Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217i.jpg" align="left" border="0" height="265" width="353">
The Housing Market Index (HMI) from the National Association
of Home Builders ticked up this month after having reached the record
low in January. At nine the figure still was, however, less than half
the year-ago figure. 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;. Numerical results over
50 indicate a predominance of &#8220;good&#8221; readings.
The Home Builders Association indicated that its sub-index of
present sales conditions also ticked higher to 7 from the record low
reached in January. The latest figure remained well below last year's
average level of 16, 2007's average of 27, 2006's average of 45 and
2005's average of 73.Since 1990, the year-to-year change in this index
has had an 85% correlation with the year-to-year percentage change in
new single-family home sales.
The index of builders&#8217; expectations for sales in six months
fell to a record low but the &#8220;traffic" of
prospective buyers ticked up slightly for the second consecutive month
from its record low.
Index readings ticked up slightly last month in each of the
country's regions except the Northeast where the index plumbed a new
low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217j.jpg" align="right" border="0" height="265" width="353">
Not only are builders disturbed by the market for new homes,
but the assessment of conditions for remodeling a home also reached a
record low during the fourth quarter. Expectations also fell to a
record low.
During the third quarter 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, rose to
its highest level since early 2004. It was up by more than one-third
from the 2006 low due to lower home prices, lower interest rates and
higher income.
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.
Credit Easing: A Policy for a Time of Financial Crisis
from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2009/0209/02monpol.cfm">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/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">February</th>
<th scope="col">January
&nbsp;</th>
<th scope="col">&nbsp;February
'08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good = 100)</td>
<td>9</td>
<td>8</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>7</td>
<td>6</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>15</td>
<td>17</td>
<td>27</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>11</td>
<td>8</td>
<td>19</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

The Housing Market Index (HMI) from the National Association of Home Builders ticked up this month after having reached the record low in January. At nine the figure still was, however, less than half the year-ago figure. The index is [...]

U.S. Home Builders' Survey Ticked Up Slightly

Louise Curley

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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217g.jpg" align="left" border="0" height="265" width="353">
While German investors continue to see current economic
conditions getting worse, they have begun to be less negative on the
outlook. The German government has approved an 80 billion euro ($102
billion) stimulus program to be spent over two years. The European
Central Bank, after reducing its key interest by 225 basis points since
October 2008, kept the rate at 2% in February but, in his press
conference on February 5, Jean-Claude Trichet, President of the Bank
stated that 2% was not considered by the Governing Council to be a
lower limit and that the situation would be examined at the next
meeting.
These developments may have influenced the institutional
investors and analysts who participated in the latest ZEW survey which
took place between February 2 and 16.The excess of pessimists over
optimists regarding economic conditions six months ahead fell from
31.0% to 5.8%. Although the decline in pessimists regarding the outlook
is encouraging, put in perspective, it is less reassuring. It is still
negative and well below the long term average of an excess of optimists
over pessimists of 26.4%. ZEW President, Wolfgang Franz, summarized the
results of the survey as "A ray of hope--no more, no less."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217h.jpg" align="right" border="0" height="265" width="353">
Although the investors were less negative about the prospects
six months ahead, they became even more negative about current
conditions. The excess of pessimist over optimists regarding current
economic conditions increased from 72.1% to 86.2%.
In line with their less negative view of the outlook, the
investors have become less negative about their profit expectations,
but they are still far from expecting anything but lower profits. The
highest expectations of profits in a -9.2% for Utilities. That is,
those expecting a decrease in profits outweigh those expecting an
increase by 9.2%. The worst is for Vehicles/Automobile where the excess
of those expecting a decrease in profits over those expecting an
increase is 75.3%. The outlook for profits in the Machinery industry is
only marginally better than that for Automobiles.The excess of those
expecting a decrease in profits over those expecting an increase is
74.6%. Profit expectations for the these industries are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">ZEW Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions (%
Balance)</td>
<td>-86.2</td>
<td>-72.1</td>
<td>-64.5</td>
<td>-50.4</td>
<td>-35.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Condition 6 Months
Ahead (% Balance)</td>
<td>-5.8</td>
<td>-31.0</td>
<td>-45.2</td>
<td>-53.5</td>
<td>-63.0</td>
</tr>
<tr>
<td class="firstcol">Profit
Expectation&nbsp; (% Increase-Decrease)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Utilities&nbsp;</td>
<td>-9.2</td>
<td>-12.4</td>
<td>-11.2</td>
<td>-15.9</td>
<td>-22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Vehicles/Automobiles&nbsp;</td>
<td>-75.3</td>
<td>-90.3</td>
<td>-89.3</td>
<td>-94.6</td>
<td>-91.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Machinery&nbsp;</td>
<td>-74.6</td>
<td>-80.1</td>
<td>-75.2</td>
<td>-74.8</td>
<td>-61.2</td>
</tr>
</tbody>
</table>
</body></html>

