Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904h.jpg" width="353">
The EMU ex-energy PPI inflation rate is excessive. It is up by 0.2% in the month and at a 2.4% pace over three-months. Still over six-month its pace had been 3.2%. That deceleration is a hopeful sign, but it still leaves the pace of the PPI above the Yr/Yr inflation rate of 2.9%. In any event the ECB inflation guideline is for inflation below 2%; having the PPI running at a pace in excess of that is not helpful.
All main sectors three-month inflation rates are above the 2% ceiling except for capital goods. The overall pace of ex-energy inflation is 2.4% for three months and 2.9% Yr/Yr. For Germany and Italy ex energy inflation is lower Yr/yr compared to the year previous period and the 3-month inflation rates each are lower that their respective six month counterpart rates. In the UK Yr/Yr ex-energy inflation is steady at 3% but over three months ex-energy inflation is lower at 2.5%.
The situation for W. Europe seems to be that inflation is on its way to behaving if only at a slow pace. Still that is something and with the weakness and concerns about subprime and the financial sector that just might be enough to help to keep the ECB&#146;s next rate hike at bay.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Euro area and UK PPI Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol"> Euro area 13</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> 3-Mo</td>
<td> 6-MO</td>
<td> Yr/Yr</td>
<td> Y/Y Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Total ex Construction</td>
<td>0.3%</td>
<td>0.1%</td>
<td> 2.8%</td>
<td>3.7%</td>
<td> 1.8%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excl Energy</td>
<td> 0.2%</td>
<td> 0.1%</td>
<td> 2.4%</td>
<td> 3.2%</td>
<td> 2.9%</td>
<td> 3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital Goods</td>
<td>0.1%</td>
<td>0.0%</td>
<td> 0.6%</td>
<td> 1.1%</td>
<td>1.7%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.6%</td>
<td> 1.8%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate &amp; Capital Goods</td>
<td>0.1%</td>
<td>0.1%</td>
<td> 2.2%</td>
<td>3.5%</td>
<td> 3.5%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Energy</td>
<td>0.5%</td>
<td>-0.1%</td>
<td> 4.3%</td>
<td>5.6%</td>
<td> -1.9%</td>
<td>14.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>0.2%</td>
<td> 4.1%</td>
<td>5.6%</td>
<td> 2.3%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Germany</td>
<td>-0.1%</td>
<td>0.2%</td>
<td> 1.7%</td>
<td>2.0%</td>
<td> 1.1%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany ex Energy</td>
<td> 0.1%</td>
<td> 0.2%</td>
<td> 1.8%</td>
<td> 2.8%</td>
<td> 2.4%</td>
<td> 3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"> France</td>
<td>#N/A</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France ex Energy</td>
<td> #N/A</td>
<td> 0.1%</td>
<td> #N/A</td>
<td> #N/A</td>
<td> #N/A</td>
<td> 2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Italy</td>
<td>0.4%</td>
<td>0.1%</td>
<td> 3.7%</td>
<td>4.6%</td>
<td> 2.1%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy ex Energy</td>
<td> 0.3%</td>
<td> 0.1%</td>
<td> 2.8%</td>
<td> 3.3%</td>
<td> 3.2%</td>
<td> 4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"> UK</td>
<td>0.6%</td>
<td>0.6%</td>
<td>5.9%</td>
<td> -1.6%</td>
<td> 0.4%</td>
<td>9.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK ex Energy</td>
<td> 0.4%</td>
<td> 0.1%</td>
<td> 2.5%</td>
<td> 3.3%</td>
<td> 3.0%</td>
<td> 3.0%</td>
</tr>
<tr>
<td colspan="7">Euro area 13 Harmonized PPI excluding Construction.</td>
</tr>
<tr>
<td colspan="7">The Euro area 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Slovenia.</td>
</tr>
</tbody>
</table>
</body>
</html>

The EMU ex-energy PPI inflation rate is excessive. It is up by 0.2% in the month and at a 2.4% pace over three-months. Still over six-month its pace had been 3.2%. That deceleration is a hopeful sign, but it still leaves the pace of [...]

