Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623f.jpg" align="left" border="0" height="265" width="353">
While the World Bank has down graded its forecast for Euro
area growth this year to -4.5% from its earlier forecast of -2.7%,
indicators of French and German Business confidence have become less
pessimistic, although they are still negative. Yesterday, the German
IFO reported an improvement in its Business Climate indicator and
today, France's INSEE (National Institute of Statistics and Economic
Studies) reports that its Composite Business Indicator has risen to 73
in June from 71 in May and 68 in April. Both the Industry and Services
components of the Composite Indicator, show similar rises and the
Construction component has held steady at 92. The components of the
Composite Indicator are shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623g.jpg" align="right" border="0" height="265" width="353">
The June preliminary or "flash" result from the Markit
Economics Purchasing Managers' Survey for France, released today, also
suggests that business is becoming less pessimistic. The diffusion
index for the purchasing managers' views on the total economy is 47.7,
close to the 50 mark above which expansion is indicated.
The second chart shows the INSEE indicator against its long
term average* and the results of the Markit Economics Purchasing
Managers' Survey against the 50% line that divides expansion and
contraction. The purchasing managers appear to be the less pessimistic.
The INSEE indicator is so constructed that its long term
average is 100 and its standard deviation, 10.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;
&nbsp;</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp; 09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Business Indicator
(LT Ave = 100)</td>
<td>73</td>
<td>71</td>
<td>68</td>
<td>69</td>
<td>70</td>
<td>78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Industry</td>
<td>75</td>
<td>73</td>
<td>71</td>
<td>68</td>
<td>69</td>
<td>75</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Construction</td>
<td>92</td>
<td>92</td>
<td>92</td>
<td>95</td>
<td>93</td>
<td>96</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Services</td>
<td>67</td>
<td>64</td>
<td>60</td>
<td>60</td>
<td>66</td>
<td>68</td>
</tr>
</tbody>
</table>
</body></html>

While the World Bank has down graded its forecast for Euro area growth this year to -4.5% from its earlier forecast of -2.7%, indicators of French and German Business confidence have become less pessimistic, although they are still [...]

French Business Confidence: Viewed By Entrepreneurs And Purchasing Managers

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623c.jpg" align="left" border="0" height="265" width="353">
Tentative signs of recovery in the U.S. economy have recently
become more vague. The immediate effect of this backpedaling is evident
in energy markets where the cash market price for a gallon of regular
gasoline is down roughly twenty-five cents during just the last week.
Yesterday, the cash market price for a gallon of regular gasoline was
$1.79 versus the daily high of $2.04 last week and the weekly average
of $1.98. If sustained these declines likely be reflected in the retail
price for regular gasoline which last week rose
slightly to an average $2.69 per gallon of regular. That increase
pulled prices up by more than $1.00 per gallon, or by more than
one-half, from the December low to the highest level since
late-October. The figures are reported by the U.S. Department of Energy
and can be found in Haver's WEEKLY &amp; DAILY databases.
The tenuous nature of the recovery also is reflected in a
lower price for crude oil. Crude prices dropped
yesterday to $66.93 from last week's high of $71.37 and from an average
$70.61 last week for a barrel of West Texas Intermediate. The
speculation of weaker demand came against the backdrop of a 3.8%
year-to-year rise in crude oil production during the latest four weeks.
In addition, oil is plentiful as evidenced by a 13.4% y/y rise in
inventories of crude oil &amp; petroleum products. The figures on
crude oil production and inventories are available in Haver's OILWKLY
database.
Finally, an earlier plateau of natural gas prices was
sustained. The Monday price of $3.96 per mmbtu (-69.4% y/y) held
roughly steady with last week but that price was up slightly from the
earlier low of 3.56. Current prices are down by two-thirds from the
high reached in early-July of $13.19/mmbtu.
Fighting Downturns with Fiscal Policy from
the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-20.pdf">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">06/22/09</th>
<th scope="col">06/15/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.69</td>
<td>2.67</td>
<td>-34.0%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>70.61</td>
<td>70.83</td>
<td>-47.5%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body></html>

Tentative signs of recovery in the U.S. economy have recently become more vague. The immediate effect of this backpedaling is evident in energy markets where the cash market price for a gallon of regular gasoline is down roughly [...]

