Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908a.jpg">
Small business&#39; optimism improved last month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated, however, that the improvement was not enough to generate an increase in hiring intentions. Their small business optimism index rose to 88.6 during August after the slight July decline. The index remained improved from the lows of this past winter but were down from last year.During the last ten years, there has been an 85% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The improvement in business&#39; sentiment has done little, however, to improve hiring intentions. The percentage of firms with one or more job openings slipped to just 8% during August, the lowest level since 1982. During the last ten years there has been a 74% correlation between the NFIB employment percentage and the six-month change in nonfarm payrolls. Still, the outlook has brightened slightly. The percentage of firms planning to raise employment rose to a net-zero from negative figures as low as -10 in March.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908b.jpg">
Perhaps this negativism will improve if the economy turns around as expected. The percentage of small businesses expecting the economy to improve bounced off its lows to 10 and that was back near the spring high. The percentage expecting credit conditions to ease, however, remained in its recent low range while the percentage reporting that now is a good time to expand business held stable in its modestly positive range of recent months.
As is normally the case, improvement in firms&#39; capital spending intentions will wait for the economy to strengthen before they rise. During the next 3-6 months, plans for capital spending fell to a new series&#39; low. This weakness in investment continues to reflect poor profits. Forty-percent of firms are reporting lower earnings this quarter versus last, though that is improved from the net -47% in January.
The largest, single most important problems seen by business were poor sales (32%), taxes (18%, lower the recent 22% high), government requirements (11%), insurance cost &amp; availability (9%), competition from large businesses (8%) and inflation (5%).
The percentage of firms actually raising prices (-19) slipped and remained near the record low. During the last ten years there has been a 69% correlation between the six-month change in the producer price index and the level of the NFIB price index.The percentage of firms planning to raise prices improved to a net 8 from the March low of 0. Worker compensation also remained depressed near the series&#39; lows.<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908c.jpg">
About 24 million small businesses exist in the United States. Small business creates 80% of all new jobs in America and the NFIB figures can be found in Haver&#39;s SURVEYS database.
Why Don&#39;t Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, and Securitization from the Federal Reserve Bank of New England is available <a href="http://www.bos.frb.org/economic/ppdp/2009/ppdp0904.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index (SA, 1986=100)</td>
<td>88.6</td>
<td>86.5</td>
<td>-2.7%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms With One or More Job Openings</td>
<td>8</td>
<td>9</td>
<td>15</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms Raising Avg. Selling Pric1es (Net)</td>
<td>-19</td>
<td>-19</td>
<td>26</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
</body>
</html>

Small business' optimism improved last month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated, however, that the improvement was not enough to generate an [...]

U.S. Small Business Optimism Improves Slightly But Hiring Plans Drift To 27-Year Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908a.jpg" align="left" border="0">
Small business' optimism improved last month as the severe
economic weakness of early this year passed. The National Federation of
Independent Business (NFIB) indicated, however, that the improvement
was not enough to generate an increase in hiring intentions. Their
small business optimism index rose to 88.6 during August after the
slight July decline. The index remained improved from the lows of this
past winter but were down from last year.During the last ten years,
there has been an 85% correlation between the level of the NFIB index
and the two-quarter change in real GDP.
The improvement in business' sentiment has done little,
however, to improve hiring intentions. The percentage of firms with one
or more job openings slipped to just 8% during August, the lowest level
since 1982. During the last ten years there has been a 74% correlation
between the NFIB employment percentage and the six-month change in
nonfarm payrolls. Still, the outlook has brightened slightly. The
percentage of firms planning to raise employment rose to a net-zero
from negative figures as low as -10 in March.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908b.jpg" align="right" border="0">
Perhaps this negativism will improve if the economy turns
around as expected. The percentage of small businesses expecting the
economy to improve bounced off its lows to 10 and that was back near
the spring high. The percentage expecting credit conditions to ease,
however, remained in its recent low range while the percentage
reporting that now is a good time to expand business held stable in its
modestly positive range of recent months.
As is normally the case, improvement in firms' capital
spending intentions will wait for the economy to strengthen before they
rise. During the next 3-6 months, plans for capital spending fell to a
new series' low. This weakness in investment continues to reflect poor
profits. Forty-percent of firms are reporting lower earnings this
quarter versus last, though that is improved from the net -47% in
January.
The largest, single most important problems seen by business
were poor sales (32%), taxes (18%, lower the recent 22% high),
government requirements (11%), insurance cost &amp; availability
(9%), competition from large businesses (8%) and inflation (5%).
The percentage of firms actually
raising prices (-19) slipped and remained near the record low.
During the last ten years there has been a 69% correlation between the
six-month change in the producer price index and the level of the NFIB
price index.The percentage of firms planning
to raise prices improved to a net 8 from the March low of 0. Worker
compensation also remained depressed near the series' lows.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090908c.jpg" align="left" border="0">
About 24 million small businesses exist in the United States.
Small business creates 80% of all new jobs in America and the NFIB
figures can be found in Haver's SURVEYS database.
Why Don't Lenders Renegotiate More Home Mortgages?
Redefaults, Self-Cures, and Securitization from the Federal
Reserve Bank of New England is available <a href="http://www.bos.frb.org/economic/ppdp/2009/ppdp0904.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.6</td>
<td>86.5</td>
<td>-2.7%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>9</td>
<td>15</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-19</td>
<td>-19</td>
<td>26</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
 
German Industrial Production Down: New Orders Up In July 
by <a href="/comment/Curley.html">Louise
Curley</a> September 08, 2009



<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>

U.S. Small Business OptimismImproves Slightly But Hiring Plans Drift To 27-Year Low

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904d.jpg" align="left" border="0" height="265" width="353">
Both Italy&#8217;s exports and imports are beginning to turn their
plunging growth rates higher. The Yr/Yr trend has begun to turn (see
chart) for both exports and imports. The balance did swing to surplus a
month ago but it still shows a reduced deficit in the current month
compared to earlier months. Over three months the export rate of
decline has been cut to an annual rate of about -8% compared to -18%
for imports. 
 

