Robert Brusca

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The EU and EMU rates of unemployment were steady in June. Among the earliest EMU members unemployment fell in June in only two of 11 counties, Spain and The Netherlands. The rate also fell in Greece for April which is the most topical observation for Greece. 

Despite the hiatus in the unemployment rate dropping in June, rates of unemployment are still falling on a broad front over longer spans of time: three months, six-months and twelve-months. 

Still there remains a chasm of difference between Germany's unemployment rate and everyone else's. Germany's rate of unemployment has stayed at a post-reunification low. Apart from Germany, only Ireland has a rate of unemployment that is below its historic median back to 1991. However, Finland is close to its 50% queue standing at the 51.3 percentile mark.

Levels of unemployment are falling for EU and for EMU but the annualized pace of the drop has been slowing. For Luxembourg, Italy and Austria rates of unemployment hover in the top 12% of all rates they have experienced historically since early 1991.For these three countries recovery continues to elude the labor market. Belgium and Austria show signs of some recovery reversal. Belgium has inflation rising and has its rate of unemployment up by four-tenths of a percentage point over three-months. For Austria the unemployment rate is up by three-tenths of a percentage point over three-months and by five-tenths over 12-months. 

Growth
The early read on EMU GDP has it rising at a 1.2% annualized pace in Q2 and by 1.6% Year-on-year. Both of those rates represent a reduction from Q1 when GDP rose at a 2.2% pace in the quarter and by 1.7% Year-over-year. France's growth rate was reported as flat but the act of compounding its quarterly rate produces a slight contraction in Q2 and a year-on-year pace of just 1.4%. France's PMI data have been floating barely North and sometimes South of the 50 diffusion level for some time. A decline in quarterly French GDP is not surprising in that context. 

 Inflation
The July EMU inflation reading also is on offer today and it shows inflation up by 0.1% Year-on-year with core inflation up by 0.8% Year-on-year. Headline inflation has turned positive again. And three-month compounded rates of inflation are above 2% for the headline but not for the Core. The ECB tends to focus on the year-over-year headline rate with the objective of keeping it just below 2%. Inflation remains well short of that objective, but there is some discernable up-creep. 

The global economy news round-up
Economic reports remain somewhat confused or in flux. In the U.S. GDP disappointed as corporate investment weakness blunted a sharp pick-up by consumers to hold the Q2 GDP gain near 4% instead of north of 2% as had been expected. In Japan a whole barrage of data showed weaker retail sales, weaker household consumption, dropping prices, a slide in housing and a drop in auto production. There was a pickup in overall industrial production to balance all that negative news. But in the biggest news, the BoJ failed to impress markets with its decision last night to step-up its ETF purchases deciding neither to deepen its negative rate objective nor to resort to "helicopter" money. It did double its lending program. 

The Outlook
Globally economic conditions remain mixed. It is hard to argue whether economic growth rates are really changing speeds or not. Governments and central banks continue to try to take action but nothing has impressed markets. The outlook remains guarded. In the U.S., the Fed is playing it day by day. The IMF has recently reduced its outlook slightly. The aftermath of Brexit overhangs Europe. In its meeting today the BOJ has cut back its expectations for inflation and for growth despite its new policy actions. Global conditions remain in flux with more of the risk seeming to fall on the down-side. 


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The EU and EMU rates of unemployment were steady in June. Among the earliest EMU members unemployment fell in June in only two of 11 counties, Spain and The Netherlands. The rate also fell in Greece for April which is the most topical [...]

Euro Area Unemployment Rates Steady. Down-trend Remains in Place

Tom Moeller

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Economic growth of 1.2% (SAAR, 1.2% y/y) during the second quarter followed a
0.8% Q1 gain, revised from 1.1%. GDP's increase disappointed expectations for a
2.6% rise in the Action Economics Forecast Survey. Inventory decumulation
subtracted 1.2 percentage points from GDP growth. It was the largest of five
consecutive quarterly subtractions. Growth during 2015 was revised to 2.6% from
2.4% estimated earlier. The GDP price index increased 2.2% (1.2% y/y), the
quickest increase in a year. A 1.9% rise had been expected.
Accompanying the slowdown in overall output growth, domestic final demand
improved. A 2.1% rise (2.0% y/y) in domestic final sales was the quickest
increase in three quarters. Consumer spending growth led the improvement with a
4.2% rise (2.7% y/y), the quickest gain since Q4'14. It was led by an 8.4% rise
(4.4% y/y) in durable goods purchases. Recreational goods &amp; vehicle buying
jumped 14.3% (9.3% y/y), the quickest rise since Q1'12. Spending on home
furnishings &amp; appliances rose 8.3% (6.8% y/y) and motor vehicles buying
gained 4.5% (-0.8% y/y). In the nondurable goods area spending rose 6.0% (3.1%
y/y), powered by an 8.6% gain (2.7% y/y) in food &amp; beverage spending.
Apparel buying rose 4.1% (1.5% y/y), but gasoline &amp; fuel oil purchases
fell 1.2% (+2.4% y/y). Spending on services strengthened 3.0% (2.3% y/y), the
largest increase since Q4'14. It reflected a strengthened 4.2% rise (1.2% y/y)
in housing &amp; utilities and a 3.8% increase (4.2% y/y) in medical care.
Recreation spending declined, however, at a 4.5% rate (+1.3% y/y).
Outside of personal spending, final demand declined. Business fixed
investment fell at a 2.2% rate (-1.3% y/y), the third consecutive quarterly
shortfall. Structures spending fell 7.9% (-7.0% y/y) and equipment purchases
were off 3.5% (-1.9% y/y). Computer purchases declined 5.9% (+3.8% y/y) but
industrial equipment buying gained 12.0% (3.1% y/y). Purchases of intellectual
property products rose 3.5% (3.5% y/y).
Residential investment declined at a 6.1% annual rate (+6.2% y/y), the first
decline since Q1'14.