Gasoline Prices Off Sharply With Weaker Economic News

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623a.jpg" width="353">
The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, the same as they did during April, to 4.77M (AR). Consensus expectations had been for April sales of 4.80M homes. Total sales include sales of condos and co-ops.
Home affordability recovered most of its April slip and rose to near its record high. The increase came despite a modest m/m gain in home prices from an April level that was revised sharply lower. Home prices remained down by one-quarter from the 2007 peak. The series dates back to 1971.
The recently enacted tax credit is for first-time home buyers of either a new or a pre-owned home. The credit of up to $8,000 extends through the rest 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><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090623b.jpg" width="353">
Sales of existing single-family homes alone increased 1.9% last month and they were up 4.9% from the January low. Nevertheless, sales remained near the lowest level since July 1997. (These data have a longer history than the total series).
The number of unsold homes (condos &amp; single-family) on the market reversed roughly half of a sharp April increase with a 3.5% decline and year-to-year inventories are down 15.3%. At the current sales rate there was a 9.6 months&#39; supply on the market which was near the lowest since 2007. For single-family homes the inventory also fell 3.3% (-15.8% y/y). At the current sales rate there was a 9.0 month&#39;s supply, near the lowest since 2007.
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.
Why has home ownership fallen among the young? from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/workingpapers/wp2009_01.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (Thous)</th>
<th scope="col">May</th>
<th scope="col">April</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>4,770</td>
<td>4,660</td>
<td>-3.6%</td>
<td>4,893</td>
<td>5,674</td>
<td>6,516</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>800</td>
<td>770</td>
<td>-10.1</td>
<td>845</td>
<td>1,010</td>
<td>1,093</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>1,090</td>
<td>1,000</td>
<td>-4.4</td>
<td>1,130</td>
<td>1,331</td>
<td>1,494</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>1,740</td>
<td>1,740</td>
<td>-8.9</td>
<td>1,860</td>
<td>2,243</td>
<td>2,577</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>1,140</td>
<td>1,150</td>
<td>11.8</td>
<td>1,064</td>
<td>1,095</td>
<td>1,357</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>4,250</td>
<td>4,170</td>
<td>-3.0</td>
<td>4,341</td>
<td>4,960</td>
<td>5,712</td>
</tr>
<tr>
<td class="firstcol">Median Price, Total, $</td>
<td>173,000</td>
<td>166,600</td>
<td>-16.8</td>
<td>197,250</td>
<td>216,633</td>
<td>222,042</td>
</tr>
</tbody>
</table>


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The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, [...]

U.S. Existing Home Sales Rise With Affordability And Tax Credit

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col">Ezone 16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

The EMU (16-country) consolidated balance of trade with countries outside the region fell to eru336mln in April from eur1.7bln in March. The Year-to-date deficit of eur2.5BLn is below the YTD average for the same period of a year ago [...]

EMU Trade Balance Deficit For Goods Shrinks

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
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Germany's IFO institute reported today that its business climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This was the third month of improvement. The business climate index is made up of the business community's [...]

