y) while real capital goods exports gained 2.2% (-20.0 y/y) for the second month of strong increase.
The international trade data can be found in Haver&#39;s USECON database. Detailed figures are available in the USINT 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/USECON/@EE/@EE01/@EE01.HTM">Foreign Trade&nbsp;</a></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">U.S. Trade Deficit</td>
<td>$32.0B</td>
<td>$27.5B</td>
<td>$64.9B (7/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods &amp; Services</td>
<td>2.2%</td>
<td>2.1%</td>
<td>-22.4%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods &amp; Services</td>
<td>4.7%</td>
<td>2.5%</td>
<td>-30.4%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>3.6%</td>
<td>24.3%</td>
<td>-55.0%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>6.1%</td>
<td>-1.1%</td>
<td>-25.7%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body>
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Improvement in the U.S. economy probably is behind the July deterioration in the international trade deficit to $32.0B versus a little-revised June deficit of $27.5B. Consensus expectations had been for a deficit of $27.0B. Nonoil [...]

U.S. Trade Deficit Deepens With A Jump In Imports

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910c.jpg" align="left" border="0" height="265" width="353">
French industrial production rose by a thin margin of 0.1% in
June, less than expected. Auto production contracted after a strong
spurt in earlier months. Still, France has showed one of the stronger
rebounds in EMU IP. It did not sink as far as German IP but it has
rebounded just as much. 
 

In France consumer durables output fell by a sharp 2.6% in
July. For nondurables consumer output was up by 1.1%. Capital goods
output took a set back despite what has been a solid run of growth for
that sector. Intermediate goods output rose strongly in July. 
 

Trends in French IP are up strongly and across the board with
the exception of consumer durables. 
 

In the current quarter output is rising at a 7.7% annual rate
with all main sectors doing better than that except, again, consumer
durables which is contracting in the new quarter and weighing down the
headline. On balance the rebound is robust and seems well entrenched.
The lack of progress in consumer durable goods is however a fly in the
recovery ointment. It suggests that consumers are able to be coaxed out
to buy some things but that they do not have the fundamental confidence
to take on the bigger-ticket items. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> French IP Excluding Construction </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter -To-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>13.9%</td>
<td>-0.7%</td>
<td>-13.0%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Dur</td>
<td>-2.6%</td>
<td>-2.9%</td>
<td>0.8%</td>
<td>-17.8%</td>
<td>-20.9%</td>
<td>-21.5%</td>
<td>-23.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Ndur</td>
<td>1.1%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>5.9%</td>
<td>-3.4%</td>
<td>-2.3%</td>
<td>11.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital</td>
<td>-0.2%</td>
<td>1.1%</td>
<td>4.0%</td>
<td>21.0%</td>
<td>7.4%</td>
<td>-15.0%</td>
<td>11.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermed</td>
<td>1.6%</td>
<td>-0.1%</td>
<td>3.7%</td>
<td>22.7%</td>
<td>4.4%</td>
<td>-19.6%</td>
<td>17.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</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">&nbsp; Auto</td>
<td>-1.9%</td>
<td>14.3%</td>
<td>12.5%</td>
<td>154.2%</td>
<td>23.2%</td>
<td>-29.8%</td>
<td>87.2%</td>
</tr>
</tbody>
</table>
</body></html>

French industrial production rose by a thin margin of 0.1% in June, less than expected. Auto production contracted after a strong spurt in earlier months. Still, France has showed one of the stronger rebounds in EMU IP. It did not [...]