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Spending by governments eased 0.9% (+0.9% y/y) as state &amp; local
government purchases fell 1.3% (+1.0% y/y). Federal government spending eased
0.2% (+0.7% y/y), but defense spending declined 3.0% (-0.8% y/y).
Foreign trade added 0.2 percentage points to overall economic growth. The
addition was due to a 1.4% rise in exports (-1.2% y/y) following three straight
quarters of decline. Goods exports rose 2.7% (-1.3% y/y) while services exports
eased 0.9% -1.1% y/y). Imports slipped 0.4% (+0.2% y/y), off for the second
straight quarter. Goods imports fell 0.9% (-0.4% y/y), but services imports
gained 1.5% (2.9% y/y). 
The GDP price index increased 2.2% (1.2% y/y) as the residential investment
price index jumped 5.2% (3.1% y/y). Higher energy prices raised the PCE price
index 1.9% (0.9% y/y). Excluding food &amp; energy, the PCE price index
increased 1.7% (1.6% y/y). The business fixed investment price index gained 1.1%
(0.5% y/y).&nbsp; 
The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts, including the integrated economic accounts and
the recently added GDP data for U.S. Territories. The Action Economics consensus
estimates can be found in AS1REPNA.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>
	
 


 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $ (%, AR</a>)</th>
 <th scope="col" >Q2'16 (Advance Estimate)</th>
 <th scope="col" >Q1'16 </th>
 <th scope="col" >Q4'15</th>
 <th scope="col" >Q2'16 Y/Y</th>
 <th scope="col" >2015</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Gross Domestic Product</td>
 <td >&nbsp;1.2</td>
 <td >&nbsp;0.8</td>
 <td >&nbsp;0.9</td>
 <td >1.2</td>
 <td >2.6</td>
 <td >2.4</td>
 <td >1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Inventory Effect</td>
 <td >-1.2</td>
 <td >-0.4</td>
 <td >-0.4</td>
 <td >-0.7</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >0.2</td>
 </tr>
 <tr>
 <td class="firstcol" >Final Sales</td>
 <td >2.4</td>
 <td >1.3</td>
 <td >1.2 </td>
 <td >1.9</td>
 <td >2.4</td>
 <td >2.5</td>
 <td >1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
 <td >0.2</td>
 <td >0.0</td>
 <td >-0.5</td>
 <td >-0.1 </td>
 <td >-0.7</td>
 <td >-0.1</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Domestic Final Sales</td>
 <td >2.1</td>
 <td >1.2</td>
 <td >1.7</td>
 <td >2.0</td>
 <td >3.1</td>
 <td >2.6</td>
 <td >1.2</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" >Personal Consumption Expenditures</td>
 <td >4.2</td>
 <td >1.6</td>
 <td >2.3</td>
 <td >2.7</td>
 <td >3.2</td>
 <td >2.9</td>
 <td >1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Business Fixed Investment</td>
 <td >-2.2</td>
 <td >-3.4</td>
 <td >-3.3</td>
 <td >-1.3</td>
 <td >2.1</td>
 <td >6.0</td>
 <td >3.5</td>
 </tr>
 <tr>
 <td class="firstcol" >Residential Investment</td>
 <td >-6.1</td>
 <td >7.8</td>
 <td >11.5</td>
 <td >6.2</td>
 <td >11.7</td>
 <td >3.5</td>
 <td >11.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Government Spending</td>
 <td >-0.9</td>
 <td >1.6</td>
 <td >0.1</td>
 <td >0.9</td>
 <td >1.8</td>
 <td >-0.9</td>
 <td >-2.9</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" >GDP&nbsp;&nbsp; &nbsp;&nbsp;</td>
 <td >2.2</td>
 <td >0.5</td>
 <td >0.8</td>
 <td >1.2</td>
 <td >1.1</td>
 <td >1.8</td>
 <td >1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Personal Consumption Expenditures</td>
 <td >1.9</td>
 <td >0.3</td>
 <td >0.4</td>
 <td >0.9</td>
 <td >0.3</td>
 <td >1.5</td>
 <td >1.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Less Food/Energy</td>
 <td >1.7</td>
 <td >2.1</td>
 <td >1.2</td>
 <td >1.6</td>
 <td >1.4</td>
 <td >1.6</td>
 <td >1.5</td>
 </tr>
 </tbody>
</table>


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Economic growth of 1.2% (SAAR, 1.2% y/y) during the second quarter followed a 0.8% Q1 gain, revised from 1.1%. GDP's increase disappointed expectations for a 2.6% rise in the Action Economics Forecast Survey. Inventory decumulation [...]

