Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703a.jpg" width="353">
The Bureau of Labor Statistics reported that nonfarm payrolls fell 62,000 in June. While the decline was in-line with expectations, it was the sixth consecutive monthly drop and it brought the total loss of jobs this year to 438,000. During the last three months payrolls fell at a 0.6% annual rate. That compared to a rate of decline in excess of 2.0% by the end of the last recession.
Employment is surveyed during the week that contains the 12th day of the month. Therefore, the effect of floods in the Midwest will become apparent with the July jobs report.
During the second quarter, the level of aggregate hours worked (employment multiplied by hours worked) fell at a 0.9% rate from 1Q. With 2% growth in productivity assumed, that suggests 1% growth in real GDP.
Factory sector jobs fell another 33,000 and at 3.1% rate over the last three months. That was near the fastest rate of decline since 2003 but during the 2001 recession employment dropped at a 10% rate.
Construction sector employment dropped 43,000 and the rate of job loss has been exceptionally large. Falling at a 7.4% rate during the last three months it about matches the worst rate of job loss in the construction sector since 1991.
Hiring in the service sector continued to weaken. Jobs rose just 7,000 (0.7% y/y), compared to growth of 1.6% to 1.8% during the last three years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703c.jpg" width="353">
This aggregate understates the weakening in private service sector jobs which fell 22,000 last month for the fifth decline in the last six months. The three-month rate of job loss of -0.2% compares to growth of 1.5% to 2.1% during the prior four years. Retail sector job loss has run at a 2.0% rate during the last three months. Jobs in the information sector also have been lost at a 1.7% rate, the same rate of decline as in the professional &amp; business services sector. These declines have been offset by 4.6% growth in the number of jobs in education and by 2.4% growth health care jobs. The number of finance sector jobs have fallen at a 0.7% rate during the last three months while temporary help services jobs, often a leading indicator of employment growth, have been declining at an accelerated 12.3% rate. Real estate sector jobs have been shed at a 0.4% rate during the last three months which is an improvement from the 3% to 4% rates of job loss late last year and early this year.
Government sector jobs rose an upwardly revised 29,000, the same as during May, and have increased at a 1.5% rate during the last three months. Federal government hiring has been strongest and is up at a 2.8% rate during the last three months followed by 2.3% growth in state employment and 0.9% growth in local government hiring.
The one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level) continued to portend further job loss as it stood at 46.9%. The three- month index remained even weaker at 41.9%. The three-month figure for the factory sector was somewhat weaker at 31.0%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703b.jpg" width="353">
In the Bureau of Labor Statistics household sector survey, the unemployment rate remained stable at 5.5% in June versus expectations for a slight decline. Employment fell a hard 155,000 after the 285,000 May decline. This measure of employment has been roughly unchanged since early-2007. The level of the unemployed rose 12,000 (21.5% y/y) after an 861,000 jump in May.
During June, the labor force fell 144,000 (+0.9% y/y) after its 577,000 surge in May. The labor force participation rate slipped month-to month to 66.1% from 66.2% versus 66.0% during all of last year and 66.2% in 2006.
The average duration of unemployment rose to 17.5 weeks from 16.6 in May. The figure now is on the rise versus the averages of the last two years.
Average hourly earnings increased a steady 0.3% and three-month growth was stable at 3.2% after 4.0% growth during 2006 and 2007. Factory sector earnings rose 2.6% y/y while private service sector earnings rose 3.7% y/y.
Global Financial Turmoil and the World Economy is yesterday&#39;s speech by Fed Governor Frederic S. Mishkin and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080702a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-62</td>
<td>-62</td>
<td>-67</td>
<td>0.0%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-49</td>
<td>-28</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-33</td>
<td>-22</td>
<td>-52</td>
<td>-2.5%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-43</td>
<td>-37</td>
<td>-59</td>
<td>-5.9%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
<td>33.8 (June &#39;07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3</td>
<td>0.3%</td>
<td>0.1%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.5%</td>
<td>5.5%</td>
<td>5.0%</td>
<td>4.6% (June &#39;07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Bureau of Labor Statistics reported that nonfarm payrolls fell 62,000 in June. While the decline was in-line with expectations, it was the sixth consecutive monthly drop and it brought the total loss of jobs this year to 438,000. [...]

