Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827c.jpg" width="353">
Spain&#39;s price trends show tempered results only for investment goods. Overall PPI inflation is stronger over three months than for year/year trends. Intermediate goods trends are firm at around a 6% pace. Consumer goods price trends are accelerating. 
The impact of these various trends on the overall PPI is depicted in the sequential growth rate chart on the left. Year/year inflation is ever so gradually edging lower. But over 6 months and 3 months, inflation has flared to a stronger pace and to a pace that is above the year/year pace. That is usually a prescription for year/year acceleration as well. While not the largest of the Euro economies, Spain is still significant. Its price trends will not be encouraging to the ECB. But then again this is only the PPI not the favored CPI measure (HICP). 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Spain PPI
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol"> SPAIN</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> May-07</td>
<td> 3-Mo</td>
<td> 6-Mo</td>
<td> Yr/Yr</td>
<td> Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>5.4%</td>
<td>4.9%</td>
<td> 2.3%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td> 6.9%</td>
<td> 2.9%</td>
<td> 1.8%</td>
<td> 3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>0.3%</td>
<td>0.6%</td>
<td>0.6%</td>
<td> 6.0%</td>
<td>6.5%</td>
<td> 5.5%</td>
<td>7.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Investment Goods</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.4%</td>
<td> 2.1%</td>
<td> 2.7%</td>
<td>3.0%</td>
<td>2.4%</td>
</tr>
<tr class="even">
<td colspan="8">&nbsp;</td>
</tr>
<tr>
<td class="firstcol">HIPPX Constructions</td>
<td>--</td>
<td>0.5%</td>
<td>0.6%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
China's Trade Balance Dips in July but Is Still Third Highest on Record  
by <a href="/comment/Curley.html">Louise Curley</a> August 27, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827d.jpg" width="353">
China&#39;s trade surplus declined by $2,426 million from June to $23,294 million in July, but it was still the third highest on record. Exports were up by $6,894 million but imports rose by $9,320 million. Data on the trade balance, exports and imports are shown in the first chart.
China&#39;s balance of trade with Japan continues to show surplus, while that with Europe and the United States show large deficits. There has been some decline in the deficits with the U. S. and Europe since February of this year, but the declines have been small. The second chart shows the balance of trade with Japan, the U. S. and Europe.
The July data on China&#39;s exports to the U. S. are probably too soon to reflect any impact of the spate of recalls and questions about the quality of some of its exports, notably frozen fish, tooth paste, toys and blankets. As the third chart shows, July exports of toys to the U. S. were up and exports of frozen fish were flat. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827f.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">CHINA&nbsp;</th>
<th scope="col">Jul 07</th>
<th scope="col">Jun 07&nbsp;</th>
<th scope="col">Jul 06&nbsp;</th>
<th scope="col">M/M 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">Exports</td>
<td>107115</td>
<td>100221</td>
<td>79927</td>
<td>6894</td>
<td>27189</td>
<td>968950</td>
<td>761953</td>
<td>593327</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>83821</td>
<td>47501</td>
<td>65677</td>
<td>9320</td>
<td>18144</td>
<td>791473</td>
<td>659959</td>
<td>561228</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance</td>
<td>23294</td>
<td>25720</td>
<td>14250</td>
<td>-2426</td>
<td>9044</td>
<td>177477</td>
<td>101999</td>
<td>32094</td>
</tr>
<tr>
<td colspan="9"> Exports to: </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>8946</td>
<td>7992</td>
<td>7331</td>
<td>954</td>
<td>1614</td>
<td>91723</td>
<td>84097</td>
<td>73536</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>19791</td>
<td>18799</td>
<td>16613</td>
<td>993</td>
<td>3178</td>
<td>203516</td>
<td>162938</td>
<td>124973</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>22152</td>
<td>23321</td>
<td>18042</td>
<td>-1169</td>
<td>4110</td>
<td>215310</td>
<td>165678</td>
<td>122923</td>
</tr>
<tr>
<td colspan="9">Imports from:</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>11373</td>
<td>10730</td>
<td>9673</td>
<td>643</td>
<td>1700</td>
<td>115811</td>
<td>100468</td>
<td>94192</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>5879</td>
<td>5504</td>
<td>5130</td>
<td>376</td>
<td>749</td>
<td>59223</td>
<td>48735</td>
<td>44653</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>9370</td>
<td>10888</td>
<td>9614</td>
<td>-1518</td>
<td>-244</td>
<td>114877</td>
<td>96403</td>
<td>88731</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Slipped Less Than Expected Last Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 27, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827a.jpg" width="353">
Sales of existing homes fell again in July to 5.750M units. Though the decline of 0.2% from a revised 5.76M in June was slight, it still amounted to the lowest level since 2002 and was down 9.0% from the year earlier level. Sales were down 20.2% from the peak during September of 2005. Sales of 5.70M were expected by the Consensus of economists.
Sales of single family homes fell 0.4% last month to 5.0M after a revised 3.3% decline in June. Sales were 20.6% below the peak month of September 2005.
By region, single family home sales rose 1.4% (-2.7% y/y) in the Northeast but n the West sales rose 1.0% (-15.5% y/y) in July. Sales in the Midwest slipped 1.6% (-4.8% y/y) and down South sales slipped 1.0% (-10.4% y/y).
The inventory of single family &quot;homes on the market&quot; rose 2.7% (16.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827b.jpg" width="353">
The median price of an existing single family home slipped 0.3% and versus last year fell 1.0%.
The broad aggregate data on existing home sales are included in Haver&#39;s USECON database; details about prices by region and inventories are available in the REALTOR database.
International Trade: A Larger Piece of the Economic Pie from the Federal Reserve Bank of Atlanta is Available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=73A20C29-5056-9F12-12EF96DE8AD55372&amp;method=display_body">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 (SAAR, 000s)</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 Sales</td>
<td>5,750</td>
<td>5,760</td>
<td>-9.0%</td>
<td>6,510</td>
<td>7,065</td>
<td>6,727</td>
</tr>
<tr>
<td class="firstcol">Single-Family Sales</td>
<td>5,000</td>
<td>5,020</td>
<td>-9.3%</td>
<td>5,708</td>
<td>6,182</td>
<td>5,914</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Single-Family Home Price (NSA,000s)</td>
<td>$228.6</td>
<td>$229.2</td>
<td>-1.0%</td>
<td>$221.9</td>
<td>$217.5</td>
<td>$192.8</td>
</tr>
</tbody>
</table>
</body>
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Spain's price trends show tempered results only for investment goods. Overall PPI inflation is stronger over three months than for year/year trends. Intermediate goods trends are firm at around a 6% pace. Consumer goods price trends [...]