U.S. GDP Growth Disappoints as Inventories Are Reduced

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<title>Chicago Purchasing Managers Index Recovers Sharply by Tom Moeller&nbsp;
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Economic growth of 1.2% (SAAR, 1.2% y/y) during the second quarter followed a
0.8% Q1 gain, revised from 1.1%. GDP's increase disappointed expectations for a
2.6% rise in the Action Economics Forecast Survey. Inventory decumulation
subtracted 1.2 percentage points from GDP growth. It was the largest of five
consecutive quarterly subtractions. Growth during 2015 was revised to 2.6% from
2.4% estimated earlier. The GDP price index increased 2.2% (1.2% y/y), the
quickest increase in a year. A 1.9% rise had been expected.
Accompanying the slowdown in overall output growth, domestic final demand
improved. A 2.1% rise (2.0% y/y) in domestic final sales was the quickest
increase in three quarters. Consumer spending growth led the improvement with a
4.2% rise (2.7% y/y), the quickest gain since Q4'14. It was led by an 8.4% rise
(4.4% y/y) in durable goods purchases. Recreational goods &amp; vehicle buying
jumped 14.3% (9.3% y/y), the quickest rise since Q1'12. Spending on home
furnishings &amp; appliances rose 8.3% (6.8% y/y) and motor vehicles buying
gained 4.5% (-0.8% y/y). In the nondurable goods area spending rose 6.0% (3.1%
y/y), powered by an 8.6% gain in (2.7% y/y) food &amp; beverage spending.
Apparel buying rose 4.1% (1.5% y/y), but gasoline &amp; fuel oil oil purchases
fell 1.2% (+2.4% y/y). Spending on services strengthened 3.0% (2.3% y/y), the
largest increase since Q4'14. It reflected a strengthened 4.2% rise (1.2% y/y)
in housing &amp; utilities and a 3.8% increase (4.2% y/y) in medical care.
Recreation spending declined, however, at a 4.5% rate (+1.3% y/y).
Outside of personal spending, final demand declined. Business fixed
investment fell at a 2.2% rate (-1.3% y/y), the third consecutive quarterly
shortfall. Structures spending fell 7.9% (-7.0% y/y) and equipment purchases
were off 3.5% (-1.9% y/y). Computer purchases declined 5.9% (+3.8% y/y) but
industrial equipment buying gained 12.0% (3.1% y/y). Purchases of intellectual
property products rose 3.5% (3.5% y/y).
Residential investment declined at a 6.1% annual rate (+6.2% y/y), the first
decline since Q1'14.
Spending by governments eased 0.9% (+0.9% y/y) as state &amp; local
government purchases fell 1.3% (+1.0% y/y). Federal government spending eased
0.2% (+0.7% y/y), but defense spending declined 3.0% (-0.8% y/y).
Foreign trade added 0.2 percentage points to overall economic growth. The
addition was due to a 1.4% rise in exports (-1.2% y/y) following three straight
quarters of decline. Goods exports rose 2.7% (-1.3% y/y while services exports
eased 0.9% -1.1% y/y). Imports slipped 0.4% (+0.2% y/y), off for the second
straight quarter. Goods imports fell 0.9% (-0.4% y/y), but services imports
gained 1.5% (2.9% y/y). 
The GDP price index increased 2.2% (1.2% y/y) as the residential investment
price index jumped 5.2% (3.1% y/y). Higher energy prices raised the PCE price
index 1.9% (0.9% y/y). Excluding food &amp; energy, the PCE price index
increased 1.7% (1.6% y/y). The business fixed investment price index gained 1.1%
(0.5% y/y).&nbsp; 
The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts, including the integrated economic accounts and
the recently added GDP data for U.S. Territories. The Action Economics consensus
estimates can be found in AS1REPNA.
&nbsp;
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="746"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $ (%, AR</a>)</th>
 <th scope="col" width="147">Q2'16 (Advance Estimate)</th>
 <th scope="col" width="147">Q1'16 </th>
 <th scope="col" width="147">Q4'15</th>
 <th scope="col" width="147">Q2'16 Y/Y</th>
 <th scope="col" width="148">2015</th>
 <th scope="col" width="148">2014</th>
 <th scope="col" width="148">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="746">Gross Domestic Product</td>
 <td align="center" width="147">&nbsp;1.2</td>
 <td align="center" width="147">&nbsp;0.8</td>
 <td align="center" width="147">&nbsp;0.9</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="148">2.6</td>
 <td align="center" width="148">2.4</td>
 <td align="center" width="148">1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">&nbsp; Inventory Effect</td>
 <td align="center" width="147">-1.2</td>
 <td align="center" width="147">-0.4</td>
 <td align="center" width="147">-0.4</td>
 <td align="center" width="147">-0.7</td>
 <td align="center" width="148">0.2</td>
 <td align="center" width="148">0.0</td>
 <td align="center" width="148">0.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Final Sales</td>
 <td align="center" width="147">2.4</td>
 <td align="center" width="147">1.3</td>
 <td align="center" width="147">1.2 </td>
 <td align="center" width="147">1.9</td>
 <td align="center" width="148">2.4</td>
 <td align="center" width="148">2.5</td>
 <td align="center" width="148">1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">&nbsp; Foreign Trade Effect</td>
 <td align="center" width="147">0.2</td>
 <td align="center" width="147">0.0</td>
 <td align="center" width="147">-0.5</td>
 <td align="center" width="147">-0.1 </td>
 <td align="center" width="148">-0.7</td>
 <td align="center" width="148">-0.1</td>
 <td align="center" width="148">0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Domestic Final Sales</td>
 <td align="center" width="147">2.1</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="147">1.7</td>
 <td align="center" width="147">2.0</td>
 <td align="center" width="148">3.1</td>
 <td align="center" width="148">2.6</td>
 <td align="center" width="148">1.2</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1630">Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Personal Consumption Expenditures</td>
 <td align="center" width="147">4.2</td>
 <td align="center" width="147">1.6</td>
 <td align="center" width="147">2.3</td>
 <td align="center" width="147">2.7</td>
 <td align="center" width="148">3.2</td>
 <td align="center" width="148">2.9</td>
 <td align="center" width="148">1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Business Fixed Investment</td>
 <td align="center" width="147">-2.2</td>
 <td align="center" width="147">-3.4</td>
 <td align="center" width="147">-3.3</td>
 <td align="center" width="147">-1.3</td>
 <td align="center" width="148">2.1</td>
 <td align="center" width="148">6.0</td>
 <td align="center" width="148">3.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Residential Investment</td>
 <td align="center" width="147">-6.1</td>
 <td align="center" width="147">7.8</td>
 <td align="center" width="147">11.5</td>
 <td align="center" width="147">6.2</td>
 <td align="center" width="148">11.7</td>
 <td align="center" width="148">3.5</td>
 <td align="center" width="148">11.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Government Spending</td>
 <td align="center" width="147">-0.9</td>
 <td align="center" width="147">&nbsp;1.6</td>
 <td align="center" width="147">0.1</td>
 <td align="center" width="147">0.9s</td>
 <td align="center" width="148">1.8</td>
 <td align="center" width="148">-0.9</td>
 <td align="center" width="148">-2.9</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1630">Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">GDP&nbsp;&nbsp; &nbsp;&nbsp;</td>
 <td align="center" width="147">2.2</td>
 <td align="center" width="147">0.5</td>
 <td align="center" width="147">0.8</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="148">1.1</td>
 <td align="center" width="148">1.8</td>
 <td align="center" width="148">1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Personal Consumption Expenditures</td>
 <td align="center" width="147">1.9</td>
 <td align="center" width="147">0.3</td>
 <td align="center" width="147">0.4</td>
 <td align="center" width="147">0.9</td>
 <td align="center" width="148">0.3</td>
 <td align="center" width="148">1.5</td>
 <td align="center" width="148">1.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">&nbsp;Less Food/Energy</td>
 <td align="center" width="147">1.7</td>
 <td align="center" width="147">2.1</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="147">1.6</td>
 <td align="center" width="148">1.4</td>
 <td align="center" width="148">1.6</td>
 <td align="center" width="148">1.5</td>
 </tr>
 </tbody>
</table>