U.S. Payrolls Fell for Sixth Month, Jobless Rate Stable at 5.5%

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics reported that nonfarm
payrolls fell 62,000 in June. While the decline was in-line
with expectations, it was the sixth consecutive monthly drop and it
brought the total loss of jobs this year to 438,000. During the last
three months payrolls fell at a 0.6% annual rate. That compared to a
rate of decline in excess of 2.0% by the end of the last recession.
Employment is surveyed during the week that contains the 12th
day of the month. Therefore, the effect of floods in the Midwest will
become apparent with the July jobs report.
During the second quarter, the level of aggregate hours worked
(employment multiplied by hours worked) fell at a 0.9% rate from 1Q.
With 2% growth in productivity assumed, that suggests 1% growth in real
GDP.
Factory sector jobs fell another 33,000 and at 3.1% rate over
the last three months. That was near the fastest rate of decline since
2003 but during the 2001 recession employment dropped at a 10% rate.
Construction sector employment dropped 43,000 and the rate of
job loss has been exceptionally large. Falling at a 7.4% rate during
the last three months it about matches the worst rate of job loss in
the construction sector since 1991.
Hiring in the service sector continued to weaken. Jobs rose
just 7,000 (0.7% y/y), compared to growth of 1.6% to 1.8% during the
last three years.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703c.jpg" align="right" border="0" height="265" width="353">
This aggregate understates the weakening in private service
sector jobs which fell 22,000 last month for the fifth decline in the
last six months. The three-month rate of job loss
of -0.2% compares to growth of 1.5% to 2.1% during the prior four
years. Retail sector job loss has run at a 2.0% rate during the last
three months. Jobs in the information sector also have been lost at a
1.7% rate, the same rate of decline as in the professional &amp;
business services sector. These declines have been offset by 4.6%
growth in the number of jobs in education and by 2.4% growth health
care jobs. The number of finance sector jobs have fallen at a 0.7% rate
during the last three months while temporary help services jobs, often
a leading indicator of employment growth, have been declining at an
accelerated 12.3% rate. Real estate sector jobs have been shed at a
0.4% rate during the last three months which is an improvement from the
3% to 4% rates of job loss late last year and early this year.
Government sector jobs rose an upwardly revised 29,000, the
same as during May, and have increased at a 1.5% rate during the last
three months. Federal government hiring has been strongest and is up at
a 2.8% rate during the last three months followed by 2.3% growth in
state employment and 0.9% growth in local government hiring.
The one month diffusion index, which
measures the breadth of job gain or loss (50 is the break-even level)
continued to portend further job loss as it stood at 46.9%. The three-
month index remained even weaker at 41.9%. The three-month figure for
the factory sector was somewhat weaker at 31.0%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703b.jpg" align="left" border="0" height="265" width="353">
In the Bureau of Labor Statistics household sector survey, the
unemployment rate remained stable at 5.5% in June
versus expectations for a slight decline. Employment fell a hard
155,000 after the 285,000 May decline. This measure of employment has
been roughly unchanged since early-2007. The level of the unemployed
rose 12,000 (21.5% y/y) after an 861,000 jump in May.
During June, the labor force fell 144,000 (+0.9% y/y) after
its 577,000 surge in May. The labor force participation rate slipped
month-to month to 66.1% from 66.2% versus 66.0% during all of last year
and 66.2% in 2006.
The average duration of unemployment rose to 17.5 weeks from
16.6 in May. The figure now is on the rise versus the averages of the
last two years.
Average hourly earnings increased a steady
0.3% and three-month growth was stable at 3.2% after 4.0% growth during
2006 and 2007. Factory sector earnings rose 2.6% y/y while private
service sector earnings rose 3.7% y/y.
Global Financial Turmoil and the World Economy
is yesterday's speech by Fed Governor Frederic S. Mishkin and it can be
found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080702a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment:
000s</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-62</td>
<td>-62</td>
<td>-67</td>
<td>0.0%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-49</td>
<td>-28</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-33</td>
<td>-22</td>
<td>-52</td>
<td>-2.5%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-43</td>
<td>-37</td>
<td>-59</td>
<td>-5.9%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