While German investors continue to see current economic conditions getting worse, they have begun to be less negative on the outlook. The German government has approved an 80 billion euro ($102 billion) stimulus program to be spent [...]

German Investors Begin To See A Ray Of Hope For The Economy

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217d.jpg" align="left" border="0" height="265" width="353">
Recession has hit the Euro Area trade flows hard as exports
already lower by 6.8% lower in November fell by another 0.9% in
December. But imports that fell by 4.8% on November fell by a
further-chilling 3.9% in December. The confluence of these trends
shrank the EMU trade deficit in December to Eur 257mln from Eur 4.0 Bln
in November. Yr/Yr exports are lower by 5.4% compared to imports which
are down by 6.6%. Over three months the annual rates of decline are
-35% for exports and -43% for imports. Over the last six months the
pace of decline has accelerated sharply. Yr/yr numbers do not begin to
show the depth of the problem. 
 

German finance minister Steinbrueck warned that Euro-region
countries may be forced to bail out other members of the 16-nation bloc
that face problems refinancing their debt. &#8220;Some countries are slowly
getting into difficulties with their payments,&#8221; Steinbrueck said late
yesterday in a speech in Dusseldorf. &#8220;The euro-region treaties don&#8217;t
foresee any help for insolvent countries, but in reality the other
states would have to rescue those running into difficulty.&#8221; This
underscores the degree of difficulty of economic times in Europe. Also
underlining that tough sledding is the warning by the rating agency
Moody&#8217;s today. Moody&#8217;s cautions that banks with substantial lending
exposure to Eastern Europe could be downgraded. Thus another class of
assets (Eastern European loans) has gone bad. Of course the banks with
the most of this type of lending are European. Emerging Europe is being
called the &#8216;sub-prime&#8217; of Europe. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col">Euro Area
13 - Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (257)</td>
<td>&#8364;&#8364; (4,005)</td>
<td>&#8364;&#8364; (1,922)</td>
<td>&#8364;&#8364; (3,760)</td>
<td>&#8364;&#8364; (2,235)</td>
</tr>
<tr class="even">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>-0.9%</td>
<td>-6.8%</td>
<td>-35.3%</td>
<td>-17.1%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-3.0%</td>
<td>-7.1%</td>
<td>-3.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-13.0%</td>
<td>-60.4%</td>
<td>-34.9%</td>
<td>-12.2%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-4.0%</td>
<td>-24.7%</td>
<td>-10.8%</td>
<td>-6.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Imports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>-3.9%</td>
<td>-4.8%</td>
<td>-43.4%</td>
<td>-21.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-2.9%</td>
<td>-15.1%</td>
<td>-7.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-0.4%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-0.5%</td>
<td>-8.2%</td>
<td>-1.8%</td>
<td>-1.3%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">*Eur mlns; mo or period average;
Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
</body></html>

Recession has hit the Euro Area trade flows hard as exports already lower by 6.8% lower in November fell by another 0.9% in December. But imports that fell by 4.8% on November fell by a further-chilling 3.9% in December. The [...]

Exports and Imports Plunge in the Euro Area as Deficit Contracts

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217a.jpg" width="353">
The February Empire State Index of manufacturing sector activity, reported by the Federal Reserve Bank of New York, fell to a new low for the series which dates back to 2001. The figure of -34.65 was down from -22.20 in January and it was lower than Consensus expectations for a reading of -24.0.
The figure is a diffusion index. Since the series&#39; inception in 2001 there has been a 68% correlation between its level and the three-month change in U.S. factory sector industrial production.
The index of pricing pressure improved slightly month-to-month but it too remained near the series&#39; 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.
The new orders index fell sharply from January to a new series low of -30.51. That compares to last February&#39;s reading of -10.40.Fifty percent of survey participants reported lower levels of orders while only twenty percent reported higher orders.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217b.jpg" width="353">
The employment index improved just slightly month-to-month but also remained near the series&#39; low. In the history of the NY employment index, there has been an 87% correlation between it and the three-month growth in overall U.S. factory sector employment as reported by the Labor Department.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
The Empire State index of expected business conditions in six months fell to near the series&#39; low. The subseries for employment collapsed and new orders remained near the series&#39; low. The pricing index moved into negative territory.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217c.jpg" width="353">
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&#39;s SURVEYS database.
Stabilizing the Housing Market: Focus on Communities is yesterday&#39;s speech by Federal Reserve Governor Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20090216a.htm">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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February &#39;08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-34.65</td>
<td>-22.20</td>
<td>-7.52</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>-13.79</td>
<td>-18.18</td>
<td>47.37</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>


