Robert Brusca

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Exports rebounded strongly in December after coming up flat in
November. Overall exports rose by 3.1% in December as MFG exports rose
by 2.7% in December. Three month growth rates continue to show strong
growth, accelerating slightly for overall exports but with MFG exports
losing a bit of momentum compared to their six-month pace
Import growth is positive. Its three-and six-month rates of
growth have steadied at or below the 10% growth rate mark.
Manufacturing import growth is positive but barely growing at all,
rising at 0.3% annualized rate of growth over three months, having
slowed from nearly a 7% pace over six months.
Europe&#8217;s trade surplus is at a five year high. Exports are at
their highest level in 12-months as well. Europe continues to act as a
region with export-led growth. Exports are digging out from the
recession faster than imports. Imports are lower by 8% Yr/yr compared
to exports that are lower by just 2%.
Domestic demand is lagging in the Euro-Area. Exports are
pulling the region into recovery faster than its own consumers.
Europe&#8217;s recovery depends on the continuation of global growth as much
as any region.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area
Trade trends for goods 
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="2">m/m%</td>
<td style="font-weight: bold;" colspan="3">% Saar</td>
<td style="font-weight: bold;">&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">Nov-09</td>
<td style="font-weight: bold;">3M</td>
<td style="font-weight: bold;">6M</td>
<td style="font-weight: bold;">12M</td>
<td style="font-weight: bold;">12M Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&nbsp; 7,003 </td>
<td>&#8364;&nbsp; 5,294 </td>
<td>&#8364;&nbsp; (3,252)</td>
<td>&#8364;&nbsp; 4,482 </td>
<td>&#8364;&nbsp; (3,450)</td>
<td>&#8364;&nbsp; 1,384 </td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">Exports</td>
</tr>
<tr class="odd">
<td class="firstcol">All Exp</td>
<td>3.1%</td>
<td style="color: red;">0.0%</td>
<td>25.6%</td>
<td>22.6%</td>
<td style="color: red;">-2.3%</td>
<td style="color: red;">-6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food and Drinks</td>
<td>4.8%</td>
<td>1.7%</td>
<td>18.3%</td>
<td>10.6%</td>
<td style="color: red;">-1.9%</td>
<td style="color: red;">4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Raw materials</td>
<td>7.7%</td>
<td style="color: red;">-0.7%</td>
<td>51.4%</td>
<td>31.5%</td>
<td>24.6%</td>
<td style="color: red;">-19.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>2.9%</td>
<td style="color: red;">-0.2%</td>
<td>25.6%</td>
<td>23.4%</td>
<td style="color: red;">-2.9%</td>
<td style="color: red;">-7.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; MFG</td>
<td>2.7%</td>
<td style="color: red;">-0.3%</td>
<td>17.7%</td>
<td>21.3%</td>
<td style="color: red;">-5.2%</td>
<td style="color: red;">-7.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">IMPORTS</td>
</tr>
<tr class="odd">
<td class="firstcol">All IMP</td>
<td>1.7%</td>
<td>0.9%</td>
<td>7.2%</td>
<td>10.7%</td>
<td style="color: red;">-7.8%</td>
<td style="color: red;">-9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food and Drinks</td>
<td style="color: red;">-1.3%</td>
<td>3.2%</td>
<td style="color: red;">-14.0%</td>
<td style="color: red;">-3.1%</td>
<td style="color: red;">-8.7%</td>
<td style="color: red;">1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Raw materials</td>
<td>4.4%</td>
<td>3.2%</td>
<td>41.2%</td>
<td>43.8%</td>
<td style="color: red;">-19.0%</td>
<td style="color: red;">-6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>1.7%</td>
<td>0.6%</td>
<td>7.5%</td>
<td>10.5%</td>
<td style="color: red;">-7.2%</td>
<td style="color: red;">-9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; MFG</td>
<td>1.5%</td>
<td style="color: red;">-0.1%</td>
<td>0.3%</td>
<td>6.9%</td>
<td style="color: red;">-9.2%</td>
<td style="color: red;">-8.5%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">*Eur mlns;
mo or period
average</td>
</tr>
</tbody>
</table>
</body></html>

Exports rebounded strongly in December after coming up flat in November. Overall exports rose by 3.1% in December as MFG exports rose by 2.7% in December. Three month growth rates continue to show strong growth, accelerating slightly [...]