<td>33.8 (June '07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3</td>
<td>0.3%</td>
<td>0.1%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.5%</td>
<td>5.5%</td>
<td>5.0%</td>
<td>4.6% (June '07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for
Unemployment Insurance Surged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 3, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703f.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance last week surged to
404,000 versus an upwardly revised 388,000 during the prior week.
Consensus expectations had been for 385,000 claims.
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last ten years there has
been a (negative) 76% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims again rose to
390,500 (22.5% y/y). Claims averaged 369,000 during May. The numbers
compare to March when initial claims averaged 375,000.
Continuing claims for unemployment insurance reversed some of
the prior week's jump with a 19,000 worker decline. The four-week
average of continuing claims rose to a new cycle high of 3,110,750.
Continuing claims provide some indication of workers' ability
to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment slipped to 2.3%.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">06/28/08</th>
<th scope="col">06/21/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;404</td>
<td>388</td>
<td>25.5%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,116</td>
<td>21.9%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
U.S. ISM Non-Manufacturing Index
Lowest Since January, Pricing Power Surged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 3, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703e.jpg" align="left" border="0" height="265" width="353">
In June, the Composite Index for the non-manufacturing sector
from the Institute for Supply Management fell to its lowest level since
this past January. At 48.2, the index fell from 51.7. Consensus
expectations had been for a higher reading of 51.0.
Beginning with the January 2008 Non-Manufacturing <cite>Report
On Business</cite>®, a composite index is now calculated as an
indicator of the overall economic condition for the non-manufacturing
sector. It is a composite index based on the diffusion indexes for four
of the indicators (business activity, new orders, employment and
supplier deliveries) with equal weights. The latest report from the ISM
can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
The non-manufacturing business activity sub-index fell to 49.9
from 53.6 and so far in 2008 has averaged a break-even 49.9, down from
56.0 during all of last year. Since the series' inception in 1997 there
has been a 48% correlation between the level of the business activity
index for the non-manufacturing sector and the Q/Q change in real GDP
for the services and the construction sectors.
The new orders sub-index fell hard to 48.6 from 53.6 in May.
The employment index fell even harder to 43.8, a historic low for this
series. Since the series' inception in 1997 there has been a 56%
correlation between the level of the ISM non-manufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.
Pricing power surged to a historic high for this series. Since
inception ten years ago, there has been a 60% correlation between the
price index and the q/q change in the GDP services chain price index.
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 back to July 1997.
Liquidity Crisis from the Federal Reserve
Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/br/2008/q2/elul_liquidity-crises.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>48.2</td>
<td>51.7</td>
<td>55.1</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>84.5</td>
<td>77.0</td>
<td>65.6</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>
Service Sectors Are Weakening
Across Europe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 3, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080703d.jpg" align="left" border="0" height="265" width="353">
The service sector is eroding across Europe. France had
resisted deterioration for some time but in recent months the French
reading has dropped sharply. Spain and the UK have the weakest readings
since this index was instituted on a broad basis in May of 2000. France
and Italy are in the lower 10 percentile of their respective ranges.
Germany, at 53.3, is still showing expansion and is above the midpoint
of its range at a percentile standing of 56.9. For the whole of the
e-Zone the service sector standing is in the bottom 17 percentile of
its range. 
 

All country indices were slipping from mid-2007 onward Germany
alone saw its service sector then find a bottom and rebound from early
2008 through April. But over the past two months Germany&#8217;s service
sector has been under pressure, despite is being the clear best
performer in the e-Zone. 
 