Spain’s PPI: Eases Monthly Pace in July but Still Too Strong

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/070824e.jpg" width="353">
A further clarification on the borrowings data reported late yesterday by the Federal Reserve. There&#39;s some confusion over whether any banks borrowed earlier in the week or if it was just the four large banks who announced they were borrowing on Wednesday.
The Fed&#39;s &quot;Factors Affecting Bank Reserves&quot; H.4.1 release includes two measures for these factors, the daily average for the 7-day week ended each Wednesday and the amount outstanding on Wednesday at the close of business. The average amount of &quot;Primary Credit&quot; for the entire week ended August 22 was $1,200 million. The amount outstanding Wednesday night was $2,001 million. The Fed doesn&#39;t publish these figures for each day. We can, though, use the ones we have to address the general question, was there borrowing before Wednesday?
Take the $1,200 million average for the week. Multiply by 7 to obtain the aggregate amount of daily borrowing for the whole week; this is $8,400 million. Subtract the amount outstanding Wednesday night, $2,001 million, leaving $6,399 million. Divide this by the remaining days of the week, 6, and see that there indeed was an average $1,067 million every day before Wednesday. This is a not inconsiderable amount, given that there had been only $11 million of primary credit on average during the week before. We have no idea what days saw the most, who those borrowers might have been or even what Fed district they are in. But there was in fact noticeable borrowing prior to Wednesday and it looks to us that it was large enough that it probably came from a number of institutions.

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A further clarification on the borrowings data reported late yesterday by the Federal Reserve. There's some confusion over whether any banks borrowed earlier in the week or if it was just the four large banks who announced they were [...]