For exports transportation equipment, capital goods and other
goods are still showing outsized Yr/Yr declines of -20% or more. Food
exports and consumer goods exports are dropping at a slower pace of
less than 10%. 
 

Imports are showing Yr/Yr declines of 16% for capital goods
and 44% for other goods. Transport equipment imports are declining at
an 8.6% pace compared to foods and beverages with a drop of 0.7% and
consumer goods imports that are advancing Yr/Yr. services imports are
declining rapidly Yr/Yr as well. 
 

The more rapid drop in imports cuts the flow of an item that
diminishes growth since imports siphon off domestic demand to foreign
producers. Italy&#8217;s exports in contrast have held up better and are
maintaining their levels better than imports. In this way trade is
helping to prop up Italian GDP. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Italy's
Trade Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/mo % monthly rate</td>
<td colspan="4">Period Specified saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">Seasonally Adjusted</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-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">Current Account Bal</td>
<td>&#8364;&#8364; (2,378)</td>
<td>&#8364;&#8364; 470</td>
<td>&#8364;&#8364; (2,959)</td>
<td>&#8364;&#8364; (1,622)</td>
<td>&#8364;&#8364; (2,919)</td>
<td>&#8364;&#8364; (3,907)</td>
<td>&#8364;&#8364; (3,700)</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Goods Balance</td>
<td>&#8364;&#8364; 939</td>
<td>&#8364;&#8364; 1,662</td>
<td>&#8364;&#8364; 1,096</td>
<td>&#8364;&#8364; 1,232</td>
<td>&#8364;&#8364; 544</td>
<td>&#8364;&#8364; 1</td>
<td>&#8364;&#8364; 267</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Exports</td>
<td>-2.6%</td>
<td>-4.4%</td>
<td>5.1%</td>
<td>-8.2%</td>
<td>-30.9%</td>
<td>-23.7%</td>
<td>-4.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imports</td>
<td>0.5%</td>
<td>-7.0%</td>
<td>1.7%</td>
<td>-18.3%</td>
<td>-36.2%</td>
<td>-27.6%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Services Balance</td>
<td>&#8364;&#8364; (788)</td>
<td>&#8364;&#8364; (429)</td>
<td>&#8364;&#8364; (1,061)</td>
<td>&#8364;&#8364; (759)</td>
<td>&#8364;&#8364; (822)</td>
<td>&#8364;&#8364; (814)</td>
<td>&#8364;&#8364; (488)</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Exports</td>
<td>3.6%</td>
<td>-5.5%</td>
<td>0.6%</td>
<td>-6.0%</td>
<td>-22.9%</td>
<td>-14.8%</td>
<td>5.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Imports</td>
<td>9.3%</td>
<td>-13.7%</td>
<td>0.5%</td>
<td>-19.3%</td>
<td>-12.2%</td>
<td>-8.2%</td>
<td>-1.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Not Seasonally Adjusted</td>
<td colspan="7">All Yr/Yr</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-1.8%</td>
<td>&nbsp;</td>
<td>3.9%</td>
<td>&nbsp;</td>
<td>5.9%</td>
<td>&nbsp;</td>
<td>10.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-21.9%</td>
<td>&nbsp;</td>
<td>-3.7%</td>
<td>&nbsp;</td>
<td>15.1%</td>
<td>&nbsp;</td>
<td>10.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-29.6%</td>
<td>&nbsp;</td>
<td>2.3%</td>
<td>&nbsp;</td>
<td>11.4%</td>
<td>&nbsp;</td>
<td>8.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>-9.4%</td>
<td>&nbsp;</td>
<td>-8.8%</td>
<td>&nbsp;</td>
<td>8.8%</td>
<td>&nbsp;</td>
<td>7.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-32.0%</td>
<td>&nbsp;</td>
<td>-10.2%</td>
<td>&nbsp;</td>
<td>13.7%</td>
<td>&nbsp;</td>
<td>17.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Imports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-0.7%</td>
<td>&nbsp;</td>
<td>-1.9%</td>
<td>&nbsp;</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>7.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-16.1%</td>
<td>&nbsp;</td>
<td>-10.9%</td>
<td>&nbsp;</td>
<td>7.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-8.6%</td>
<td>&nbsp;</td>
<td>-15.3%</td>
<td>&nbsp;</td>
<td>11.0%</td>
<td>&nbsp;</td>
<td>-0.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>1.3%</td>
<td>&nbsp;</td>
<td>-3.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
<td>&nbsp;</td>
<td>12.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-44.9%</td>
<td>&nbsp;</td>
<td>18.0%</td>
<td>&nbsp;</td>
<td>0.0%</td>
<td>&nbsp;</td>
<td>45.5%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Balances in Mlns of euros</td>
</tr>
</tbody>
</table>
</body></html>

Both Italy’s exports and imports are beginning to turn their plunging growth rates higher. The Yr/Yr trend has begun to turn (see chart) for both exports and imports. The balance did swing to surplus a month ago but it still shows a [...]

