Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040510b.jpg" width="353">
The Czech Republic, Denmark, Greece, Norway and Slovakia released Consumer price indexes for April. Since most of the data are seasonally unadjusted, year over year changes are shown in the following table for the first four months of 2004. A slight acceleration is shown in the data for Norway, while the other countries show a stable or slightly decelerating trend.
Except for Slovakia, where inflation is running at about 8%, inflation does not appear to be a problem. In both Greece and the Czech Republic, inflation is running below 3% a year and in Denmark and Norway it is virtually zero.
While the inflation evidence contained in the consumer price indexes has so far been sanguine, consumers&#39; surveys have recently shown a decline in the balance of respondents who expect the price trend to improve over the next twelve months. Moreover, strong world growth has put pressure on commodity prices, particularly that of oil. These factors suggest upward pressure on prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Y/Y %Chg in Consumer Price Indexes</th>
<th scope="col">Apr 04</th>
<th scope="col">Mar 04</th>
<th scope="col">Feb 04</th>
<th scope="col">Jan 04</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Czech Republic (2000=100)</td>
<td>2.25</td>
<td>2.44</td>
<td>2.25</td>
<td>2.25</td>
</tr>
<tr>
<td class="firstcol">Denmark (2000=100)</td>
<td>0.80</td>
<td>0.74</td>
<td>0.94</td>
<td>1.13</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece (1999=100)</td>
<td>2.88</td>
<td>2.71</td>
<td>2.50</td>
<td>2.95</td>
</tr>
<tr>
<td class="firstcol">Norway (1998=100)</td>
<td>0.35</td>
<td>-0.62</td>
<td>-1.75</td>
<td>-1.83</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia (December 2000=100)</td>
<td>8.02</td>
<td>8.26</td>
<td>8.50</td>
<td>8.29</td>
</tr>
<tr>
<td class="firstcol">Y/Y % Chg Oil Price (Brent)</td>
<td>33.19</td>
<td>11.00</td>
<td>-6.33</td>
<td>-0.10</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Balance expecting price trend to improve over next 12 mo (Euro Survey)</td>
<td>3</td>
<td>6</td>
<td>7</td>
<td>6</td>
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</tbody>
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The Czech Republic, Denmark, Greece, Norway and Slovakia released Consumer price indexes for April. Since most of the data are seasonally unadjusted, year over year changes are shown in the following table for the first four months of [...]

Current European CPIs Show no Sign of Rising Inflation but Consumer Expectations and High Oil Prices Pose Upside Risks

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040510a.jpg" width="353">
The Index of Leading Indicators for the Major Seven OECD Countries suggested further economic growth with a 0.3% gain in March and a 0.3% February rise which was revised from the initial 0.1% uptick. March marked the twelfth consecutive monthly gain.
Six-month growth in the leading index continued at 7.2% versus the high of 8.1% in December.
Leaders in Japan surged 0.6% in March following no change in February. That lifted the six-month growth rate to 3.7%, the strongest since early 2000.
The leading index for the European Union also was strong showing a third consecutive 0.4% rise in March. The six month growth rate moved to 6.2%, near the cycle high.
Spain posted the strongest monthly increase since 1991. The 1.4% gain lifted six month to 5.2%, the highest in a year. The leaders in Italy jumped the most for any one month in over two years with a 0.6% gain. That pulled the six month growth rate to a respectable 2.7%. New orders have firmed and consumer confidence may have bottomed.
Leaders in Germany added 0.2% to an upwardly revised 0.1% uptick in February but the six-month growth rate fell to 7.08%. In France the leading index ticked up 0.1% following an upwardly revised 0.6% February gain. The six-month growth rate remained firm at 7.8%. Leaders in the UK were unchanged in March following two successive 0.4% gains. The six month growth rate remained firm at 4.2%.
In Canada the leading index fell 0.1% and the six-month growth dipped to 6.9% as share prices fell with consumer sentiment. Leading indicators in the United States rose just 0.2% but February was revised to 0.5% from 0.1% and the six-month growth rate remained firm at 10.1%.
Visit the OECD&#39;s website at this <a href="http://www.oecd.org/home/">website</a>.
Analysis from 2003 of inflation in OECD countries done by the US Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/ifdp/2003/765/default.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/OECDMEI/OECDMEI.HTM"> OECD Main Economic Indicators</a></th>
<th scope="col"> Mar</th>
<th scope="col"> Feb</th>
<th scope="col"> Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>121.5</td>
<td>121.1</td>
<td>7.7%</td>
<td>1.4%</td>
<td>2.1%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>121.5</td>
<td>121.1</td>
<td>6.3%</td>
<td>1.9%</td>
<td>3.0%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>102.7</td>
<td>102.1</td>
<td>3.4%</td>
<td>1.1%</td>
<td>-0.5%</td>
<td>-4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>134.1</td>
<td>133.7</td>
<td>11.3%</td>
<td>1.8%</td>
<td>2.6%</td>
<td>-3.6%</td>
</tr>
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</table>
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The Index of Leading Indicators for the Major Seven OECD Countries suggested further economic growth with a 0.3% gain in March and a 0.3% February rise which was revised from the initial 0.1% uptick. March marked the twelfth [...]