The companion readings for consumer confidence show that the
performance of confidence across countries correlates well with the
performance of the service sector. Consumers in Spain and the UK are
the glummest and these countries have the weakest service sectors. The
French and Italian consumers are also glum but not as shell-shocked as
in the UK and Spain. Meanwhile, in Germany, consumer confidence, like
the service sector reading itself, stands above its range midpoint in
June. 
 

The service sector is where the jobs are and therefore where
much of consumer income is generated. The performance of this sector is
important to the economy. The slippage in European services sector
performance is a bad sign for the future, especially on a day that the
ECB has chosen to hike its key lending rate by 25bp. 
 
 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> NTC
Services Indices for EU/EMU</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey1">
<td class="firstcol">Euro-13</td>
<td>49.13</td>
<td>50.60</td>
<td>51.98</td>
<td>50.57</td>
<td>51.03</td>
<td>53.32</td>
<td>17.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany</td>
<td>53.35</td>
<td>53.79</td>
<td>54.92</td>
<td>54.02</td>
<td>52.54</td>
<td>53.83</td>
<td>56.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France</td>
<td>50.10</td>
<td>50.46</td>
<td>52.82</td>
<td>51.13</td>
<td>54.23</td>
<td>56.34</td>
<td>8.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy</td>
<td>48.52</td>
<td>48.12</td>
<td>49.81</td>
<td>48.82</td>
<td>48.37</td>
<td>51.21</td>
<td>9.3%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain</td>
<td>36.72</td>
<td>43.26</td>
<td>42.50</td>
<td>40.83</td>
<td>42.29</td>
<td>47.51</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Ireland</td>
<td>41.94</td>
<td>43.89</td>
<td>45.19</td>
<td>43.67</td>
<td>46.55</td>
<td>50.84</td>
<td>0.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol" colspan="8">EU
only</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK (CIPs)</td>
<td>47.14</td>
<td>49.77</td>
<td>50.35</td>
<td>49.09</td>
<td>50.98</td>
<td>52.88</td>
<td>6.0%</td>
</tr>
<tr class="grey5">
<td colspan="8" class="firstcol">EU
Commission Indices for
EU and EMU</td>
</tr>
<tr class="grey4">
<td class="firstcol">EU Index</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey1">
<td class="firstcol">EU Services</td>
<td>7</td>
<td>6</td>
<td>6</td>
<td>-14.67</td>
<td>-13.33</td>
<td>-9.58</td>
<td>17.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">EMU</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey1">
<td class="firstcol">Services</td>
<td>9</td>
<td>8</td>
<td>7</td>
<td>8.00</td>
<td>9.33</td>
<td>13.25</td>
<td>39.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Cons Confidence</td>
<td>-17</td>
<td>-15</td>
<td>-12</td>
<td>-14.67</td>
<td>-13.33</td>
<td>5.64</td>
<td>17.4%</td>
</tr>
<tr class="grey2">
<td colspan="8" class="firstcol">Consumer
confidence by
country</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany-Consumer Confidence</td>
<td>-4</td>
<td>-4</td>
<td>0</td>
<td>-2.67</td>
<td>-2.33</td>
<td>1.08</td>
<td>59.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">France-Consumer Confidence</td>
<td>-22</td>
<td>-18</td>
<td>-15</td>
<td>-18.33</td>
<td>-16.50</td>
<td>-11.33</td>
<td>21.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Italy-Consumer Confidence</td>
<td>-21</td>
<td>-20</td>
<td>-23</td>
<td>-21.33</td>
<td>-22.33</td>
<td>-21.42</td>
<td>14.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Spain-Consumer Confidence</td>
<td>-38</td>
<td>-31</td>
<td>-25</td>
<td>-31.33</td>
<td>-25.67</td>
<td>-20.25</td>
<td>0.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">UK-Consumer Confidence</td>
<td>-20</td>
<td>-15</td>
<td>-13</td>
<td>-16.00</td>
<td>-12.33</td>
<td>-7.75</td>
<td>0.0%</td>
</tr>
<tr class="grey6">
<td colspan="8" class="firstcol">percentile
is over range since May
2000</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702c.jpg" align="left" border="0" height="265" width="353">
The charts show that trends in the PPI are still working their
way higher. The table shows that energy and manufacturing sector
inflation trends as well as the total excluding construction embody
accelerating trends. Headline inflation is accelerating in Germany,
Italy, France and the UK. Core inflation is accelerating steadily in
those countries too, except for France and Germany. In Germany core
inflation accelerated over 6-mo compared to 12 months then leveled off
at 4%. In France Inflation accelerated to 4.2% over six months from
3.5% over 12-months then backed off to 4% over three-months. So
countries where the core is not accelerating are not showing much in
the way of hopeful trends either. 
 