Italy's Trade Trends Turn

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904a.jpg" width="353">
The August jobs figures from the Bureau of Labor Statistics gave conflicting signals. Suggesting some improvement in the labor market was payroll employment which declined the least of any month in a year, although the declines during the prior two months were revised deeper. Working the other way were the household survey figures. The unemployment rate, at 9.7%, jumped to its highest level since 1982. Together, the data hardly suggest that the recession is over, though downward momentum seems to have eased.
The length of the average workweek was stable m/m and q/q at 33.1. So far in the third quarter, aggregate hours worked (employment times hours) have fallen at a 2.6% annual rate after a 7.8% decline during 2Q.
Nonfarm payrolls fell 216,000 during August. That was less than the expected 228,000 decline however declines during the prior two months were revised deeper by a collective 49,000. The latest decline was the least since August of last year. Nevertheless, so far during this recession, employment has fallen by a total of 6.9 million, the record by far for a 20-month period. In percentage terms jobs are down 5.0% since the 2007 peak, also a record. Most recently, the payroll decline moderated to an average 318,000 over the last three months versus a peak three-month rate of 701,000 this past winter.
The jump in the unemployment rate to 9.7% from 9.4% compared with expectations for a smaller rise to 9.5%. The rate&#39;s cycle low of 4.4% occurred in October 2006. This level of the official unemployment rate pales, however, in comparison to the rate which includes &quot;marginally attached workers&quot; and those who are working part-time for economic reasons. It rose to 16.8%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904b.jpg" width="353">
The increase in the overall jobless rate was due to a 392,000 (-3.9% y/y) fall in employment. That was easier than the worst monthly declines of this past winter but in-line with those of the last several months. It was accompanied by a modest 73,000 (-0.2% y/y) increase in the labor force after two months of sharp decline. The latest increase also saw a slight 38,000 decline in the number of &quot;discouraged workers&quot; after four months of increase. Also from the household survey, the median duration of unemployment slipped m/m to 15.4 weeks but that still was up from 8.3 weeks one year ago. The ranks of the long-term unemployed, however, rose slightly to 4.988 million.
From the payroll survey, the moderation in the rate of job loss continued to stem from smaller declines in both factory sector and private service payrolls. Manufacturing sector jobs fell 63,000 last month after a 43,000 July decline. These shortfalls compare to an average 161,000 monthly decline during the prior nine months. Employment in the private service sector dropped 62,000 last month (-3.2% y/y) after a 126,000 July drop. Here again the declines are easier than 289,000 average during the prior nine months. Finally, job cuts in the construction sector also have moderated, but to a lesser extent. Employment here fell a reduced 65,000 last month after a 73,000 July decline and an average 100,000 during the nine months ended June.
In the government sector employment continued down as budgets shrank with lower tax revenues. Government jobs fell 18,000 (-0.3% y/y) after a downwardly-revised 28,000 July drop. Jobs with the federal government fell 5,000 (+1.9% y/y) for the third decline in the last four months. The number of state gov&#39;t jobs fell 5,000 (-1.1% y/y) and local gov&#39;t payrolls fell 8,000 (-0.5% y/y for the third consecutive down month. Should the federal government bail out the states? Lessons from past recessions from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2009_265.pdf">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904c.jpg" width="353">
Average hourly earnings rose 0.3% during August for the second consecutive month. The 0.5% three-month growth rate is up off its low but compares to roughly 4% growth from 2006 to 2008. Earnings in the factory sector rose 0.2% and the three-month growth rate rose to 0.5%. Growth durable sector&#39;s earnings rose to 0.7%. Earnings in the private service sector recovered to 0.4% during the last three months.
The figures referenced above are available in Haver&#39;s USECON database. Additional detail can be found in the LABOR and in the EMPL databases.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment: 000s</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-216</td>
<td>-276</td>
<td>-463</td>
<td>-4.3%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-247</td>
<td>-443</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-63</td>
<td>-43</td>
<td>-123</td>
<td>-12.1%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-65</td>
<td>-73</td>
<td>-79</td>
<td>-15.1%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-80</td>
<td>-154</td>
<td>-251</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.1</td>
<td>33.1</td>
<td>33.0</td>
<td>33.7 (Aug. &#39;08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.7%</td>
<td>9.4%</td>
<td>9.5%</td>
<td>6.2% (Aug. &#39;08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

The August jobs figures from the Bureau of Labor Statistics gave conflicting signals. Suggesting some improvement in the labor market was payroll employment which declined the least of any month in a year, although the declines during [...]

