Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821c.jpg" width="353">
The ZEW indicator of confidence among German institutional investors and analysts showed that pessimists outweighed optimists by 6.9% in August. In July, optimists outweighed pessimists by 10.9% in July. The decline of 17.3 percentage points was the largest since the decline of 20.7 last August. The participants&#39; appraisal of current conditions fell by 8 percentage points from 88.2 in July to 80.2 in August. Expectations and appraisals of current conditions are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821d.jpg" width="353">
The turmoil in stock markets around the world during the period when the survey took place--July 30 to August 20--no doubt affected the participants&#39; expectations and also their outlook for profits in selected industries.
Profit expectations for the banking and insurance industries were lowered sharply. For the banking industry, pessimists exceeded optimists by 37.3% in August while in July, optimists had exceeded pessimists by 21.9%. Comparable figures for the insurance industry were 13.2% and 23.7%. Monthly changes in profit expectations for the banking and insurance industries along with those for construction and consumer/trade industries--two other industries where profit expectations showed substantial declines in August are show in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821e.jpg" width="353">
There were some improvements in the monthly changes of profit expectations. Most improvements involved a decline in the excess of pessimists, but profit expectations in the telecommunication industry actually showed an excess of optimists of 3.5%. Monthly changes in profit expectations for the telecommunication industry are shown in the third chart along with those for the information technology, utilities and service industries that also showed improvement in that the excess of pessimists over optimists was lower in August than in July. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ZEW MEASURES OF CONFIDENCE (%)</th>
<th scope="col">Aug 07</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">Aug 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>
<td class="firstcol">Expectations</td>
<td>-6.9</td>
<td>10.4</td>
<td>-5.6</td>
<td>-17.3</td>
<td>-1.3</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr>
<td class="firstcol">Current conditions</td>
<td>80.2</td>
<td>88.2</td>
<td>33.6</td>
<td>-8.0</td>
<td>46.6</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The ZEW indicator of confidence among German institutional investors and analysts showed that pessimists outweighed optimists by 6.9% in August. In July, optimists outweighed pessimists by 10.9% in July. The decline of 17.3 percentage [...]

Market Turmoil Shakes Confidence of German Investors and Analysts

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821f.jpg" width="353">
Exports were up more strongly in June than were imports shrinking the Euro area trade deficit in the month. Exports have a reasonably strong history of growth across its main categories. Import growth also has been firm and broad-based. However, manufacturing exports and imports are the slowest year-over-year. Manufacturing exports are rising at an 8.8% pace compared to imports at 7.6%. But over short time horizons both export and import growth has slowed.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Ezone 13-Trade Trends for Goods
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M%</td>
<td colspan="3">% SAAR</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Jun-07</td>
<td>May-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr>
<td class="firstcol">Balance*</td>
<td>&#128;&#128; 5,217</td>
<td>&#128;&#128; 3,893</td>
<td>&#128;&#128; 4,211</td>
<td>&#128;&#128; 3,427</td>
<td>&#128;&#128; 1,563</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>1.7%</td>
<td>0.6%</td>
<td>8.8%</td>
<td>4.9%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>0.5%</td>
<td>14.7%</td>
<td>2.3%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">Raw Materials</td>
<td>--</td>
<td>2.3%</td>
<td>30.0%</td>
<td>7.4%</td>
<td>13.6%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>0.8%</td>
<td>4.6%</td>
<td>-0.1%</td>
<td>8.8%</td>
</tr>
<tr>
<td class="firstcol">IMPORTS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>0.7%</td>
<td>0.3%</td>
<td>10.2%</td>
<td>-1.2%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-0.1%</td>
<td>15.8%</td>
<td>7.4%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">Raw Materials</td>
<td>--</td>
<td>2.3%</td>
<td>14.7%</td>
<td>5.4%</td>
<td>16.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>1.6%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td colspan="6">*Eur mlns; mo or period average; Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
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Exports were up more strongly in June than were imports shrinking the Euro area trade deficit in the month. Exports have a reasonably strong history of growth across its main categories. Import growth also has been firm and broad- [...]