None of these inflation rates is acceptable to the ECB. For
the PPI even core inflation rates are running DOUBLE the ceiling that
has been set for headline HICP inflation rate. No wonder the ECB is
widely believed to be readying a rate hike. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> Euro Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro Area 13</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Construction</td>
<td>1.2%</td>
<td>0.9%</td>
<td>11.7%</td>
<td>9.2%</td>
<td>7.1%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Excl Energy</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.5%</td>
<td>4.9%</td>
<td>3.8%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>1.8%</td>
<td>2.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>4.5%</td>
<td>1.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.4%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>3.4%</td>
<td>4.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Energy</td>
<td>4.1%</td>
<td>2.1%</td>
<td>36.7%</td>
<td>23.7%</td>
<td>18.2%</td>
<td>-0.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.3%</td>
<td>0.6%</td>
<td>11.2%</td>
<td>8.0%</td>
<td>6.3%</td>
<td>2.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>1.0%</td>
<td>1.1%</td>
<td>11.6%</td>
<td>8.8%</td>
<td>6.0%</td>
<td>1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany Ex Energy</td>
<td>0.4%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>4.0%</td>
<td>2.9%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>1.3%</td>
<td>0.8%</td>
<td>11.0%</td>
<td>7.9%</td>
<td>6.7%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France Ex Energy</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>4.2%</td>
<td>3.5%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>1.5%</td>
<td>0.4%</td>
<td>11.9%</td>
<td>9.2%</td>
<td>7.5%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy Ex Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>5.3%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>1.7%</td>
<td>2.3%</td>
<td>21.1%</td>
<td>17.9%</td>
<td>16.5%</td>
<td>0.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK Ex Energy</td>
<td>1.2%</td>
<td>1.0%</td>
<td>11.8%</td>
<td>9.7%</td>
<td>6.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Euro Area 13 Harmonized PPI
excluding Construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13 countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

The charts show that trends in the PPI are still working their way higher. The table shows that energy and manufacturing sector inflation trends as well as the total excluding construction embody accelerating trends. Headline [...]

PPI Inflation Trends Continue Strong in the Euro Area

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702f.jpg" width="353">
Job cut announcements fell 21.0% last month and reversed all of their rise during May, according to the Challenger, Grey &amp; Christmas survey. The three-month rise in layoffs surged, however, to its highest level since early 2006.
A rise in the three-month average of job cut announcements in the financial, automotive, transportation and telecommunication sectors led the recent strength.
During the last ten years there has been a 76% (inverse) correlation between the three-month moving average of announced job cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans again fell sharply (-63.7% y/y).
The Evolution of World Income Distribution from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/br/2008/q2/sill_evolution-of-world-income-distribution.pdf"> here</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>81,755</td>
<td>103,522</td>
<td>46.7%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
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Job cut announcements fell 21.0% last month and reversed all of their rise during May, according to the Challenger, Grey & Christmas survey. The three-month rise in layoffs surged, however, to its highest level since early 2006. A [...]