OECD Leaders Up Again, Tone Firmer

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040507b.jpg" width="353">
Employment in Canada rose by nearly 50,000 in April, rebounding from two monthly declines. The job gain helped push the unemployment rate down 0.2% to 7.3%, the lowest since September 2001. The rate had peaked at 8.0% in December 2001 and again in August 2003. During the 2001 recession, the unemployment rate rose from a low of 6.7%, experiencing a total increase of 1.3 percentage points.
April employment increased most notably in construction, finance, business support services, health care and &quot;other&quot; services. Jobs showed modest rises in manufacturing and several other industries, but declined in wholesale and retail trade and in educational services. The so-called employment rate, employment as a percentage of the population over age 15, rose to 62.5%, maintaining an uptrend that started at the very beginning of 2002.
Canada&#39;s labor market has performed better in the last few years than that in the U.S. While it appears that the U.S. is just now breaking out of a disappointingly sluggish employment pattern, jobs in Canada never suffered a protracted decline in the 2001 recession and since then have expanded with some vigor. Correspondingly, the recent unemployment situation in Canada has been &quot;less bad&quot; than in the U.S. While, as noted, the unemployment rate in Canada rose 1.3% during the recession, joblessness in the U.S. surged from 3.9% in early 2000 to a high of 6.3% in June 2003. The rate is higher in the U.S. than in Canada, but it showed much more deterioration during the recession and has since been much later beginning any retreat. This contrasting behavior in the neighboring countries might be seen as an extended payback in the U.S. for its very strong performance in the 1990s, which was not fully shared in Canada. Whatever the explanation, Canada has caught up with the U.S. in its ability to find work for the proportion of the population which desires it.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Canada: Selected Labor Market Indicators</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Year/Year</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment Change </td>
<td>+50K</td>
<td>-13K</td>
<td>1.7%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>1.1%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Employment Rate </td>
<td>62.5%</td>
<td>62.4%</td>
<td>62.3%</td>
<td>62.4%</td>
<td>61.8%</td>
<td>61.2%</td>
<td>61.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>7.3%</td>
<td>7.5%</td>
<td>7.6%</td>
<td>7.6%</td>
<td>7.6%</td>
<td>7.2%</td>
<td>6.8%</td>
</tr>
<tr>
<td class="firstcol">Labor Force Change</td>
<td>+17K</td>
<td>+8K</td>
<td>1.3%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>1.5%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate</td>
<td>67.4%</td>
<td>67.4%</td>
<td>67.5%</td>
<td>67.5%</td>
<td>66.9%</td>
<td>66.0%</td>
<td>65.9%</td>
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Employment in Canada rose by nearly 50,000 in April, rebounding from two monthly declines. The job gain helped push the unemployment rate down 0.2% to 7.3%, the lowest since September 2001. The rate had peaked at 8.0% in December 2001 [...]

Canada Labor Market Sustains Gains; Fares Better than U.S.