IP In France Edges Higher In July

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910a.jpg">
Initial claims for jobless insurance have been suggesting improvement in the labor market, however grudging. For last week, the Labor Department indicated that claims fell 26,000 to 550,000 which was their lowest level since early-July and down from the March weekly peak of 674,000. The latest decline about matched expectations.
Continuing claims for unemployment insurance during the latest week fell and more than reversed all of the prior period&#39;s increase. The decline was to the lowest level since early-April and claims were down by 10% from the late-June high, a decline which probably owes partially to the exhaustion of benefits. Continuing claims provide an indication of workers&#39; ability to find employment. The level of 6,088,000 claims is up sharply from the year-ago level. The four-week average of continuing claims fell modestly to 6,182,500. The series dates back to 1966.
Extended benefits for unemployment insurance slipped for the fourth week in the last five. Nevertheless, the trend in benefits has been sharply upward as worker rehiring continues weak. Through mid-August extended benefits averaged 453,831 versus 416,630 during July.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910b.jpg">
The insured rate of unemployment dipped slightly to 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 Aug. 22 were in Puerto Rico (7.0 percent), Pennsylvania (5.9), Oregon (5.9), Michigan (5.7), Nevada (5.7), California (5.3), Wisconsin (5.3), Connecticut (5.2), New Jersey (5.1), North Carolina (4.8), Rhode Island (4.8), and South Carolina (4.8).
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">09/05/09</th>
<th scope="col">08/29/09</th>
<th scope="col">08/22/09</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>550</td>
<td>576</td>
<td>574</td>
<td>23.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,088</td>
<td>6,247</td>
<td>71.5%</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>4.7</td>
<td>2.7 (08/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for jobless insurance have been suggesting improvement in the labor market, however grudging. For last week, the Labor Department indicated that claims fell 26,000 to 550,000 which was their lowest level since early- [...]

U.S. Weekly Claims For Jobless Insurance Near Cycle Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910a.jpg" align="left" border="0">
Initial claims for jobless insurance have been suggesting
improvement in the labor market, however grudging. For last week, the
Labor Department indicated that claims fell 26,000 to 550,000 which was
their lowest level since early-July and down from the March weekly peak
of 674,000. The latest decline about matched expectations.
Continuing claims for unemployment insurance during the latest
week fell and more than reversed all of the prior period's increase.
The decline was to the lowest level since early-April and claims were
down by 10% from the late-June high, a decline which probably owes
partially to the exhaustion of benefits. Continuing claims provide an
indication of workers' ability to find employment. The level of
6,088,000 claims is up sharply from the year-ago level. The four-week
average of continuing claims fell modestly to 6,182,500. The series
dates back to 1966.
Extended benefits for unemployment insurance slipped for the
fourth week in the last five. Nevertheless, the trend in benefits has
been sharply upward as worker rehiring continues weak. Through
mid-August extended benefits averaged 453,831 versus 416,630 during
July.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910b.jpg" align="right" border="0">
The insured rate of unemployment dipped slightly to 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 Aug.
22 were in Puerto Rico (7.0 percent), Pennsylvania (5.9), Oregon (5.9),
Michigan (5.7), Nevada (5.7), California (5.3), Wisconsin (5.3),
Connecticut (5.2), New Jersey (5.1), North Carolina (4.8), Rhode Island
(4.8), and South Carolina (4.8).
The unemployment insurance claims data is available in Haver'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">09/05/09</th>
<th scope="col">08/29/09</th>
<th scope="col">08/22/09</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>550</td>
<td>576</td>
<td>574</td>
<td>23.0%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,088</td>
<td>6,247</td>
<td>71.5%</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>4.7</td>
<td>2.7 (08/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
 IP In France Edges Higher In July 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> September 10, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910c.jpg" align="left" border="0" height="265" width="353">
French industrial production rose by a thin margin of 0.1% in
June, less than expected. Auto production contracted after a strong
spurt in earlier months. Still, France has showed one of the stronger
rebounds in EMU IP. It did not sink as far as German IP but it has
rebounded just as much. 
 

In France consumer durables output fell by a sharp 2.6% in
July. For nondurables consumer output was up by 1.1%. Capital goods
output took a set back despite what has been a solid run of growth for
that sector. Intermediate goods output rose strongly in July. 
 

Trends in French IP are up strongly and across the board with
the exception of consumer durables. 
 