Borrowing at the Fed: Some Arithmetic

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824g.jpg" width="353">
GDP steady Y/Y up Q/Q on stronger private consumption. 
UK trends are more or less in tact with the release of the Q2 GDP report. Both exports and imports are sharply lower owing to a boost in both flows in Q1 2006. Quarterly trade flows show that exports are lagging a bit more in their recovery compared to imports. Private consumption is still strong, unlike on the continent. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK GDP
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="2">&nbsp;</td>
<td colspan="2">Consumption</td>
<td colspan="2">Capital Formation</td>
<td>3COLSPAN</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Total</td>
<td>Housing</td>
<td>Exports</td>
<td>Imports</td>
<td>Domestic Demand</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Q/Q; X-M is Q/Q change in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.4%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>-4.3%</td>
<td>#N/A</td>
<td>-4.0%</td>
<td>-1.7%</td>
<td>3.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>2.8%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>4.5%</td>
<td>16.0%</td>
<td>-3.3%</td>
<td>-2.6%</td>
<td>2.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.3%</td>
<td>4.4%</td>
<td>1.8%</td>
<td>13.1%</td>
<td>-11.4%</td>
<td>-1.4%</td>
<td>-3.0%</td>
<td>2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>2.8%</td>
<td>1.1%</td>
<td>1.3%</td>
<td>8.7%</td>
<td>8.4%</td>
<td>-38.5%</td>
<td>-39.8%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Yr/Yr; X-M is Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.0%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>5.3%</td>
<td>#N/A</td>
<td>-13.4%</td>
<td>-13.5%</td>
<td>2.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>3.0%</td>
<td>2.9%</td>
<td>1.1%</td>
<td>8.9%</td>
<td>6.7%</td>
<td>-11.6%</td>
<td>-9.8%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.1%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>9.8%</td>
<td>5.0%</td>
<td>-1.1%</td>
<td>0.1%</td>
<td>3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>3.0%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>12.6%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">5-Yrs</td>
<td>2.8%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>4.3%</td>
<td>#N/A</td>
<td>3.1%</td>
<td>3.6%</td>
<td>2.9%</td>
</tr>
</tbody>
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GDP steady Y/Y up Q/Q on stronger private consumption. UK trends are more or less in tact with the release of the Q2 GDP report. Both exports and imports are sharply lower owing to a boost in both flows in Q1 2006. Quarterly trade [...]

Yr/Yr UK GDP Growth Holds Steady

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824f.jpg" width="353">
Longer view shows price pressures dissipating in Germany. 
On the month, German export and import prices were subdued but over three months some pressures are evident. But broader year-over-year trends do seem to have turned a corner. Excluding petroleum export and import prices are moving lower: fast for imports, slower for exports. Domestically, producer prices excluding energy are ever so gradually losing momentum, while consumer prices are slow in showing declines after having stepped up their pace sharply early in 2007. Internationally, excluding petroleum, trends are generally milder than their domestic counterparts.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
German International and Domestic Inflation Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M % Change</td>
<td colspan="4">% SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">SA</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Export Prices</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Import Prices</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>6.9%</td>
<td>5.6%</td>
<td>0.4%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">NSA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Exports ex Petrol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Imports ex Petrol</td>
<td>-0.4%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: SA</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">CPI</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">CPI ex energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>1.9%</td>
<td>1.1%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">PPI ex energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>2.6%</td>
<td>2.5%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
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Longer view shows price pressures dissipating in Germany. On the month, German export and import prices were subdued but over three months some pressures are evident. But broader year-over-year trends do seem to have turned a corner. [...]

German Export and Import Prices Misbehave as Domestic Trends Turn Lower Too

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824d.jpg" width="353">
July new home sales increased 2.8% from June to 870,000 following a 4.0% drop during June which was less than reported initially. 
The sales increase during July owed mostly to a 22.4% (-19.6% y/y) gain in sales in the West. Sales also rose 0.6% (-3.0% y/y) in the South but in the Northeast sales fell 24.3% (11.7 y/y) after a similar drop during June. In the Midwest sales fell 0.9% (-18.2% y/y) after a whopping 21.5% decline during June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824c.jpg" width="353">
The inventory of unsold homes fell 0.9% (-7.0% y/y) after three months of steady decline.
The median new home price rose 3.9% (+0.6% y/y) after three months of hard decline during which the June decline was deepened to -4.6% m/m.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>870</td>
<td>846</td>
<td>-10.2%</td>
<td>1,049</td>
<td>1,279</td>
<td>1,201</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>239,500</td>
<td>230,600</td>
<td>0.6%</td>
<td>241,125</td>
<td>234,208</td>
<td>217,817</td>
</tr>
</tbody>
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July new home sales increased 2.8% from June to 870,000 following a 4.0% drop during June which was less than reported initially. The sales increase during July owed mostly to a 22.4% (-19.6% y/y) gain in sales in the West. Sales also [...]