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040507a.jpg" width="353">
Non-farm payroll growth in April of 288,000 surpassed Consensus expectations for a 175,000 rise. It was accompanied by upward revisions to payroll gains in both the prior two months. Since payrolls began rising last September the monthly increase has averaged 139,000 and payrolls have risen 0.9%.
The one-month diffusion index for private non-farm payrolls slipped to 61.7% from an upwardly revised March reading of 64.0. This breadth-of-change measure has had an 86% correlation with the monthly change in employment over the last ten years. Readings above 50 are consistent with positive growth in payrolls.
Manufacturing sector payrolls grew 21,000 following upwardly revised figures for the prior two months. The last three months have been the best for factory sector hiring since late 1998. Gains were scattered across industries. The one-month diffusion index for manufacturing payrolls improved to 55.4% from an upwardly revised 51.9% in March.
Service producing payrolls jumped 246,000 (1.0% y/y). The gain was led by a 123,000 (3.0% y/y) rise in the professional &amp; business services category including a 35,300 (12.1% y/y) rise in temporary help services.
Government sector jobs rose 8,000 (-0.1% y/y) but construction jobs were strong again, up 18,000 (2.8% y/y).
The index of aggregate hours worked (employment times hours worked) rose 0.3% and began 2Q 0.3% ahead of the 1Q average.
Average hourly earnings rose 0.3% (2.2% y/y) with a notable 0.4% (2.8% y/y) gain in factory sector earnings. Earnings in the financial as well as the information sectors also were strong.
From the separate household survey the unemployment rate fell to an expected 5.6%. Employment surged 278,000 (0.7% y/y) and the labor force rose 91,000 (+0.2% y/y). The labor force participation rate was unchanged for the third month at 65.9% versus 67.1% averaged from 1997-2000.
&quot;Economic Policy Implications of World Demographic Change&quot; from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/econrev/Pdf/1q04john.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM"> Employment</a></th>
<th scope="col"> April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>288,000</td>
<td>337,000</td>
<td>0.8%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>21,000</td>
<td>9,000</td>
<td>-1.9%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.6%</td>
<td>5.7%</td>
<td>6.0%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
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Non-farm payroll growth in April of 288,000 surpassed Consensus expectations for a 175,000 rise. It was accompanied by upward revisions to payroll gains in both the prior two months. Since payrolls began rising last September the [...]

U.S. Non-farm Payroll Growth in Gear

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506d.jpg" width="353">
Factory orders in Germany eased in March by 0.5%, but maintained their relatively high levels of the prior five months and extended a mostly rising trend into an 11th month.
German data are classified according to the origin of the order, domestic or foreign. While both categories are up sharply from a year ago, it is evident in the graph that foreign orders have provided the firmer support to German manufacturing over the past 2-1/2 years. In fact, remarkably, capital goods orders from foreign customers did not experience a yearly decline during the recent recession. Scattered months showed 12-month decreases, but yearly totals rose without exception, albeit only a very little in 2001. Foreign orders for consumer goods were actually strong in 2001 and 2002, although they have trailed off somewhat since then.
The domestic German appetite for manufactured goods is more languid. Even after large increases last September and October, the level of domestic orders in March remains 3% lower than the 2000 base-year level. Consumer orders are the major weakness, as the first quarter this year averaged 86.0, off markedly from last year&#39;s average of 90.0. This sluggishness could well be related to a downtrend in employment. Both jobs and job vacancies have also been declining, suggesting that prospects are not particularly favorable for an early upturn in employment and a consequent rebound in domestic demand for manufactured consumer goods.

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<th scope="col" class="firstcol">&nbsp;</th>
SA, 2000=100
<th scope="col">Mar/Feb, SA %Chg</th>
<th scope="col">Mar/Mar NSA %Chg</th>
Year/Year %Chg
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Mar</td>
<td>Feb</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">Total Orders*</td>
<td>101.7</td>
<td>102.2</td>
<td>-0.5</td>
<td>13.5</td>
<td>0.8</td>
<td>-0.2</td>
<td>-2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>97.0</td>
<td>97.3</td>
<td>-0.3</td>
<td>12.8</td>
<td>0.0</td>
<td>-3.2</td>
<td>-2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>107.6</td>
<td>108.3</td>
<td>-0.6</td>
<td>14.3</td>
<td>1.6</td>
<td>3.6</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>104.3</td>
<td>103.6</td>
<td>0.7</td>
<td>15.3</td>
<td>1.2</td>
<td>0.1</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>99.4</td>
<td>100.3</td>
<td>-0.9</td>
<td>15.4</td>
<td>1.4</td>
<td>-3.5</td>
<td>-2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>108.8</td>
<td>106.7</td>
<td>2.0</td>
<td>15.2</td>
<td>1.1</td>
<td>3.3</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>91.4</td>
<td>93.1</td>
<td>-1.8</td>
<td>10.5</td>
<td>-3.5</td>
<td>-2.6</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>84.8</td>
<td>85.6</td>
<td>-0.9</td>
<td>12.4</td>
<td>-4.8</td>
<td>-5.4</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>106.3</td>
<td>110.1</td>
<td>-3.5</td>
<td>11.4</td>
<td>-0.9</td>
<td>3.5</td>
<td>4.6</td>
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Factory orders in Germany eased in March by 0.5%, but maintained their relatively high levels of the prior five months and extended a mostly rising trend into an 11th month. German data are classified according to the origin of the [...]

