Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826c.jpg" width="353">
Sales of new single-family homes rose again in July, the fourth consecutive monthly gain. The seasonally adjusted annual rate was 433,000, up 9.6% from an upwardly revised 395,000 in June and the largest monthly amount since September 2008. Sales were 13.4% below the year earlier amount; while still a sizable shrinkage, this compares very well with the worst of these year-to-year comparisons, 45.9% as recently as January. In fact, it is the most favorable yearly comparison (&quot;least unfavorable&quot;, is perhaps better) since April 2006.
The latest sales increase is more encouraging than the previous month&#39;s because it was accompanied by almost steady prices. The median price was $210,100 compared to $210,400 in June. More, the June number was revised up from $206,200. Further price encouragement comes from yesterday&#39;s report of the S&amp;P Case Shiller Index for June. That widely watched measure of existing home prices rose 0.7%, its first positive monthly move since May 2006.*
Sales volume advanced in three of the four regions. The Northeast led with a 16.2% gain, month-on-month. For July, its sales ran 9.8% AHEAD of July 2008, the first yearly rise since October 2007. Sales in the South increased 16.2% from upwardly revised amounts in June and May. And volume in the West increased 1.0% from mildly revised figures in the prior months. In contrast, some of the recent gain in the Midwest was revised away and sales there fell 7.6% in July. So the pattern is still quite uneven around the country. And the actual numbers remain very small Still, they&#39;re mostly headed in a good direction.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826d.jpg" width="353">
The market&#39;s aggregate condition continues to improve, as the overhang of unsold homes continues to fall. The decline in July was 3.2%; in conjunction with the sales gain, this put the months&#39; supply of unsold homes at 7.5 months, down an entire month from June&#39;s figure and well off the 12.4 months registered in January.*Note there are two distinctions in these price series. The median price of new homes included in this dataset is simply that, the median price of the houses actually sold during the period, regardless of their characteristics. The Case-Shiller Index, firstly, pertains to existing homes, but secondly, it measures the price movements in the exact houses since the last time they were sold. So the weighted average price change that makes the index covers only price change with quality held constant. Both measures are valid, but they explain different kinds of price developments.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>433</td>
<td>395</td>
<td>362</td>
<td>-13.4%</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>45</td>
<td>34</td>
<td>25</td>
<td>&nbsp;+9.8</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>61</td>
<td>66</td>
<td>48</td>
<td>-4.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>222</td>
<td>191</td>
<td>202</td>
<td>-18.4</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>105</td>
<td>104</td>
<td>87</td>
<td>-14.6</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>210,100</td>
<td>210,400</td>
<td>221,400</td>
<td>&nbsp;-11.5</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
<tr>
<td class="firstcol">S&amp;P Case-Shiller House Price Index (January 1980=100)</td>
<td>N.A.</td>
<td>141.31</td>
<td>140.26</td>
<td>-15.5</td>
<td>165.95</td>
<td>196.98</td>
<td>204.84</td>
</tr>
</tbody>
</table>
</body>
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Sales of new single-family homes rose again in July, the fourth consecutive monthly gain. The seasonally adjusted annual rate was 433,000, up 9.6% from an upwardly revised 395,000 in June and the largest monthly amount since September [...]