Euro Area Export and Import Growth Both Tic Up in June

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey reported that chain store sales rose 0.2% last week after the 0.9% decline during the prior period. 
The average level of store sales, thus, so far in August is just even with the July level which rose 0.4% from June. 
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS was unchanged from the prior week (1.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821b.jpg" width="353"> 
Gasoline prices for regular, on average rose one penny last week to $2.78 per gallon (-4.8% y/y).
The average gas price so far in August is 5.6% lower than in July and prices have fallen 13.5% from their peak during May of $3.22 per gallon.
The market price for regular gasoline in N.Y. harbor increased yesterday to $1.98 (11.1% y/y) and so far in August has averaged roughly 6.8% lower than during July.
For crude oil, the price for West Texas Intermediate fell yesterday to $71.13 per barrel and so far in August has averaged $73.60, 0.2% below July.

<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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a>&nbsp;</th>
<th scope="col">08/18/07&nbsp;</th>
<th scope="col">08/11/06&nbsp;</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales&nbsp;</td>
<td>482.0</td>
<td>480.8&nbsp;</td>
<td>2.7%&nbsp;</td>
<td>3.3%&nbsp;</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


</html>

The International Council of Shopping Centers (ICSC)-UBS survey reported that chain store sales rose 0.2% last week after the 0.9% decline during the prior period. The average level of store sales, thus, so far in August is just even [...]

U.S. Weekly Chain Store Sales Ticked Up, As Did Gasoline Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821f.jpg" width="353">
Exports were up more strongly in June than were imports shrinking the Euro area trade deficit in the month. Exports have a reasonably strong history of growth across its main categories. Import growth also has been firm and broad-based. However, manufacturing exports and imports are the slowest year-over-year. Manufacturing exports are rising at an 8.8% pace compared to imports at 7.6%. But over short time horizons both export and import growth has slowed.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Ezone 13-Trade Trends for Goods
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M%</td>
<td colspan="3">% SAAR</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Jun-07</td>
<td>May-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr>
<td class="firstcol">Balance*</td>
<td>&#128;&#128; 5,217</td>
<td>&#128;&#128; 3,893</td>
<td>&#128;&#128; 4,211</td>
<td>&#128;&#128; 3,427</td>
<td>&#128;&#128; 1,563</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>1.7%</td>
<td>0.6%</td>
<td>8.8%</td>
<td>4.9%</td>
<td>10.1%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>0.5%</td>
<td>14.7%</td>
<td>2.3%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">Raw Materials</td>
<td>--</td>
<td>2.3%</td>
<td>30.0%</td>
<td>7.4%</td>
<td>13.6%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>0.8%</td>
<td>4.6%</td>
<td>-0.1%</td>
<td>8.8%</td>
</tr>
<tr>
<td class="firstcol">IMPORTS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>0.7%</td>
<td>0.3%</td>
<td>10.2%</td>
<td>-1.2%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-0.1%</td>
<td>15.8%</td>
<td>7.4%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">Raw Materials</td>
<td>--</td>
<td>2.3%</td>
<td>14.7%</td>
<td>5.4%</td>
<td>16.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>1.6%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td colspan="6">*Eur mlns; mo or period average; Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
 Market Turmoil Shakes Confidence of German Investors and Analysts 
by <a href="/comment/Curley.html">Louise Curley</a> August 21, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821c.jpg" width="353">
The ZEW indicator of confidence among German institutional investors and analysts showed that pessimists outweighed optimists by 6.9% in August. In July, optimists outweighed pessimists by 10.9% in July. The decline of 17.3 percentage points was the largest since the decline of 20.7 last August. The participants&#39; appraisal of current conditions fell by 8 percentage points from 88.2 in July to 80.2 in August. Expectations and appraisals of current conditions are shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821d.jpg" width="353">
The turmoil in stock markets around the world during the period when the survey took place--July 30 to August 20--no doubt affected the participants&#39; expectations and also their outlook for profits in selected industries.
Profit expectations for the banking and insurance industries were lowered sharply. For the banking industry, pessimists exceeded optimists by 37.3% in August while in July, optimists had exceeded pessimists by 21.9%. Comparable figures for the insurance industry were 13.2% and 23.7%. Monthly changes in profit expectations for the banking and insurance industries along with those for construction and consumer/trade industries--two other industries where profit expectations showed substantial declines in August are show in the second chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821e.jpg" width="353">
There were some improvements in the monthly changes of profit expectations. Most improvements involved a decline in the excess of pessimists, but profit expectations in the telecommunication industry actually showed an excess of optimists of 3.5%. Monthly changes in profit expectations for the telecommunication industry are shown in the third chart along with those for the information technology, utilities and service industries that also showed improvement in that the excess of pessimists over optimists was lower in August than in July. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ZEW MEASURES OF CONFIDENCE (%)</th>
<th scope="col">Aug 07</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">Aug 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>
<td class="firstcol">Expectations</td>
<td>-6.9</td>
<td>10.4</td>
<td>-5.6</td>
<td>-17.3</td>
<td>-1.3</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr>
<td class="firstcol">Current conditions</td>
<td>80.2</td>
<td>88.2</td>
<td>33.6</td>
<td>-8.0</td>
<td>46.6</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
</tbody>
</table>
U.S. Weekly Chain Store Sales Ticked Up, As Did Gasoline Prices 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 21, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey reported that chain store sales rose 0.2% last week after the 0.9% decline during the prior period. 
The average level of store sales, thus, so far in August is just even with the July level which rose 0.4% from June. 
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS was unchanged from the prior week (1.9% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070821b.jpg" width="353"> 
Gasoline prices for regular, on average rose one penny last week to $2.78 per gallon (-4.8% y/y).
The average gas price so far in August is 5.6% lower than in July and prices have fallen 13.5% from their peak during May of $3.22 per gallon.
The market price for regular gasoline in N.Y. harbor increased yesterday to $1.98 (11.1% y/y) and so far in August has averaged roughly 6.8% lower than during July.
For crude oil, the price for West Texas Intermediate fell yesterday to $71.13 per barrel and so far in August has averaged $73.60, 0.2% below July.