Euro area PPI ex Energy is Excessive but Slowly Behaving

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904f.jpg" width="353">
The value of construction put in place fell 0.4% after a 0.1% increase in July. Consensus expectations had been for no change. Year-to-year, the value of total construction has been up 2.0%, but all of the increase has been due to a gain in public construction.
Residential building was down a sharp 1.4%. New single family building fell a whopping 2.2% and brought the y/y decline in activity to 25.3%. Spending on improvements softened the decline with just a 0.1% dip and increased y/y by 2.4%.
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904g.jpg" width="353">
Nonresidential building increased 0.4% for the second consecutive month. The gain lifted y/y gain in activity to 15.4%. Office construction rose 0.6% (10.4% y/y) and construction in the commercial sector popped 1.0% (15.0% y/y) led by a 4.1% rise in multi-retail building (15.7% y/y).
Public construction spending increased 0.7% (12.7% y/y). Though construction on highways &amp; streets fell 4.3% in July, the year-to-year gain amounts to 59.2%. The value of construction on highways and streets is nearly one third of the value of total public construction spending.
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>5.6%</td>
<td>10.7%</td>
<td>11.0%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>-6.0%</td>
<td>4.7%</td>
<td>12.0%</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.4%</td>
<td>-0.6%</td>
<td>-16.1%</td>
<td>0.5%</td>
<td>13.7%</td>
<td>18.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.4%</td>
<td>0.4%</td>
<td>15.4%</td>
<td>15.2%</td>
<td>7.8%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.7%</td>
<td>1.0%</td>
<td>12.7%</td>
<td>9.2%</td>
<td>6.2%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
</body>
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The value of construction put in place fell 0.4% after a 0.1% increase in July. Consensus expectations had been for no change. Year-to-year, the value of total construction has been up 2.0%, but all of the increase has been due to a [...]

U.S. Construction Spending Declined Again

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904d.jpg" width="353">
The economy of Slovakia grew 9.4% at an annual rate in the second quarter of this year according to Eurostat data (J936GDPT@EUROSTAT), and 7.52% according to the country sourced data (F936NGPC@EMERGECW). The first chart shows the annual rates of change in the two series. The Eurostat data are based on 1995 Koruna, while the country sourced data are based on 2000 Koruna; however, that is a matter of scale and should not affect percentage changes. A more substantive difference between the two series arises from the fact that the Eurostat series is working day adjusted and has been harmonized. A comparison of the quarterly annual rates of change in the two series, suggests that the working day adjustment and perhaps other<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904e.jpg" width="353"> seasonal factors could account for the quarterly differences in the two series since the quarterly differences appear to average out as the annual changes are virtually the same in both series as shown in the table below
Eurostat has, so far, released data only for total GDP for the second quarter, while the country data show the composition of GDP in the second quarter. Consumption increased 5.1% at an annual rate in the second quarter and while exports declined by almost 2%, imports were down almost 12%. The biggest spur to growth was an annual rate of increase of 33.5% in gross capital formation as can be seen in the second chart and in the table below.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SLOVAKIA&nbsp;</th>
<th scope="col">Q2&nbsp;07</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q2 06&nbsp;</th>
<th scope="col">Q/Q DIF&nbsp;</th>
<th scope="col">Y/Y DIF&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP Growth (Annual Rate)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Eurostat Data</td>
<td>9.84</td>
<td>9.76</td>
<td>8.98</td>
<td>0.86</td>
<td>0.78</td>
<td>8.27</td>
<td>6.04</td>
<td>5.42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Country Sourced Data</td>
<td>7.52</td>
<td>0.72</td>
<td>6.29</td>
<td>6.80</td>
<td>1.23</td>
<td>8.28</td>
<td>6.03</td>
<td>5.41</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;&nbsp; Personal Consumption Expenditure </td>
<td>5.08</td>
<td>11.37</td>
<td>3.34</td>
<td>-6.29</td>
<td>1.74</td>
<td>5.61</td>
<td>5.01</td>
<td>3.58</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Gross Capital Formation</td>
<td>33.55</td>
<td>-43.55</td>
<td>4.45</td>
<td>77.10</td>
<td>29.45</td>
<td>8.20</td>
<td>18.66</td>
<td>14.20</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Export</td>
<td>-1.87</td>
<td>21.30</td>
<td>20.36</td>
<td>-23.17</td>
<td>-22.23</td>
<td>20.71</td>
<td>13.78</td>
<td>7.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Imports</td>
<td>-11.92</td>
<td>19.56</td>
<td>0.13</td>
<td>-31.47</td>
<td>-12.05</td>
<td>17.78</td>
<td>16.62</td>
<td>8.83</td>
</tr>
</tbody>
</table>
</body>
</html>

The economy of Slovakia grew 9.4% at an annual rate in the second quarter of this year according to Eurostat data (J936GDPT@EUROSTAT), and 7.52% according to the country sourced data (F936NGPC@EMERGECW). The first chart shows the [...]