In the current quarter output is rising at a 7.7% annual rate
with all main sectors doing better than that except, again, consumer
durables which is contracting in the new quarter and weighing down the
headline. On balance the rebound is robust and seems well entrenched.
The lack of progress in consumer durable goods is however a fly in the
recovery ointment. It suggests that consumers are able to be coaxed out
to buy some things but that they do not have the fundamental confidence
to take on the bigger-ticket items. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> French IP
Excluding Construction </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar exept m/m</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter 
-To-Date</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>13.9%</td>
<td>-0.7%</td>
<td>-13.0%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Dur</td>
<td>-2.6%</td>
<td>-2.9%</td>
<td>0.8%</td>
<td>-17.8%</td>
<td>-20.9%</td>
<td>-21.5%</td>
<td>-23.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Ndur</td>
<td>1.1%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>5.9%</td>
<td>-3.4%</td>
<td>-2.3%</td>
<td>11.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital</td>
<td>-0.2%</td>
<td>1.1%</td>
<td>4.0%</td>
<td>21.0%</td>
<td>7.4%</td>
<td>-15.0%</td>
<td>11.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermed</td>
<td>1.6%</td>
<td>-0.1%</td>
<td>3.7%</td>
<td>22.7%</td>
<td>4.4%</td>
<td>-19.6%</td>
<td>17.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</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">&nbsp; Auto</td>
<td>-1.9%</td>
<td>14.3%</td>
<td>12.5%</td>
<td>154.2%</td>
<td>23.2%</td>
<td>-29.8%</td>
<td>87.2%</td>
</tr>
</tbody>
</table>
 U.S. Trade Deficit Deepens With A
Jump In Imports 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 10, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910d.jpg" align="left" border="0" height="265" width="353">
Improvement in the U.S. economy probably is behind the July
deterioration in the international trade deficit to $32.0B versus a
little-revised June deficit of $27.5B. Consensus expectations had been
for a deficit of $27.0B. Nonoil imports reversed six months of decline
with a 6.1% m/m gain, though that still left them down by one-quarter
from the year-ago level. A 3.6% rise in oil imports reflected higher
prices. Real petroleum imports slipped m/m and are off 10.8% y/y with
the recession. For the third straight month, U.S. exports posted a
strong gain. The competitive foreign exchange value of the dollar
helped exports to rise by 2.2%, about as they did during May and June.
The gains pared the YTD drop to 4.0%.
Adjusted for price inflation overall and for higher oil prices
specifically, the trade deficit in goods deepened somewhat during July
to $38.8B after having fallen to the lowest level since June 1999. It
was down from the peak of $47.6B last July. Real non-auto consumer
goods imports jumped 5.3% m/m but remained off 12.5% from last year.
Real automotive vehicles &amp; parts imports jumped 21.3% and pared
the y/y drop to 33.8%. Non-auto capital goods imports rose 4.3% but
that still left them off one-quarter from last year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090910e.jpg" align="right" border="0" height="265" width="353">
The rise in petroleum imports was driven by higher crude oil
prices. Prices rose to a July average of $62.48 per barrel versus the
February low of $39.22. The recession and the rise in prices, however,
prompted a decline in the volume of petroleum imports. Despite a June
gain they have fallen roughly ten-percent since December.
Reflecting the competitive value of the dollar, real
merchandise exports jumped 3.9% after two months of lesser increase.
The chained dollar value of auto exports led the gain with a 24.7%
increase (-40.9% y/y). Non-auto consumer goods exports rose a lesser
2.7% (-14.6% y/y) while real capital goods exports gained 2.2% (-20.0
y/y) for the second month of strong increase.
The international trade data can be found in Haver's USECON
database. Detailed figures are available in the USINT
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/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></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">U.S. Trade Deficit</td>
<td>$32.0B</td>
<td>$27.5B</td>
<td>$64.9B (7/08)</td>
<td>$695.9</td>
<td>$701.4</td>
<td>$760.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Exports - Goods
&amp; Services</td>
<td>2.2%</td>
<td>2.1%</td>
<td>-22.4%</td>
<td>11.2%</td>
<td>13.2%</td>
<td>13.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Imports - Goods
&amp; Services</td>
<td>4.7%</td>
<td>2.5%</td>
<td>-30.4%</td>
<td>7.6</td>
<td>6.0%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>3.6%</td>
<td>24.3%</td>
<td>-55.0%</td>
<td>37.0%</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>6.1%</td>
<td>-1.1%</td>
<td>-25.7%</td>
<td>1.5%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Weekly Claims For JoblessInsurance Near Cycle Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909b.jpg" align="right" border="0" height="265" width="353">
The
deteriorating job market and uncertain prospects for improvement, plus
over-leverage from past spending, has prompted an end to the growth in
consumer credit. The Federal Reserve reported late-yesterday that
consumer credit outstanding fell during July for the sixth straight
month and for the tenth month since last summer. Perhaps more
impressive, however, is the magnitude of the cutbacks. The $21.5B July
decline was the record for any one month and double-digit monthly
declines have prevailed all this year. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909c.jpg" align="right" border="0" height="265" width="353">
On a percentage basis the 4.2%
y/y decline is a record.Usage of non-revolving credit (autos
&amp; other consumer durables), which accounts for nearly
two-thirds of the total, fell a record $15.4B after a $10.7B June drop.
Except for the mid-1970s, these declines were enough to pull the
retrenchment to near the record for a two-month period in dollar terms
as well as on a percentage basis. The 2.6% y/y decline is near the
record. Additionally weighing on overall credit has been the tight rein
on revolving credit usage. During July, revolving credit outstanding
fell $6.1B for the tenth consecutive monthly drop. In percentage terms
the decline pulled the outstanding total down a record 7.1%. Despite
these huge declines, there arguably is more to come. Consumers have
been successful in reducing credit outstanding as a percentage of
disposable income to 22.7% from its 2005 high of 24.4%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909d.jpg" align="right" border="0" height="265" width="353">
However, these
levels compare to the lows near 16% in the early-1990s. Now that the
"shop-till-you-drop" mantra has been diffused by the aging population
of the U.S., a return to some lower level of credit usage is likely.
These figures are the major input to the Fed's quarterly Flow of Funds
accounts for the household sector. Credit data are available in
Haver's USECON database.&nbsp; The Flow of
Funds data are in Haver's FFUNDS database. 
 