New Home Sales and Prices Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824a.jpg" width="353">
New orders for durable goods during July gained an impressive 5.9% and the gain during the prior month was revised up slightly to 1.9%. Consensus expectations had been for a 2.0% rise in orders for last month.
During the last ten years there has been a 67% correlation between the y/y change in durable goods orders and the change in production of durable goods.
The rise in new orders less the transportation category for July, however, was a less impressive 1.3% ... less impressive especially since it followed a 2.5% flop in June.
Changing new orders for motor vehicles &amp; parts caused much of this volatility with a 9.8% rise last month after a 0.7% decline during June. And the aircraft sector got into the act with a 13.0% rise last month which was roughly a third of the 31.4% spike during June. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824b.jpg" width="353">
Orders for nondefense capital goods rose 5.8% during July following the 6.4% June increase which was revised up slightly. (Orders in May fell 6.8%.) Still, excluding aircraft &amp; parts July orders rose a modest 2.2% following two months of decline The y/y change is roughly zero. During the last ten years there has been an 84% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment &amp; software from the GDP accounts.
Orders for computers &amp; electronic products also have been volatile. They rose 7.4% (+1.8% y/y) after a little revised 2.8% June decline. Orders for just computers &amp; related products fell 4.0% (-8.4% y/y) for the second month of sharp decline. Primary metals orders rose 7.9% (-0.5% y/y) but that only lifted orders back about to where they were in March. And electrical equipment orders fell for the third consecutive month (+0.2% y/y). Machinery orders were the strongest area with a 5.5% (4.4% y/y) increase following a 3.4% June gain.
Shipments of durable goods rose 3.8% (4.2% y/y) after a 1.1% June slip. Less the transportation sector, shipments made up declines during the prior two months with a 1.9% (1.3% y/y) increase. During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods. The July increase less transportation amounted to 1.9% (1.3% y/y).

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</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">Durable Goods Orders</td>
<td>5.9%</td>
<td>1.9%</td>
<td>8.1%</td>
<td>6.3%</td>
<td>9.9%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>1.3%</td>
<td>-2.5%</td>
<td>1.3%</td>
<td>7.6%</td>
<td>8.8%</td>
<td>7.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>5.8%</td>
<td>6.4%</td>
<td>14.2%</td>
<td>10.6%</td>
<td>17.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.2%</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>8.5%</td>
<td>11.1%</td>
<td>3.2%</td>
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New orders for durable goods during July gained an impressive 5.9% and the gain during the prior month was revised up slightly to 1.9%. Consensus expectations had been for a 2.0% rise in orders for last month. During the last ten [...]