</html>

The February Empire State Index of manufacturing sector activity, reported by the Federal Reserve Bank of New York, fell to a new low for the series which dates back to 2001. The figure of -34.65 was down from -22.20 in January and it [...]

U.S. Empire State Index Fell To A New Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217a.jpg" align="left" border="0" height="265" width="353">
The February Empire State Index of manufacturing sector
activity, reported by the Federal Reserve Bank of New York, fell to a
new low for the series which dates back to 2001. The figure of -34.65
was down from -22.20 in January and it was lower than Consensus
expectations for a reading of -24.0.
The figure is a diffusion index. Since the series' inception
in 2001 there has been a 68% correlation between its level and the
three-month change in U.S. factory sector industrial production.
The index of pricing pressure improved slightly month-to-month
but it too remained near the series' 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.
The new orders index fell sharply from January to a new series
low of -30.51. That compares to last February's reading of -10.40.Fifty
percent of survey participants reported lower levels of orders while
only twenty percent reported higher orders.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217b.jpg" align="right" border="0" height="265" width="353">
The employment index improved just slightly month-to-month but
also remained near the series' low. In the history of the NY employment
index, there has been an 87% correlation between it and the three-month
growth in overall U.S. factory sector employment as reported by the
Labor Department.
Like the Philadelphia Fed Index of General Business
Conditions, the Empire State Business Conditions Index reflects answers
to an independent survey question; it is not a weighted combination of
the components.
The Empire State index of expected business
conditions in six months fell to near the series' low. The
subseries for employment collapsed and new orders remained near the
series' low. The pricing index moved into negative territory.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State conducted by the Federal Reserve Bank
of New York. Participants from across the state in a variety of
industries respond to a questionnaire and report the change in a
variety of indicators from the previous month. Respondents also state
the likely direction of these same indicators six months ahead. 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217c.jpg" align="left" border="0" height="265" width="353">
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.



Stabilizing the Housing Market: Focus on
Communities is yesterday's speech by Federal Reserve Governor
Elizabeth A. Duke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/duke20090216a.htm">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/@S511/@S511.HTM">Empire
State Manufacturing Survey</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">February '08&nbsp;</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>-34.65</td>
<td>-22.20</td>
<td>-7.52</td>
<td>-10.10</td>
<td>17.23</td>
<td>20.24</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>-13.79</td>
<td>-18.18</td>
<td>47.37</td>
<td>46.99</td>
<td>35.64</td>
<td>41.88</td>
</tr>
</tbody>
</table>
 Exports and Imports Plunge in the
Euro Area as Deficit Contracts&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217d.jpg" align="left" border="0" height="265" width="353">
Recession has hit the Euro Area trade flows hard as exports
already lower by 6.8% lower in November fell by another 0.9% in
December. But imports that fell by 4.8% on November fell by a
further-chilling 3.9% in December. The confluence of these trends
shrank the EMU trade deficit in December to Eur 257mln from Eur 4.0 Bln
in November. Yr/Yr exports are lower by 5.4% compared to imports which
are down by 6.6%. Over three months the annual rates of decline are
-35% for exports and -43% for imports. Over the last six months the
pace of decline has accelerated sharply. Yr/yr numbers do not begin to
show the depth of the problem. 
 