<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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a>&nbsp;</th>
<th scope="col">08/18/07&nbsp;</th>
<th scope="col">08/11/06&nbsp;</th>
<th scope="col">Y/Y&nbsp;</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales&nbsp;</td>
<td>482.0</td>
<td>480.8&nbsp;</td>
<td>2.7%&nbsp;</td>
<td>3.3%&nbsp;</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820d.jpg" width="353">
Among the Haver updates released today were balance of payments data for Greece and Taiwan. The two countries have very different balances of payments. Greece traditionally runs a deficit on current account while Taiwan runs a surplus. Typically, a deficit (surplus) is offset largely by inflows (outflows) in its capital and financial accounts and changes in foreign exchange reserves. Because of difficulties in the measurement of all the various flows in the balance of payments, an item &quot;errors and omissions&quot; is introduced to balance the account. The first two charts show how Greece&#39;s current account deficit, and Taiwan&#39;s surplus are offset by changes in capital flows, foreign exchange reserves and &quot;errors and omissions&quot;.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820e.jpg" width="353">
Greece&#39;s deficit on current account is the result of deficits on trade in goods and its income account that outweigh small surpluses on trade in services and transfer. Taiwan, on the other hand has a large surplus on goods and on its income account that more than offsets small deficits on trade in services and in transfers. The components of the current account for Greece and Taiwan are shown in the third and fourth charts.
When foreign exchange reserves are used to offset a deficit in the current account, they appear with a plus sign in the balance of payments account, however, the store of reserves has been reduced. Thus in the balance of payments a plus sign in the reserves means a decline in reserves and a minus sign indicates an increase. Over the years Taiwan has often opted to increase reserves, rather than invest the surplus on current account in foreign assets. At the end of June, Taiwanese reserves amounted to $266 billion, compared with $355 million for Greece. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820f.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820g.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"></th>
<th scope="col">Q2 07</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q2 06&nbsp;</th>
<th scope="col">Q/Q Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="9">GREECE (Millions Euros)</td>
</tr>
<tr>
<td class="firstcol">Current Account</td>
<td>-4688</td>
<td>-9022</td>
<td>-6256</td>
<td>1334</td>
<td>-1432</td>
<td>-23660</td>
<td>-14348</td>
<td>-10453</td>
</tr>
<tr>
<td class="firstcol">Capital &amp; Financial Account* (Includes change in Reserves</td>
<td>8148</td>
<td>8800</td>
<td>6491</td>
<td>652</td>
<td>1657</td>
<td>23404</td>
<td>14655</td>
<td>10220</td>
</tr>
<tr>
<td class="firstcol"> Errors and Omission </td>
<td>-461</td>
<td>222</td>
<td>-235</td>
<td>-682</td>
<td>-226</td>
<td>255</td>
<td>-308</td>
<td>233</td>
</tr>
<tr>
<td class="firstcol">Actual Foreign Exchange Reserves &nbsp;(Mil US$)</td>
<td>355</td>
<td>466</td>
<td>514</td>
<td>-101</td>
<td>-159</td>
<td>389</td>
<td>326</td>
<td>679</td>
</tr>
<tr class="odd">
<td colspan="9">TAIWAN (Millions US$)</td>
</tr>
<tr>
<td class="firstcol">Current Account</td>
<td>4976</td>
<td>8780</td>
<td>4511</td>
<td>-3804</td>
<td>465</td>
<td>24658</td>
<td>19019</td>
<td>18478</td>
</tr>
<tr>
<td class="firstcol">Capital &amp; Financial Account</td>
<td>-7187</td>
<td>-10998</td>
<td>-5841</td>
<td>3811</td>
<td>-1346</td>
<td>-19749</td>
<td>2185</td>
<td>7089</td>
</tr>
<tr>
<td class="firstcol"> Change in Foreign Exchange Reserves&nbsp; </td>
<td>1893</td>
<td>-369</td>
<td>-482</td>
<td>2262</td>
<td>2375</td>
<td>-6086</td>
<td>-20056</td>
<td>-26595</td>
</tr>
<tr>
<td class="firstcol"> Errors and Omission </td>
<td>318</td>
<td>2587</td>
<td>1812</td>
<td>-2269</td>
<td>-1494</td>
<td>1177</td>
<td>1852</td>
<td>1028</td>
</tr>
<tr>
<td class="firstcol">Actual Foreign Exchange Reserves &nbsp;(Mil US$)</td>
<td>266055</td>
<td>267490</td>
<td>260350</td>
<td>-1436</td>
<td>5705</td>
<td>266148</td>
<td>253290</td>
<td>241738</td>
</tr>
</tbody>
</table>
</body>
</html>