U.S. Payroll Decline Eases But The Unemployment Rate Jumps To 26-Year High

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904a.jpg" align="left" border="0" height="265" width="353">
The August jobs figures from the Bureau of Labor Statistics
gave conflicting signals. Suggesting some improvement in the labor
market was payroll employment which declined the least of any month in
a year, although the declines during the prior two months were revised
deeper. Working the other way were the household survey figures. The
unemployment rate, at 9.7%, jumped to its highest level since 1982.
Together, the data hardly suggest that the recession is over, though
downward momentum seems to have eased.
The length of the average workweek was stable m/m and q/q at
33.1. So far in the third quarter, aggregate hours worked (employment
times hours) have fallen at a 2.6% annual rate after a 7.8% decline
during 2Q.
Nonfarm payrolls fell 216,000 during August. That was less
than the expected 228,000 decline however declines during the prior two
months were revised deeper by a collective 49,000. The latest decline
was the least since August of last year. Nevertheless, so far during
this recession, employment has fallen by a total of 6.9 million, the
record by far for a 20-month period. In percentage terms jobs are down
5.0% since the 2007 peak, also a record. Most recently, the payroll
decline moderated to an average 318,000 over the last three months
versus a peak three-month rate of 701,000 this past winter.
The jump in the unemployment rate to 9.7% from 9.4% compared
with expectations for a smaller rise to 9.5%. The rate's cycle low of
4.4% occurred in October 2006. This level of the official unemployment
rate pales, however, in comparison to the rate which includes
"marginally attached workers" and those who are working part-time for
economic reasons. It rose to 16.8%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904b.jpg" align="right" border="0" height="265" width="353">
The increase in the overall jobless rate was due to a 392,000
(-3.9% y/y) fall in employment. That was easier than the worst monthly
declines of this past winter but in-line with those of the last several
months. It was accompanied by a modest 73,000 (-0.2% y/y) increase in
the labor force after two months of sharp decline. The latest increase
also saw a slight 38,000 decline in the number of "discouraged workers"
after four months of increase. Also from the household survey, the
median duration of unemployment slipped m/m to 15.4 weeks but that
still was up from 8.3 weeks one year ago. The ranks of the long-term
unemployed, however, rose slightly to 4.988 million.
From the payroll survey, the moderation in the rate of job
loss continued to stem from smaller declines in both factory sector and
private service payrolls. Manufacturing sector jobs fell 63,000 last
month after a 43,000 July decline. These shortfalls compare to an
average 161,000 monthly decline during the prior nine months.
Employment in the private service sector dropped 62,000 last month
(-3.2% y/y) after a 126,000 July drop. Here again the declines are
easier than 289,000 average during the prior nine months. Finally, job
cuts in the construction sector also have moderated, but to a lesser
extent. Employment here fell a reduced 65,000 last month after a 73,000
July decline and an average 100,000 during the nine months ended June.
In the government sector employment continued down as budgets
shrank with lower tax revenues. Government jobs fell 18,000 (-0.3% y/y)
after a downwardly-revised 28,000 July drop. Jobs with the federal
government fell 5,000 (+1.9% y/y) for the third decline in the last
four months. The number of state gov't jobs fell 5,000 (-1.1% y/y) and
local gov't payrolls fell 8,000 (-0.5% y/y for the third consecutive
down month. Should the federal government bail out the
states? Lessons from past recessions from the Federal Reserve
Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2009_265.pdf">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904c.jpg" align="left" border="0" height="265" width="353">
Average hourly earnings rose 0.3% during August for the second
consecutive month. The 0.5% three-month growth rate is up off its low
but compares to roughly 4% growth from 2006 to 2008. Earnings in the
factory sector rose 0.2% and the three-month growth rate rose to 0.5%.
Growth durable sector's earnings rose to 0.7%. Earnings in the private
service sector recovered to 0.4% during the last three months.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-216</td>
<td>-276</td>
<td>-463</td>
<td>-4.3%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-247</td>
<td>-443</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-63</td>
<td>-43</td>
<td>-123</td>
<td>-12.1%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-65</td>
<td>-73</td>
<td>-79</td>
<td>-15.1%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-80</td>
<td>-154</td>
<td>-251</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.1</td>
<td>33.1</td>
<td>33.0</td>
<td>33.7 (Aug. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.7%</td>
<td>9.4%</td>
<td>9.5%</td>
<td>6.2% (Aug. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 Italy's Trade Trends Turn 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 4, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904d.jpg" align="left" border="0" height="265" width="353">
Both Italy&#8217;s exports and imports are beginning to turn their
plunging growth rates higher. The Yr/Yr trend has begun to turn (see
chart) for both exports and imports. The balance did swing to surplus a
month ago but it still shows a reduced deficit in the current month
compared to earlier months. Over three months the export rate of
decline has been cut to an annual rate of about -8% compared to -18%
for imports. 
 

For exports transportation equipment, capital goods and other
goods are still showing outsized Yr/Yr declines of -20% or more. Food
exports and consumer goods exports are dropping at a slower pace of
less than 10%. 
 

Imports are showing Yr/Yr declines of 16% for capital goods
and 44% for other goods. Transport equipment imports are declining at
an 8.6% pace compared to foods and beverages with a drop of 0.7% and
consumer goods imports that are advancing Yr/Yr. services imports are
declining rapidly Yr/Yr as well. 
 