&nbsp;
Chicago Purchasing Managers Index Recovers Sharply 
by <a href="http://haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;July 29, 2016
Chicago purchasing managers reported that their Business Barometer surged to
56.8 this month following a May decline to 49.3. The figure was at the highest
level since January 2015, and exceeded expectations for 50.4 in the Action
Economics Forecast Survey.
Haver Analytics constructs an ISM-Adjusted Index using the Chicago
numbers, comparable to the overall ISM index to be released tomorrow. Our figure
increased to 52.9, the highest level since October. During the last ten years,
there has been a 61% correlation between the adjusted Chicago Purchasing
Managers index and real GDP growth.
Increases in the component series were widespread. Most notable was a 14.4
point gain in the new orders index to 63.2, the highest level since October
2014. The order backlog measure also surged 12.0 points to the highest level
(59.7) since March 2011. The production and inventory indexes increased
moderately to 56.3 and 50.0, respectively.
The employment figure also declined 3.3 points to 45.0, the lowest level
since November 2009. During the last ten years, there has been an 80%
correlation between the employment figure and the m/m change in factory sector
employment. Supplier delivery speeds quickened, prompting a decline in the
index.
The prices paid reading eased to 55.7, leaving the Q2 average of 56.4 above
the Q1 mean of 43.3. An increased 25% (NSA) of respondents reported paying
higher prices while 10% paid less.
The MNI Chicago Report is produced by MNI/Deutsche Borse Group in partnership
with ISM-Chicago. The survey covers a sample of over 200 purchasing
professionals in the Chicago area with a monthly response rate of about 50%. The
ISM-Adjusted headline index is calculated by Haver Analytics using these data to
construct a figure with the ISM methodology. The figures can be found in Haver's
SURVEYS database. The Consensus expectations figure is available in AS1REPNA.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="984">Chicago Purchasing Managers Index (%, SA)</th>
 <th scope="col" width="113">Jul</th>
 <th scope="col" width="113">Jun</th>
 <th scope="col" width="113">May</th>
 <th scope="col" width="113">Jun '15</th>
 <th scope="col" width="114">2015</th>
 <th scope="col" width="114">2014</th>
 <th scope="col" width="114">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="984">General Business Barometer</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">56.8</td>
 <td align="center" width="113">49.3</td>
 <td align="center" width="113">49.2</td>
 <td align="center" width="114">50.3</td>
 <td align="center" width="114">60.7</td>
 <td align="center" width="114">56.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">ISM-Adjusted General Business Barometer</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">52.9</td>
 <td align="center" width="113">48.0</td>
 <td align="center" width="113">49.5</td>
 <td align="center" width="114">51.6</td>
 <td align="center" width="114">59.3</td>
 <td align="center" width="114">54.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Production</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">56.3</td>
 <td align="center" width="113">47.4</td>
 <td align="center" width="113">50.4</td>
 <td align="center" width="114">52.5</td>
 <td align="center" width="114">64.5</td>
 <td align="center" width="114">58.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;New Orders</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">63.2</td>
 <td align="center" width="113">48.8</td>
 <td align="center" width="113">51.2</td>
 <td align="center" width="114">50.4</td>
 <td align="center" width="114">63.8</td>
 <td align="center" width="114">59.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Order Backlogs</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">59.7</td>
 <td align="center" width="113">47.7</td>
 <td align="center" width="113">42.9</td>
 <td align="center" width="114">44.4</td>
 <td align="center" width="114">54.2</td>
 <td align="center" width="114">48.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Inventories</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">50.0</td>
 <td align="center" width="113">37.9</td>
 <td align="center" width="113">47.9</td>
 <td align="center" width="114">52.1</td>
 <td align="center" width="114">55.9</td>
 <td align="center" width="114">45.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Employment</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">45.0</td>
 <td align="center" width="113">48.3</td>
 <td align="center" width="113">47.2</td>
 <td align="center" width="114">50.3</td>
 <td align="center" width="114">56.0</td>
 <td align="center" width="114">55.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="984">&nbsp;&nbsp;Supplier Deliveries</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">50.0</td>
 <td align="center" width="113">57.8</td>
 <td align="center" width="113">50.7</td>
 <td align="center" width="114">52.5</td>
 <td align="center" width="114">56.5</td>
 <td align="center" width="114">52.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Prices Paid</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">55.7</td>
 <td align="center" width="113">56.5</td>
 <td align="center" width="113">50.4</td>
 <td align="center" width="114">46.8</td>
 <td align="center" width="114">61.0</td>
 <td align="center" width="114">59.8</td>
 </tr>
 </tbody>
</table>