Slovakia Continues its Fast Pace of Growth: Difference Between Eurostat and Country Sourced Data

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904a.jpg" width="353">
The Institute of Supply Management (ISM) reported that the Composite Index of activity in the manufacturing sector fell slightly last month to 52.9 from 53.8 during July. Consensus expectations had been for a reading of 53.0.</div><div align="left"> 
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production. It is appropriate to correlate the ISM index level with factory sector growth. The ISM index is a diffusion index. It measures growth by being constructed using all of the absolute change in activity added to one half of the no change in activity measures.</div><div align="left"> <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904b.jpg" width="353">
The prices index also fell two points to its lowest level since February. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.</div><div align="left"> 
Declines in three of the index&#39;s five components led the composite index &#39;s decline last month. New orders fell 2.2 points to its lowest since March. The inventory index and the supplier delivery measure fell as well. The employment index, however, rose to the highest level in four months and production index recouped a small piece of its sharp July decline. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.<div align="left"> </div><div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904c.jpg" width="353">
The index of new export orders rose slightly to its highest level in three months. The import index, however, fell sharply to its lowest level since 2003.</div>
The prices paid index fell two points to its lowest level since February. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.</div><div align="left"> 
<a class="nav" href="http://www.federalreserve.gov/boarddocs/speeches/2007/20070831/default.htm">Fed Chairman Ben S. Bernanke&#39;s speech on Housing, Housing Finance, and Monetary policy</a></div><div align="left">at the Federal Reserve Bank of Kansas City&#39;s Economic Symposium, Jackson Hole, Wyoming can be found above. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
&nbsp;
August
July
August &#39;06
2006
2005
2004
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3">Composite Index</td>
<td colspan="3">52.9</td>
<td colspan="3">53.8</td>
<td colspan="3">54.3</td>
<td colspan="3">53.9</td>
<td colspan="3">55.5</td>
<td colspan="3">60.5</td>
</tr>
<tr>
<td colspan="3">&nbsp; New Orders Index</td>
<td colspan="3">55.3</td>
<td colspan="3">57.5</td>
<td colspan="3">54.6</td>
<td colspan="3">55.4</td>
<td colspan="3">57.4</td>
<td colspan="3">63.5</td>
</tr>
<tr class="odd">
<td colspan="3">Prices Paid Index (NSA)</td>
<td colspan="3">63.0</td>
<td colspan="3">73.0</td>
<td colspan="3">78.5</td>
<td colspan="3">65.0</td>
<td colspan="3">66.4</td>
<td colspan="3">79.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Institute of Supply Management (ISM) reported that the Composite Index of activity in the manufacturing sector fell slightly last month to 52.9 from 53.8 during July. Consensus expectations had been for a reading of 53.0. During [...]