U.S. New Home Sales Improve Again; Case-Shiller Price Index Rises

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826a.jpg" width="353">
Durable goods orders rebounded in July, jumping 4.9%, and June&#39;s numbers were revised higher so that the original 2.5% decline is now shown at 1.3%. The major part of the July gain was in nondefense aircraft orders, which more than doubled from their June amount. However, other orders also increased by a total of 1.9%; this subtotal had been virtually flat in May and June.
Most industry groups in this advance report saw orders increase in July, and some sectors that were weak in June saw notable upward revisions. In particular, the computer and communications sectors, which had been mainly responsible for the original June contraction now appear to be performing much better. Computer orders were changed from -1.2% in June to +0.5%, while they did drop back in the July data by 2.8%. Communications equipment, initially with a major decline of 10.8% in June, experienced a revision to just -0.6%, and surged by 9.4% last month.
Among other sectors, only machinery orders fell in July, by 6.6%. By contrast, electrical equipment and appliance orders gained 5.3% and primary metals and fabricated metal products had increases of 2.6% and 2.8%, respectively. &quot;Other&quot; durable goods orders were up 2.4%.
By end-use, orders for nondefense capital goods rose 8.6%, but this was fully accounted for by the big aircraft gain. Other capital goods orders eased by 0.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826b.jpg" width="353">
In last month&#39;s commentary on this report, Tom Moeller bemoaned the fact that durable goods shipments were continuing to languish. That may be starting to change. The marginal decline for June reported then is now estimated at +0.7%, with July following with a 2% increase. Computers, semiconductors, motor vehicles and aircraft led the upturn, and several other items also gained. Inventories, however, continue to decline, although the 0.8% July fall is noticeably less than 1.3% average over the first half of 2009. Another still-hesitant indicator is unfilled orders; these edged down 0.1% in July, following nine consecutive declines averaging 1.2%. Thus, the durable goods industries seem to be preparing to break out of their recession. However, those sizable revisions to June&#39;s advance data suggest that some skepticism remains in order.
The durable goods figures are available in Haver&#39;s USECON 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/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a> (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>4.9</td>
<td><strike>-2.5</strike> -1.3</td>
<td>1.3</td>
<td>-22.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.8</td>
<td>&nbsp;<strike>1.1</strike>&nbsp;&nbsp; 2.5</td>
<td>0.8</td>
<td>-22.5</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>8.6</td>
<td><strike>-3.4</strike> -0.4</td>
<td>9.1</td>
<td>-22.9</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-0.3</td>
<td><strike>&nbsp;1.4</strike>&nbsp; 3.6</td>
<td>4.3</td>
<td>-21.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
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Durable goods orders rebounded in July, jumping 4.9%, and June's numbers were revised higher so that the original 2.5% decline is now shown at 1.3%. The major part of the July gain was in nondefense aircraft orders, which more than [...]