Euro-Area Trade Surplus Moves Up Sharply

Tom Moeller

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217g.jpg" style="width: 353px; height: 265px;" align="right">
Higher oil
prices and the lower dollar have been the primary factors behind the
movement in import prices this past year. Just for January, a 1.4% rise
in prices was nearly the strongest since last June and beat Consensus
expectations for a 1.0% gain.
Petroleum prices jumped 4.8% last month
and they have roughly doubled since last January. This month, the
strength in Brent crude oil prices tapered off with a decline to an
average $72.91 after reaching a daily high near $80 per barrel early in
January.
Conversely the lower value of the U.S. dollar has helped lift
non-oil import prices. A 0.6% January increase was near the elevated
gains during the prior four months. Since their low last March non-oil
import prices have risen 2.4% after a 5.3% decline during the prior
twelve months. (During the last ten years, there has been a negative
81% correlation between the nominal trade-weighted exchange value of
the US dollar vs. major currencies and the y/y change in non-oil import
prices.)&nbsp;
 Prices for nonauto consumer goods rose for the
first month in the last three but the slight y/y increase is improved
from the deflation as of last Fall. Prices for durable consumer goods
increased a firm 0.6% to lift the y/y increase to 0.6% from a 1.1%
decline as of last fall. Capital goods also slipped m/m but the pace of
price deflation has slowed.
Total export prices increased 0.8% (3.4%
y/y) reflecting a 1.4% (4.5% y/y) increase in agricultural export
prices and a 0.7% gain (3.3% y/y) in non-agricultural prices. These
declines reversed just some of the strength through 2008
The
import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT
database.
Is
the International Role of the Dollar Changing? from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci16-1.pdf">here</a>.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217i.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA, %)</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.4</td>
<td>0.2</td>
<td>1.5</td>
<td>11.5</td>
<td>-11.5</td>
<td>11.5</td>
<td>4.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.8</td>
<td>-1.4</td>
<td>5.4</td>
<td>95.5</td>
<td>-36.0</td>
<td>37.7</td>
<td>11.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.6</td>
<td>0.5</td>
<td>0.6</td>
<td>1.2</td>
<td>-4.2</td>
<td>5.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>0.8</td>
<td>0.6</td>
<td>0.8</td>
<td>3.4</td>
<td>-4.6</td>
<td>6.0</td>
<td>4.9</td>
</tr>
</tbody>
</table>

</body></html>

Higher oil prices and the lower dollar have been the primary factors behind the movement in import prices this past year. Just for January, a 1.4% rise in prices was nearly the strongest since last June and beat Consensus expectations [...]

U.S. Import Price Gains Continue Strong

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217d.jpg" style="width: 353px; height: 265px;" align="right"> With a 0.9%
January increase, U.S. industrial output posted its strongest monthly
gain since August. Moreover, the run-up since the June bottom has
totaled 5.3%. That compares with a 13.2% decline during the prior year
which exceeded the declines during most other postwar recessions. A
1.1% increase in the output of consumer goods paced the January
production increase. The y/y gain of 3.2% has been driven by a nearly
one-half increase in auto products output during the last year. Output
of computers, video &amp; audio output also rose 1.0% (-5.3% y/y)
for the fifth consecutive strong monthly gain. Output of appliances,
furniture &amp; carpeting was unchanged last month (-7.5% y/y)
after a sharp December fall which was part of an 18.1% 2009 drop.
Business equipment output was strong for the second consecutive month
but still was off 3.7% y/y after the 12.5% decline during all of last
year. Finally, apparel output jumped 3.4% last month (0.7% y/y) and
since its bottom has risen 5.9%.&nbsp;Capacity utilization rose
further to 72.67%, its highest level since December 2008. In the
factory sector alone utilization rose to 69.4% from the 2009 low of
65.2%. Utilization in the primary metals area has risen sharply to
61.9% from a 2009 average of 51.2% with the rebound in output. There's
also been rise in utilization in the motor vehicle sector to 55.0% from
a low of 36.8% in June. Utilization was 77.0% in 2005. The rise in
utilization was accompanied by another 0.1% m/m decline in capacity
which was off a record 1.1%y/y.&nbsp;The industrial
production data are available in Haver's USECON
database.Using FOMC Forecasts to Forecast the
Economy from the Federal Reserve Bank of St. Louis can be
found <a href="http://research.stlouisfed.org/publications/net/20100201/netpub.pdf">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (SA,%)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output</td>
<td>0.9</td>
<td>0.7</td>
<td>0.6</td>
<td>1.0</td>
<td>-9.7</td>
<td>-2.2</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>0.9</td>
<td>0.0</td>
<td>0.9</td>
<td>1.6</td>
<td>-11.3</td>
<td>-3.2</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>1.1</td>
<td>0.7</td>
<td>-0.3</td>
<td>3.2</td>
<td>-5.2</td>
<td>-2.6</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>1.0</td>
<td>1.3</td>
<td>-0.3</td>
<td>-3.7</td>
<td>-12.5</td>
<td>-1.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>0.9</td>
<td>-1.7</td>
<td>1.6</td>
<td>-5.4</td>
<td>-17.6</td>
<td>-6.3</td>
<td>-2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>0.8</td>
<td>0.5</td>
<td>1.3</td>
<td>2.0</td>
<td>-10.9</td>
<td>-1.9</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.7</td>
<td>6.3</td>
<td>-3.0</td>
<td>-0.5</td>
<td>-2.6</td>
<td>0.3</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>72.6</td>
<td>71.9</td>
<td>71.3</td>
<td>71.1 (Jan. '09)</td>
<td>70.1</td>
<td>77.5</td>
<td>80.6</td>
</tr>
</tbody>
</table>
</body></html>