ISM Index Down Slightly; As Expected

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904h.jpg">
The EMU ex-energy PPI inflation rate is excessive. It is up by 0.2% in the month and at a 2.4% pace over three-months. Still over six-month its pace had been 3.2%. That deceleration is a hopeful sign, but it still leaves the pace of the PPI above the Yr/Yr inflation rate of 2.9%. In any event the ECB inflation guideline is for inflation below 2%; having the PPI running at a pace in excess of that is not helpful.
All main sectors three-month inflation rates are above the 2% ceiling except for capital goods. The overall pace of ex-energy inflation is 2.4% for three months and 2.9% Yr/Yr. For Germany and Italy ex energy inflation is lower Yr/yr compared to the year previous period and the 3-month inflation rates each are lower that their respective six month counterpart rates. In the UK Yr/Yr ex-energy inflation is steady at 3% but over three months ex-energy inflation is lower at 2.5%.
The situation for W. Europe seems to be that inflation is on its way to behaving if only at a slow pace. Still that is something and with the weakness and concerns about subprime and the financial sector that just might be enough to help to keep the ECB&#146;s next rate hike at bay.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Euro area and UK PPI Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol"> Euro area 13</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> 3-Mo</td>
<td> 6-MO</td>
<td> Yr/Yr</td>
<td> Y/Y Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Total ex Construction</td>
<td>0.3%</td>
<td>0.1%</td>
<td> 2.8%</td>
<td>3.7%</td>
<td> 1.8%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excl Energy</td>
<td> 0.2%</td>
<td> 0.1%</td>
<td> 2.4%</td>
<td> 3.2%</td>
<td> 2.9%</td>
<td> 3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital Goods</td>
<td>0.1%</td>
<td>0.0%</td>
<td> 0.6%</td>
<td> 1.1%</td>
<td>1.7%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.6%</td>
<td> 1.8%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate &amp; Capital Goods</td>
<td>0.1%</td>
<td>0.1%</td>
<td> 2.2%</td>
<td>3.5%</td>
<td> 3.5%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Energy</td>
<td>0.5%</td>
<td>-0.1%</td>
<td> 4.3%</td>
<td>5.6%</td>
<td> -1.9%</td>
<td>14.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>0.2%</td>
<td> 4.1%</td>
<td>5.6%</td>
<td> 2.3%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Germany</td>
<td>-0.1%</td>
<td>0.2%</td>
<td> 1.7%</td>
<td>2.0%</td>
<td> 1.1%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany ex Energy</td>
<td> 0.1%</td>
<td> 0.2%</td>
<td> 1.8%</td>
<td> 2.8%</td>
<td> 2.4%</td>
<td> 3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"> France</td>
<td>#N/A</td>
<td>0.2%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France ex Energy</td>
<td> #N/A</td>
<td> 0.1%</td>
<td> #N/A</td>
<td> #N/A</td>
<td> #N/A</td>
<td> 2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol"> Italy</td>
<td>0.4%</td>
<td>0.1%</td>
<td> 3.7%</td>
<td>4.6%</td>
<td> 2.1%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy ex Energy</td>
<td> 0.3%</td>
<td> 0.1%</td>
<td> 2.8%</td>
<td> 3.3%</td>
<td> 3.2%</td>
<td> 4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol"> UK</td>
<td>0.6%</td>
<td>0.6%</td>
<td>5.9%</td>
<td> -1.6%</td>
<td> 0.4%</td>
<td>9.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK ex Energy</td>
<td> 0.4%</td>
<td> 0.1%</td>
<td> 2.5%</td>
<td> 3.3%</td>
<td> 3.0%</td>
<td> 3.0%</td>
</tr>
<tr>
<td colspan="7">Euro area 13 Harmonized PPI excluding Construction.</td>
</tr>
<tr>
<td colspan="7">The Euro area 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Slovenia.</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Declined Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 4, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904f.jpg" width="353">
The value of construction put in place fell 0.4% after a 0.1% increase in July. Consensus expectations had been for no change. Year-to-year, the value of total construction has been up 2.0%, but all of the increase has been due to a gain in public construction.
Residential building was down a sharp 1.4%. New single family building fell a whopping 2.2% and brought the y/y decline in activity to 25.3%. Spending on improvements softened the decline with just a 0.1% dip and increased y/y by 2.4%.
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904g.jpg" width="353">
Nonresidential building increased 0.4% for the second consecutive month. The gain lifted y/y gain in activity to 15.4%. Office construction rose 0.6% (10.4% y/y) and construction in the commercial sector popped 1.0% (15.0% y/y) led by a 4.1% rise in multi-retail building (15.7% y/y).
Public construction spending increased 0.7% (12.7% y/y). Though construction on highways &amp; streets fell 4.3% in July, the year-to-year gain amounts to 59.2%. The value of construction on highways and streets is nearly one third of the value of total public construction spending.