German Business Confidence Improving But Still Subdued

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622a.jpg" align="left" border="0" height="265" width="353">
Germany's IFO institute reported today that its business
climate index rose to 85.9 (2000=100) in June up from 84.3 in May. This
was the third month of improvement. The business climate index is made
up of the business community's appraisal of current conditions and the
economic outlook six months ahead. There was a small decline in the
appraisal of current conditions, from 82.5 to 82.4 which was more than
offset by a significant improvement in the outlook six months ahead
from 86.0 to 89.5.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622b.jpg" align="right" border="0">
Although these signs are encouraging, business confidence
remains subdued. The business climate index is lower than the 100 mark,
which represents conditions back in 2000 and even much lower than the
recent peak of 109.1, reached in December 2006. There are still many
more pessimists than optimists--38.3%-- regarding current conditions.
While the outlook for the next six months has improved, there are still
18.8% more of the respondents who are pessimistic about the outcome
than those who are optimistic. The percent balances for the Business
Climate, Current Conditions and Outlook for the next six months are
shown in the first chart.
Just last week the ZEW survey revealed that the financial
community was decidedly more optimistic about the future of the
economy. Since April optimists in the financial community have
outweighed pessimists regarding the six months outlook. In June the
excess was 44.8%, up from 31.1% in May and 13.0% in April. The second
chart compares the percent balances of opinions on expectations for the
business and financial communities. Expectations of both communities
tend to move in the same direction but the expectations of the
financial community tend to be much more volatile than those of the
business community. Part of the greater volatility of the ZEW survey
may be due, in part, to its small sample size. The ZEW sample in June
consisted of 271 institutional investors and financial analysts, while
the IFO sample consisted of some 7000 representatives of manufacturing,
construction and wholesaling and retailing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">German
Business Confidence</th>
<th scope="col">Jun 09</th>
<th scope="col">May&nbsp;09</th>
<th scope="col">Apr 09</th>
<th scope="col">Mar 09&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">IFO (2000=100)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>85.9</td>
<td>84.3</td>
<td>83.7</td>
<td>82.2</td>
<td>82.6</td>
<td>83.1</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>82.4</td>
<td>82.5</td>
<td>83.5</td>
<td>82.7</td>
<td>84.3</td>
<td>86.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>89.5</td>
<td>86.0</td>
<td>&nbsp;84.0</td>
<td>81.7</td>
<td>81.0</td>
<td>79.6</td>
</tr>
<tr class="grey4">
<td class="firstcol">IFO ( % Percent
Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Business Climate</td>
<td>-28.9</td>
<td>-32.1</td>
<td>-33.1</td>
<td>-36.2</td>
<td>-35.4</td>
<td>-34.4</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Current Conditions</td>
<td>-38.3</td>
<td>-38.0</td>
<td>-36.1</td>
<td>-37.8</td>
<td>-34.7</td>
<td>-29.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Expectations</td>
<td>-18.8</td>
<td>-25.9</td>
<td>-30.1</td>
<td>-34.7</td>
<td>-36.1</td>
<td>-38.9</td>
</tr>
<tr class="grey1">
<td class="firstcol">ZEW (% Percent Balance)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; Expectations</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
<td>-5.8</td>
<td>-31.0</td>
</tr>
</tbody>
</table>
EMU Trade Balance Deficit For
Goods Shrinks 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> June 22, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090622c.jpg" align="left" border="0" height="265" width="353">
The EMU (16-country) consolidated balance of trade with
countries outside the region fell to eru336mln in April from eur1.7bln
in March. The Year-to-date deficit of eur2.5BLn is below the YTD
average for the same period of a year ago that stood at eur 1.1bln. 
 

Over the last year and the last six months exports and imports
are declining at about the same speed in percentage terms. But over the
last three months exports have stabilized dropping at just a 0.5%
annual rate compared to imports whose decline is at a 17% annual rate.
So the export decline has been out ahead of the import decline until
this month when more stable exports allowed imports to catch up with
the export Yr/Yr and six month trends. 
 