Among the Haver updates released today were balance of payments data for Greece and Taiwan. The two countries have very different balances of payments. Greece traditionally runs a deficit on current account while Taiwan runs a [...]

Contrasting Balance of Payments for Greece and Taiwan

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820h.jpg" width="353">
French industrial orders build on May acceleration. 
As the Euro area growth seemed to sputter in Q2, various indicators weakened as well. And GDP in the Euro area was below expectations in Q2. Certainly the VAT hike in Germany, the Euro area&#39;s largest economy was a factor. But since then there have been few signs that growth has been put back on track. Against this background, strong French orders is a welcome sign. May had showed a strong bump up in orders, but the 5.1% simple monthly gain in June makes the surge in orders much more certain. With concerns about subprime lending risks and losses and other financial strife, it is key to see the economy on stronger footing. This report is the first sign we have that Europe was tipped into this period on very strong growth. It will be interesting to see what numbers will turn out for July as well. We have to wait for August figures to see true post lending crisis impacts begin to emerge. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French Orders
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">SAAR except m/m</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>5.1%</td>
<td>2.6%</td>
<td>0.6%</td>
<td>38.6%</td>
<td>26.6%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>5.1%</td>
<td>4.8%</td>
<td>1.7%</td>
<td>57.5%</td>
<td>27.7%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
</body>
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French industrial orders build on May acceleration. As the Euro area growth seemed to sputter in Q2, various indicators weakened as well. And GDP in the Euro area was below expectations in Q2. Certainly the VAT hike in Germany, the [...]

French Industrial Orders Pop in June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820a.jpg" width="353">
The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago fell back in July to -0.10 after a brief move into positive territory during the prior month.
The Chicago Fed indicated that the production &amp; income category made a positive contribution to the index. They were offset by negative contributions in the employment, the consumption and housing category. The sales, orders, and inventories category made a neutral contribution in July.
The three-month moving average of the CFNAI also fell back into negative territory where it has been now for eleven months.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_August2007.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.10</td>
<td>0.06</td>
<td>0.02</td>
<td>0.02</td>
<td>0.28</td>
<td>0.32</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago fell back in July to -0.10 after a brief move into positive territory during the prior month. The Chicago Fed indicated that the production & income category [...]