U.S. Durable Goods Orders Look To Form Base for Recovery

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826a.jpg" align="left" border="0" height="265" width="353">
Durable goods orders rebounded in July, jumping 4.9%, and
June's numbers were revised higher so that the original 2.5% decline is
now shown at 1.3%. The major part of the July gain was in nondefense
aircraft orders, which more than doubled from their June amount.
However, other orders also increased by a total of 1.9%; this subtotal
had been virtually flat in May and June.
Most industry groups in this advance report saw orders
increase in July, and some sectors that were weak in June saw notable
upward revisions. In particular, the computer and communications
sectors, which had been mainly responsible for the original June
contraction now appear to be performing much better. Computer orders
were changed from -1.2% in June to +0.5%, while they did drop back in
the July data by 2.8%. Communications equipment, initially with a major
decline of 10.8% in June, experienced a revision to just -0.6%, and
surged by 9.4% last month.
Among other sectors, only machinery orders fell in July, by
6.6%. By contrast, electrical equipment and appliance orders gained
5.3% and primary metals and fabricated metal products had increases of
2.6% and 2.8%, respectively. "Other" durable goods orders were up 2.4%.
By end-use, orders for nondefense capital goods rose 8.6%, but
this was fully accounted for by the big aircraft gain. Other capital
goods orders eased by 0.3%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826b.jpg" align="right" border="0" height="265" width="353">
In last month's commentary on this report, Tom Moeller
bemoaned the fact that durable goods shipments were continuing to
languish. That may be starting to change. The marginal decline for June
reported then is now estimated at +0.7%, with July following with a 2%
increase. Computers, semiconductors, motor vehicles and aircraft led
the upturn, and several other items also gained. Inventories, however,
continue to decline, although the 0.8% July fall is noticeably less
than 1.3% average over the first half of 2009. Another still-hesitant
indicator is unfilled orders; these edged down 0.1% in July, following
nine consecutive declines averaging 1.2%. Thus, the durable goods
industries seem to be preparing to break out of their recession.
However, those sizable revisions to June's advance data suggest that
some skepticism remains in order.
The durable goods figures are available in Haver's USECON
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/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS
Classification</a> (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</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">Durable Goods Orders</td>
<td>4.9</td>
<td><strike>-2.5</strike> -1.3</td>
<td>1.3</td>
<td>-22.8</td>
<td>-5.8</td>
<td>1.4</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Excluding Transportation</td>
<td>0.8</td>
<td>&nbsp;<strike>1.1</strike>&nbsp;&nbsp;
2.5</td>
<td>0.8</td>
<td>-22.5</td>
<td>-1.2</td>
<td>-0.3</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>8.6</td>
<td><strike>-3.4</strike> -0.4</td>
<td>9.1</td>
<td>-22.9</td>
<td>-6.8</td>
<td>3.5</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-0.3</td>
<td><strike>&nbsp;1.4</strike>&nbsp; 3.6</td>
<td>4.3</td>
<td>-21.6</td>
<td>-0.3</td>
<td>-2.7</td>
<td>10.7</td>
</tr>
</tbody>
</table>
U.S. New Home Sales Improve Again;
Case-Shiller Price Index Rises 
by <a href="/comment/Stone.html">Carol
Stone</a> August 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826c.jpg" align="left" border="0" height="265" width="353">
Sales of new single-family homes rose again in July, the
fourth consecutive monthly gain. The seasonally adjusted annual rate
was 433,000, up 9.6% from an upwardly revised 395,000 in June and the
largest monthly amount since September 2008. Sales were 13.4% below the
year earlier amount; while still a sizable shrinkage, this compares
very well with the worst of these year-to-year comparisons, 45.9% as
recently as January. In fact, it is the most favorable yearly
comparison ("least unfavorable", is perhaps better) since April 2006.
The latest sales increase is more encouraging than the
previous month's because it was accompanied by almost steady prices.
The median price was $210,100 compared to $210,400 in June. More, the
June number was revised up from $206,200. Further price encouragement
comes from yesterday's report of the S&amp;P Case Shiller Index for
June. That widely watched measure of existing home prices rose 0.7%,
its first positive monthly move since May 2006.*
Sales volume advanced in three of the four regions. The
Northeast led with a 16.2% gain, month-on-month. For July, its sales
ran 9.8% AHEAD of July 2008, the first yearly rise since October 2007.
Sales in the South increased 16.2% from upwardly revised amounts in
June and May. And volume in the West increased 1.0% from mildly revised
figures in the prior months. In contrast, some of the recent gain in
the Midwest was revised away and sales there fell 7.6% in July. So the
pattern is still quite uneven around the country. And the actual
numbers remain very small Still, they're mostly headed in a good
direction.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090826d.jpg" align="right" border="0" height="265" width="353">
The market's aggregate condition continues to improve, as the
overhang of unsold homes continues to fall. The decline in July was
3.2%; in conjunction with the sales gain, this put the months' supply
of unsold homes at 7.5 months, down an entire month from June's figure
and well off the 12.4 months registered in January.*Note there are two
distinctions in these price series. The median price of new homes
included in this dataset is simply that, the median price of the houses
actually sold during the period, regardless of their characteristics.
The Case-Shiller Index, firstly, pertains to existing homes, but
secondly, it measures the price movements in the exact houses since the
last time they were sold. So the weighted average price change that
makes the index covers only price change with quality held constant.
Both measures are valid, but they explain different kinds of price
developments.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">US
New Homes</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales
(SAAR, 000s)</td>
<td>433</td>
<td>395</td>
<td>362</td>
<td>-13.4%</td>
<td>479</td>
<td>768</td>
<td>1,049</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>45</td>
<td>34</td>
<td>25</td>
<td>&nbsp;+9.8</td>
<td>35</td>
<td>64</td>
<td>64</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>61</td>
<td>66</td>
<td>48</td>
<td>-4.7</td>
<td>69</td>
<td>118</td>
<td>161</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>222</td>
<td>191</td>
<td>202</td>
<td>-18.4</td>
<td>264</td>
<td>408</td>
<td>559</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>105</td>
<td>104</td>
<td>87</td>
<td>-14.6</td>
<td>111</td>
<td>178</td>
<td>266</td>
</tr>
<tr>
<td class="firstcol">Median Price
(NSA, $)</td>
<td>210,100</td>
<td>210,400</td>
<td>221,400</td>
<td>&nbsp;-11.5</td>
<td>230,408</td>
<td>243,742</td>
<td>243,067</td>
</tr>
<tr>
<td class="firstcol">S&amp;P
Case-Shiller House Price Index (January 1980=100)</td>
<td>N.A.</td>
<td>141.31</td>
<td>140.26</td>
<td>-15.5</td>
<td>165.95</td>
<td>196.98</td>
<td>204.84</td>
</tr>
</tbody>
</table>
German Ifo Index Is ShowingWidespread Recovery 
by <a href="/comment/Brusca.html">Robert
Brusca</a> August 26, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090827a.jpg" align="left" border="0" height="265" width="353">
The month-to-month improvement in the all sector IFO diffusion
index is the second largest since 1991. All sectors improved in the
month. The manufacturing index is improving especially rapidly. The
services sector has dug itself out of its declining phase and has
posted not just an improvement but an outright gain in the month. 
 