The bar chart shows that the goods deficit has been on an
improving trend for the last four months but before that the
performance had been somewhat erratic. Year-over-Year export and import
declines now are very much in step. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Ezone
16-Trade trends for goods </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
<td>12M Ago</td>
</tr>
<tr class="grey4">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (336)</td>
<td>&#8364;&#8364; (1,780)</td>
<td>&#8364;&#8364; (1,396)</td>
<td>&#8364;&#8364; (2,432)</td>
<td>&#8364;&#8364; 399</td>
<td>&#8364;&#8364; (183)</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">Exports</td>
</tr>
<tr class="grey2">
<td class="firstcol">All Exp</td>
<td>-1.3%</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-36.6%</td>
<td>-24.3%</td>
<td>12.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-1.3%</td>
<td>2.9%</td>
<td>4.7%</td>
<td>-21.3%</td>
<td>-12.1%</td>
<td>18.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>0.6%</td>
<td>10.6%</td>
<td>66.7%</td>
<td>-31.8%</td>
<td>-26.9%</td>
<td>19.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-1.4%</td>
<td>1.2%</td>
<td>-2.1%</td>
<td>-37.7%</td>
<td>-25.1%</td>
<td>11.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-2.2%</td>
<td>3.1%</td>
<td>2.7%</td>
<td>-35.7%</td>
<td>-24.3%</td>
<td>10.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="7">IMPORTS</td>
</tr>
<tr class="grey2">
<td class="firstcol">All IMP</td>
<td>-2.7%</td>
<td>0.6%</td>
<td>-17.4%</td>
<td>-38.1%</td>
<td>-24.3%</td>
<td>12.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food and Drinks</td>
<td>-6.8%</td>
<td>6.5%</td>
<td>1.1%</td>
<td>-11.2%</td>
<td>-8.3%</td>
<td>14.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Raw materials</td>
<td>-7.9%</td>
<td>-0.8%</td>
<td>-44.3%</td>
<td>-63.2%</td>
<td>-40.7%</td>
<td>8.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other</td>
<td>-2.1%</td>
<td>0.3%</td>
<td>-17.2%</td>
<td>-38.1%</td>
<td>-24.4%</td>
<td>12.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp; MFG</td>
<td>-5.9%</td>
<td>2.7%</td>
<td>-25.4%</td>
<td>-34.7%</td>
<td>-23.5%</td>
<td>6.7%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">*Eur mlns;
mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

German Business ConfidenceImproving But Still Subdued

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090619d.jpg" align="left" border="0" height="265" width="353">
UK retail sales fell unexpectedly in May and, combined with
news of greater public sector borrowing, markets sold off with
particular pressure on the pound sterling. The UK has been posting some
of the best economic numbers in Europe but with the slippage in retail
sales some of that optimism has faded. Still there are upbeat signs in
the UK economy. 
 

One sign of optimism is still retail sales themselves.
Although the Yr/Yr figures are worsening the six months trends have
barely turned lower and three-month trends are sill quite strong and
advancing. Perhaps the disappointment is more about markets getting
ahead of themselves than about any real disappointment in retail sales
trends themselves. 
 

The UK housing market is showing some signs of stirring.
Mortgage lending still fell in the recent month (May) but lenders
suspect that demand for purchases has been increasing. It is mostly
re-mortgaging activity that has been slackening off. It is reported
that for every home for sale there are four who are looking to buy
according to a survey by the U.K.'s National Association of Estate
Agents on Thursday. There are still signs of an upswing in the UK. 
 

The CBI industrial trend survey is still very weak but its
index moved up to -51 from -56 in May as well. 
 

On balance the reaction to retail sales may prove to be
excessively pessimistic since improving trends still seem to the rule,
not the exception, in the UK. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">UK Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>May-09</td>
<td>Apr-09</td>
<td>Mar-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>Quarter 2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Total</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>1.2%</td>
<td>6.3%</td>
<td>2.4%</td>
<td>-1.1%</td>
<td>6.4%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>0.6%</td>
<td>0.2%</td>
<td>0.8%</td>
<td>6.6%</td>
<td>4.8%</td>
<td>3.8%</td>
<td>8.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing footwear</td>
<td>-2.3%</td>
<td>-1.0%</td>
<td>1.3%</td>
<td>-7.9%</td>
<td>1.7%</td>
<td>-8.5%</td>
<td>8.5%</td>
<td>-9.3%</td>
</tr>
<tr>
<td class="firstcol" colspan="9">&nbsp;</td>
</tr>
<tr>
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Ex Auto</td>
<td>-0.7%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>6.0%</td>
<td>2.0%</td>
<td>-1.7%</td>
<td>6.1%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body></html>

UK retail sales fell unexpectedly in May and, combined with news of greater public sector borrowing, markets sold off with particular pressure on the pound sterling. The UK has been posting some of the best economic numbers in Europe [...]