The more rapid drop in imports cuts the flow of an item that
diminishes growth since imports siphon off domestic demand to foreign
producers. Italy&#8217;s exports in contrast have held up better and are
maintaining their levels better than imports. In this way trade is
helping to prop up Italian GDP. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Italy's
Trade Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/mo % monthly rate</td>
<td colspan="4">Period Specified saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">Seasonally Adjusted</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-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">Current Account Bal</td>
<td>&#8364;&#8364; (2,378)</td>
<td>&#8364;&#8364; 470</td>
<td>&#8364;&#8364; (2,959)</td>
<td>&#8364;&#8364; (1,622)</td>
<td>&#8364;&#8364; (2,919)</td>
<td>&#8364;&#8364; (3,907)</td>
<td>&#8364;&#8364; (3,700)</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Goods Balance</td>
<td>&#8364;&#8364; 939</td>
<td>&#8364;&#8364; 1,662</td>
<td>&#8364;&#8364; 1,096</td>
<td>&#8364;&#8364; 1,232</td>
<td>&#8364;&#8364; 544</td>
<td>&#8364;&#8364; 1</td>
<td>&#8364;&#8364; 267</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Exports</td>
<td>-2.6%</td>
<td>-4.4%</td>
<td>5.1%</td>
<td>-8.2%</td>
<td>-30.9%</td>
<td>-23.7%</td>
<td>-4.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imports</td>
<td>0.5%</td>
<td>-7.0%</td>
<td>1.7%</td>
<td>-18.3%</td>
<td>-36.2%</td>
<td>-27.6%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Services Balance</td>
<td>&#8364;&#8364; (788)</td>
<td>&#8364;&#8364; (429)</td>
<td>&#8364;&#8364; (1,061)</td>
<td>&#8364;&#8364; (759)</td>
<td>&#8364;&#8364; (822)</td>
<td>&#8364;&#8364; (814)</td>
<td>&#8364;&#8364; (488)</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Exports</td>
<td>3.6%</td>
<td>-5.5%</td>
<td>0.6%</td>
<td>-6.0%</td>
<td>-22.9%</td>
<td>-14.8%</td>
<td>5.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Imports</td>
<td>9.3%</td>
<td>-13.7%</td>
<td>0.5%</td>
<td>-19.3%</td>
<td>-12.2%</td>
<td>-8.2%</td>
<td>-1.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Not Seasonally Adjusted</td>
<td colspan="7">All Yr/Yr</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-1.8%</td>
<td>&nbsp;</td>
<td>3.9%</td>
<td>&nbsp;</td>
<td>5.9%</td>
<td>&nbsp;</td>
<td>10.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-21.9%</td>
<td>&nbsp;</td>
<td>-3.7%</td>
<td>&nbsp;</td>
<td>15.1%</td>
<td>&nbsp;</td>
<td>10.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-29.6%</td>
<td>&nbsp;</td>
<td>2.3%</td>
<td>&nbsp;</td>
<td>11.4%</td>
<td>&nbsp;</td>
<td>8.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>-9.4%</td>
<td>&nbsp;</td>
<td>-8.8%</td>
<td>&nbsp;</td>
<td>8.8%</td>
<td>&nbsp;</td>
<td>7.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-32.0%</td>
<td>&nbsp;</td>
<td>-10.2%</td>
<td>&nbsp;</td>
<td>13.7%</td>
<td>&nbsp;</td>
<td>17.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Imports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-0.7%</td>
<td>&nbsp;</td>
<td>-1.9%</td>
<td>&nbsp;</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>7.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-16.1%</td>
<td>&nbsp;</td>
<td>-10.9%</td>
<td>&nbsp;</td>
<td>7.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-8.6%</td>
<td>&nbsp;</td>
<td>-15.3%</td>
<td>&nbsp;</td>
<td>11.0%</td>
<td>&nbsp;</td>
<td>-0.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>1.3%</td>
<td>&nbsp;</td>
<td>-3.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
<td>&nbsp;</td>
<td>12.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-44.9%</td>
<td>&nbsp;</td>
<td>18.0%</td>
<td>&nbsp;</td>
<td>0.0%</td>
<td>&nbsp;</td>
<td>45.5%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Balances
in Mlns of euros</td>
</tr>
</tbody>
</table>
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U.S. Payroll Decline Eases But TheUnemployment Rate Jumps To 26-Year High

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903h.jpg" align="left" border="0" height="265" width="353">
The Markit PMIs turned higher in August. Across the main
reporting Markit economics we find MFG PMIs are over the break-even
mark of 50 in two of seven EU nations. Three others have readings with
a &#8216;49&#8217; handle. Italy back-slid in August and has the second weakest MFG
reading at 44.24; Ireland&#8217;s MFG PMI rose this month but stands at a
weaker level than Italy&#8217;s gauge, at 43.98. Still, all the countries in
the table sport PMI readings that reside in the upper 50% of their
range except Italy and Ireland. Country level readings are in the 60th
percentile or better. Greece and France post the highest relative
readings, in the 70th percentile of their respective ranges or better,
For EMU the current reading is 48.24 and that stands in the 60th
percentile, or in the top 40% of its range. 
 

The services readings for August also show widespread
improvement. The jump this month was very large for EMU and the gains
for services spread across all major individually reporting countries
in our six large-country sample. 
 