German finance minister Steinbrueck warned that Euro-region
countries may be forced to bail out other members of the 16-nation bloc
that face problems refinancing their debt. &#8220;Some countries are slowly
getting into difficulties with their payments,&#8221; Steinbrueck said late
yesterday in a speech in Dusseldorf. &#8220;The euro-region treaties don&#8217;t
foresee any help for insolvent countries, but in reality the other
states would have to rescue those running into difficulty.&#8221; This
underscores the degree of difficulty of economic times in Europe. Also
underlining that tough sledding is the warning by the rating agency
Moody&#8217;s today. Moody&#8217;s cautions that banks with substantial lending
exposure to Eastern Europe could be downgraded. Thus another class of
assets (Eastern European loans) has gone bad. Of course the banks with
the most of this type of lending are European. Emerging Europe is being
called the &#8216;sub-prime&#8217; of Europe. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col">Euro Area
13 - Trade trends for goods</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>&#8364;&#8364; (257)</td>
<td>&#8364;&#8364; (4,005)</td>
<td>&#8364;&#8364; (1,922)</td>
<td>&#8364;&#8364; (3,760)</td>
<td>&#8364;&#8364; (2,235)</td>
</tr>
<tr class="even">
<td class="firstcol">Exports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>-0.9%</td>
<td>-6.8%</td>
<td>-35.3%</td>
<td>-17.1%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-3.0%</td>
<td>-7.1%</td>
<td>-3.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-13.0%</td>
<td>-60.4%</td>
<td>-34.9%</td>
<td>-12.2%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-4.0%</td>
<td>-24.7%</td>
<td>-10.8%</td>
<td>-6.6%</td>
</tr>
<tr class="even">
<td class="firstcol">Imports</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>-3.9%</td>
<td>-4.8%</td>
<td>-43.4%</td>
<td>-21.0%</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol">Food and Drinks</td>
<td>--</td>
<td>-2.9%</td>
<td>-15.1%</td>
<td>-7.8%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">Raw materials</td>
<td>--</td>
<td>-0.4%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>--</td>
<td>-0.5%</td>
<td>-8.2%</td>
<td>-1.8%</td>
<td>-1.3%</td>
</tr>
<tr>
<td colspan="6" class="firstcol">*Eur mlns;
mo or period average;
Gray shaded areas lag one month</td>
</tr>
</tbody>
</table>
 German Investors Begin To See A
Ray Of Hope For The Economy 
by <a href="/comment/Curley.html">Louise
Curley</a> February 17, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217g.jpg" align="left" border="0" height="265" width="353">
While German investors continue to see current economic
conditions getting worse, they have begun to be less negative on the
outlook. The German government has approved an 80 billion euro ($102
billion) stimulus program to be spent over two years. The European
Central Bank, after reducing its key interest by 225 basis points since
October 2008, kept the rate at 2% in February but, in his press
conference on February 5, Jean-Claude Trichet, President of the Bank
stated that 2% was not considered by the Governing Council to be a
lower limit and that the situation would be examined at the next
meeting.
These developments may have influenced the institutional
investors and analysts who participated in the latest ZEW survey which
took place between February 2 and 16.The excess of pessimists over
optimists regarding economic conditions six months ahead fell from
31.0% to 5.8%. Although the decline in pessimists regarding the outlook
is encouraging, put in perspective, it is less reassuring. It is still
negative and well below the long term average of an excess of optimists
over pessimists of 26.4%. ZEW President, Wolfgang Franz, summarized the
results of the survey as "A ray of hope--no more, no less."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217h.jpg" align="right" border="0" height="265" width="353">
Although the investors were less negative about the prospects
six months ahead, they became even more negative about current
conditions. The excess of pessimist over optimists regarding current
economic conditions increased from 72.1% to 86.2%.
In line with their less negative view of the outlook, the
investors have become less negative about their profit expectations,
but they are still far from expecting anything but lower profits. The
highest expectations of profits in a -9.2% for Utilities. That is,
those expecting a decrease in profits outweigh those expecting an
increase by 9.2%. The worst is for Vehicles/Automobile where the excess
of those expecting a decrease in profits over those expecting an
increase is 75.3%. The outlook for profits in the Machinery industry is
only marginally better than that for Automobiles.The excess of those
expecting a decrease in profits over those expecting an increase is
74.6%. Profit expectations for the these industries are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY&nbsp;</th>
<th scope="col">Feb 09</th>
<th scope="col">Jan&nbsp; 09&nbsp;</th>
<th scope="col">Dec 08&nbsp;</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">ZEW Survey&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions (%
Balance)</td>
<td>-86.2</td>
<td>-72.1</td>
<td>-64.5</td>
<td>-50.4</td>
<td>-35.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Condition 6 Months
Ahead (% Balance)</td>
<td>-5.8</td>
<td>-31.0</td>
<td>-45.2</td>
<td>-53.5</td>
<td>-63.0</td>
</tr>
<tr>
<td class="firstcol">Profit
Expectation&nbsp; (% Increase-Decrease)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Utilities&nbsp;</td>
<td>-9.2</td>
<td>-12.4</td>
<td>-11.2</td>
<td>-15.9</td>
<td>-22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Vehicles/Automobiles&nbsp;</td>
<td>-75.3</td>
<td>-90.3</td>
<td>-89.3</td>
<td>-94.6</td>
<td>-91.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Machinery&nbsp;</td>
<td>-74.6</td>
<td>-80.1</td>
<td>-75.2</td>
<td>-74.8</td>
<td>-61.2</td>
</tr>
</tbody>
</table>
 U.S. Home Builders' Survey Ticked
Up Slightly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 17, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217i.jpg" align="left" border="0" height="265" width="353">