UK Retail Sales Fall And Markets Quiver

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

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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251031A2.jpg

251031D2.jpg

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) improved 0.3% during the four weeks ended October 31, 2025 after holding steady in the prior four week period. The index increased 0.8% y/y.

**Metals** group prices increased 4.3% (6.1% y/y) in the last four weeks as the cost of aluminum rose 7.0% (9.5% y/y). Copper scrap prices improved 6.5% (16.4% y/y) while zinc prices strengthened 6.8% in four weeks (3.0% y/y). Steel scrap prices rose 2.3% (-6.6% y/y) and tin prices increased 2.2% (16.1% y/y). Lead prices improved 1.1% (unchanged y/y) in four weeks.

Prices in the **Textile** group increased 1.2% during the last four weeks, and rose 2.4% y/y. The cost of burlap strengthened 14.5% in the last four weeks while surging 37.6% over the last year. Offsetting this rise, cotton prices fell 1.2% and declined 5.8% y/y.

**Miscellaneous** group prices weakened 3.0% in the last four weeks, unchanged y/y, as framing lumber prices fell 6.5% (+4.1% y/y). The cost of tallow, used for frying & baking, declined 13.1% (+11.2% y/y) in four weeks. Offsetting this weakness, natural rubber prices held steady (-10.1% y/y).

Prices in the **crude oil & benzene** group declined 1.7% (-9.3% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 3.1% in four weeks to $60.80 per barrel and declined 11.7% y/y. The price was increased from a low of $58.47 in the third week of the month. The price of the petro-chemical benzene fell 2.9% (-23.3% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index rose 0.5% (1.6% y/y) over the last four weeks, the same as during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

251031C2.jpg

251031B2.jpg

- Metals and textile prices strengthen.
- Framing lumber costs backpedal.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Edges Higher in Latest Four Weeks

Andrew Cates

**US monetary policy**
This first chart shows that Chair Powell’s cautious tone in the aftermath of this week’s FOMC meeting led markets to scale back expectations for further near-term easing. Fed funds futures for late 2025 through mid-2026 rose slightly, signalling that investors now expect a shallower and slower easing cycle than before. While the rate cut itself confirmed the Fed’s gradual pivot toward easier policy, markets interpreted Powell’s remarks as suggesting that a December move is not guaranteed and that the central bank remains wary of declaring victory on inflation too soon.

251030Z1.jpg

**The global business cycle**
The latest flash PMI surveys for October highlight a still-divergent global picture, with services-led resilience offsetting persistent manufacturing weakness. Activity remains strongest in India and the United States, both comfortably in expansion territory, while Germany has shown one of the clearest signs of improvement within the euro area after a long period of contraction. The broader euro area and UK readings point to modest but positive momentum, suggesting that growth is stabilising rather than accelerating. In contrast, France remains mired below the 50 threshold, signalling continued contraction, and Japan and Australia are treading water with only marginal gains.

251030Z2.jpg

**Consumer confidence in the US and Europe** 
Consumer confidence trends have diverged across major economies in 2025. In the UK, sentiment has improved gradually, supported by easing inflation and lower interest rates. In the euro area, confidence has stabilised after a prolonged downturn, though households remain wary. By contrast, US confidence has slipped further, probably reflecting a softening labour market, slowing wage growth, and heightened concern about job security. Overall, global consumer sentiment remains fragile and uneven, suggesting that household spending could stay subdued even if price pressures recede and monetary policy becomes more accommodative.