With both manufacturing and the services sectors are making
strong gains they are boosting the overall EMU composite index which
moved up above the mark of 50, signaling growth. For its part, the OECD
sees an end to the global recession. But it is warning of continued
difficulties and strong head winds. The outlook has improved but the
degree of improvement remains shrouded in caution. No agency is
sticking its neck out to look for strong growth, even though most are
now citing improvement and calls that say the recession is over are
becoming commonplace 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">NTC/Markit MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-13</td>
<td>48.24</td>
<td>46.25</td>
<td>42.62</td>
<td>45.70</td>
<td>41.43</td>
<td>39.34</td>
<td>60.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>49.17</td>
<td>45.65</td>
<td>40.88</td>
<td>45.23</td>
<td>40.51</td>
<td>38.81</td>
<td>62.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>50.78</td>
<td>48.13</td>
<td>45.86</td>
<td>48.26</td>
<td>44.12</td>
<td>41.10</td>
<td>71.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>44.25</td>
<td>45.36</td>
<td>42.69</td>
<td>44.10</td>
<td>40.87</td>
<td>39.24</td>
<td>42.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>47.20</td>
<td>47.33</td>
<td>42.76</td>
<td>45.76</td>
<td>40.78</td>
<td>36.57</td>
<td>65.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Austria</td>
<td>49.95</td>
<td>46.46</td>
<td>42.01</td>
<td>46.14</td>
<td>41.73</td>
<td>40.07</td>
<td>65.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Greece</td>
<td>51.13</td>
<td>48.82</td>
<td>47.67</td>
<td>49.21</td>
<td>45.46</td>
<td>44.48</td>
<td>75.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Ireland</td>
<td>43.98</td>
<td>43.66</td>
<td>42.47</td>
<td>43.37</td>
<td>40.11</td>
<td>39.27</td>
<td>48.6%</td>
</tr>
<tr class="grey1">
<td colspan="8">EU</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>49.71</td>
<td>50.25</td>
<td>46.78</td>
<td>48.91</td>
<td>45.97</td>
<td>41.69</td>
<td>68.8%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

The Markit PMIs turned higher in August. Across the main reporting Markit economics we find MFG PMIs are over the break-even mark of 50 in two of seven EU nations. Three others have readings with a ‘49’ handle. Italy back-slid in [...]

Markit MFG PMIs Turn Higher; Gains Are Widespread

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903e.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity regained its legs last month. The Composite
Index for the nonmanufacturing sector from the Institute for Supply
Management (ISM) rose to 48.4 last month after having slipped to 46.4
during July. The latest level was the highest since September of last
year and the figure about matched Consensus expectations for a reading
of 48.0. A level of the ISM index below 50 indicates declining
activity. Since the series' inception in 1997 there has been a 65%
correlation between the level of the business activity index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
ISM surveys more than 370 purchasing
managers in more than 62 industries including law firms, hospitals,
government and retailers. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903f.jpg" align="right" border="0" height="265" width="353">
The nonmanufacturing survey dates back to
July 1997. The figures are available in Haver's USECON database.
The improvement in the August index was broad-based amongst
the
component series. The business activity index for the service sector
broached the break-even level for the first time since last September
with a rise to 51.3. The new orders series neared that break-even level
with an increase to 49.9, up from November's low of 35.6. Finally, the
employment index rose to 43.5 and that was the highest level since
September. Since the series' inception in 1997 there has been a 56%
correlation between the level of the ISM nonmanufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.
 The rise in service sector
activity powered a sharp improvement in pricing power. The 21.8 point
m/m jump in the price index to 63.1&nbsp; placed the index at its
highest level since last September. Twenty-three percent of firms
reported higher prices while a significantly reduced 6%&nbsp;
reporting lower prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903g.jpg" align="right" border="0" height="265" width="353">
Since its inception ten years ago, there has
been a 60% correlation between the price index and the q/q change in
the GDP services chain price index.
Beginning with the
January 2008 Nonmanufacturing <cite>Report On Business</cite> &#174;,
the composite index is calculated as an indicator of the overall
economic condition for the non-manufacturing sector. It is a composite
index based on the diffusion indices of four of the indicators
(business activity, new orders, employment and supplier deliveries)
with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ismreport/mfgrob.cfm">here.</a>
Changes in the Use of Electronic Means of Payment:
1995-2007 also from the Federal Reserve Bank of Philadelphia
is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_changes-in-electronic-payment.pdf">here.</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>48.4</td>
<td>46.4</td>
<td>50.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>51.3</td>
<td>46.1</td>
<td>50.8</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>43.5</td>
<td>41.5</td>
<td>45.6</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.1</td>
<td>41.3</td>
<td>74.1</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

</body></html>

Improvement in service sector activity regained its legs last month. The Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose to 48.4 last month after having slipped to 46.4 during July. [...]

U.S. ISM Nonmanufacturing Index Improves While Prices Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903d.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements returned last month to near this cycle&#39;s low. They fell to 76,456 after having ticked up during July. The figures remain well below this cycle&#39;s peak level of layoffs which occurred this past January when there were 241,749 cuts.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment. Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
The problem with the reduction in job cuts is that, while hiring plans are up 34.1% from last year, the level remains low.
The Challenger figures are available in Haver&#39;s SURVEYS database.
The Exchange Rate: What&#39;s in It for Prices? from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>76,456</td>
<td>97,373</td>
<td>-13.8%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>13,100</td>
<td>17,183</td>
<td>34.1</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>
</body>
</html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements returned last month to near this cycle's low. They fell to 76,456 after having ticked up during July. The figures remain well below this [...]