With a 0.9% January increase, U.S. industrial output posted its strongest monthly gain since August. Moreover, the run-up since the June bottom has totaled 5.3%. That compares with a 13.2% decline during the prior year which exceeded [...]

Industrial Output Firms

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217a.jpg" style="width: 353px; height: 265px;" align="right">
Housing
starts increased a modest 2.8% last month to 591,000 (AR) units
following a slightly revised decline to 575,000 during December. The
small gain was only enough, however, to lift starts back to the level
reached last summer. In fact, the 21.1% twelve-month increase from near
the recession low pales in comparison to the 50%-90% increases
following downturns since the 1970s. Since their peak in January of
2006, starts remain down by three-quarters. January's figure slightly
beat Consensus expectations for 580,000 starts.&nbsp; Last month,
starts of single-family homes ticked up just 1.5% to 484,000 after
December's 3.0% decline. Year-to-year starts have risen by one-third
but they're up just 1.5% from the 4Q average. During the last ten
years, there has been an 84% correlation between the q/q change in
single-family starts and their contribution to quarterly GDP growth.
The increase in January starts of single-family units was contained by
declines in the Midwest (63.0% y/y) and in the Southern (28.5% y/y)
regions of the country. In the Northeast starts rose moderately m/m
(82.1% y/y) and in the West starts just recouped the moderate December
decline (21.7% y/y).A 9.2% increase in starts of multi-family units
added to firmer increases during the prior two months. Starts of
apartments, condominiums &amp; town houses still were down 76.2%
from the January 2006 peak. Despite a moderate 4.9% m/m decline,
January building permits remain up by one-quarter from their low last
March. Permits to build a single-family home rose slightly m/m
and have risen one-half from their low last January.The
housing starts figures can be found in Haver's USECON database.Mortgage
Choice and the Pricing of Fixed-Rate and Adjustable-Rate Mortgages
from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-03.html">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Nov. Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>591</td>
<td>575</td>
<td>579</td>
<td>21.1%</td>
<td>553</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>484</td>
<td>477</td>
<td>492</td>
<td>35.6</td>
<td>440</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>107</td>
<td>98</td>
<td>87</td>
<td>-18.3</td>
<td>113</td>
<td>285</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>621</td>
<td>653</td>
<td>589</td>
<td>16.9</td>
<td>558</td>
<td>895</td>
<td>1,392</td>
</tr>
</tbody>
</table>
</body></html>

Housing starts increased a modest 2.8% last month to 591,000 (AR) units following a slightly revised decline to 575,000 during December. The small gain was only enough, however, to lift starts back to the level reached last summer. In [...]

U.S. Housing Starts Rise But Forward Momentum Is Weak

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217a.jpg" style="width: 353px; height: 265px;" align="right">Housing
starts increased a modest 2.8% last month to 591,000 (AR) units
following a slightly revised decline to 575,000 during December. The
small gain was only enough, however, to lift starts back to the level
reached last summer. In fact, the 21.1% twelve-month increase from near
the recession low pales in comparison to the 50%-90% increases
following downturns since the 1970s. Since their peak in January of
2006, starts remain down by three-quarters. January's figure slightly
beat Consensus expectations for 580,000 starts.&nbsp;
 Last month,
starts of single-family homes ticked up just 1.5% to 484,000 after
December's 3.0% decline. Year-to-year starts have risen by one-third
but they're up just 1.5% from the 4Q average. During the last ten
years, there has been an 84% correlation between the q/q change in
single-family starts and their contribution to quarterly GDP growth.
The increase in January starts of single-family units was contained by
declines in the Midwest (63.0% y/y) and in the Southern (28.5% y/y)
regions of the country. In the Northeast starts rose moderately m/m
(82.1% y/y) and in the West starts just recouped the moderate December
decline (21.7% y/y).
A 9.2% increase in starts of multi-family units
added to firmer increases during the prior two months. Starts of
apartments, condominiums &amp; town houses still were down 76.2%
from the January 2006 peak.
 Despite a moderate 4.9% m/m decline,
January building permits remain up by one-quarter from their low last
March. Permits to build a single-family home rose slightly m/m
and have risen one-half from their low last January.
The
housing starts figures can be found in Haver's USECON database.
Mortgage
Choice and the Pricing of Fixed-Rate and Adjustable-Rate Mortgages
from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2010/el2010-03.html">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Nov. Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>591</td>
<td>575</td>
<td>579</td>
<td>21.1%</td>
<td>553</td>
<td>900</td>
<td>1,342</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>484</td>
<td>477</td>
<td>492</td>
<td>35.6</td>
<td>440</td>
<td>616</td>
<td>1,036</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>107</td>
<td>98</td>
<td>87</td>
<td>-18.3</td>
<td>113</td>
<td>285</td>
<td>306</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>621</td>
<td>653</td>
<td>589</td>
<td>16.9</td>
<td>558</td>
<td>895</td>
<td>1,392</td>
</tr>
</tbody>
</table>