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<title>Chicago Purchasing Managers Index Recovers Sharply by Tom Moeller&nbsp;
July 29</title>
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Economic growth of 1.2% (SAAR, 1.2% y/y) during the second quarter followed a
0.8% Q1 gain, revised from 1.1%. GDP's increase disappointed expectations for a
2.6% rise in the Action Economics Forecast Survey. Inventory decumulation
subtracted 1.2 percentage points from GDP growth. It was the largest of five
consecutive quarterly subtractions. Growth during 2015 was revised to 2.6% from
2.4% estimated earlier. The GDP price index increased 2.2% (1.2% y/y), the
quickest increase in a year. A 1.9% rise had been expected.
The GDP figures can be found in Haver's USECON and USNA
database. USNA contains virtually all of the Bureau of Economic Analysis'
detail in the national accounts, including the integrated economic accounts and
the recently added GDP data for U.S. Territories. The Action Economics consensus
estimates can be found in AS1REPNA.
&nbsp;
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="746"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2009 $ (%, AR</a>)</th>
 <th scope="col" width="147">Q2'16 (Advance Estimate)</th>
 <th scope="col" width="147">Q1'16 </th>
 <th scope="col" width="147">Q4'15</th>
 <th scope="col" width="147">Q2'16 Y/Y</th>
 <th scope="col" width="148">2015</th>
 <th scope="col" width="148">2014</th>
 <th scope="col" width="148">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="746">Gross Domestic Product</td>
 <td align="center" width="147">&nbsp;1.2</td>
 <td align="center" width="147">&nbsp;0.8</td>
 <td align="center" width="147">&nbsp;0.9</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="148">2.6</td>
 <td align="center" width="148">2.4</td>
 <td align="center" width="148">1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">&nbsp; Inventory Effect</td>
 <td align="center" width="147">-1.2</td>
 <td align="center" width="147">-0.4</td>
 <td align="center" width="147">-0.4</td>
 <td align="center" width="147">-0.7</td>
 <td align="center" width="148">0.2</td>
 <td align="center" width="148">0.0</td>
 <td align="center" width="148">0.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Final Sales</td>
 <td align="center" width="147">2.4</td>
 <td align="center" width="147">1.3</td>
 <td align="center" width="147">1.2 </td>
 <td align="center" width="147">1.9</td>
 <td align="center" width="148">2.4</td>
 <td align="center" width="148">2.5</td>
 <td align="center" width="148">1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">&nbsp; Foreign Trade Effect</td>
 <td align="center" width="147">0.2</td>
 <td align="center" width="147">0.0</td>
 <td align="center" width="147">-0.5</td>
 <td align="center" width="147">-0.1 </td>
 <td align="center" width="148">-0.7</td>
 <td align="center" width="148">-0.1</td>
 <td align="center" width="148">0.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Domestic Final Sales</td>
 <td align="center" width="147">2.1</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="147">1.7</td>
 <td align="center" width="147">2.0</td>
 <td align="center" width="148">3.1</td>
 <td align="center" width="148">2.6</td>
 <td align="center" width="148">1.2</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1630">Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Personal Consumption Expenditures</td>
 <td align="center" width="147">4.2</td>
 <td align="center" width="147">1.6</td>
 <td align="center" width="147">2.3</td>
 <td align="center" width="147">2.7</td>
 <td align="center" width="148">3.2</td>
 <td align="center" width="148">2.9</td>
 <td align="center" width="148">1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Business Fixed Investment</td>
 <td align="center" width="147">-2.2</td>
 <td align="center" width="147">-3.4</td>
 <td align="center" width="147">-3.3</td>
 <td align="center" width="147">-1.3</td>
 <td align="center" width="148">2.1</td>
 <td align="center" width="148">6.0</td>
 <td align="center" width="148">3.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">Residential Investment</td>
 <td align="center" width="147">-6.1</td>
 <td align="center" width="147">7.8</td>
 <td align="center" width="147">11.5</td>
 <td align="center" width="147">6.2</td>
 <td align="center" width="148">11.7</td>
 <td align="center" width="148">3.5</td>
 <td align="center" width="148">11.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Government Spending</td>
 <td align="center" width="147">-0.9</td>
 <td align="center" width="147">&nbsp;1.6</td>
 <td align="center" width="147">0.1</td>
 <td align="center" width="147">0.9s</td>
 <td align="center" width="148">1.8</td>
 <td align="center" width="148">-0.9</td>
 <td align="center" width="148">-2.9</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" width="1630">Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">GDP&nbsp;&nbsp; &nbsp;&nbsp;</td>
 <td align="center" width="147">2.2</td>
 <td align="center" width="147">0.5</td>
 <td align="center" width="147">0.8</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="148">1.1</td>
 <td align="center" width="148">1.8</td>
 <td align="center" width="148">1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="746">Personal Consumption Expenditures</td>
 <td align="center" width="147">1.9</td>
 <td align="center" width="147">0.3</td>
 <td align="center" width="147">0.4</td>
 <td align="center" width="147">0.9</td>
 <td align="center" width="148">0.3</td>
 <td align="center" width="148">1.5</td>
 <td align="center" width="148">1.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="746">&nbsp;Less Food/Energy</td>
 <td align="center" width="147">1.7</td>
 <td align="center" width="147">2.1</td>
 <td align="center" width="147">1.2</td>
 <td align="center" width="147">1.6</td>
 <td align="center" width="148">1.4</td>
 <td align="center" width="148">1.6</td>
 <td align="center" width="148">1.5</td>
 </tr>
 </tbody>
</table>