Chicago Fed National Activity Index Negative, Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820h.jpg" width="353">
French industrial orders build on May acceleration. 
As the Euro area growth seemed to sputter in Q2, various indicators weakened as well. And GDP in the Euro area was below expectations in Q2. Certainly the VAT hike in Germany, the Euro area&#39;s largest economy was a factor. But since then there have been few signs that growth has been put back on track. Against this background, strong French orders is a welcome sign. May had showed a strong bump up in orders, but the 5.1% simple monthly gain in June makes the surge in orders much more certain. With concerns about subprime lending risks and losses and other financial strife, it is key to see the economy on stronger footing. This report is the first sign we have that Europe was tipped into this period on very strong growth. It will be interesting to see what numbers will turn out for July as well. We have to wait for August figures to see true post lending crisis impacts begin to emerge. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French Orders
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">SAAR except m/m</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>5.1%</td>
<td>2.6%</td>
<td>0.6%</td>
<td>38.6%</td>
<td>26.6%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>5.1%</td>
<td>4.8%</td>
<td>1.7%</td>
<td>57.5%</td>
<td>27.7%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
 Contrasting Balance of Payments for Greece and Taiwan 
by <a href="/comment/Curley.html">Louise Curley</a> August 20 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820d.jpg" width="353">
Among the Haver updates released today were balance of payments data for Greece and Taiwan. The two countries have very different balances of payments. Greece traditionally runs a deficit on current account while Taiwan runs a surplus. Typically, a deficit (surplus) is offset largely by inflows (outflows) in its capital and financial accounts and changes in foreign exchange reserves. Because of difficulties in the measurement of all the various flows in the balance of payments, an item &quot;errors and omissions&quot; is introduced to balance the account. The first two charts show how Greece&#39;s current account deficit, and Taiwan&#39;s surplus are offset by changes in capital flows, foreign exchange reserves and &quot;errors and omissions&quot;.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820e.jpg" width="353">
Greece&#39;s deficit on current account is the result of deficits on trade in goods and its income account that outweigh small surpluses on trade in services and transfer. Taiwan, on the other hand has a large surplus on goods and on its income account that more than offsets small deficits on trade in services and in transfers. The components of the current account for Greece and Taiwan are shown in the third and fourth charts.
When foreign exchange reserves are used to offset a deficit in the current account, they appear with a plus sign in the balance of payments account, however, the store of reserves has been reduced. Thus in the balance of payments a plus sign in the reserves means a decline in reserves and a minus sign indicates an increase. Over the years Taiwan has often opted to increase reserves, rather than invest the surplus on current account in foreign assets. At the end of June, Taiwanese reserves amounted to $266 billion, compared with $355 million for Greece. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820f.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820g.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"></th>
<th scope="col">Q2 07</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q2 06&nbsp;</th>
<th scope="col">Q/Q Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="9">GREECE (Millions Euros)</td>
</tr>
<tr>
<td class="firstcol">Current Account</td>
<td>-4688</td>
<td>-9022</td>
<td>-6256</td>
<td>1334</td>
<td>-1432</td>
<td>-23660</td>
<td>-14348</td>
<td>-10453</td>
</tr>
<tr>
<td class="firstcol">Capital &amp; Financial Account* (Includes change in Reserves</td>
<td>8148</td>
<td>8800</td>
<td>6491</td>
<td>652</td>
<td>1657</td>
<td>23404</td>
<td>14655</td>
<td>10220</td>
</tr>
<tr>
<td class="firstcol"> Errors and Omission </td>
<td>-461</td>
<td>222</td>
<td>-235</td>
<td>-682</td>
<td>-226</td>
<td>255</td>
<td>-308</td>
<td>233</td>
</tr>
<tr>
<td class="firstcol">Actual Foreign Exchange Reserves &nbsp;(Mil US$)</td>
<td>355</td>
<td>466</td>
<td>514</td>
<td>-101</td>
<td>-159</td>
<td>389</td>
<td>326</td>
<td>679</td>
</tr>
<tr class="odd">
<td colspan="9">TAIWAN (Millions US$)</td>
</tr>
<tr>
<td class="firstcol">Current Account</td>
<td>4976</td>
<td>8780</td>
<td>4511</td>
<td>-3804</td>
<td>465</td>
<td>24658</td>
<td>19019</td>
<td>18478</td>
</tr>
<tr>
<td class="firstcol">Capital &amp; Financial Account</td>
<td>-7187</td>
<td>-10998</td>
<td>-5841</td>
<td>3811</td>
<td>-1346</td>
<td>-19749</td>
<td>2185</td>
<td>7089</td>
</tr>
<tr>
<td class="firstcol"> Change in Foreign Exchange Reserves&nbsp; </td>
<td>1893</td>
<td>-369</td>
<td>-482</td>
<td>2262</td>
<td>2375</td>
<td>-6086</td>
<td>-20056</td>
<td>-26595</td>
</tr>
<tr>
<td class="firstcol"> Errors and Omission </td>
<td>318</td>
<td>2587</td>
<td>1812</td>
<td>-2269</td>
<td>-1494</td>
<td>1177</td>
<td>1852</td>
<td>1028</td>
</tr>
<tr>
<td class="firstcol">Actual Foreign Exchange Reserves &nbsp;(Mil US$)</td>
<td>266055</td>
<td>267490</td>
<td>260350</td>
<td>-1436</td>
<td>5705</td>
<td>266148</td>
<td>253290</td>
<td>241738</td>
</tr>
</tbody>
</table>
Chicago Fed National Activity Index Negative, Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 20, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820a.jpg" width="353">
The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago fell back in July to -0.10 after a brief move into positive territory during the prior month.
The Chicago Fed indicated that the production &amp; income category made a positive contribution to the index. They were offset by negative contributions in the employment, the consumption and housing category. The sales, orders, and inventories category made a neutral contribution in July.
The three-month moving average of the CFNAI also fell back into negative territory where it has been now for eleven months.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_August2007.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.10</td>
<td>0.06</td>
<td>0.02</td>
<td>0.02</td>
<td>0.28</td>
<td>0.32</td>
</tr>
</tbody>
</table>
Tom Moeller 
by <a href="/comment/Moeller.html">U.S. Leading Economic Indicators RoseAugust 20, 2007 By Tom Moeller</a>  