German Industry Relying on Foreign Demand

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506b.jpg" width="353">
Initial claims for jobless insurance fell 25,000 last week to 315,000, the lowest level since October 2000. Consensus expectations had been for a decline to 338,000 claims. Claims during the prior week were revised up slightly.
The 4-week moving average of initial claims fell slightly to 343,250 (-21.1% y/y).
Continuing claims for unemployment insurance plunged 69,000 (2.3%) and the prior week&#39;s slight increase was revised to a slight decline.
The insured rate of unemployment fell to 2.3% from 2.4%. This unemployment rate averaged 2.8% during 2002 and 2003.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 5/01/04</th>
<th scope="col">4/24/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 315</td>
<td>340</td>
<td>-25.5%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,945</td>
<td>-19.0%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
1Q04 U.S. Productivity Growth Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506c.jpg" width="353">
Non-farm labor productivity grew 3.5% last quarter, slightly firmer than Consensus expectations for 3.0% growth. Year-to-year growth in productivity of 5.4% remained near the highest level since the early 1960s.
Output rose 4.9% (5.8% y/y) and hours worked by all persons (employment times hours) rose 1.3% (0.4% y/y).
Unit labor costs grew a slight 0.5% as compensation growth rose to 4.0% from 2.5% in 4Q. It was the first rise in unit labor costs since 1Q03.
Productivity in the manufacturing sector grew 3.1% (5.3% y/y), the weakest quarterly growth rate since 2Q03. Unit labor costs in the factory sector rose 2.0% (-0.4% y/y), the first gain since 2Q03.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col"> 1Q &#39;04 (Prelim)</th>
<th scope="col"> 4Q &#39;03 (Final)</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>3.5%</td>
<td>2.5%</td>
<td>5.4%</td>
<td>4.4%</td>
<td>4.9%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>4.0%</td>
<td>2.5%</td>
<td>4.0%</td>
<td>3.4%</td>
<td>2.3%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-1.3%</td>
<td>-0.9%</td>
<td>-2.5%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Disappointing 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 6, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040506a.jpg" width="353">
Unit sales of light vehicles fell 1.6% (0.0% y/y) in April to 16.41M following m/m gains during the prior two months. Consensus expectations were for sales of 16.7M.
Car sales slipped 4.7% to 7.36M to the lowest level since January. Sales of light trucks firmed 1.1% following a very slight March gain.
Domestic light vehicle sales fell 1.6% m/m to 13.10M (+0.2% y/y). Imported vehicle sales edged 1.5% lower to 3.31M (-0.6% y/y).
Imports&#39; share of the US market for new vehicles in April held at 20.2% versus 19.7% during 2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM"> Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col"> April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.41</td>
<td>16.68</td>
<td>0.0%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.36</td>
<td>7.72</td>
<td>-2.6%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.06</td>
<td>8.96</td>
<td>2.2%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance fell 25,000 last week to 315,000, the lowest level since October 2000. Consensus expectations had been for a decline to 338,000 claims. Claims during the prior week were revised up slightly. The [...]