Industrial Output Firms 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 17, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217d.jpg" style="width: 353px; height: 265px;" align="right">With
a 0.9%
January increase, U.S. industrial output posted its strongest monthly
gain since August. Moreover, the run-up since the June bottom has
totaled 5.3%. That compares with a 13.2% decline during the prior year
which exceeded the declines during most other postwar recessions.
 A
1.1% increase in the output of consumer goods paced the January
production increase. The y/y gain of 3.2% has been driven by a nearly
one-half increase in auto products output during the last year. Output
of computers, video &amp; audio output also rose 1.0% (-5.3% y/y)
for the fifth consecutive strong monthly gain. Output of appliances,
furniture &amp; carpeting was unchanged last month (-7.5% y/y)
after a sharp December fall which was part of an 18.1% 2009 drop.
Business equipment output was strong for the second consecutive month
but still was off 3.7% y/y after the 12.5% decline during all of last
year. Finally, apparel output jumped 3.4% last month (0.7% y/y) and
since its bottom has risen 5.9%.
&nbsp;Capacity utilization rose
further to 72.67%, its highest level since December 2008. In the
factory sector alone utilization rose to 69.4% from the 2009 low of
65.2%. Utilization in the primary metals area has risen sharply to
61.9% from a 2009 average of 51.2% with the rebound in output. There's
also been rise in utilization in the motor vehicle sector to 55.0% from
a low of 36.8% in June. Utilization was 77.0% in 2005. The rise in
utilization was accompanied by another 0.1% m/m decline in capacity
which was off a record 1.1%y/y.&nbsp;
The industrial
production data are available in Haver's USECON
database.
Using
FOMC Forecasts to Forecast the
Economy from the Federal Reserve Bank of St. Louis can be
found <a href="http://research.stlouisfed.org/publications/net/20100201/netpub.pdf">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production (SA,%)</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Output</td>
<td>0.9</td>
<td>0.7</td>
<td>0.6</td>
<td>1.0</td>
<td>-9.7</td>
<td>-2.2</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Manufacturing</td>
<td>0.9</td>
<td>0.0</td>
<td>0.9</td>
<td>1.6</td>
<td>-11.3</td>
<td>-3.2</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Consumer
Goods</td>
<td>1.1</td>
<td>0.7</td>
<td>-0.3</td>
<td>3.2</td>
<td>-5.2</td>
<td>-2.6</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Business
Equipment</td>
<td>1.0</td>
<td>1.3</td>
<td>-0.3</td>
<td>-3.7</td>
<td>-12.5</td>
<td>-1.1</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Construction
Supplies</td>
<td>0.9</td>
<td>-1.7</td>
<td>1.6</td>
<td>-5.4</td>
<td>-17.6</td>
<td>-6.3</td>
<td>-2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;Materials</td>
<td>0.8</td>
<td>0.5</td>
<td>1.3</td>
<td>2.0</td>
<td>-10.9</td>
<td>-1.9</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.7</td>
<td>6.3</td>
<td>-3.0</td>
<td>-0.5</td>
<td>-2.6</td>
<td>0.3</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization
(%)</td>
<td>72.6</td>
<td>71.9</td>
<td>71.3</td>
<td>71.1 (Jan. '09)</td>
<td>70.1</td>
<td>77.5</td>
<td>80.6</td>
</tr>
</tbody>
</table>

U.S. Import Price Gains Continue
Strong 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 17, 2010