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820b.jpg" width="353">
The Conference Board reported that the composite index of leading economic indicators rose 0.4% during July following an unrevised 0.3% decline during June.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators and the lagged change in real GDP.
The breadth of one month gain amongst the 10 components of the leading index improved to 65%, its best since March.
Lower initial claims for unemployment insurance and improved vendor performance accounted for most the leader&#146;s increase.
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070820c.jpg" width="353">
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators increased 0.2% after an upwardly revised 0.2% rise during June. The coincident index, made up of payroll employment, personal income, industrial production and business sales, has increased in every month since August 2005. Over the last ten years there has been a 91% correlation between the y/y change in the coincident indicators and real GDP growth.
The lagging index rose 0.2%. As a result the ratio of coincident to lagging indicators (a measure of economic excess) was unchanged. Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world. 
The Cost of Business Cycles for Unskilled Workers from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr214.html"> here</a>.<a href="http://www.newyorkfed.org/research/staff_reports/sr214.html"> </a>
Job-Finding and Separation Rates in the OECD from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr298.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</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">Leading</td>
<td>0.4%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>1.2%</td>
<td>2.5%</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>2.1%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.2%</td>
<td>0.5%</td>
<td>3.2%</td>
<td>3.0%</td>
<td>3.5%</td>
<td>0.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

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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- 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

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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.

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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

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Market Turmoil Shakes Confidence of German Investors and Analysts

Euro Area Export and Import Growth Both Tic Up in June

U.S. Weekly Chain Store Sales Ticked Up, As Did Gasoline Prices

Euro Area Export and Import Growth Both Tic Up in June

Contrasting Balance of Payments for Greece and Taiwan

French Industrial Orders Pop in June

Chicago Fed National Activity Index Negative, Again

French Industrial Orders Pop in June