&nbsp;
Chicago Purchasing Managers Index Recovers Sharply 
by <a href="http://haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;July 29, 2016
Chicago purchasing managers reported that their Business Barometer surged to
56.8 this month following a May decline to 49.3. The figure was at the highest
level since January 2015, and exceeded expectations for 50.4 in the Action
Economics Forecast Survey.
Haver Analytics constructs an ISM-Adjusted Index using the Chicago
numbers, comparable to the overall ISM index to be released tomorrow. Our figure
increased to 52.9, the highest level since October. During the last ten years,
there has been a 61% correlation between the adjusted Chicago Purchasing
Managers index and real GDP growth.
Increases in the component series were widespread. Most notable was a 14.4
point gain in the new orders index to 63.2, the highest level since October
2014. The order backlog measure also surged 12.0 points to the highest level
(59.7) since March 2011. The production and inventory indexes increased
moderately to 56.3 and 50.0, respectively.
The employment figure also declined 3.3 points to 45.0, the lowest level
since November 2009. During the last ten years, there has been an 80%
correlation between the employment figure and the m/m change in factory sector
employment. Supplier delivery speeds quickened, prompting a decline in the
index.
The prices paid reading eased to 55.7, leaving the Q2 average of 56.4 above
the Q1 mean of 43.3. An increased 25% (NSA) of respondents reported paying
higher prices while 10% paid less.
The MNI Chicago Report is produced by MNI/Deutsche Borse Group in partnership
with ISM-Chicago. The survey covers a sample of over 200 purchasing
professionals in the Chicago area with a monthly response rate of about 50%. The
ISM-Adjusted headline index is calculated by Haver Analytics using these data to
construct a figure with the ISM methodology. The figures can be found in Haver's
SURVEYS database. The Consensus expectations figure is available in AS1REPNA.
<table width="1782" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="984">Chicago Purchasing Managers Index (%, SA)</th>
 <th scope="col" width="113">Jul</th>
 <th scope="col" width="113">Jun</th>
 <th scope="col" width="113">May</th>
 <th scope="col" width="113">Jun '15</th>
 <th scope="col" width="114">2015</th>
 <th scope="col" width="114">2014</th>
 <th scope="col" width="114">2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="984">General Business Barometer</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">56.8</td>
 <td align="center" width="113">49.3</td>
 <td align="center" width="113">49.2</td>
 <td align="center" width="114">50.3</td>
 <td align="center" width="114">60.7</td>
 <td align="center" width="114">56.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">ISM-Adjusted General Business Barometer</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">52.9</td>
 <td align="center" width="113">48.0</td>
 <td align="center" width="113">49.5</td>
 <td align="center" width="114">51.6</td>
 <td align="center" width="114">59.3</td>
 <td align="center" width="114">54.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Production</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">56.3</td>
 <td align="center" width="113">47.4</td>
 <td align="center" width="113">50.4</td>
 <td align="center" width="114">52.5</td>
 <td align="center" width="114">64.5</td>
 <td align="center" width="114">58.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;New Orders</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">63.2</td>
 <td align="center" width="113">48.8</td>
 <td align="center" width="113">51.2</td>
 <td align="center" width="114">50.4</td>
 <td align="center" width="114">63.8</td>
 <td align="center" width="114">59.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Order Backlogs</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">59.7</td>
 <td align="center" width="113">47.7</td>
 <td align="center" width="113">42.9</td>
 <td align="center" width="114">44.4</td>
 <td align="center" width="114">54.2</td>
 <td align="center" width="114">48.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Inventories</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">50.0</td>
 <td align="center" width="113">37.9</td>
 <td align="center" width="113">47.9</td>
 <td align="center" width="114">52.1</td>
 <td align="center" width="114">55.9</td>
 <td align="center" width="114">45.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Employment</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">45.0</td>
 <td align="center" width="113">48.3</td>
 <td align="center" width="113">47.2</td>
 <td align="center" width="114">50.3</td>
 <td align="center" width="114">56.0</td>
 <td align="center" width="114">55.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="984">&nbsp;&nbsp;Supplier Deliveries</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">50.0</td>
 <td align="center" width="113">57.8</td>
 <td align="center" width="113">50.7</td>
 <td align="center" width="114">52.5</td>
 <td align="center" width="114">56.5</td>
 <td align="center" width="114">52.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="984">&nbsp;&nbsp;Prices Paid</td>
 <td align="center" width="113"></td>
 <td align="center" width="113">55.7</td>
 <td align="center" width="113">56.5</td>
 <td align="center" width="113">50.4</td>
 <td align="center" width="114">46.8</td>
 <td align="center" width="114">61.0</td>
 <td align="center" width="114">59.8</td>
 </tr>
 </tbody>
</table>

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The Federal Reserve Bank of Kansas City reported that regional manufacturing
sector business activity deteriorated sharply during July, and completely
reversed the improvement during the prior three months. The Composite Index of
10th District factory sector activity fell to -6, the weakest figure since
March. Deterioration in the component readings was broad-based, notably for
shipments, new orders and production. The materials inventories and employment
figures also declined moderately as did export orders. Prices paid for finished
products fell sharply, but raw materials prices eased following increases early
this year.&nbsp; 
The Composite Index reflecting 6-month expectations improved sharply to the
highest reading since January of last year. The strength completely reversed
deterioration through last September. Improvement was notable for new orders,
production and the employee workweek. Expected export orders rose slightly. The
increases in the employment and capital expenditures measures moderated.
Expected prices for finished products jumped to the highest level in 12 months
while raw materials prices also strengthened.
The diffusion indexes are calculated as the percentage of total respondents
reporting increases minus the percentage reporting declines. The survey included
94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and
northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's
SURVEYS database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" 0801 >Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th 0801 >Jul</th>
 <th 0801 >Jun</th>
 <th 0801 >May</th>
 <th 0801 >Jul '14</th>
 <th 0801 >2015</th>
 <th 0801>2014</th>
 <th 0801>2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 >Conditions Versus One Month Ago (%
 Balance)</td>
 <td 0801 >-6</td>
 <td 0801 >2</td>
 <td 0801 >-5</td>
 <td 0801 >-7</td>
 <td 0801 >-5</td>
 <td 0801 >7</td>
 <td 0801 >0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
 <td 0801 >-5</td>
 <td 0801 >4</td>
 <td 0801 >-3</td>
 <td 0801 >-7</td>
 <td 0801 >-8</td>
 <td 0801 >7</td>
 <td 0801 >1</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 >&nbsp;&nbsp; Number of Employees</td>
 <td 0801 >-5</td>
 <td 0801 >-4</td>
 <td 0801 >-13</td>
 <td 0801 >-17</td>
 <td 0801 >-10</td>
 <td 0801 >5</td>
 <td 0801 >-2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td 0801 >-11</td>
 <td 0801 >-4</td>
 <td 0801 >-8</td>
 <td 0801 >2</td>
 <td 0801 >-5</td>
 <td 0801 >5</td>
 <td 0801 >4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Expected Conditions in Six Months</td>
 <td 0801 >14</td>
 <td 0801 >7</td>
 <td 0801 >4</td>
 <td 0801 >4</td>
 <td 0801 >4</td>
 <td 0801 >17</td>
 <td 0801 >10</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
 <td 0801 >30</td>
 <td 0801 >12</td>
 <td 0801 >15</td>
 <td 0801 >13</td>
 <td 0801 >11</td>
 <td 0801 >26</td>
 <td 0801 >18</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Number of Employees</td>
 <td 0801 >6</td>
 <td 0801 >13</td>
 <td 0801 >-4</td>
 <td 0801 >5</td>
 <td 0801 >6</td>
 <td 0801 >18</td>
 <td 0801 >9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td 0801 >13</td>
 <td 0801 >5</td>
 <td 0801 >-1</td>
 <td 0801 >13</td>
 <td 0801 >9</td>
 <td 0801 >26</td>
 <td 0801 >24</td>
 </tr>
 </tbody>
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The Federal Reserve Bank of Kansas City reported that regional manufacturing sector business activity deteriorated sharply during July, and completely reversed the improvement during the prior three months. The Composite Index of 10th [...]