<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217g.jpg" style="width: 353px; height: 265px;" align="right">Higher
oil
prices and the lower dollar have been the primary factors behind the
movement in import prices this past year. Just for January, a 1.4% rise
in prices was nearly the strongest since last June and beat Consensus
expectations for a 1.0% gain.
Petroleum prices jumped 4.8% last month
and they have roughly doubled since last January. This month, the
strength in Brent crude oil prices tapered off with a decline to an
average $72.91 after reaching a daily high near $80 per barrel early in
January.
Conversely the lower value of the U.S. dollar has helped lift
non-oil import prices. A 0.6% January increase was near the elevated
gains during the prior four months. Since their low last March non-oil
import prices have risen 2.4% after a 5.3% decline during the prior
twelve months. (During the last ten years, there has been a negative
81% correlation between the nominal trade-weighted exchange value of
the US dollar vs. major currencies and the y/y change in non-oil import
prices.)&nbsp;
 Prices for nonauto consumer goods rose for the
first month in the last three but the slight y/y increase is improved
from the deflation as of last Fall. Prices for durable consumer goods
increased a firm 0.6% to lift the y/y increase to 0.6% from a 1.1%
decline as of last fall. Capital goods also slipped m/m but the pace of
price deflation has slowed.
Total export prices increased 0.8% (3.4%
y/y) reflecting a 1.4% (4.5% y/y) increase in agricultural export
prices and a 0.7% gain (3.3% y/y) in non-agricultural prices. These
declines reversed just some of the strength through 2008
The
import and export price series can be found in Haver's USECON
database. Detailed figures are available in the USINT
database.
Is
the International Role of the Dollar Changing? from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci16-1.pdf">here</a>.&nbsp;
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217h.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217i.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export
Prices (NSA, %)</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.4</td>
<td>0.2</td>
<td>1.5</td>
<td>11.5</td>
<td>-11.5</td>
<td>11.5</td>
<td>4.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.8</td>
<td>-1.4</td>
<td>5.4</td>
<td>95.5</td>
<td>-36.0</td>
<td>37.7</td>
<td>11.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.6</td>
<td>0.5</td>
<td>0.6</td>
<td>1.2</td>
<td>-4.2</td>
<td>5.3</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>0.8</td>
<td>0.6</td>
<td>0.8</td>
<td>3.4</td>
<td>-4.6</td>
<td>6.0</td>
<td>4.9</td>
</tr>
</tbody>
</table>

Euro-Area Trade Surplus Moves Up
Sharply 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 17, 2010


<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100217j.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left">
Exports rebounded strongly in December after coming up flat in
November. Overall exports rose by 3.1% in December as MFG exports rose
by 2.7% in December. Three month growth rates continue to show strong
growth, accelerating slightly for overall exports but with MFG exports
losing a bit of momentum compared to their six-month pace
Import growth is positive. Its three-and six-month rates of
growth have steadied at or below the 10% growth rate mark.
Manufacturing import growth is positive but barely growing at all,
rising at 0.3% annualized rate of growth over three months, having
slowed from nearly a 7% pace over six months.
Europe&#8217;s trade surplus is at a five year high. Exports are at
their highest level in 12-months as well. Europe continues to act as a
region with export-led growth. Exports are digging out from the
recession faster than imports. Imports are lower by 8% Yr/yr compared
to exports that are lower by just 2%.
Domestic demand is lagging in the Euro-Area. Exports are
pulling the region into recovery faster than its own consumers.
Europe&#8217;s recovery depends on the continuation of global growth as much
as any region.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area
Trade trends for goods 
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="2">m/m%</td>
<td style="font-weight: bold;" colspan="3">%
Saar</td>
<td style="font-weight: bold;">&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">Nov-09</td>
<td style="font-weight: bold;">3M</td>
<td style="font-weight: bold;">6M</td>
<td style="font-weight: bold;">12M</td>
<td style="font-weight: bold;">12M Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&nbsp; 7,003 </td>
<td>&#8364;&nbsp; 5,294 </td>
<td>&#8364;&nbsp; (3,252)</td>
<td>&#8364;&nbsp; 4,482 </td>
<td>&#8364;&nbsp; (3,450)</td>
<td>&#8364;&nbsp; 1,384 </td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">Exports</td>
</tr>
<tr class="odd">
<td class="firstcol">All Exp</td>
<td>3.1%</td>
<td style="color: red;">0.0%</td>
<td>25.6%</td>
<td>22.6%</td>
<td style="color: red;">-2.3%</td>
<td style="color: red;">-6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food and Drinks</td>
<td>4.8%</td>
<td>1.7%</td>
<td>18.3%</td>
<td>10.6%</td>
<td style="color: red;">-1.9%</td>
<td style="color: red;">4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Raw materials</td>
<td>7.7%</td>
<td style="color: red;">-0.7%</td>
<td>51.4%</td>
<td>31.5%</td>
<td>24.6%</td>
<td style="color: red;">-19.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>2.9%</td>
<td style="color: red;">-0.2%</td>
<td>25.6%</td>
<td>23.4%</td>
<td style="color: red;">-2.9%</td>
<td style="color: red;">-7.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; MFG</td>
<td>2.7%</td>
<td style="color: red;">-0.3%</td>
<td>17.7%</td>
<td>21.3%</td>
<td style="color: red;">-5.2%</td>
<td style="color: red;">-7.2%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="7" class="firstcol">IMPORTS</td>
</tr>
<tr class="odd">
<td class="firstcol">All IMP</td>
<td>1.7%</td>
<td>0.9%</td>
<td>7.2%</td>
<td>10.7%</td>
<td style="color: red;">-7.8%</td>
<td style="color: red;">-9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food and Drinks</td>
<td style="color: red;">-1.3%</td>
<td>3.2%</td>
<td style="color: red;">-14.0%</td>
<td style="color: red;">-3.1%</td>
<td style="color: red;">-8.7%</td>
<td style="color: red;">1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Raw materials</td>
<td>4.4%</td>
<td>3.2%</td>
<td>41.2%</td>
<td>43.8%</td>
<td style="color: red;">-19.0%</td>
<td style="color: red;">-6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other</td>
<td>1.7%</td>
<td>0.6%</td>
<td>7.5%</td>
<td>10.5%</td>
<td style="color: red;">-7.2%</td>
<td style="color: red;">-9.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; MFG</td>
<td>1.5%</td>
<td style="color: red;">-0.1%</td>
<td>0.3%</td>
<td>6.9%</td>
<td style="color: red;">-9.2%</td>
<td style="color: red;">-8.5%</td>
</tr>
<tr class="even">
<td colspan="7" class="firstcol">*Eur mlns;
mo or period
average</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Housing Starts Rise ButForward Momentum Is Weak