Still in relative terms, ranking sectors within each one&#8217;s
range of actual variation finds construction as the relative strongest
reading. Its -24 reading in August is above the mid point of its range
and just below its average reading of -29 compared to a current reading
of -24. 
 
 

Retailing stands in the 44th percentile of its range.
Wholesaling and services stand in the upper thirty percentiles of their
respective ranges. While manufacturing is rising strongly it remains as
the relative weakest sector in the bottom 29th percentile of its range. 
 

The overall index stands at the 30th percentile of its range. 
 

The strong rise in the MFG sector drove the improvement this
month. as the MFG sector showed the greatest rise in the history of its
index. Wholesale&#8217;s improvement ranks eighth. The improvement in
services is the ninth largest in its shorter history since June 2001;
the other series date from 1991. 
 

The rebound in the IFO index is impressive. The levels of the
various sectors fall short of being construed as a complete recovery,
but they do show that a recovery process is in train. It is too soon to
be able to guess accurately at when the economy will be on an even
keel. But for now the improvement is rapid and in the right direction.
The IFO confirms other reports that suggest that the recovery phase has
begun. 
 
 


<table border="0" cellspacing="0" width="100%">
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Summary
of IFO Sector Diffusion readings: CLIMATE</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">CLIMATE Sum</td>
<td>Current</td>
<td>Last Month</td>
<td colspan="6">Since Jan 1991*</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Average</td>
<td>Median</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>% range</td>
</tr>
<tr class="odd">
<td class="firstcol">All Sectors</td>
<td>-19.7</td>
<td>-25.9</td>
<td>-9.4</td>
<td>-9.9</td>
<td>17.5</td>
<td>-36.2</td>
<td>53.7</td>
<td>30.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>-22.0</td>
<td>-29.7</td>
<td>-2.0</td>
<td>-0.3</td>
<td>27.5</td>
<td>-42.8</td>
<td>70.3</td>
<td>29.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-24.0</td>
<td>-25.3</td>
<td>-29.3</td>
<td>-30.3</td>
<td>0.7</td>
<td>-50.1</td>
<td>50.8</td>
<td>51.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Wholesale</td>
<td>-14.6</td>
<td>-22.5</td>
<td>-14.7</td>
<td>-16.3</td>
<td>23.9</td>
<td>-39.0</td>
<td>62.9</td>
<td>38.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>-15.0</td>
<td>-17.8</td>
<td>-16.0</td>
<td>-15.1</td>
<td>16.8</td>
<td>-40.4</td>
<td>57.2</td>
<td>44.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>1.4</td>
<td>-3.0</td>
<td>10.9</td>
<td>9.5</td>
<td>28.5</td>
<td>-14.5</td>
<td>43.0</td>
<td>37.0%</td>
</tr>
<tr>
<td colspan="9" class="firstcol">* June 2001
for Services</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090825d.jpg" align="left" border="0" height="265" width="353">
German GDP&#8217;s turnaround reveals its secrets &#8211; Germany
finalized its GDP and provided details on Q2 GDP performance. GDP rose
by 1.3% annualized and compounded Q/Q. Private consumption continued
positive in Q2. Public spending on Consumption cooled, rising at a 1.7%
a.r. down from its pace of +4.3% in Q1. Gross fixed capital spending
made a sharp turn rising at a mild 3% pace after plunging at a rate of
-27% in Q1. Housing investment picked up to a 5.8% pace from 1% in Q1.
But exports fell subtracting from growth. That was more than offset by
the plunge of 19% at annual rate by imports in Q2. On balance domestic
demand still contracted in Germany in Q2 on an inventory pullback. 
 