The Housing Market Index (HMI) from the National Association
of Home Builders ticked up this month after having reached the record
low in January. At nine the figure still was, however, less than half
the year-ago figure. 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;. Numerical results over
50 indicate a predominance of &#8220;good&#8221; readings.
The Home Builders Association indicated that its sub-index of
present sales conditions also ticked higher to 7 from the record low
reached in January. The latest figure remained well below last year's
average level of 16, 2007's average of 27, 2006's average of 45 and
2005's average of 73.Since 1990, the year-to-year change in this index
has had an 85% correlation with the year-to-year percentage change in
new single-family home sales.
The index of builders&#8217; expectations for sales in six months
fell to a record low but the &#8220;traffic" of
prospective buyers ticked up slightly for the second consecutive month
from its record low.
Index readings ticked up slightly last month in each of the
country's regions except the Northeast where the index plumbed a new
low. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217j.jpg" align="right" border="0" height="265" width="353">
Not only are builders disturbed by the market for new homes,
but the assessment of conditions for remodeling a home also reached a
record low during the fourth quarter. Expectations also fell to a
record low.
During the third quarter 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, rose to
its highest level since early 2004. It was up by more than one-third
from the 2006 low due to lower home prices, lower interest rates and
higher income.
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.
Credit Easing: A Policy for a Time of Financial Crisis
from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2009/0209/02monpol.cfm">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/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">February</th>
<th scope="col">January
&nbsp;</th>
<th scope="col">&nbsp;February
'08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index
(All Good = 100)</td>
<td>9</td>
<td>8</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>42</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family Sales</td>
<td>7</td>
<td>6</td>
<td>20</td>
<td>16</td>
<td>27</td>
<td>45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Single-Family Sales:
Next Six Months</td>
<td>15</td>
<td>17</td>
<td>27</td>
<td>25</td>
<td>37</td>
<td>51</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Traffic of
Prospective Buyers</td>
<td>11</td>
<td>8</td>
<td>19</td>
<td>14</td>
<td>21</td>
<td>30</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Empire State Index Fell To ANew Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217e.jpg" align="left" border="0" height="265" width="353">
The Cabinet office's first estimate of Gross Domestic Product
for the fourth quarter of 2008 revealed today that Japan's GDP declined
at a seasonally adjusted annual rate of 12.7%, a full percent above
consensus, confirming Kazuo Momma's fears that GDP may have declined at
"an unimaginable speed" expressed a week ago. (Kazuo Momma is Head of
Research and Statistics at the Bank of Japan.) The decline in GDP in
Japan compares with a 5.8% decline in the Euro Area and a 3.8% decline
in the United States in the same period, as shown in the first chart.
The sharpest decline was registered in exports, which, on a
seasonally adjusted annual rate basis, fell 45.0%. Gross Fixed Capital
Formation declined 11.3% and Private Consumption declined 1.6%. The
increase in inventories continued to decline. Government Consumption
increased 4.9%, the first this year, and imports were up by 12.0%.
Increased imports, however, affect GDP negatively.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090217f.jpg" align="right" border="0" height="265" width="353">
Japan has been in recession since November 2007 according to a
government panel that dates recessions. Attempts to stimulate the
economy have been hampered by the already high ratio of debt to GDP
(1.70 for Japan in the fourth quarter, compared to 0.75 for the U. S.)
and political in-fighting.Kaoru Yosana, Economic and Fiscal Policy
Minister, is unwilling to support further stimulus until the
supplementary budget for fiscal year 2008 and the budget for fiscal
year 2009 have been passed in the Diet and begun to be implemented.
Meanwhile gridlock in the Parliament has blocked passage of a 10
trillion yen ($100 billion) stimulus package proposed by Prime Minister
Taro Aso.
One surprising result in the data is the increase in the
deflator. The first in ten years, as shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">JAPAN&nbsp;Seasonally
Adjusted Annual Rate of Change 
(ex where noted)</th>
<th scope="col">Q4 08</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08&nbsp;</th>
<th scope="col">Q1 08&nbsp;</th>
<th scope="col">Q4 07</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">GDP&nbsp;</td>
<td>-12.71</td>
<td>-2.28</td>
<td>-3.61</td>
<td>0.63</td>
<td>4.49</td>
</tr>
<tr class="odd">
<td class="firstcol">Private
Consumption&nbsp;</td>
<td>-1.63</td>
<td>1.19</td>
<td>-2.97</td>
<td>3.00</td>
<td>1.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Government
Consumption&nbsp;</td>
<td>4.93</td>
<td>-0.63</td>
<td>-3.63</td>
<td>-0.86</td>
<td>7.56</td>
</tr>
<tr class="odd">
<td class="firstcol">Gross Fixed Capital
Formation&nbsp;</td>
<td>-11.29</td>
<td>-6.48</td>
<td>-7.82</td>
<td>-2.84</td>
<td>-0.66</td>
</tr>
<tr class="odd">
<td class="firstcol">Change in Inventory
(Billion Yen)</td>
<td>1932.7</td>
<td>2833.2</td>
<td>2599.3</td>
<td>4047.4</td>
<td>3566.5</td>
</tr>
<tr>
<td class="firstcol">Exports of Goods and
Services</td>
<td>-45.01</td>
<td>2.54</td>
<td>-9.00</td>
<td>12.57</td>
<td>12.40</td>
</tr>
<tr>
<td class="firstcol">Imports of Goods and
Services&nbsp;</td>
<td>12.03</td>
<td>6.28</td>
<td>-11.73</td>
<td>6.13</td>
<td>1.43</td>
</tr>
<tr class="even">
<td class="firstcol">Deflator&nbsp;Y/Y
% Chg</td>
<td>0.97</td>
<td>-1.66</td>
<td>-1.50</td>
<td>-1.32</td>
<td>-1.38</td>
</tr>
</tbody>
</table>
</body></html>