The latest Beige Book from the U.S. Federal
Reserve Board can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090909/fullreport20090909.pdf">here</a>.
The Credit Crisis and Cycle-Proof Regulation
from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit Outstanding (m/m Chg, SAAR)</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&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-21.5B</td>
<td>&nbsp;$-15.6B</td>
<td>-4.2%</td>
<td>1.6%</td>
<td>5.6%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-6.1B</td>
<td>$-4.9B</td>
<td>-7.0%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-15.4B</td>
<td>$-10.7B</td>
<td>-2.6%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body></html>

The deteriorating job market and uncertain prospects for improvement, plus over-leverage from past spending, has prompted an end to the growth in consumer credit. The Federal Reserve reported late-yesterday that consumer credit [...]

Consumer Credit Outstanding Falls For An Unprecedented Sixth Straight Month

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909a.jpg" align="left" border="0">
German consumer prices fall Yr/Yr! - The headlines may read
that German inflation on the HICP measure is down again Yr/Yr but don&#8217;t
bite on that headline or on the nuance that it might be deflation time
in Europe. Nothing is farther form the truth. First of all, Germany&#8217;s
headline inflation rose by 0.7% from July even as it fell from August
of one year ago. Next, the German domestic inflation gauge rose by 0.5%
in the month and is up by a narrow 0.1% Yr/Yr, failing to confirm any
downtrend. Moreover, German domestic core (ex food and energy)
inflation rose by 0.2% and is up by 1.1% Yr/Yr. Inflation in Germany is
tame the core pace is steady, and deflation is nowhere in sight. 
 

The cards are stacked against deflation - For those who might
harbor deflation dreams let&#8217;s note that we are looking at data from
August. In September the German HICP index will rise by 0.1 index
points in 2008. So any rise less than 0.1 index points (less than 0.1%)
in Sept 2009, will take the headline German HICP lower again. But then
from September 2008 to August of 2009 every single month&#8217;s headline
price index (the index LEVEL) is below that of September 2008. If
German deflation is going to set in, that will have to happen on the
strength of current prices falling month-by-month in the future not
just rising more slowly than they did one year ago. 
 

There is no real deflation trend - Headline HICP inflation is
up in eight of the last nine months in terms of its month-to-month
changes. There is no real evidence that deflation has taken any hold in
Germany. Indeed, the chart on German Yr/Yr headline and core HICP
inflation shows that the headline rate, while still negative, has
upward momentum building. 
 