Jobless Claims Lowest Since October 2000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505e.jpg" width="353">
The Euro-Zone Purchasing Managers Index for the service industries remained basically steady in April at 54.54, compared with March&#39;s 54.40. Employment gained, notably, and new business edged higher. But expectations eroded, perhaps a reflection of rising prices. These international PMI surveys are conducted by NTC-Research for Reuters, Inc.
Among the individual countries, Spain rebounded, although it did not recoup fully from March&#39;s terror attack-related drop. Activity in Germany and Italy showed modest gains, but lost some ground in France.
Separately, the service sector in Russia advanced in April to 59.43 from 58.67 in March. There were modest improvements in all the components: employment, new business, outstanding business and expectations. At the same time, this gain still left the index, which is compiled by Moscow Narodny Bank, well below the mid-60s range that prevailed last autumn.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers Index Percent (&gt;50 = expansion;&nbsp; &lt;50 = contraction)</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Apr 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Zone Total</td>
<td>54.54</td>
<td>54.40</td>
<td>56.22</td>
<td>47.68</td>
<td>56.36</td>
<td>51.58</td>
<td>51.63</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>49.53</td>
<td>49.26</td>
<td>48.17</td>
<td>45.75</td>
<td>46.91</td>
<td>49.35</td>
<td>52.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Business</td>
<td>53.60</td>
<td>53.58</td>
<td>55.47</td>
<td>46.38</td>
<td>50.85</td>
<td>51.24</td>
<td>50.11</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Business Expectations</td>
<td>64.24</td>
<td>66.07</td>
<td>69.79</td>
<td>62.57</td>
<td>65.09</td>
<td>65.74</td>
<td>62.08</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>53.30</td>
<td>53.16</td>
<td>54.14</td>
<td>44.60</td>
<td>48.49</td>
<td>48.62</td>
<td>48.87</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>55.04</td>
<td>55.86</td>
<td>58.58</td>
<td>51.12</td>
<td>63.99</td>
<td>54.71</td>
<td>54.26</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>55.83</td>
<td>55.18</td>
<td>56.12</td>
<td>49.78</td>
<td>53.34</td>
<td>52.97</td>
<td>53.91</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>55.67</td>
<td>53.90</td>
<td>59.09</td>
<td>46.92</td>
<td>52.51</td>
<td>52.57</td>
<td>51.64</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Russia</td>
<td>59.43</td>
<td>55.84</td>
<td>56.96</td>
<td>58.90</td>
<td>61.84</td>
<td>58.08</td>
<td>61.20</td>
</tr>
</tbody>
</table>
</body>
</html>

The Euro-Zone Purchasing Managers Index for the service industries remained basically steady in April at 54.54, compared with March's 54.40. Employment gained, notably, and new business edged higher. But expectations eroded, perhaps a [...]

Growth Steady in Euro-Zone Service Sector after Slowing in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505d.jpg" width="353">
The Business Activity Index for the non-manufacturing sector reported by the Institute for Supply Management rose to another series&#39; high of 68.4 in April. Consensus expectations had been for a roughly unchanged reading of 65.0 versus 65.8 in March.
Since the series&#39; inception in 1997 there has been a 59% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
The employment index strengthened to 54.5 as 21% of firms reported higher employment in April, up from 12% in 2002 and 17% last year. April was the highest employment reading since October 2000 and the ninth month in ten above 50.
Since the series&#39; inception in 1997 there has been a 62% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing and construction industries.
The new orders index improved to 65.6, near the series&#39; high, versus 62.8 in March.
Business activity for the non-manufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index again was strong and rose to 68.6 from 65.7 in March. It was the second highest reading on record.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">April &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>68.4</td>
<td>65.8</td>
<td>53.6</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>68.6</td>
<td>65.7</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>
Mortgage Applications Up As Interest Rates Moved Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 5, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040505a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 4.4% (-37.4% y/y) last week as borrowers acted ahead of potentially more significant increases in interest rates.
Purchase applications jumped 4.1% (+16.0% y/y) following a 6.8% rise the week earlier. Purchase applications for the month of April rose 3.3% versus the March average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 4.7% (-58.6% y/y) following five weeks of sharp decline.
The effective interest rate on a conventional 30-Year mortgage rose further to 6.38% from 6.27% the week prior. The average for April was 6.16% versus 5.65% averaged in March. The effective rate on a 15-year mortgage rose to 5.75% from 5.63% the week prior. The average for April was 5.54% versus 5.00% in March.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">04/30/04</th>
<th scope="col">04/23/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>780.9</td>
<td>748.0</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>482.5</td>
<td>463.5</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,516.0</td>
<td>2,403.0</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>


</html>

The Business Activity Index for the non-manufacturing sector reported by the Institute for Supply Management rose to another series' high of 68.4 in April. Consensus expectations had been for a roughly unchanged reading of 65.0 versus [...]

ISM Non-Manufacturing Index Reached Another New High

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Robert Brusca

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

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**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

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

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief: 2004

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