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>5.6%</td>
<td>10.7%</td>
<td>11.0%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>-6.0%</td>
<td>4.7%</td>
<td>12.0%</td>
<td>13.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.4%</td>
<td>-0.6%</td>
<td>-16.1%</td>
<td>0.5%</td>
<td>13.7%</td>
<td>18.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.4%</td>
<td>0.4%</td>
<td>15.4%</td>
<td>15.2%</td>
<td>7.8%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>0.7%</td>
<td>1.0%</td>
<td>12.7%</td>
<td>9.2%</td>
<td>6.2%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
Slovakia Continues its Fast Pace of Growth: Difference Between Eurostat and Country Sourced Data 
by <a href="/comment/Curley.html">Louise Curley</a> September 4, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904d.jpg" width="353">
The economy of Slovakia grew 9.4% at an annual rate in the second quarter of this year according to Eurostat data (J936GDPT@EUROSTAT), and 7.52% according to the country sourced data (F936NGPC@EMERGECW). The first chart shows the annual rates of change in the two series. The Eurostat data are based on 1995 Koruna, while the country sourced data are based on 2000 Koruna; however, that is a matter of scale and should not affect percentage changes. A more substantive difference between the two series arises from the fact that the Eurostat series is working day adjusted and has been harmonized. A comparison of the quarterly annual rates of change in the two series, suggests that the working day adjustment and perhaps other<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904e.jpg" width="353"> seasonal factors could account for the quarterly differences in the two series since the quarterly differences appear to average out as the annual changes are virtually the same in both series as shown in the table below
Eurostat has, so far, released data only for total GDP for the second quarter, while the country data show the composition of GDP in the second quarter. Consumption increased 5.1% at an annual rate in the second quarter and while exports declined by almost 2%, imports were down almost 12%. The biggest spur to growth was an annual rate of increase of 33.5% in gross capital formation as can be seen in the second chart and in the table below.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SLOVAKIA&nbsp;</th>
<th scope="col">Q2&nbsp;07</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q2 06&nbsp;</th>
<th scope="col">Q/Q DIF&nbsp;</th>
<th scope="col">Y/Y DIF&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP Growth (Annual Rate)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Eurostat Data</td>
<td>9.84</td>
<td>9.76</td>
<td>8.98</td>
<td>0.86</td>
<td>0.78</td>
<td>8.27</td>
<td>6.04</td>
<td>5.42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Country Sourced Data</td>
<td>7.52</td>
<td>0.72</td>
<td>6.29</td>
<td>6.80</td>
<td>1.23</td>
<td>8.28</td>
<td>6.03</td>
<td>5.41</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;&nbsp; Personal Consumption Expenditure </td>
<td>5.08</td>
<td>11.37</td>
<td>3.34</td>
<td>-6.29</td>
<td>1.74</td>
<td>5.61</td>
<td>5.01</td>
<td>3.58</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Gross Capital Formation</td>
<td>33.55</td>
<td>-43.55</td>
<td>4.45</td>
<td>77.10</td>
<td>29.45</td>
<td>8.20</td>
<td>18.66</td>
<td>14.20</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Export</td>
<td>-1.87</td>
<td>21.30</td>
<td>20.36</td>
<td>-23.17</td>
<td>-22.23</td>
<td>20.71</td>
<td>13.78</td>
<td>7.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Imports</td>
<td>-11.92</td>
<td>19.56</td>
<td>0.13</td>
<td>-31.47</td>
<td>-12.05</td>
<td>17.78</td>
<td>16.62</td>
<td>8.83</td>
</tr>
</tbody>
</table>
ISM Index Down Slightly; As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 4, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904a.jpg" width="353">
The Institute of Supply Management (ISM) reported that the Composite Index of activity in the manufacturing sector fell slightly last month to 52.9 from 53.8 during July. Consensus expectations had been for a reading of 53.0. </div><div align="left"> 
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production. It is appropriate to correlate the ISM index level with factory sector growth. The ISM index is a diffusion index. It measures growth by being constructed using all of the absolute change in activity added to one half of the no change in activity measures.</div><div align="left"> <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904b.jpg" width="353">
The prices index also fell two points to its lowest level since February. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.</div><div align="left"> 
Declines in three of the index&#39;s five components led the composite index &#39;s decline last month. New orders fell 2.2 points to its lowest since March. The inventory index and the supplier delivery measure fell as well. The employment index, however, rose to the highest level in four months and production index recouped a small piece of its sharp July decline. During the last twenty years there has been a 67% correlation between the level of the ISM employment Index and the three month growth in factory sector employment.<div align="left"> </div><div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070904c.jpg" width="353">