Growth is taking root - With German industrial orders up
strongly and orders in Europe expanding and revivals in consumer
sentiment being experienced, it seems that Europe and Germany are on
their way back to better times. While the economies on the continent
may continue to fall short of being in full employment, there is no
evidence to suggest that prices have much downside risk. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">German HICP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">HICP Total</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>0.6%</td>
<td>-0.1%</td>
<td>3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Core</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.9%</td>
</tr>
<tr class="grey3">
<td colspan="8">CPI</td>
</tr>
<tr class="grey2">
<td class="firstcol">All</td>
<td>0.5%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>0.6%</td>
<td>0.1%</td>
<td>3.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; CPIxF&amp;E</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>-1.1%</td>
<td>-3.0%</td>
<td>-2.7%</td>
<td>7.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Alcohol</td>
<td>0.4%</td>
<td>-0.8%</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>4.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>1.9%</td>
<td>-1.5%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>-0.4%</td>
<td>1.5%</td>
<td>1.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rent &amp;Util</td>
<td>0.3%</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>3.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Health Care</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>0.7%</td>
<td>1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Transport</td>
<td>2.4%</td>
<td>-1.1%</td>
<td>0.8%</td>
<td>8.9%</td>
<td>3.6%</td>
<td>-2.0%</td>
<td>4.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Communication</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>-0.9%</td>
<td>-1.6%</td>
<td>-3.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rec &amp;Culture</td>
<td>0.5%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>3.6%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Education</td>
<td>-0.5%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>0.6%</td>
<td>-8.2%</td>
<td>-5.1%</td>
<td>3.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>1.8%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>81.8%</td>
<td>54.5%</td>
<td>18.2%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Current Compared
to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

German consumer prices fall Yr/Yr! - The headlines may read that German inflation on the HICP measure is down again Yr/Yr but don’t bite on that headline or on the nuance that it might be deflation time in Europe. Nothing is farther [...]

German Prices Fall Yr/Yr Again-But It's NOT Deflation

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909a.jpg" align="left" border="0">
German consumer prices fall Yr/Yr! - The headlines may read
that German inflation on the HICP measure is down again Yr/Yr but don&#8217;t
bite on that headline or on the nuance that it might be deflation time
in Europe. Nothing is farther form the truth. First of all, Germany&#8217;s
headline inflation rose by 0.7% from July even as it fell from August
of one year ago. Next, the German domestic inflation gauge rose by 0.5%
in the month and is up by a narrow 0.1% Yr/Yr, failing to confirm any
downtrend. Moreover, German domestic core (ex food and energy)
inflation rose by 0.2% and is up by 1.1% Yr/Yr. Inflation in Germany is
tame the core pace is steady, and deflation is nowhere in sight. 
 

The cards are stacked against deflation - For those who might
harbor deflation dreams let&#8217;s note that we are looking at data from
August. In September the German HICP index will rise by 0.1 index
points in 2008. So any rise less than 0.1 index points (less than 0.1%)
in Sept 2009, will take the headline German HICP lower again. But then
from September 2008 to August of 2009 every single month&#8217;s headline
price index (the index LEVEL) is below that of September 2008. If
German deflation is going to set in, that will have to happen on the
strength of current prices falling month-by-month in the future not
just rising more slowly than they did one year ago. 
 

There is no real deflation trend - Headline HICP inflation is
up in eight of the last nine months in terms of its month-to-month
changes. There is no real evidence that deflation has taken any hold in
Germany. Indeed, the chart on German Yr/Yr headline and core HICP
inflation shows that the headline rate, while still negative, has
upward momentum building. 
 

Growth is taking root - With German industrial orders up
strongly and orders in Europe expanding and revivals in consumer
sentiment being experienced, it seems that Europe and Germany are on
their way back to better times. While the economies on the continent
may continue to fall short of being in full employment, there is no
evidence to suggest that prices have much downside risk. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">German HICP</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">HICP Total</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>0.6%</td>
<td>-0.1%</td>
<td>3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Core</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.9%</td>
</tr>
<tr class="grey3">
<td colspan="8">CPI</td>
</tr>
<tr class="grey2">
<td class="firstcol">All</td>
<td>0.5%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>0.6%</td>
<td>0.1%</td>
<td>3.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; CPIxF&amp;E</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Food</td>
<td>-0.4%</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>-1.1%</td>
<td>-3.0%</td>
<td>-2.7%</td>
<td>7.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Alcohol</td>
<td>0.4%</td>
<td>-0.8%</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>4.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Clothing &amp; Shoes</td>
<td>1.9%</td>
<td>-1.5%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>-0.4%</td>
<td>1.5%</td>
<td>1.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rent &amp;Util</td>
<td>0.3%</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>3.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Health Care</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>0.7%</td>
<td>1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Transport</td>
<td>2.4%</td>
<td>-1.1%</td>
<td>0.8%</td>
<td>8.9%</td>
<td>3.6%</td>
<td>-2.0%</td>
<td>4.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Communication</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>-0.9%</td>
<td>-1.6%</td>
<td>-3.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Rec &amp;Culture</td>
<td>0.5%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>3.6%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Education</td>
<td>-0.5%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>0.6%</td>
<td>-8.2%</td>
<td>-5.1%</td>
<td>3.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Restaurant &amp; Hotel</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Other</td>
<td>0.4%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>1.8%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Diffusion</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>81.8%</td>
<td>54.5%</td>
<td>18.2%</td>
<td>--</td>
</tr>
<tr class="grey1">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Current Compared
to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
 