251030Z3.jpg

**Credit conditions in the euro area** 
The latest data on Euro Area M3 growth underline that monetary conditions remain mildly restrictive, even after the ECB’s recent rate reductions. Money growth has decelerated sharply over the past year, with only a limited contribution from private-sector credit and little net support from lending to government. The ECB’s Q4 Bank Lending Survey, released this week, suggests that while financing conditions are beginning to ease, credit dynamics remain weak. Banks reported a further net tightening of credit standards for firms, reflecting continued risk aversion, even as loan demand from businesses and households picked up modestly thanks to lower interest rates and improving sentiment.

251030Z4.jpg

**The UK manufacturing sector**
Turning to the UK, the latest CBI Industrial Trends Survey offers little sign of improvement in manufacturing conditions. The balance of firms reporting excess stocks of finished goods has fallen further into negative territory, consistent with efforts to run down inventories amid weak demand and high uncertainty. And on that score, the share of firms citing uncertainty about demand over the next year as a constraint on capital expenditure has shifted up, highlighting persistent caution in investment planning. Together, these indicators point to a sector still struggling to regain momentum after a protracted slowdown—one where firms are prioritising cost control and liquidity preservation over expansion, despite an easing in headline inflation and gradual monetary policy support.

251030Z5.jpg

**Traded goods price inflation**
The Drewry Container Index, which tracks global shipping costs for a standard 40-foot container, has fallen back in recent months from the elevated levels seen in 2024, reflecting softer global trade volumes and a partial unwinding of last year’s supply-chain pressures. Even so, concerns have re-emerged that new US tariff measures and associated logistical bottlenecks could push freight rates and producer price inflation (PPI) higher in the coming months. The final chart below illustrates how closely traded goods price inflation, represented by Haver’s aggregation of PPI inflation for advanced economies, has tended to move with swings in container shipping costs. While traded goods inflation remains subdued for now, any renewed disruptions to global shipping routes or tariff-driven frictions could quickly feed through to higher input costs—especially in manufacturing sectors reliant on long and complex supply chains.

251030Z6.jpg

Global equity markets are once again flirting with record highs, buoyed by renewed optimism that the global economy can achieve a soft landing—and by persistent enthusiasm over the potential productivity gains from AI-related investment. The Federal Reserve’s decision to cut rates by 25bps this week—its second this autumn—initially reinforced expectations that global monetary policy is shifting toward a more accommodative stance. However, Chair Powell’s reminder that a further cut in December was “not inevitable” tempered that optimism and was met with some disappointment in financial markets (chart 1). Even so, the broader tone remains constructive, though it contrasts with a still-fragile macro environment. Renewed conflict in Gaza, the ongoing US government shutdown, and intensifying trade tensions have kept risk sentiment uneven and underscored the fragility of the recovery. The latest flash PMIs (chart 2) show modest global expansion led by services, while manufacturing continues to struggle. Consumer confidence (chart 3) tells a similar story: sentiment has weakened in the US as the labour market softens, stabilised in the euro area, and improved slightly in the UK. In the euro area, sluggish money and credit growth (chart 4) and the ECB’s latest bank-lending survey confirm that financial conditions remain mildly restrictive despite recent rate cuts. The UK CBI Industrial Trends Survey (chart 5) points to manufacturers reducing inventories and deferring investment plans amid demand uncertainty. Externally, the Drewry Container Index (chart 6) has fallen back from 2024’s elevated levels, signalling easing supply-chain pressures and subdued traded-goods inflation—though tariff realignments remain a potential source of friction.

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Charts of the Week: Optimism with Caveats

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Initial claims for unemployment insurance increased 11,892 during the week ended October 18 to 232,163. The increase reversed most of the earlier week’s decline of 14,839. The four-week moving average of initial claims edged up to 227,953 and have trended higher this year, after weakening late in 2024. The four- week average hit a low of 200,323 in January 2024.