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216f.jpg" style="width: 353px; height: 265px;" align="right">Low
interest rates and improved affordability have yet to generate strong
improvement in the housing market. The National Association of Home
Builders' index of housing market activity improved this month to 17
from 15 in January, but that was only back to the 4Q average.
Nevertheless, the index remained double the low of 8 hit last January.
The index is compiled from survey questions asking builders to rate
market conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very
low&#8221;. The figure is thus a diffusion index
with numerical results over 50 indicating a predominance of &#8220;good&#8221;
readings.&nbsp;The present sales index improved m/m to 17 and
equaled the 4Q and 3Q averages. The sub-index of sales during the next
six months also improved modestly versus January.&nbsp;The Home
Builders' Association also reported that the traffic of prospective
buyers languished at a reading of 12 which was below the averages from
2Q to 4Q of last year.&nbsp;The regional housing market
indexes showed improvement versus last year throughout the country but
there has been modest backpedaling in the Northeast &amp; the
Midwest and relative stability in the South &amp; the
West.The Home Builders' Housing Opportunity Index, which is
the share of homes sold that could be considered affordable to a family
earning the median income, fell in 3Q '09 (the latest available figure)
to 70.1%. It had jumped earlier to a record high of 72.5% buoyed by
lower home prices, lower interest rates and higher income. (There is a
break in the series from 2002 to 2003.).&nbsp;The NAHB has compiled
the Housing Market Index since 1985. The
weights assigned to the individual index components are .5920 for
single family detached sales, present time; .1358 for single family
detached sales, next six months; and .2722 for traffic of prospective
buyers. The results, along with other housing and remodeling indexes
from NAHB Economics, are included in Haver&#8217;s SURVEYS
database.&nbsp;IMF Explores Contours of Future
Macroeconomic Policy from the International Monetary Fund can
be found <a href="http://www.imf.org/external/pubs/ft/survey/so/2010/INT021210A.htm">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216g.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216h.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM" style="color: black;">Nat'l Association of Home Builders</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">&nbsp;February '09</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good=100)</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>9</td>
<td>15</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>17</td>
<td>15</td>
<td>16</td>
<td>7</td>
<td>13</td>
<td>16</td>
<td>27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>27</td>
<td>26</td>
<td>26</td>
<td>15</td>
<td>24</td>
<td>25</td>
<td>37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>12</td>
<td>12</td>
<td>13</td>
<td>11</td>
<td>13</td>
<td>14</td>
<td>21</td>
</tr>
</tbody>
</table>
</body></html>

Low interest rates and improved affordability have yet to generate strong improvement in the housing market. The National Association of Home Builders' index of housing market activity improved this month to 17 from 15 in January, but [...]