U.S. Durable Goods Orders Better Due To Transportation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824g.jpg" width="353">
GDP steady Y/Y up Q/Q on stronger private consumption. 
UK trends are more or less in tact with the release of the Q2 GDP report. Both exports and imports are sharply lower owing to a boost in both flows in Q1 2006. Quarterly trade flows show that exports are lagging a bit more in their recovery compared to imports. Private consumption is still strong, unlike on the continent. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK GDP
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="2">&nbsp;</td>
<td colspan="2">Consumption</td>
<td colspan="2">Capital Formation</td>
<td>3COLSPAN</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Total</td>
<td>Housing</td>
<td>Exports</td>
<td>Imports</td>
<td>Domestic Demand</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Q/Q; X-M is Q/Q change in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.4%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>-4.3%</td>
<td>#N/A</td>
<td>-4.0%</td>
<td>-1.7%</td>
<td>3.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>2.8%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>4.5%</td>
<td>16.0%</td>
<td>-3.3%</td>
<td>-2.6%</td>
<td>2.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.3%</td>
<td>4.4%</td>
<td>1.8%</td>
<td>13.1%</td>
<td>-11.4%</td>
<td>-1.4%</td>
<td>-3.0%</td>
<td>2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>2.8%</td>
<td>1.1%</td>
<td>1.3%</td>
<td>8.7%</td>
<td>8.4%</td>
<td>-38.5%</td>
<td>-39.8%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Yr/Yr; X-M is Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.0%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>5.3%</td>
<td>#N/A</td>
<td>-13.4%</td>
<td>-13.5%</td>
<td>2.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>3.0%</td>
<td>2.9%</td>
<td>1.1%</td>
<td>8.9%</td>
<td>6.7%</td>
<td>-11.6%</td>
<td>-9.8%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.1%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>9.8%</td>
<td>5.0%</td>
<td>-1.1%</td>
<td>0.1%</td>
<td>3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>3.0%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>12.6%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">5-Yrs</td>
<td>2.8%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>4.3%</td>
<td>#N/A</td>
<td>3.1%</td>
<td>3.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
German Export and Import Prices Misbehave as Domestic Trends Turn Lower Too 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 24, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824f.jpg" width="353">
Longer view shows price pressures dissipating in Germany. 
On the month, German export and import prices were subdued but over three months some pressures are evident. But broader year-over-year trends do seem to have turned a corner. Excluding petroleum export and import prices are moving lower: fast for imports, slower for exports. Domestically, producer prices excluding energy are ever so gradually losing momentum, while consumer prices are slow in showing declines after having stepped up their pace sharply early in 2007. Internationally, excluding petroleum, trends are generally milder than their domestic counterparts.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
German International and Domestic Inflation Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M % Change</td>
<td colspan="4">% SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">SA</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Export Prices</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Import Prices</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>6.9%</td>
<td>5.6%</td>
<td>0.4%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">NSA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Exports ex Petrol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Imports ex Petrol</td>
<td>-0.4%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: SA</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">CPI</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">CPI ex energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>1.9%</td>
<td>1.1%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">PPI ex energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>2.6%</td>
<td>2.5%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
Borrowing at the Fed:  Some Arithmetic 
by <a href="/comment/Stone.html">Carol Stone</a> August 24, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824e.jpg" width="353">
A further clarification on the borrowings data reported late yesterday by the Federal Reserve. There&#39;s some confusion over whether any banks borrowed earlier in the week or if it was just the four large banks who announced they were borrowing on Wednesday.
The Fed&#39;s &quot;Factors Affecting Bank Reserves&quot; H.4.1 release includes two measures for these factors, the daily average for the 7-day week ended each Wednesday and the amount outstanding on Wednesday at the close of business. The average amount of &quot;Primary Credit&quot; for the entire week ended August 22 was $1,200 million. The amount outstanding Wednesday night was $2,001 million. The Fed doesn&#39;t publish these figures for each day. We can, though, use the ones we have to address the general question, was there borrowing before Wednesday?
Take the $1,200 million average for the week. Multiply by 7 to obtain the aggregate amount of daily borrowing for the whole week; this is $8,400 million. Subtract the amount outstanding Wednesday night, $2,001 million, leaving $6,399 million. Divide this by the remaining days of the week, 6, and see that there indeed was an average $1,067 million every day before Wednesday. This is a not inconsiderable amount, given that there had been only $11 million of primary credit on average during the week before. We have no idea what days saw the most, who those borrowers might have been or even what Fed district they are in. But there was in fact noticeable borrowing prior to Wednesday and it looks to us that it was large enough that it probably came from a number of institutions.