Imports cushion drop in domestic demand - The sharp drop in
imports helped to offset the impact of domestic demand weakness on GDP
by adding 8.6% to the annual rate of growth as exports cut over two
percentage points from GDP growth in Q2. Private consumption alone
added 1.7 percentage points to growth. The cut in GDP has a lot do with
inventory investment that is still a drag. But that will become a
positive in the future. 
 

So far so good - So far the German details on GDP are
relatively encouraging. But the outsized drop in imports that boosted
growth will not repeat. Meanwhile exports fell in Q2 and they are a key
factor in the growth story. Exports do show signs of turning up; at
least orders for exports are up. Retail spending in Germany is positive
but it has remained weak. So while there are bright spots there are
still challenges ahead for German growth. 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> German GDP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td colspan="3">Consumption</td>
<td>Capital Formation</td>
<td>&nbsp;</td>
<td></td>
<td>Domestic</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>G Fix Invst</td>
<td>Housing</td>
<td>Exports</td>
<td>Imports</td>
<td>Demand</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol"> % change Q/Q; X-M is Q/Q
change in Blns of euros</td>
</tr>
<tr>
<td class="firstcol">Q2-09</td>
<td>1.3%</td>
<td>2.9%</td>
<td>1.7%</td>
<td>3.1%</td>
<td>5.8%</td>
<td>-4.7%</td>
<td>-19.0%</td>
<td>-5.0%</td>
</tr>
<tr>
<td class="firstcol">Q1-09</td>
<td>-13.4%</td>
<td>2.6%</td>
<td>4.3%</td>
<td>-27.5%</td>
<td>1.0%</td>
<td>-35.8%</td>
<td>-19.6%</td>
<td>-4.1%</td>
</tr>
<tr>
<td class="firstcol">Q4-08</td>
<td>-9.4%</td>
<td>-1.7%</td>
<td>2.2%</td>
<td>-7.8%</td>
<td>-4.0%</td>
<td>-28.1%</td>
<td>-15.6%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Q3-08</td>
<td>-1.3%</td>
<td>1.3%</td>
<td>0.5%</td>
<td>2.4%</td>
<td>-1.6%</td>
<td>-0.4%</td>
<td>14.2%</td>
<td>4.8%</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol"> % change Yr/Yr; X-M is
Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr>
<td class="firstcol">Q2-09</td>
<td>-5.9%</td>
<td>1.2%</td>
<td>2.2%</td>
<td>-8.3%</td>
<td>0.2%</td>
<td>-18.6%</td>
<td>-11.0%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Q1-09</td>
<td>-6.7%</td>
<td>-0.1%</td>
<td>2.5%</td>
<td>-11.2%</td>
<td>-5.4%</td>
<td>-17.5%</td>
<td>-7.6%</td>
<td>-1.6%</td>
</tr>
<tr>
<td class="firstcol">Q4-08</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>2.4%</td>
<td>-1.4%</td>
<td>-0.1%</td>
<td>-6.3%</td>
<td>0.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">Q3-08</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>2.3%</td>
<td>2.9%</td>
<td>1.7%</td>
<td>3.4%</td>
<td>5.3%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">5-Yrs</td>
<td>0.4%</td>
<td>0.6%</td>
<td>1.4%</td>
<td>1.6%</td>
<td>0.7%</td>
<td>2.0%</td>
<td>3.0%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
</body></html>

German GDP’s turnaround reveals its secrets – Germany finalized its GDP and provided details on Q2 GDP performance. GDP rose by 1.3% annualized and compounded Q/Q. Private consumption continued positive in Q2. Public spending on [...]