Kansas City Federal Reserve Factory Sector Index Declines; Expectations Improve

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The Federal Reserve Bank of Kansas City reported that regional manufacturing
sector business activity deteriorated sharply during July, and completely
reversed the improvement during the prior three months. The Composite Index of
10th District factory sector activity fell to -6, the weakest figure since
March. Deterioration in the component readings was broad-based, notably for
shipments, new orders and production. The materials inventories and employment
figures also declined moderately as did export orders. Prices paid for finished
products fell sharply, but raw materials prices eased following increases early
this year.

The Composite Index reflecting 6-month expectations improved sharply to the
highest reading since January of last year. The strength completely reversed
deterioration through last September. Improvement was notable for new orders,
production and the employee workweek. Expected export orders rose slightly. The
increases in the employment and capital expenditures measures moderated.
Expected prices for finished products jumped to the highest level in 12 months
while raw materials prices also strengthened.

The diffusion indexes are calculated as the percentage of total respondents
reporting increases minus the percentage reporting declines. The survey included
94 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming and
northern New Mexico. Data for the Kansas City Fed Survey can be found in Haver's
SURVEYS database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" 0801 >Kansas City Federal Reserve
 Manufacturing Survey (SA)</th>
 <th 0801 >Jul</th>
 <th 0801 >Jun</th>
 <th 0801 >May</th>
 <th 0801 >Jul '14</th>
 <th 0801 >2015</th>
 <th 0801 >2014</th>
 <th 0801 >2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 >Conditions Versus One Month Ago (%
 Balance)</td>
 <td 0801 >-6</td>
 <td 0801 >2</td>
 <td 0801 >-5</td>
 <td 0801 >-7</td>
 <td 0801 >-5</td>
 <td 0801 >7</td>
 <td 0801 >0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
 <td 0801 >-5</td>
 <td 0801 >4</td>
 <td 0801 >-3</td>
 <td 0801 >-7</td>
 <td 0801 >-8</td>
 <td 0801 >7</td>
 <td 0801 >1</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 >&nbsp;&nbsp; Number of Employees</td>
 <td 0801 >-5</td>
 <td 0801 >-4</td>
 <td 0801 >-13</td>
 <td 0801 >-17</td>
 <td 0801 >-10</td>
 <td 0801 >5</td>
 <td 0801 >-2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td 0801 >-11</td>
 <td 0801 >-4</td>
 <td 0801 >-8</td>
 <td 0801 >2</td>
 <td 0801 >-5</td>
 <td 0801 >5</td>
 <td 0801 >4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Expected Conditions in Six Months</td>
 <td 0801 >14</td>
 <td 0801 >7</td>
 <td 0801 >4</td>
 <td 0801 >4</td>
 <td 0801 >4</td>
 <td 0801 >17</td>
 <td 0801 >10</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; New Orders Volume</td>
 <td 0801 >30</td>
 <td 0801 >12</td>
 <td 0801 >15</td>
 <td 0801 >13</td>
 <td 0801 >11</td>
 <td 0801 >26</td>
 <td 0801 >18</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Number of Employees</td>
 <td 0801 >6</td>
 <td 0801 >13</td>
 <td 0801 >-4</td>
 <td 0801 >5</td>
 <td 0801 >6</td>
 <td 0801 >18</td>
 <td 0801 >9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >&nbsp;&nbsp; Prices Received for
 Finished Product</td>
 <td 0801 >13</td>
 <td 0801 >5</td>
 <td 0801 >-1</td>
 <td 0801 >13</td>
 <td 0801 >9</td>
 <td 0801 >26</td>
 <td 0801 >24</td>
 </tr>
 </tbody>
 </table>
 
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The EU region saw its sentiment gauge drop to 104.8 in July from 105.7 in June in the wake of the U.K. Brexit vote. A good deal of this weakness is from the U.K. itself, still an EU member, whose own index fell by 4.1% month-to-month. Interestingly, in EMU sentiment gained 0.2% in July after dropping 0.2% in June.

Month-to-month erosion is the rule

The EU-wide industrial sector that had improved in June held most of that gain, giving back just a tick in July. The sector has been posting more or less the same ratings since late-2013. Consumer confidence in EU fell sharply, dropping to a -7.6 reading, its worst since December 2014. Retail stepped back to a 1.1 reading after posting a 1.6 reading in June. Retailing has been sliding since it reached its cycle peak in October of last year. Construction improved to a -14 reading from -15 in June, extending its long slow and relatively isolated improving glide to better readings. The services sector which peaked in December 2015 at 15.3 continues its erosion, dropping to 9.0 in July from 9.4 in June. 