U.S. Durable Goods Orders Better Due To Transportation 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 24, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824a.jpg" width="353">
New orders for durable goods during July gained an impressive 5.9% and the gain during the prior month was revised up slightly to 1.9%. Consensus expectations had been for a 2.0% rise in orders for last month.
During the last ten years there has been a 67% correlation between the y/y change in durable goods orders and the change in production of durable goods.
The rise in new orders less the transportation category for July, however, was a less impressive 1.3% ... less impressive especially since it followed a 2.5% flop in June.
Changing new orders for motor vehicles &amp; parts caused much of this volatility with a 9.8% rise last month after a 0.7% decline during June. And the aircraft sector got into the act with a 13.0% rise last month which was roughly a third of the 31.4% spike during June. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824b.jpg" width="353">
Orders for nondefense capital goods rose 5.8% during July following the 6.4% June increase which was revised up slightly. (Orders in May fell 6.8%.) Still, excluding aircraft &amp; parts July orders rose a modest 2.2% following two months of decline The y/y change is roughly zero. During the last ten years there has been an 84% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment &amp; software from the GDP accounts.
Orders for computers &amp; electronic products also have been volatile. They rose 7.4% (+1.8% y/y) after a little revised 2.8% June decline. Orders for just computers &amp; related products fell 4.0% (-8.4% y/y) for the second month of sharp decline. Primary metals orders rose 7.9% (-0.5% y/y) but that only lifted orders back about to where they were in March. And electrical equipment orders fell for the third consecutive month (+0.2% y/y). Machinery orders were the strongest area with a 5.5% (4.4% y/y) increase following a 3.4% June gain.
Shipments of durable goods rose 3.8% (4.2% y/y) after a 1.1% June slip. Less the transportation sector, shipments made up declines during the prior two months with a 1.9% (1.3% y/y) increase. During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods. The July increase less transportation amounted to 1.9% (1.3% y/y).