The Cabinet office's first estimate of Gross Domestic Product for the fourth quarter of 2008 revealed today that Japan's GDP declined at a seasonally adjusted annual rate of 12.7%, a full percent above consensus, confirming Kazuo [...]

Data Confirm Worst Fears Of Rapid Decline In Japanese Economy

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090213d.jpg" align="left" border="0" height="265" width="353">
GDP is declining in the e-Zone at a very rapid rate. The
fourth quarter GDP declines in the zone have been larger than had been
expected. Declines in Europe are now generally worse than the declines
in the US. Germany has just adopted a second stimulus package worth 50
billion euros over two years to buffer its sagging economy. Budgets in
EMU are beginning to strain or to shatter the EMU guidelines know as
the Maastricht Criteria. Italy and France have been warned by the
Chairman of e-Zone finance ministers, George Junker, about
protectionist policies. "The European Commission needs to examine very
intensively the details of the Italian and French stimulus programs,"
Juncker was quoted as saying in a pre-release of an interview with a
German newspaper. These are the sorts of things that happen in
recession. Survival is the first order of business and sometimes the
rules get trampled or slightly skirted along the road to survival. 
 

As the G-7 finance ministers meet in Italy there is concern
about protectionism. The US too has been warned by Japan. The Japanese
are worried about the &#8216;buy American&#8217; provisions in the US stimulus
package. No one wants a trade war. But everyone seems to being skating
close to the edge. 
 

Economies are weak and the manufacturing and export-based
economies have been hit the hardest. Note that among this growth of
counties the US Q4 result is second best; Germany and Italy have been
hit hardest. . The US, of course, has a large service sector and it is
a net importing nation. The short fall in US demand has activated one
of the automatic stabilizers in GDP, imports. Imports are weakened so
US GDP has been buffered in its decline, since imports subtract from
GDP growth. Weaker imports mean stronger GDP. But that has transmitted
more weakness overseas to the countries that export to the US. Still
the domestic weakness in the US is severe and it is so severe that
Japan&#8217;s Toyota is planning layoffs in its US operations. 
 