The index of new export orders rose slightly to its highest level in three months. The import index, however, fell sharply to its lowest level since 2003.</div>
The prices paid index fell two points to its lowest level since February. During the last twenty years there has been a 77% correlation between the price index and the three month change in the PPI for intermediate goods.</div><div align="left"> 
<a class="nav" href="http://www.federalreserve.gov/boarddocs/speeches/2007/20070831/default.htm">Fed Chairman Ben S. Bernanke&#39;s speech on Housing, Housing Finance, and Monetary policy</a> </div><div align="left">at the Federal Reserve Bank of Kansas City&#39;s Economic Symposium, Jackson Hole, Wyoming can be found above. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
&nbsp;
August
July
August &#39;06
2006
2005
2004
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3">Composite Index</td>
<td colspan="3">52.9</td>
<td colspan="3">53.8</td>
<td colspan="3">54.3</td>
<td colspan="3">53.9</td>
<td colspan="3">55.5</td>
<td colspan="3">60.5</td>
</tr>
<tr>
<td colspan="3">&nbsp; New Orders Index</td>
<td colspan="3">55.3</td>
<td colspan="3">57.5</td>
<td colspan="3">54.6</td>
<td colspan="3">55.4</td>
<td colspan="3">57.4</td>
<td colspan="3">63.5</td>
</tr>
<tr class="odd">
<td colspan="3">Prices Paid Index (NSA)</td>
<td colspan="3">63.0</td>
<td colspan="3">73.0</td>
<td colspan="3">78.5</td>
<td colspan="3">65.0</td>
<td colspan="3">66.4</td>
<td colspan="3">79.8</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831c.jpg" width="353">
Personal income rose 0.5% in July, slightly firmer than June&#39;s 0.4%. Consensus forecasts had pointed to a 0.3% July rise. This monthly increase put the 12-month change at 6.6%.
The PCE chain price index rose just 0.1% during July, following June&#39;s 0.2%, which was a shade more than originally reported. The core PCE price measure also rose 0.1% and it too was revised to 0.2% from 0.1% in June. The total price index is up a mere 2.1% on the year, and the core rate 1.9%. annualized, the gain in core prices came in at 1.6% over the last three months. The increase in the total PCE price index was 2.9% during the same three months (AR), down from the 3.7% three-month-gain in June and 4.9% through May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831d.jpg" width="353">
Wages &amp; salaries increased 0.5% (7.2% y/y) in July and factory sector wages rose just 0.2% (6.6% y/y) after a 0.5% June rise.Wage &amp; salary income in service-producing industries rose 0.6% (8.1% y/y) after a 0.5% increase in June while pay in the government sector rose 0.2% (4.5% y/y).
Interest income grew 0.7%, picking up to 2.7% y/y, while dividend income rose 1.0% (14.8% y/y), about the same as during the prior six months.
Personal current taxes increased 0.3% (11.0% y/y). That left disposable personal income to grow 0.6% (6.0% y/y) after a 0.4% June gain. Real disposable personal income thus rose 0.5% last month, extending an improvement from a 0.1% decline during May and a 0.2% rise in June.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831e.jpg" width="353">
Personal consumption expenditures increased just 0.4% in July following a 0.2% gain during June. Expectations were for 0.3% rise. Durable goods purchases recovered somewhat, with a 0.3% increase after June&#39;s 1.6% fall. Motor vehicle outlays rose 0.5%, after their 3.7% drop in June, although they were 3.0% below July 2006. Spending on furniture &amp; other household equipment was up 0.5%, and June&#39;s decline, originally 1.0%, was revised to 0.3%. Spending on gasoline continued to decline, in July by 0.6%. The year/year change is now -3.9%, reflecting this July decline and the surge in the corresponding month last year. Spending on apparel turned up by 1.0% after June&#39;s 0.8% fall; year/year growth thus improved to 4.2% from June&#39;s 3.7%. Outlays in the big services sector expanded 0.4% following June&#39;s 0.6% advance and were 5.8% above a year ago.
The personal saving rate was 0.7% in July. This is not &quot;high&quot;, but signifies a better performance than we had been aware of. After the July revisions put the saving rate back up into positive territory, now it seems to show negative only under special circumstances, just as Hurricane Katrina and last summer&#39;s striking surge in gasoline prices. Most of the time, people seem to be able to fit their spending to their income.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.5%</td>
<td>0.4%</td>
<td>6.6%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.2%</td>
<td>4.7%</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Saving Rate</td>
<td>0.7%</td>
<td>0.5%</td>
<td>-0.3% (July 06)</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>