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</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">Durable Goods Orders</td>
<td>5.9%</td>
<td>1.9%</td>
<td>8.1%</td>
<td>6.3%</td>
<td>9.9%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>1.3%</td>
<td>-2.5%</td>
<td>1.3%</td>
<td>7.6%</td>
<td>8.8%</td>
<td>7.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>5.8%</td>
<td>6.4%</td>
<td>14.2%</td>
<td>10.6%</td>
<td>17.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>2.2%</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>8.5%</td>
<td>11.1%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
New Home Sales and Prices Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 24, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824d.jpg" width="353">
July new home sales increased 2.8% from June to 870,000 following a 4.0% drop during June which was less than reported initially. 
The sales increase during July owed mostly to a 22.4% (-19.6% y/y) gain in sales in the West. Sales also rose 0.6% (-3.0% y/y) in the South but in the Northeast sales fell 24.3% (11.7 y/y) after a similar drop during June. In the Midwest sales fell 0.9% (-18.2% y/y) after a whopping 21.5% decline during June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824c.jpg" width="353">
The inventory of unsold homes fell 0.9% (-7.0% y/y) after three months of steady decline.
The median new home price rose 3.9% (+0.6% y/y) after three months of hard decline during which the June decline was deepened to -4.6% m/m.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>870</td>
<td>846</td>
<td>-10.2%</td>
<td>1,049</td>
<td>1,279</td>
<td>1,201</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>239,500</td>
<td>230,600</td>
<td>0.6%</td>
<td>241,125</td>
<td>234,208</td>
<td>217,817</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070823h.jpg" width="353">
Financial markets have been in a &quot;liquidity crisis&quot;. Weekly Federal Reserve data reported just this afternoon and also earlier today give several measures of this for the US and highlight what the Federal Reserve and bankers are trying to do about it. Some evidence is shown in the graph of interest rates here. In the paragraph below, we discuss the discount and fed funds rates. Also, of late, there have been divergent moves in key money rates, such as LIBOR, which has risen and Treasury bills, which have plunged. Investors with that scarce commodity &quot;cash&quot; want to keep it safe and have poured substantial sums into the shortest most liquid asset of all, Treasury bills, while users of ordinarily highly liquid money markets have found themselves paying a premium.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070823i.jpg" width="353">
As conditions such as this worsened last Friday, the Federal Reserve Board reduced the discount rate by 50 basis points, cutting the spread between it and the federal funds rate. The Fed encouraged banks to borrow at the central bank, trying to tell them there would be no stigma attached to doing so. Today&#39;s weekly report on &quot;factors affecting reserves&quot;, the Fed&#39;s H.4.1 release, shows that this pushed so-called &quot;primary credit&quot; at Federal Reserve Banks to a daily average of $1,200 million, the largest amount since the aftermath of September 11, 2001. The other notable figure in the table below is &quot;secondary credit&quot;. Banks with more serious problems can borrow under more liberal terms if they pay a premium rate higher still than the discount rate. While the amount of these borrowings last week was small, $85 million per day, this borrowing hardly ever occurs at all; the last instance was $21 million in the week of March 14 and before that $152 million October 5, 2005. These borrowings inject funds into the banking system, and while only banks can go to the discount window, these monies are surely helping them funds their own customers.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070823j.jpg" width="353">
And why might their customers need funding? Among other needs, many of them have been cut out of the commercial paper market. We spoke here a couple of weeks ago about asset-backed commercial paper, which is used as a short-term source of funds by issuers of MBS and ABS securities while they prepare packages of securities for sale in the bond market or meet other liquidity needs. We mentioned then that this paper had become larger in total than paper issued by traditional corporate and finance company borrowers and indicated that it was likely imparting risk to commercial paper that would be unusual for this market sector. No sooner were the words out of our computer than that market seized up. Just how much is plain in the chart here. It&#39;s amazing. Haver&#39;s quality-assurance programs that pick up out-liers in data, warning database managers that something may be wrong with the figures, found this one. There was no mistake, though. A market that had been growing by $4 billion a week shrank by $125 billion over two weeks.
Some markets, such as stocks, seem to be settling just a bit from the recent turmoil. Certainly the Federal Reserve is trying to get money to places where it is needed and banks, whose basic function of making loans to borrowers had seemed to be diminishing in importance relative to their trading and asset/liability management activities, have found once again their key roles as financial intermediaries.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Million $</th>
<th scope="col">8/22/07</th>
<th scope="col">8/15/07</th>
<th scope="col">8/08/07</th>
<th scope="col">July 2007</th>
<th scope="col">Jan-June 2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Loans to Deposit Institutions</td>
<td>1,541</td>
<td>271</td>
<td>251</td>
<td>258</td>
<td>110</td>
<td>225</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Primary</td>
<td>1,200</td>
<td>11</td>
<td>1</td>
<td>52</td>
<td>52</td>
<td>59</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Secondary</td>
<td>85</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>1</td>
<td>0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Seasonal</td>
<td>256</td>
<td>260</td>
<td>249</td>
<td>206</td>
<td>56</td>
<td>166</td>
</tr>
<tr>
<td colspan="7">Percent</td>
</tr>
<tr class="odd">
<td class="firstcol">Fed Funds Rate</td>
<td>4.91</td>
<td>4.79</td>
<td>5.25</td>
<td>5.26</td>
<td>5.25</td>
<td>4.96</td>
</tr>
<tr class="odd">
<td class="firstcol">Discount Rate</td>
<td>5.82</td>
<td>6.25</td>
<td>6.25</td>
<td>6.25</td>
<td>6.25</td>
<td>5.96</td>
</tr>
<tr>
<td colspan="7">Seas. Adj. Bil. $</td>
</tr>
<tr class="odd">
<td class="firstcol">Commercial Paper--Total </td>
<td>2,042.2</td>
<td>2,132.4</td>
<td>2,223.5</td>
<td>2,191.5</td>
<td>2,045.8</td>
<td>1,798.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asset-Backed</td>
<td>1,057.4</td>
<td>1,134.5</td>
<td>1,182.9</td>
<td>1,167.7</td>
<td>1,080.1</td>
<td>931.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Weekly Change</td>
<td>-77.1</td>
<td>-48.4</td>
<td>+2.1</td>
<td>+6.7</td>
<td>+4.2</td>
<td>+4.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Financial markets have been in a "liquidity crisis". Weekly Federal Reserve data reported just this afternoon and also earlier today give several measures of this for the US and highlight what the Federal Reserve and bankers are [...]

Borrowings at the Federal Reserve Largest in 6 Years; Big Drops in Commercial Paper Outstanding

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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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).

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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

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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.

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- 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.

251106Z1.jpg

**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.

251106Z2.jpg

**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.

251106Z3.jpg

**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.

251106Z4.jpg

**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.

251106Z5.jpg

**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.

251106Z6.jpg

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:

Spain’s PPI: Eases Monthly Pace in July but Still Too Strong

Borrowing at the Fed: Some Arithmetic

Yr/Yr UK GDP Growth Holds Steady

German Export and Import Prices Misbehave as Domestic Trends Turn Lower Too

New Home Sales and Prices Up

U.S. Durable Goods Orders Better Due To Transportation

Yr/Yr UK GDP Growth Holds Steady

Borrowings at the Federal Reserve Largest in 6 Years; Big Drops in Commercial Paper Outstanding