Consumer Credit Outstanding Falls For An Unprecedented Sixth Straight
Month 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 09, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909b.jpg" align="right" border="0" height="265" width="353">The
deteriorating job market and uncertain prospects for improvement, plus
over-leverage from past spending, has prompted an end to the growth in
consumer credit. The Federal Reserve reported late-yesterday that
consumer credit outstanding fell during July for the sixth straight
month and for the tenth month since last summer. Perhaps more
impressive, however, is the magnitude of the cutbacks. The $21.5B July
decline was the record for any one month and double-digit monthly
declines have prevailed all this year. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909c.jpg" align="right" border="0" height="265" width="353">
On a percentage basis the 4.2%
y/y decline is a record.
Usage of non-revolving credit (autos
&amp; other consumer durables), which accounts for nearly
two-thirds of the total, fell a record $15.4B after a $10.7B June drop.
Except for the mid-1970s, these declines were enough to pull the
retrenchment to near the record for a two-month period in dollar terms
as well as on a percentage basis. The 2.6% y/y decline is near the
record. Additionally weighing on overall credit has been the tight rein
on revolving credit usage. During July, revolving credit outstanding
fell $6.1B for the tenth consecutive monthly drop. In percentage terms
the decline pulled the outstanding total down a record 7.1%.
 Despite
these huge declines, there arguably is more to come. Consumers have
been successful in reducing credit outstanding as a percentage of
disposable income to 22.7% from its 2005 high of 24.4%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090909d.jpg" align="right" border="0" height="265" width="353">
However, these
levels compare to the lows near 16% in the early-1990s. Now that the
"shop-till-you-drop" mantra has been diffused by the aging population
of the U.S., a return to some lower level of credit usage is likely.
These figures are the major input to the Fed's quarterly Flow
of Funds
accounts for the household sector.
 Credit data are available in
Haver's USECON database.&nbsp; The Flow of
Funds data are in Haver's FFUNDS database. 
 

The latest Beige Book from the U.S. Federal
Reserve Board can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2009/20090909/fullreport20090909.pdf">here</a>.
The Credit Crisis and Cycle-Proof Regulation
from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit Outstanding (m/m Chg, SAAR)</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&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-21.5B</td>
<td>&nbsp;$-15.6B</td>
<td>-4.2%</td>
<td>1.6%</td>
<td>5.6%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-6.1B</td>
<td>$-4.9B</td>
<td>-7.0%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-15.4B</td>
<td>$-10.7B</td>
<td>-2.6%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>