Jumpin' German GDP

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090825c.jpg" align="left" border="0" height="265" width="353">
Among the many Haver data bases where information on Eastern
European economies can be found are: EMERGECW, EUROSTAT, OECDMEI,
OECDNAQ, IFS, EIUDEEUR and EIUIEEUR.
EMERGECW contains data from the official country source.
EUROSTAT contains data on those eastern European countries
that belong to the Euro Area: Slovakia and Slovenia and those in the
European Union: Bulgaria, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland and Romania. The data sometimes differ from the
official sources as the European Commission attempts to "harmonize"
that is use a common definition for a particular series or concept for
all countries that may vary from the national definition of a
particular country. For example, the harmonized rate of unemployment in
EUROSTAT was 8.2% in Poland in June while the official rate in EMERGECW
was 10.9%.
OECDMEI (OECD Main Economic Indicators), OECDNAQ (OECD
National Accounts Quarterly) and IFS (International Monetary Fund Data)
were the forerunners of the Eurostat and Country sourced data. In
general the data for a particular country found in these data bases are
the similar to those in EMERGECW and EUROSTAT. There are, however,
differences. Data may be available monthly in some cases and only
quarterly in others. Indexes in one data base may have a different base
in another data base. As noted above the unemployment rates in EUROSTAT
and in EMERGECW are significantly different. The OECDMEI unemployment
rate is the same as the Eurostat unemployment rate and the unadjusted
IFS unemployment rate is equal to the unadjusted unemployment rate in
the EMERGECW data base. In the latter data base, seasonally adjusted
data are available. As an example of the similarities and differences
among the data bases, the attached chart shows the unadjusted IFS
unemployment rate compared with the seasonally adjusted rate from the
EMERGECW data base and the seasonally adjusted EUROSTAT and OECDMEI
unemployment rates, which are identical. The data are shown quarterly
since the unemployment rate in OECDMEI is only available on a quarterly
basis..EIUDEEUR and EIUIEEUR data bases contains a wealth of
specialized data from the Economist Intelligence Unit, including
forecasts of selected economic indicators.

</body></html>

Among the many Haver data bases where information on Eastern European economies can be found are: EMERGECW, EUROSTAT, OECDMEI, OECDNAQ, IFS, EIUDEEUR and EIUIEEUR. EMERGECW contains data from the official country source. EUROSTAT [...]

Economic Information for Eastern European Countries

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Jumpin' German GDP
 
August 25, 2009
By Robert Brusca

 
 
 
 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090825d.jpg" align="left" border="0" width="353" height="265">·
 German GDP’s turnaround reveals its secrets – Germany finalized its GDP and provided details on Q2 GDP performance. GDP rose by 1.3% annualized and compounded Q/Q. Private consumption continued positive in Q2. Public spending on Consumption cooled, rising at a 1.7% a.r. down from its pace of +4.3% in Q1. Gross fixed capital spending made a sharp turn rising at a mild 3% pace after plunging at a rate of -27% in Q1. Housing investment picked up to a 5.8% pace from 1% in Q1. But exports fell subtracting from growth. That was more than offset by the plunge of 19% at annual rate by imports in Q2. On balance domestic demand still contracted in Germany in Q2 on an inventory pullback.&nbsp; 
 
 · Imports cushion drop in domestic demand - The sharp drop in imports helped to offset the impact of domestic demand weakness on GDP by adding 8.6% to the annual rate of growth as exports cut over two percentage points from GDP growth in Q2. Private consumption alone added 1.7 percentage points to growth. The cut in GDP has a lot do with inventory investment that is still a drag. But that will become a positive in the future.&nbsp; 
 
 · So far so good - So far the German details on GDP are relatively encouraging. But the outsized drop in imports that boosted growth will not repeat. Meanwhile exports fell in Q2 and they are a key factor in the growth story. Exports do show signs of turning up; at least orders for exports are up. Retail spending in Germany is positive but it has remained weak. So while there are bright spots there are still challenges ahead for German growth.&nbsp; 
 
 
 
 
 
 German GDP
 
 
 <td WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#000000">&nbsp;</td>
 <td WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#000000">&nbsp;</td>
 
 Consumption
 
 Capital Formation
 <td WIDTH="10%" VALIGN="BOTTOM" BGCOLOR="#000000">&nbsp;</td>
 
 
 
 Domestic
 
 
 <td WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#000000" HEIGHT="16">
 &nbsp;
 </td>
 
 GDP
 
 Private
 
 Public
 
 G Fix Invst
 
 Housing
 
 Exports
 
 Imports
 
 Demand
 
 
 
 
 % change Q/Q; X-M is Q/Q change in Blns of euros
 
 
 