Challenger Layoffs Approach Recent Low

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

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Winnie Tapasanun

260116R23.jpg

260116S23.jpg

Industrial production (IP) rose a more-than-expected 0.4% m/m in December following a 0.4% rise in November (+0.2% initially) and a 0.3% decline in October (-0.1% previously), data from the Federal Reserve Board showed. December marked the third m/m gain in four months. A 0.1% m/m December increase had been expected in the Action Economics Forecast Survey. The year-on-year growth rate slowed to 2.0% in December, the lowest since September, from 2.5% in November; this compared with a 0.3% y/y decline in December 2024. The December IP index at 102.3 was 3.1% above a low of 99.2 in January 2024. IP rose 0.2% q/q in Q4 2025 after a 0.6% q/q gain in Q3 2025, increasing at a 0.7% annualized rate following a 2.3% Q3 annualized pace. In 2025, IP rose 1.3% after declines of 0.7% in 2024 and 0.2% in 2023.

By **industry groups**, manufacturing production grew 0.2% (2.0% y/y) in December, up for the third time in four months, following a 0.3% increase in November (0.0% initially) and a 0.6% drop in October (-0.4% previously). Durable goods production edged up 0.1% (3.1% y/y) in December, the first m/m increase since September, after a 0.1% downtick in November. Within durables, the following categories rose m/m in December, including output rises of 2.4% (3.5% y/y) in primary metals, 1.7% (1.3% y/y) in electrical equipment, appliances & components, 1.5% (17.2% y/y) in aerospace & miscellaneous transportation equipment, 0.8% (-2.2% y/y) in furniture & related products, 0.2% (4.8% y/y) in machinery, and 0.1% (7.4% y/y) in computer & electronic products. Notably, aircraft & parts production climbed 2.1% (30.0% y/y), the third m/m increase in four months, reversing a 2.1% November drop. To the downside, the following durable goods categories fell m/m in December, including drops of 2.3% (-5.5% y/y) in wood products, 1.1% (-2.8% y/y) in motor vehicles & parts, 1.1% (-1.0% y/y) in nonmetallic mineral products, 0.1% (+2.6% y/y) in fabricated metal products, and 0.1% (-3.7% y/y) in miscellaneous durables goods.

Nondurable goods production increased 0.3% (1.0% y/y) in December, the third m/m gain in four months, after a 0.8% rebound in November. The December increase reflected m/m output rises of 1.8% (2.1% y/y) in petroleum & coal products, 0.5% (1.9% y/y) in food, beverages & tobacco, and 0.3% (-0.2% y/y) in plastics & rubber products. In contrast, the following nondurable goods categories declined m/m in December, including output drops of 1.3% (-0.8% y/y) in textiles & product mills, 1.1% (-0.5% y/y) in apparel & leather goods, 0.3% (-3.1% y/y) in paper, 0.3% (-3.4% y/y) in printing & related support activities, and 0.1% (+1.6% y/y) in chemicals.

Utilities output recovered 2.6% (2.3% y/y) in December, the third m/m rise in four months, following a 0.3% decline in November (-0.4% initially), reflecting a 1.2% rebound (1.3% y/y) in electric utilities output and a 12.0% jump (8.7% y/y) in natural gas utilities output. Mining activity, however, fell 0.7% (+1.7% y/y), the third m/m slide in four months, after an unrevised 1.7% November gain.

By **market groups**, business equipment output advanced 0.8% (10.1% y/y) in December, up for the third time in four months, after a 0.3% increase in November. Consumer goods output rose 0.7% (0.7% y/y) after a 0.7% November rebound, reflecting a 0.7% decline (-3.5% y/y) in durable consumer goods and a 1.1% gain (1.8% y/y) in nondurable consumer goods. Materials production grew 0.2% (1.7% y/y), the third m/m increase in four months, after a 0.5% November rise. In contrast, construction supplies production fell 0.3% (+1.3% y/y) in December, the second m/m fall in three months, reversing a 0.3% increase in November.

In **special classifications**, factory output of selected high-tech industries increased 0.7% (10.9% y/y) in December, the third successive m/m gain, following a downwardly revised 0.5% rise in November (+1.1% initially). Manufacturing production excluding selected high-tech industries rose 0.2% (1.7% y/y) in December after a 0.3% gain in November, and manufacturing production excluding selected high-tech and motor vehicles & parts rose 0.3% (2.1% y/y) after a 0.4% increase; both measures posted their third m/m gain in four months.

Capacity utilization rose to 76.3% in December, the highest since July, from 76.1% in November (76.0% initially). The Action Economics Forecast Survey forecasted 76.0%. The December reading was 3.2 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization held at 75.6% in December and November (75.4% previously); the December rate was 2.6 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

260116T23.jpg

260116U23.jpg

- December IP +0.4% (+2.0% y/y), third m/m rise in four months, led by a 2.6% gain in utilities.
- Manufacturing +0.2% (+2.0% y/y), w/ durables +0.1% and nondurables +0.3%.
- Selected high-tech +0.7%, third consecutive m/m rise; motor vehicles -1.1%, fourth straight m/m fall.
- Mining -0.7%, third m/m decline in four months.
- Key categories in market groups mostly increase.
- Capacity utilization at a five-month-high 76.3%; mfg. capacity utilization steady at 75.6%.

U.S. Industrial Production Increases in December on Utilities Rebound

260116E.jpg

The European Monetary Union has concluded a year of weak-to-moderate growth with inflation largely toeing the line. As always, the inflation picture is more complicated than a simple statement. When we look at inflation, we look at the headline, we look at the core, to make sure that the volatile food & energy elements aren't dominating the index, and then we look across some of the main participants to see if the trend for inflation is shared broadly across the largest countries in the Monetary Union. When we apply those kinds of standards, the grading for the year is reduced. However, based on the headline alone, it was an excellent year for the ECB.