Continuing claims for unemployment insurance fell to 1.947 million in the week ended October 11 from 1.928 million in the prior week. The four-week moving average edged up to 1.931 million, the highest level since early September and up 3.3% y/y, less than half the peak rate of growth in April 2023.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 11, the highest unemployment rates were in New Jersey (2.12%), Washington (1.99%), California (1.88%), Massachusetts (1.84%), District of Columbia (1.75%) and Connecticut (1.71%). The lowest were in South Dakota (0.24%), Florida (0.36%), North Carolina (0.41%), Louisiana (0.42%), Nebraska (0.48%) and Virginia (0.52%). Rates in other notable states include New York (1.46%), Illinois (1.49%), Pennsylvania (1.37%), and Texas (1.14%). 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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- Rise in initial claims reverses earlier decline.
- Continuing claims jump.
- State unemployment rates vary.

U.S. Unemployment Insurance Claims Increase in Latest Week

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The European monetary union’s index of sentiment created by the European Commission rose sharply in October to its highest level since April 2023. There were improvements in the three of the five sector indexes reported with only construction and services unchanged in October relative to their September values.

Despite the nice step-up in the indexes in October, they are still at relatively low values. Only two sectors, construction and retailing, have readings above their 50th percentiles with construction at a 77.5 percentile standing and retailing at a 51.5 percentile standing. The service sector has a low 27.5 percentile standing, consumer confidence is at a 24.3 percentile standing, and the industrial sector is at a 35.9 percentile. Data are ranked over observations back to 1990, where feasible.

**‘Better’ is not always ‘good’**
Clearly the euro area is not performing particularly well at this time. The rankings data make that especially clear. The service sector and the industrial sector are substantially below their historic medians. The median occurs at a queue (or rank) standing at the 50-percentile mark. Consumer confidence is in the lower 25-percentile of its range for this period; services are in their 27th percentile – a low ranking for such an important job creating sector.

**The largest have the best October showing**
The four largest economies in the euro area lead the way in the month and on the broader trip to mediocrity. Germany, France, and Italy each rise by one percentage point or more in October. More broadly, Italy and Spain are the only two ‘large economies’ with percentile standings above their respective 50th percentiles: Spain is at a 55.3 percentile standing, Italy at a 50.9 percentile standing. The largest two economies in the monetary union, Germany and France, respectively, have standings at the 19th percentile for Germany in the 33rd percentile for France.

**Granular performance of the Euro Area**
In October only one large economy backtracked compared to September and that's Spain; its hard decline of 0.9% came after its index rose by 2.9% in September. Among the remaining 14 economies, seven of them showed declines in October and seven of them showed increases. The pickup and performance for the monetary union in October is substantially on the back of the larger economies that are doing better while these smaller monetary union members are clearly mixed.

**Standings**
In terms of standings, the smaller monetary union economies show 5 of 14 with standings above their 50th percentile. These are Portugal at 51.5%, Cyprus at 56.2%, Lithuania at 64.4%, Greece at 71.1%, and Malta at a strong 89.1%.

**Summing up**
It is a good month statistically for the euro area. However, the gains are not widespread, and the sector performance is still mixed. But this is the strongest level for the EU sentiment index since April 2023, and that is something.

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Europe

EU Indexes Show Improvement in EMU in October; Index Last Higher in April 2023

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At today’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was reduced to 3.75%-to-4.00% from 4.00%-to-4.25%. It was the lowest range since December 2022. The current range compares to a high of 5.25%-to-5.50% in mid-September 2024. Today’s target range matched expectations in the Action Economics Forecast Survey. The action was supported by all but two FOMC members; one preferred to lower the target range by 50 basis points and another preferred no cut.

The following statement was released after today’s meeting: “Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”

“The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

U.S. economic figures can be found in Haver’s **USECON** database & interest rate data are in the **WEEKLY** & **DAILY** databases.

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- FOMC lowers funds rate target by quarter point for second time this year.
- The decision was approved by all but two FOMC voters.
- Asset purchases to end.

Economy in Brief: June 2009

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French Business Confidence: Viewed By Entrepreneurs And Purchasing Managers

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U.S. Existing Home Sales Rise With Affordability And Tax Credit

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