</html>

Personal income rose 0.5% in July, slightly firmer than June's 0.4%. Consensus forecasts had pointed to a 0.3% July rise. This monthly increase put the 12-month change at 6.6%. The PCE chain price index rose just 0.1% during July, [...]

U.S. Personal Income Gains 0.5% in July; Spending Recovers from June Weakness

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831b.jpg" width="353">
In the German IFO framework the biggest slippage seems to be in orders on hand, month-to-month demand, and business expectations. These measures have dropped into the 60th to 70th percentile ranges of their respective histories. These are still firm readings but not so strong. One continuing feature of interest in this report is the strength of foreign orders on hand. Foreign orders are still near their peak reading in the 98th percentile of their range. Despite this the current situation is still evaluated as strengthening and is in the 95th percentile of its range. 
The IFO&#146;s three month outlook survey is also mixed. Only order expectations for retailers are weakening and they have been crumbling steadily and rapidly for months. Employment expectations are guarded. 
The IFO&#146;s diffusion measures by sector show a sharp drop for wholesalers with conditions eroding across most sectors. Construction and retail continue to post net negative signals and they too are fading. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
IFO Survey: Germany
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">INDEX NUMBERS</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Biz Climate</td>
<td>0.7%</td>
<td>0.8%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>2.6%</td>
<td>105.8</td>
<td>95.7</td>
<td>110.6%</td>
<td>87.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Situation</td>
<td>2.5%</td>
<td>2.4%</td>
<td>1.7%</td>
<td>4.7%</td>
<td>6.3%</td>
<td>111.5</td>
<td>94.8</td>
<td>117.7%</td>
<td>88.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td>-1.2%</td>
<td>-0.9%</td>
<td>-1.2%</td>
<td>1.0%</td>
<td>-1.0%</td>
<td>100.4</td>
<td>96.7</td>
<td>103.9%</td>
<td>76.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Situation</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>4.4%</td>
<td>4.5%</td>
<td>4.4%</td>
<td>6.7%</td>
<td>7.6%</td>
<td>111.3</td>
<td>92.2</td>
<td>120.7%</td>
<td>95.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-1.9%</td>
<td>-0.4%</td>
<td>-2.8%</td>
<td>0.9%</td>
<td>-1.4%</td>
<td>99.1</td>
<td>96.4</td>
<td>102.8%</td>
<td>73.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Activity (m/m)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>-3.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>104.7</td>
<td>96.9</td>
<td>108.0%</td>
<td>85.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Demand M/M</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-2.8%</td>
<td>-3.3%</td>
<td>-7.0%</td>
<td>0.5%</td>
<td>-3.7%</td>
<td>99.3</td>
<td>97.1</td>
<td>102.3%</td>
<td>62.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Orders on hand</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>-2.4%</td>
<td>-2.7%</td>
<td>-3.6%</td>
<td>-0.9%</td>
<td>-3.0%</td>
<td>102.2</td>
<td>96.4</td>
<td>106.0%</td>
<td>72.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign orders on hand</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>2.5%</td>
<td>1.9%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>112.1</td>
<td>94.3</td>
<td>118.8%</td>
<td>98.1%</td>
</tr>
<tr class="grey3">
<td colspan="10">Yr/Yr percentage changes in underlying Indices</td>
</tr>
<tr class="grey1">
<td colspan="10">IFO outlook for 3-Months ahead</td>
</tr>
<tr class="grey4">
<td class="firstcol">3-Mos ahead</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">INDEX NUMBERS</td>
</tr>
<tr class="grey4">
<td class="firstcol">Expected Activity</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>CURRENT</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>2.5%</td>
<td>1.0%</td>
<td>3.4%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>102.5</td>
<td>96.7</td>
<td>106.0%</td>
<td>91.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Orders expectations</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Retail Orders Expectations</td>
<td>-1.1%</td>
<td>-11.6%</td>
<td>-10.9%</td>
<td>-4.6%</td>
<td>-10.9%</td>
<td>-10.5</td>
<td>-17.5</td>
<td>59.9%</td>
<td>72.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Wholesale</td>
<td>0.8%</td>
<td>7.1%</td>
<td>5.7%</td>
<td>15.7%</td>
<td>15.0%</td>
<td>7.8</td>
<td>-14.0</td>
<td>-55.8%</td>
<td>84.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Export Biz Expectations</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>0.9%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>-0.5%</td>
<td>-1.1%</td>
<td>102.8</td>
<td>98.4</td>
<td>104.5%</td>
<td>85.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Employment Expectations</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>4.1%</td>
<td>7.4%</td>
<td>8.4%</td>
<td>7.5%</td>
<td>6.4%</td>
<td>105.0</td>
<td>96.0</td>
<td>109.4%</td>
<td>57.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

In the German IFO framework the biggest slippage seems to be in orders on hand, month-to-month demand, and business expectations. These measures have dropped into the 60th to 70th percentile ranges of their respective histories. These [...]

German IFO Detail Slows Some Slippage Amid Strength

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070831a.jpg" width="353">
The accompanying chart is the paradox of Europe. Its sentiment index is very high yet there is already a clear loss in momentum. Historically, breaks in momentum have led to significant slow downs. So far this one has been different. 
The main EU measures also show some subtle losses in momentum. This softening is reinforced by declines in sentiment indexes across the major EU members. Only France (missing its observations for August) has showed continued increases in sentiment up until now. The retail sector is relatively the strongest with its highest reading to date in August. Financial turmoil appears to have not phased it. The industrial sector is still relatively strong posting its eighth highest reading. But consumer sentiment has slipped and is in its 82nd percentile far from the 90-plus readings for retail and industry. Across the main EMU/EU countries they stand in the 60th to 80th percentiles of their ranges. This means that for EU overall it is the smaller countries that are doing even better. It is reasonable to wonder if they are simply lagging in their slowdown. There is little evidence that the recent turmoil in markets has had an impact since consumer confidence is where we would expect to see it, and that gauge did slip this month, but has been slipping in any event.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
EU Sectors and Country level Overall Sentiment
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">EU</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>R-SQ w/Confid</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall</td>
<td>113.2</td>
<td>113.3</td>
<td>115</td>
<td>115</td>
<td>91.5</td>
<td>20</td>
<td>117</td>
<td>74</td>
<td>43</td>
<td>100</td>
<td>1.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>5</td>
<td>5</td>
<td>7</td>
<td>6</td>
<td>94.1</td>
<td>8</td>
<td>7</td>
<td>-27</td>
<td>34</td>
<td>-7</td>
<td>0.89</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-3</td>
<td>-2</td>
<td>-2</td>
<td>-1</td>
<td>82.8</td>
<td>27</td>
<td>2</td>
<td>-27</td>
<td>29</td>
<td>-10</td>
<td>0.82</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>6</td>
<td>5</td>
<td>5</td>
<td>5</td>
<td>100.0</td>
<td>1</td>
<td>6</td>
<td>-21</td>
<td>27</td>
<td>-6</td>
<td>0.46</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>0</td>
<td>0</td>
<td>1</td>
<td>1</td>
<td>93.3</td>
<td>13</td>
<td>3</td>
<td>-42</td>
<td>45</td>
<td>-18</td>
<td>0.43</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>21</td>
<td>20</td>
<td>21</td>
<td>23</td>
<td>71.1</td>
<td>55</td>
<td>32</td>
<td>-6</td>
<td>38</td>
<td>17</td>
<td>0.80</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td colspan="4">% m/m</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>-0.9%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>1.0%</td>
<td>83.1</td>
<td>39</td>
<td>117</td>
<td>74</td>
<td>44</td>
<td>100</td>
<td>0.94</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-0.9%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>0.8%</td>
<td>73.7</td>
<td>26</td>
<td>121</td>
<td>79</td>
<td>42</td>
<td>100</td>
<td>0.61</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.6%</td>
<td>0.0%</td>
<td>3.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-3.0%</td>
<td>-0.9%</td>
<td>-1.3%</td>
<td>-1.4%</td>
<td>63.5</td>
<td>84</td>
<td>121</td>
<td>72</td>
<td>49</td>
<td>100</td>
<td>0.79</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>1.1%</td>
<td>-0.9%</td>
<td>1.2%</td>
<td>-1.2%</td>
<td>62.3</td>
<td>134</td>
<td>118</td>
<td>67</td>
<td>50</td>
<td>100</td>
<td>0.67</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: UK</td>
<td>4.5%</td>
<td>-5.7%</td>
<td>1.6%</td>
<td>3.4%</td>
<td>90.3</td>
<td>8</td>
<td>119</td>
<td>69</td>
<td>50</td>
<td>100</td>
<td>0.38</td>
</tr>
<tr class="odd">
<td colspan="5">Since 1990 except Services (Oct 1996)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 208-Count</td>
<td>&nbsp;</td>
<td colspan="2">Services: 126-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12">Sentiment is an index, sector readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
</body>
</html>