The Brexit slow-motion exit

The trends in EU are not simply the product of Brexit this past month, but part of an ongoing process of erosion. Maybe that is why the Brexit vote was not such a jolt to Europe. It was not a 180-degree turn. It was not a slam on of the brakes. It was an exit from a freeway that was backed up and hardly even moving. No surprise, really, despite the fact that it was not well anticipated.

EMU is a very middling group

Six of 17 reporting EMU nations saw their overall economic sentiment indexes fall in July while 11 saw improvement month-to-month. Only Greece has a sentiment standing that ranks below its historic 20th percentile. Apart from Greece, France, Austria and Finland have the lowest relative readings with sentiment standings in the 40th percentile range for all of them. Tiny Malta and Cyprus have the highest percentile standings in their low 80th percentiles. Among the four largest economies, Germany has the highest percentile standing at a 71st percentile queue reading. The EMU region as a whole has a 61.6 percentile standing that is now ahead of the 58.9 percentile standing for all of EU. The standing for the U.K. has dropped to its 52nd percentile, its weakest reading since June 2013. 

A very mediocre EU and EMU are left behind

The extremes of good and bad country level performance are now mostly gone and much of EMU now sees its EU index resides in the middle range. Eleven of 17 members have queue percentile standings for overall sentiment in their 50th to 79th percentile range; the Goldilocks zone where conditions are neither too hot nor too cold. Still, the overall EMU standing in its 61st percentile represents a very mediocre standing. The EU region sustained only 11 EU Index rankings in its 70th percentile in the recovery period with the highest reading of a 78th percentile standing coming in December 2015 flanked by standings in the 73rd and 72nd percentile. The EU as a region has had a hard time posting and keeping anything like an elevated reading compared to its pre-financial crisis days. The EMU region has had only three 70th percentile range readings in the post-recession period. 

Is it a legacy of Brexit or a legacy Brexit leaving behind?

Brexit (so far) does not seem to be a catalyst for a worsening of conditions (or of perceived conditions) in the EU and EMU except perhaps for the U.K., itself. Instead, the U.K. Brexit vote looks more like something that was spun out of an outgoing process of worsening conditions. This will be the trend to keep an eye. Will the EU and EMU continue to worsen in the period ahead or to be mired in this same morass of mediocrity? And if so, is mediocrity good enough; is it sustainable? Or will the U.K. Brexit be the kick in the rump that the EU/EMU needed to make some of the needed changes, bang (!) to kick things up a notch? 


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The EU region saw its sentiment gauge drop to 104.8 in July from 105.7 in June in the wake of the U.K. Brexit vote. A good deal of this weakness is from the U.K. itself, still an EU member, whose own index fell by 4.1% month-to-month. [...]

Euro Area Sentiment Wanes as EMU Firms

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Initial unemployment insurance claims increased to 266,000 (-1.1% y/y) during
the week ended July 23 from 252,000 in the prior week, revised from 253,000.
Claims remained near the lowest level since 1973. The four-week moving average
eased to 256,500. The Action Economics Forecast Survey expected 260,000 claims
in the latest week. During the last ten years, there has been a 75% correlation
between the level of claims and the m/m change in nonfarm payrolls.

Continuing claims for jobless nudged higher to 2.139 million (-5.8% y/y) from
2.132 million. The four-week moving average declined to 2.135 million, also near
a four-decade low.

The insured rate of unemployment ticked up to 1.6% from 1.5%.

Insured rates of unemployment continued to vary across states. Near the low
end of the range were South Dakota (0.42%), Nebraska (0.58%), Florida (0.69%),
North Carolina (0.69%), Indiana (0.77%) and Virginia (0.85%). At the high end of
the scale were Texas (1.68%), Nevada (1.92%), Illinois (1.97%), Massachusetts
(1.99%), Pennsylvania (2.49%) and New Jersey (2.78%). The state data are not
seasonally adjusted.

Data on weekly unemployment insurance are contained in Haver's WEEKLY
database and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action
Economics survey, carried in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol">Unemployment Insurance (000s)</th>
 <th>07/23/16</th>
 <th>07/16/16</th>
 <th>07/09/16</th>
 <th>Y/Y</th>
 <th>2015</th>
 <th>2014</th>
 <th>2013</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Initial Claims</td>
 <td>266</td>
 <td>252</td>
 <td>254</td>
 <td>-1.1%</td>
 <td>277</td>
 <td>307</td>
 <td>342</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Continuing Claims</td>
 <td>--</td>
 <td>2,139</td>
 <td>2,132</td>
 <td>-5.8</td>
 <td>2,268</td>
 <td>2,607</td>
 <td>2,978</td>
 </tr>
 <tr>
 <td class="firstcol">Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>1.6</td>
 <td>1.5</td>
 <td>
 1.7 
 (July 2015)
 </td>
 <td>1.7</td>
 <td>2.0</td>
 <td>2.3</td>
 </tr>
 </tbody>
 </table>
 
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Initial unemployment insurance claims increased to 266,000 (-1.1% y/y) during the week ended July 23 from 252,000 in the prior week, revised from 253,000. Claims remained near the lowest level since 1973. The four-week moving average [...]

U.S. Initial Claims for Unemployment Insurance Rise

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

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

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief: 2016

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Euro Area Unemployment Rates Steady. Down-trend Remains in Place

U.S. GDP Growth Disappoints as Inventories Are Reduced

U.S. GDP Growth Disappoints as Inventories Are Reduced

U.S. GDP Growth Disappoints as Inventories Are Reduced

Kansas City Federal Reserve Factory Sector Index Declines; Expectations Improve

Kansas City Federal Reserve Factory Sector Index Declines; Expectations Improve

Euro Area Sentiment Wanes as EMU Firms

U.S. Initial Claims for Unemployment Insurance Rise