U.S. Home Builders’ Index Improves Slightly

Louise Curley

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216d.jpg" style="width: 353px; height: 265px;" align="right">
The financial community in Germany has become less enthusiastic about
economic prospects in Germany and in the Euro Area as a whole. The
results of the latest ZEW survey of analysts and institutional
investors showed that the balance of those looking for improved
conditions six months ahead in Germany over those looking for
deteriorating conditions was 45.4% in February, down 1.8 points from
47.2% in January and down 12.6 points from the peak, 57.7%, in
September of last year. Although the majority of the participants still
view current conditions negatively, the excess of pessimists over
optimists declined slightly from 56.6% to 54.8%.
 <img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216e.jpg" style="width: 353px; height: 265px;" align="right">The
participants in the latest survey are generally less optimistic about
profit prospects. Among the thirteen industries covered, only
construction and services showed an increased balance of optimists over
pessimists. The negative balances of opinion on the outlook for profits
in the automobile and the retail/consumer goods industries increased in
February. The balance on the profit outlook for the automobile industry
was -29.7% in February compared with -23.2% in January. The comparable
figures for the consumption/trade industries were-18.9% and -12.1%. The
balances of opinion on the out look for profits in the remaining
industries are still positive after declines in February. The balances
of opinion for the thirteen industries in February and their changes
from January are shown in the table below.
 In addition to an appraisal of current economic conditions
and expectations of conditions six months ahead for Germany, the
participants in the ZEW survey also provide a similar appraisal for the
Euro Area. The balance of those expecting an improvement in the economy
of the entire Euro Area was 40.2% in February, 4.9 points lower than
that for Germany and the balance on current conditions was -62.7%, 6.1
points more unfavorable than the -56.6% for Germany. The two attached
charts compare the balances of opinion on (1) current conditions and
(2) expectations for Germany and for the Euro Area. No doubt the
severity of the financial crisis in Greece together with continued
concern over the economies of Ireland, Portugal and Spain account for
the more cautious appraisal of prospects for the entire Euro Area than
that for Germany.
<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
INDICATORS (% Balance)</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">Jan 10</th>
<th scope="col">&nbsp;Peak</th>
<th scope="col">M/M Chg</th>
<th scope="col">Chg from Peak</th>
<th scope="col">Industry</th>
<th scope="col">Feb 10&nbsp;</th>
<th scope="col">M/M Chg</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="6">Germany</td>
<td>Banks</td>
<td>15.8</td>
<td>-6.8</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-54.8</td>
<td>-56.6</td>
<td>-92.8**</td>
<td>1.8</td>
<td>38.0</td>
<td>Insurance</td>
<td>11.0</td>
<td>-5.6</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>45.1</td>
<td>47.2</td>
<td>57.7*</td>
<td>-1.9</td>
<td>-12.6</td>
<td>Automobile</td>
<td>-29.7</td>
<td>-6.5</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Chem/Pharma</td>
<td>35.8</td>
<td>-4.9</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">Euro
Area</td>
<td>Steel</td>
<td>23.8</td>
<td>-5.5</td>
</tr>
<tr class="grey3">
<td class="firstcol">Current Conditions</td>
<td>-62.1</td>
<td>-62.7</td>
<td>-93.2**</td>
<td>1.6</td>
<td>31.1</td>
<td>Electronics</td>
<td>22.0</td>
<td>-5.0</td>
</tr>
<tr class="grey3">
<td class="firstcol">Expectations</td>
<td>40.2</td>
<td>46.2</td>
<td>59.6*</td>
<td>-6.0</td>
<td>-19.4</td>
<td>Mech. Eng</td>
<td>29.6</td>
<td>-4.2</td>
</tr>
<tr class="grey2">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Retail/ Cons</td>
<td>-18.9</td>
<td>-6.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Construction</td>
<td>4.2</td>
<td>+3.8</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td class="firstcol"> Utilities
</td>
<td>21.4</td>
<td>-0.6</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Services</td>
<td>22.1</td>
<td>+1.0</td>
</tr>
<tr class="grey1">
<td colspan="6" class="firstcol">&nbsp;</td>
<td>Telecom</td>
<td>6.4</td>
<td>-3.1</td>
</tr>
<tr class="grey4">
<td colspan="6" class="firstcol">* September
2009&nbsp; ** May 2009</td>
<td>Info Tech</td>
<td>33.5</td>
<td>-2.9</td>
</tr>
</tbody>
</table>


</body></html>

The financial community in Germany has become less enthusiastic about economic prospects in Germany and in the Euro Area as a whole. The results of the latest ZEW survey of analysts and institutional investors showed that the balance [...]