This decline in GDP puts everyone on notice for how bad things
are. GDP is one measure all can see and relate to, at least to some
extent. In the US, the labor market has been hit harder than in Europe
with the its broader social safety net and business practices that are
different and a little less quick on the lay-off trigger. There is
concern about how bad the second round effects will be in the US with
such severe labor market displacement. Mitigating that is the task of
the stimulus package. So far US GDP has not been hammered to the extent
expected. But if the US has a more severe second round you can expect
that it will get Europe&#8217;s attention too. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">E-Zone and main G-10 country GDP Results</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Quarter over quarter-Saar</td>
<td colspan="4">Year/Year</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>Q4-08</td>
<td>Q3-08</td>
<td>Q2-08</td>
<td>Q4-08</td>
<td>Q3-08</td>
<td>Q2-08</td>
<td>Q1-08</td>
</tr>
<tr>
<td class="firstcol">&nbsp; EMU-15</td>
<td>-6.1%</td>
<td>-0.7%</td>
<td>-0.7%</td>
<td>-1.2%</td>
<td>0.6%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; France</td>
<td>-4.6%</td>
<td>0.4%</td>
<td>-1.2%</td>
<td>-1.0%</td>
<td>0.6%</td>
<td>1.2%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany</td>
<td>-8.2%</td>
<td>-2.1%</td>
<td>-2.0%</td>
<td>-1.7%</td>
<td>0.8%</td>
<td>2.0%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Italy</td>
<td>-7.1%</td>
<td>-2.2%</td>
<td>-2.5%</td>
<td>-2.6%</td>
<td>-1.1%</td>
<td>-0.4%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; The
Netherlands</td>
<td>-3.4%</td>
<td>-1.2%</td>
<td>-0.3%</td>
<td>-0.7%</td>
<td>1.7%</td>
<td>3.3%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; UK</td>
<td>-5.9%</td>
<td>-2.5%</td>
<td>0.0%</td>
<td>-1.8%</td>
<td>0.3%</td>
<td>1.7%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; US</td>
<td>-3.8%</td>
<td>-0.5%</td>
<td>2.8%</td>
<td>-0.2%</td>
<td>0.7%</td>
<td>2.1%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
</body></html>

GDP is declining in the e-Zone at a very rapid rate. The fourth quarter GDP declines in the zone have been larger than had been expected. Declines in Europe are now generally worse than the declines in the US. Germany has just adopted [...]

GDP In EMU Falls Hard In 2008-Q4

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

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Mortgage applications fell 1.4% (+22.7% y/y) in the week ending August 15 after rising 10.9% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans edged 0.1% higher (22.7% y/y) last week, following a 1.4% gain in the prior week. Applications to refinance a home loan fell 3.1% (+22.8% y/y) last week, following a 23.0% rise in the week of August 8.

The effective interest rate on a 30-year fixed-rate loan held steady at 6.86% in the week ending August 15 after falling from 6.94% in the first week of August. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages rose to 6.13% in the latest week from 6.09% in the week of August 8. Conversely, the rate on 30-year Jumbo loans decreased to 6.82% last week from 6.86% one week earlier. The rate on a 5-year ARM rose to 6.24% in the week of August 15 and reversed the prior week’s decline to 6.05%.

The share of applications for refinancing an existing loan eased to 46.1% of total applications in the week ending August 15 after rising to 46.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity declined to 8.60% in the latest week after rising to 9.60% in the week of August 8.

The average size of a mortgage loan fell 2.7% (+4.1% y/y) to $387,800 in the week of August 15, following a 4.5% rise in the prior week. The average size of a purchase loan edged 0.5% higher (0.6% y/y) to $429,000 in the latest week after falling 1.2% in the week ending August 8. The average size of a loan to refinance a mortgage fell 7.3% (+9.5% y/y) to $339,800 last week, after rising 18.3% to $366,400 in the prior week. It was increased from $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

**Tracking Labor Market Stress** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/08/tracking-labor-market-stress/).

- Purchase applications edge higher while loan refinancing declines.
- Effective fixed-interest rate on 30-year loans remains at four-month low.
- Average loan size declines.

U.S. Mortgage Applications Decline Last Week as Interest Rates Steady

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

Economy in Brief: February 2009

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