The accompanying chart is the paradox of Europe. Its sentiment index is very high yet there is already a clear loss in momentum. Historically, breaks in momentum have led to significant slow downs. So far this one has been different. [...]

EU Index Near a High but Losing Momentum

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

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

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251107F5.jpg

251107G5.jpg

Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

251107H5.jpg

251107I5.jpg

- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

251107A2.jpg

251107D2.jpg

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% 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.

251107C2.jpg

251107B2.jpg

- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

251107E.jpg

The chart provides a good overview for German trade trend. The table breaks trade trends down by categories and provides growth rates on shorter horizons of 3 months, 6 months and 12 months. But the chart depicts the overarching trends well. It shows the German surplus being diminished on a gradual path and not altogether in a clear monotonic fashion. Export and import lines on the chart move mostly sideways (horizontal). The export line is below the import line since late last year. These two series plots on the right-hand scale and they depict growth rates (year-over-year). So sideways movements mean roughly steady growth. Exports have been growth steadily year-over-year at a weak pace that on occasion has been a decline in terms of their year-on-year value. Generally, the green line is in positive territory. The red import line has been stronger, indicating somewhat better, steadier import growth over the period.

While exports had a good September, export growth sequenced from 12-months to 6-months, to 3-months has been weakening. Imports also put in a strong September but are showing some erosion from 12-month to 6-months to 3-months in terms of annualized rates of growth. Still, import growth rates remain quite strong and consistent; the sense of erosion is clear but also moderate – it’s a moderate erosion in progress for imports.

Capital goods exports from Germany are improving- this observation is based on lagged data with a one-month lag built in. But consumer goods and vehicle exports are slowing and rather sharply- likely as a result of U.S. tariffs.

Import side trends, with the same lag, are not as clear cut. Capital goods imports are growing, and motor vehicle imports are improving and accelerating. Consumer goods imports have erratically slowed.

Real exports and imports on sequential lagged data show exports contracting on most horizons while imports generate consistent positive growth in real terms. There is a big difference in these two trends expressed in real terms.

On balance, German trade trends are shifting. The trade balance is gradually eroding. Change is in play.

251107.jpg

Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

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**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

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**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

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**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

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**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

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**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

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Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). 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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- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

Economy in Brief: 2007

Jump to:

Euro area PPI ex Energy is Excessive but Slowly Behaving

U.S. Construction Spending Declined Again

Slovakia Continues its Fast Pace of Growth: Difference Between Eurostat and Country Sourced Data

ISM Index Down Slightly; As Expected

Euro area PPI ex Energy is Excessive but Slowly Behaving

U.S. Personal Income Gains 0.5% in July; Spending Recovers from June Weakness

German IFO Detail Slows Some Slippage Amid Strength

EU Index Near a High but Losing Momentum