 
 Q2-09
 
 
 1.3%
 
 
 2.9%
 
 
 1.7%
 
 
 3.1%
 
 
 5.8%
 
 
 -4.7%
 
 
 -19.0%
 
 
 -5.0%
 
 
 
 
 Q1-09
 
 
 -13.4%
 
 
 2.6%
 
 
 4.3%
 
 
 -27.5%
 
 
 1.0%
 
 
 -35.8%
 
 
 -19.6%
 
 
 -4.1%
 
 
 
 
 Q4-08
 
 
 -9.4%
 
 
 -1.7%
 
 
 2.2%
 
 
 -7.8%
 
 
 -4.0%
 
 
 -28.1%
 
 
 -15.6%
 
 
 -1.5%
 
 
 
 
 Q3-08
 
 
 -1.3%
 
 
 1.3%
 
 
 0.5%
 
 
 2.4%
 
 
 -1.6%
 
 
 -0.4%
 
 
 14.2%
 
 
 4.8%
 
 
 
 
 % change Yr/Yr; X-M is Yr/Yr change in Gap in
 Blns of euros
 
 
 
 
 Q2-09
 
 
 -5.9%
 
 
 1.2%
 
 
 2.2%
 
 
 -8.3%
 
 
 0.2%
 
 
 -18.6%
 
 
 -11.0%
 
 
 -1.5%
 
 
 
 
 Q1-09
 
 
 -6.7%
 
 
 -0.1%
 
 
 2.5%
 
 
 -11.2%
 
 
 -5.4%
 
 
 -17.5%
 
 
 -7.6%
 
 
 -1.6%
 
 
 
 
 Q4-08
 
 
 -1.8%
 
 
 -0.3%
 
 
 2.4%
 
 
 -1.4%
 
 
 -0.1%
 
 
 -6.3%
 
 
 0.8%
 
 
 1.7%
 
 
 
 
 Q3-08
 
 
 0.8%
 
 
 -0.1%
 
 
 2.3%
 
 
 2.9%
 
 
 1.7%
 
 
 3.4%
 
 
 5.3%
 
 
 1.4%
 
 
 
 
 5-Yrs
 
 
 0.4%
 
 
 0.6%
 
 
 1.4%
 
 
 1.6%
 
 
 0.7%
 
 
 2.0%
 
 
 3.0%
 <td WIDTH="11%" VALIGN="BOTTOM">
 
 0.7%
 
 
 &nbsp;
 </td>
 
 

©
2009&nbsp; HAVER ANALYTICS. All rights reserved
&nbsp;
<a href="http://www.haver.com/COMMENT/archive.htm">Commentary
Archive</a>




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· German GDP’s turnaround reveals its secrets – Germany finalized its GDP and provided details on Q2 GDP performance. GDP rose by 1.3% annualized and compounded Q/Q. Private consumption continued positive in Q2. Public spending on [...]