German Investors Continue To Lower Expectations

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<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216a.jpg" style="width: 353px; height: 265px;" align="right">Business
conditions in the Northeast improved this month.
The Federal Reserve Bank of New York reported that its February Empire
State Factory Index of General Business Conditions rose to 24.91, the
highest level since October, and remained near the highest level since
2004. The latest reading compares to sharply negative levels at the
recession low and suggests positive growth in factory sector activity.
The latest level exceeded Consensus expectations for a reading of
18.0.
 The figure is a diffusion index. Since the series' inception
in
2001, there has been a 74% correlation between its level and the
three-month change in U.S. factory sector industrial production. Like
the Philadelphia Fed Index of General Business Conditions, the Empire
State Business Conditions Index reflects answers to independent survey
questions; it is not a weighted combination of the components. The
series dates back only to 2001.
Amongst the separate survey questions,
the inventory series improved the most this month to 0.0 from -17.3,
which was the first reading out of negative territory since August
2008. Most other series fell m/m except employment which improved to
its highest level since October. There has been an 87% correlation
between the employment index and the three-month growth in factory
sector employment as reported by the Labor Department.&nbsp;
The prices
paid index held near the highest level since September 2008 and was up
sharply from the early-2009 low. Since inception in 2001, there has
been a 77% correlation between the index of prices paid and the
three-month change in the core intermediate materials PPI.&nbsp;
The Empire State index of expected business
conditions in six
months slipped during February from levels which were the
highest since early 2004. The inventory subseries rose sharply to its
highest since early 2008.
The Empire State Manufacturing Survey is a
monthly survey of manufacturers in New York State. Participants from
across the state in a variety of industries respond to a questionnaire
and report the change in indicators from the previous month. Each index
is seasonally adjusted. Respondents also state the likely direction of
these same indicators six months ahead. For more on the
Empire State Manufacturing Survey, including methodologies and the
latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
The Empire State data is available in Haver's SURVEYS
database.
Equipping
financial
regulators with the tools necessary to monitor systemic risk
is last Friday's Senate testimony by Fed Governor Governor Daniel K.
Tarullo and it is available <a href="http://www.federalreserve.gov/newsevents/testimony/tarullo20100212a.htm">here</a>.
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100216c.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State
Manufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">February '09&nbsp;</th>
<th scope="col">2009</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>24.91</td>
<td>15.92</td>
<td>4.5</td>
<td>-31.61</td>
<td>-2.76</td>
<td>-9.97</td>
<td>17.22</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; New Orders</td>
<td>8.78</td>
<td>20.48</td>
<td>2.77</td>
<td>-27.20</td>
<td>-2.52</td>
<td>-6.22</td>
<td>15.70</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Inventories</td>
<td>0.00</td>
<td>-17.33</td>
<td>-18.42</td>
<td>-8.05</td>
<td>-22.89</td>
<td>-7.87</td>
<td>-3.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>5.56</td>
<td>4.00</td>
<td>-5.26</td>
<td>-39.08</td>
<td>-17.28</td>
<td>-5.36</td>
<td>11.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>31.94</td>
<td>32.00</td>
<td>19.74</td>
<td>-13.79</td>
<td>1.33</td>
<td>46.99</td>
<td>35.64</td>
</tr>
</tbody>
</table>

</body></html>

Business conditions in the Northeast improved this month. The Federal Reserve Bank of New York reported that its February Empire State Factory Index of General Business Conditions rose to 24.91, the highest level since October, and [...]

Empire State Factory Conditions Improve; Inventories End Decumulation

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over 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.

250509D1.jpg

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- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

250509L1.jpg

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Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

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- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

250508N2.jpg

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Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

250508P2.jpg

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- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.

U.S. Housing Affordability Improves Slightly in March

Carol Stone, CBE

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Initial claims for unemployment insurance were 228,000 seasonally adjusted in the week ended May 3, down from 241,000 in the previous week, which was unrevised. For the latest week, the Action Economics Forecast Survey had expected a smaller decline to 233,000.

In the week ended April 26, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – was 1.879 million, down from 1.908 million in the April 19 week.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, returned to its longstanding rate of 1.2% in the April 26 week; this rate has held that amount since continuously since the week of January 6, 2024, except for the prior week’s 1.3%.

As we do highlight in every week’s discussion, economic conditions vary widely across individual states and territories. In the week ended April 19, the highest unemployment rates were in New Jersey and Rhode Island (both at 2.48%), California (2.26%), Washington (2.14%) and New York (1.85%). The lowest were in Florida (0.36%), South Dakota (0.37%), Alabama (0.41%), Virginia (0.45%) and Nebraska (0.47%). Rates in other notable states include Illinois (1.78%), Pennsylvania (1.53%) and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Continued claims for unemployment insurance decreased 29, 000 in the week ended April 26.
- Insured unemployment rate returns to longstanding 1.2%.
- Across the states, the insured unemployment rate ranges from 0.36% to 2.48%.

Economy in Brief: February 2010

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