</body></html>

German Prices Fall Yr/Yr Again-ButIt's NOT Deflation

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908d.jpg" align="left" border="0" height="265" width="353">
Data on German industrial production were released today.
Production in July fell 0.9% from June, contrary to expectations of a
continued rise. Production of electricity and other utilities was off
4.0%, construction, 2.4%, mining and quarrying, 1.6% and manufacturing
0.5%. In terms of the kind of goods produced, production of consumer
goods was flat, that of investment goods, down 3.2%, and energy
production, down 3.9%. The only positive sector was the production of
intermediate goods, which rose 1.8% suggesting that the inventory
liquidation evident in the second quarter GDP report may be abating or
even reversing. The first chart shows the production of these goods.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908e.jpg" align="right" border="0" height="265" width="353">
Data on manufacturing new orders were released yesterday and
were generally more positive than the production data, but still a
little cautionary in some of the details. The total volume of
manufacturing new orders increased 3.5% in July, The rise was due
entirely to a big increase of 10.3% in domestic new orders. Foreign
orders actually fell 2.3%. Orders for intermediate goods increased 5.2%
in the month of July while orders for investment goods were up 3.2%;
however, orders for consumer goods fell 1.5%. The second chart show the
orders for these three types of goods.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">GERMANY</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> INDUSTRIAL PRODUCTION&nbsp;
(2005=100)</td>
<td>Jul 09</td>
<td>Jun&nbsp; 09</td>
<td>Jul 08</td>
<td>M/M %&nbsp;</td>
<td>Y/Y %</td>
<td>2008&nbsp;</td>
<td>2007 </td>
<td> 2006 </td>
</tr>
<tr>
<td class="firstcol">&nbsp;Electricity and other
utilities</td>
<td>92.4</td>
<td>96.2</td>
<td>97.6</td>
<td>-3.95</td>
<td>-5.23</td>
<td>96.3</td>
<td>98.0</td>
<td>101.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Construction</td>
<td>104.2</td>
<td>106.7</td>
<td>101.8</td>
<td>-2.34</td>
<td>2.36</td>
<td>108.2</td>
<td>108.9</td>
<td>105.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Mining and Quarrying</td>
<td>114.2</td>
<td>116.1</td>
<td>107.2</td>
<td>-1.64</td>
<td>6.43</td>
<td>110.4</td>
<td>12407</td>
<td>95.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Manufacturing</td>
<td>91.7</td>
<td>95.2</td>
<td>113.6</td>
<td>-0.54</td>
<td>-19.28</td>
<td>113.1</td>
<td>112.7</td>
<td>105.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Intermediate Goods</td>
<td>94.1</td>
<td>92.7</td>
<td>116.5</td>
<td>1.83</td>
<td>-18.97</td>
<td>114.0</td>
<td>114.6</td>
<td>107.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Investment Goods</td>
<td>87.9</td>
<td>90.8</td>
<td>116.2</td>
<td>-3.19</td>
<td>-24.35</td>
<td>116.9</td>
<td>114.8</td>
<td>105.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer Goods</td>
<td>96.5</td>
<td>96.5</td>
<td>102.9</td>
<td>0.00</td>
<td>-6.22</td>
<td>104.3</td>
<td>106.3</td>
<td>102.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Energy Goods</td>
<td>90.5</td>
<td>94.2</td>
<td>96.1</td>
<td>-3.93</td>
<td>-5.83</td>
<td>95.7</td>
<td>98.3</td>
<td>100.9</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">MANUFACTURING NEW
ORDERS&nbsp;&nbsp; (2005=100)</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>90.7</td>
<td>87.6</td>
<td>113.3</td>
<td>3.54</td>
<td>-19.95</td>
<td>111.3</td>
<td>119.7</td>
<td>108.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Domestic</td>
<td>95.5</td>
<td>86.6</td>
<td>110.2</td>
<td>10.25</td>
<td>-13.34</td>
<td>108.3</td>
<td>114.8</td>
<td>106.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Foreign</td>
<td>86.5</td>
<td>88.5</td>
<td>116.0</td>
<td>-2.26</td>
<td>-25.43</td>
<td>113.8</td>
<td>124.0</td>
<td>110.8</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>97.0</td>
<td>9202</td>
<td>117.5</td>
<td>5.21</td>
<td>-17.45</td>
<td>113.1</td>
<td>118.7</td>
<td>110.2</td>
</tr>
<tr>
<td class="firstcol">Investment Goods</td>
<td>86.8</td>
<td>84.1</td>
<td>111.6</td>
<td>3.21</td>
<td>-22.22</td>
<td>110.9</td>
<td>121.7</td>
<td>108.8</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>89.9</td>
<td>91.3</td>
<td>105.7</td>
<td>-1.53</td>
<td>-14.95</td>
<td>105.5</td>
<td>110.7</td>
<td>104.2</td>
</tr>
</tbody>
</table>
</body></html>

Data on German industrial production were released today. Production in July fell 0.9% from June, contrary to expectations of a continued rise. Production of electricity and other utilities was off 4.0%, construction, 2.4%, mining and [...]

German Industrial Production Down: New Orders Up In July

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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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.

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

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

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

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Charts of the Week: Between Optimism and Uncertainty

Michael J. Moran

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

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

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

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

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

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

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

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

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

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

Import & Export Prices: Generally Modest Changes

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

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

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

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

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

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

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

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

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

Economy in Brief: 2009

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