Jumpin' German GDP 

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090825a.jpg" align="left" border="0" height="265" width="353">
Asian economies appear to be emerging from recession. Thailand
is the latest Far Eastern country to report growth in its second
quarter GDP.The second quarter was 2.32% above the first quarter.
Contrary to the experience of other Asian economies, the source of
growth in Thailand has not been exports, but the business sector.Gross
fixed capital formation increased 5% after declining almost 13% in the
first quarter and the rate of inventory liquidation declined sharply
from a liquidation of 75,380 million baht in the first quarter to one
of 4,394 million baht in the second quarter. Private consumption barely
increased while government consumption was up by 1.6%. Exports actually
declined by over 3% in the second quarter while imports increased by
almost 9%. Perhaps part of the increase in exports was due to the
increase in fixed capital formation that often entails some foreign
know how.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090825b.jpg" align="right" border="0" height="265" width="353">
Earlier, Singapore, South Korea, Indonesia and Greater
China--China, Hong Kong and Taiwan--all reported growth in the second
quarter. (China does not report quarter to quarter growth rates, but
the increase in the second quarter year over year growth implies an
increase in the first quarter.) The two charts show the growth that has
taken place in these countries in the second quarter.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Q/Q
Percent Changes ex where noted</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3 08&nbsp;</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08&nbsp;</th>
<th scope="col">GDP,Mil US$ 2008 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">China (Y/Y Percent Change)</td>
<td>7.9</td>
<td>6.1</td>
<td>6.8</td>
<td>9.0</td>
<td>10.1</td>
<td>10.6</td>
<td>4,415,884</td>
</tr>
<tr>
<td class="firstcol">Hong Kong</td>
<td>3.82</td>
<td>-4.44</td>
<td>-2.50</td>
<td>-1.71</td>
<td>-0.74</td>
<td>1.21</td>
<td>215</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>4.51</td>
<td>-2.46</td>
<td>-6.14</td>
<td>-2.79</td>
<td>0.13</td>
<td>0.33</td>
<td>392</td>
</tr>
<tr>
<td class="firstcol">Singapore</td>
<td>4.82</td>
<td>-3.21</td>
<td>4.38</td>
<td>-0.52</td>
<td>-198</td>
<td>2.92</td>
<td>182</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea</td>
<td>2.33</td>
<td>0.12</td>
<td>-5.07</td>
<td>-0.52</td>
<td>-1.98</td>
<td>2.92</td>
<td>947</td>
</tr>
<tr>
<td class="firstcol">Indonesia</td>
<td>1.37</td>
<td>0.88</td>
<td>0.20</td>
<td>1.49</td>
<td>1.82</td>
<td>1.65</td>
<td>510</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand</td>
<td>2.32</td>
<td>-1.85</td>
<td>-5.89</td>
<td>0.55</td>
<td>0.07</td>
<td>1.15</td>
<td>273</td>
</tr>
</tbody>
</table>
</body></html>

Asian economies appear to be emerging from recession. Thailand is the latest Far Eastern country to report growth in its second quarter GDP.The second quarter was 2.32% above the first quarter. Contrary to the experience of other [...]

More Good News From Asia: Thailand's Q2 GDP Increases 2.32%

Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090821a.jpg">
The National Association of Realtors reported that sales of existing homes during July jumped for the fourth consecutive month. The 7.2% m/m rise to 5,240 (SAAR) was to the highest level since August of 2007. The increase in July sales beat Consensus expectations for sales of 5.00M homes. Total sales include sales of condos and co-ops.
Sales of existing single-family homes alone increased 5.5% last month and were up 13.8% from the January low. (These data have a longer history than the total sales series).
Recent sales have been helped by a tax credit for first-time home buyers. The credit of up to $8,000 extends though the end of this year. The full details of the home-buyer tax credit can be found <a href="http://www.federalhousingtaxcredit.com/2009/faq.php">here</a>.
The improvement in home sales looks to have inspired potential sellers to put more homes on the market. The number of unsold homes (condos &amp; single-family) for sale rose 7.3% during July to the highest level since November. Nevertheless, year-to-year inventories were down 10.6%. At the current sales rate there was a 9.4 months&#39; supply on the market. The figure was stable with June and was near the lowest since June 2007. For single-family homes the inventory rose 3.1% m/m (-13.2% y/y). At the current sales rate there was an 8.6 month&#39;s supply of homes on the market, the lowest since 2007.<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090821b.jpg">
The median price of an existing home dipped m/m to $178,400. Though prices were still lower than the year ago level, they have risen by 8.3% from the January low.
The data on existing home sales, prices and affordability can be found in Haver&#39;s USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
Reflections on a Year of Crisis is the title of this morning&#39;s speech by Fed Chairman Ben S. Bernanke in Jackson Hole, Wyoming and it is available <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090821a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous, 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</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>5,240</td>
<td>4,890</td>
<td>5.0%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>930</td>
<td>820</td>
<td>3.3</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,220</td>
<td>1,100</td>
<td>8.0</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,950</td>
<td>1,820</td>
<td>5.4</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,130</td>
<td>1,150</td>
<td>1.8</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,610</td>
<td>4,330</td>
<td>5.0</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>178,400</td>
<td>182,000</td>
<td>-15.1</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Realtors reported that sales of existing homes during July jumped for the fourth consecutive month. The 7.2% m/m rise to 5,240 (SAAR) was to the highest level since August of 2007. The increase in July [...]

U.S. Existing Home Sales Rise With Distress Sales & Tax Credit

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

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Winnie Tapasanun

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

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

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

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

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

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

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

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

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

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

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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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