**Headline Inflation in 2025**
Headline inflation in 2025 rose by 2%, exactly on the target of the European Central Bank. It rose over six months at a 2% annual rate and then concluded the year over the last three months, rising at a 1.6% annual rate with some margin below the target set by the central bank itself.

**Country Headline Inflation Trends**
On a country basis, the performance is not nearly as good. While year-on-year results look pretty good, with Germany at 2%, France at 0.7% and Italy at 1.3%, Spain comes in at 3.1%. So the three largest monetary union economies come in at or below 2% with Spain as a rogue observation. When we look further at the sequence of inflation within the year, we see Germany at 2% over 12 months, rising to 3.1% over 6 months, rising further to 4% over 3 months. Inflation is accelerating at the end of the year even as Germany hits the target! This is something to keep an eye on. For France, the inflation rate also accelerates slightly but stays below the bar of 2% over three months, six months, and 12 months. For Italy, inflation is decelerating from 1.3% over 12 months to -0.3% over six months, and then inflation in Italy is contracting at a 1.9% annual rate over three months. Spanish inflation shows clear trouble with a 3.1% 12-month pace, rising to 4.6% at an annual rate over six months, and rising further to 5.9% at an annual rate over three months.

**Core Inflation**
For core inflation, the Monetary Union’s consolidated numbers are not yet compiled. However, for the four largest economies, we do have core or ex-energy inflation. For Germany, it's inflation excluding energy. On that basis, German inflation is 2.2% over 12 months, it rises to 2.7% over six months, then falls back to a 2% annual pace over three months All-in-all not a bad performance. For France, core inflation is below 2% over 12 months, six months, and three months. In Italy, once again, we see inflation decelerating: Italian inflation is 2% over 12 months - right on the ECB target. It falls to a 1.3% annual rate over six months and then falls further to a 0.3% annual rate over three months. For Spain, the core has another very difficult story for the Monetary Union. Inflation is 2.7% over 12 months, it rises to 3.1% over six months and stays at an annual rate of about 3% over three months. This is too high and it looks stubborn, particularly because it is the core.

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**Across the Big Four**
On balance, what we see is that the ECB grades-out well, based on headline inflation and based on its sequential performance for the European economic union as a whole. But large countries, show headline inflation building some steam particularly in the largest economy, Germany, and in Spain, the smallest of the BIG-4 economies. Inflation is once again mixed in the Monetary Union with German and Spanish inflation too high and with French and Italian inflation running either at or below the 2% mark and with Italy showing a tendency towards weaker prices for both the headline and the core. The change in prices over these various periods shows inflation gets the most help from oil prices over 12 months where Brent, measured in euros, falls by 22.6%; over six months Brent prices fall by 37% at an annual rate; and over three months Brent oil prices are unchanged, so that the headline isn't getting help at all from oil prices except through lagged effects.

**Summing Up**
Meanwhile, there are some signs of stronger growth taking root in Europe, especially in Germany with better industrial production being logged and with German industrial production looking significantly stronger than the PMI data, suggesting that perhaps PMI data are missing something about the rebound that is developing. Nonetheless, it was a good year for inflation and the ECB; however, it doesn't exactly end the year in the catbird’s seat. On the other hand, it does not end the year behind the curve. There are scattered pressures and needs among member countries which always makes monetary policy difficult. When some countries need higher interest rates and others need lower interest rates, the ECB is in a difficult spot. Clearly, Spain and Germany are experiencing different phenomenon than France and Italy. That could be the policy challenge for the year ahead.

Europe

Big Four Inflation in EMU 2025-Final

Andrew Cates

**The growth consensus for 2026** 
Consensus growth forecasts for 2026 have continued to firm over the past six months, with upward revisions most pronounced in economies that are more directly exposed to the global AI investment cycle. Taiwan stands out, reflecting its central role in advanced semiconductor manufacturing and the spillovers from sustained AI-related capex across the global tech supply chain. The US has also seen a sizeable upgrade, consistent with strong domestic investment in AI infrastructure and data-centre capacity, alongside resilient demand for high-value tech services. Elsewhere in Asia, upgrades to South Korea and, to a lesser extent, China and India point to a broader regional benefit from the AI-driven electronics and capital-goods cycle, even as underlying macro conditions remain mixed. Canada has also seen modest upward revisions, likely reflecting its close integration with US investment trends. By contrast, revisions across much of Europe and Japan have been more muted, while forecasts for Russia remain under downward pressure.

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**The next steps for central bank policy** 
Based on responses to the special questions in the latest Blue Chip survey, the chart highlights how uncertain panelists remain about the precise timing of the next policy move, even where there is broad agreement on direction. Expectations for both the Fed and the Bank of England are now loosely centred on March 2026 as the most likely window for the next easing step, but the spread of responses points to limited conviction and a high sensitivity to incoming data. By contrast, panelists continue to see the ECB as largely through its easing cycle, with a clear majority expecting any further move only later, if at all. The Bank of Japan remains the clear outlier: while further tightening is still the central expectation, views are split on timing, with panelists divided between a March move and a hike pushed beyond April 2026—highlighting ongoing uncertainty over the durability of domestic inflation and wage dynamics.

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**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.

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**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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