Challenger Layoffs Fell in June, Trend Up Strongly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702d.jpg" width="353">
Factory inventories increased 0.5% in May after little change during the prior month. As a result of recent moderation, the three-month growth rate eased further to 5.9% (AR), which was half the growth rates of this past Winter.
The picture of more moderate rates of inventory accumulation was widespread. Automobile inventories, in fact, fell at a 34.3% rate during the last three months. Less the transportation sector altogether, inventories rose 0.5% in May but three-month growth fell to 4.4% from a double-digit rate of accumulation earlier this year.
Inventory accumulation in the machinery sector also eased to a 5.2% growth rate, which was half the earlier rate. Accumulation in the computer &amp; electronics areas also eased, but just slightly to an 8.4% rate of growth. In the nondurables area inventories rose 0.6% in May but three-month growth of 2.4% was down considerably versus the double digit growth rate earlier this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702e.jpg" width="353">
Factory shipments nudged up 0.1% after to 2.7% March surge. Shipments of petroleum surged again, in May by 4.0% (39.0% y/y). Less petroleum shipments fell 0.6% (+0.4% y/y). Growth of 5-7% had been the norm back from 2004-2006.
Total factory orders rose an expected 0.6% again reflecting stronger petroleum orders (which equal shipments). Less petroleum, shipments rose 0.1% and three-month growth was a moderate 2.6% (AR). Durable orders overall were unchanged, which was little different than reported in the advance report, after a 1.0% April decline.
Overall unfilled orders rose 0.9% in May and the three-month growth rate remained firm at 12.3%. Higher backlogs of civilian aircraft, which have been rising at a 25.3% rate, boosted the figure. Excluding the transportation sector altogether unfilled orders still rose 0.5% in May and at a 10.1% rate during the last three months. Accelerated growth in backlogs of machinery still account for much of that strength.
Why Are Goods So Cheap in Some Countries? from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/2008/q2/alessandria-kaboski_why-are-goods-so-cheap.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5</td>
<td>-0.0</td>
<td>6.1</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.5</td>
<td>-0.2</td>
<td>5.0</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>1.3</td>
<td>5.0</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.4</td>
<td>2.8</td>
<td>7.4</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.1</td>
<td>2.7</td>
<td>4.7</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.6</td>
<td>2.9</td>
<td>7.2</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>0.7</td>
<td>15.8</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>0.5</td>
<td>1.1</td>
<td>8.5</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
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Factory inventories increased 0.5% in May after little change during the prior month. As a result of recent moderation, the three-month growth rate eased further to 5.9% (AR), which was half the growth rates of this past Winter. The [...]

U.S. Factory Inventories Rose With Shipments

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702b.jpg" align="left" border="0" height="265" width="353">
The June EMU MFG PMI moved below 50 for the first time since
June of 2005. This signals EMU-wide MFG contraction. The dip comes
ahead of a meeting of the ECB when it is expected to hike rates. EMU
member finance ministers have been warning the ECB of the potential for
a rate hike to turn growth negative in the e-Zone. Meanwhile, in the
interest rate and exchange rate sensitive MFG sector it already has
happened- at least by one measure. 
 

Of the three largest EMU economies, two are registering
contraction in MFG by the Market PMI measures: Italy and France. The
Euro-Area&#8217;s strongest and largest economy, Germany remains in positive
territory &#8211; but is easing. 
 

The Euro Area plus Italy and France show that the economy is
losing momentum at a rapid pace. Germany, on the other hand, has
rebounded from its weakest reading and is losing momentum at a slower
pace. 
 

Still, the negative reading for the Euro Area's overall MFG
PMI does not make it easier for the ECB to do what it seems already to
have decided to do - that is to hike rates. Since the ECB began
considering a rate hike more seriously, inflation has overrun the ECB
ceiling by an even larger amount. Headline inflation is now is at more
that twice the pace that the ceiling allows, leaving the ECB chasing
after its own credibility. This is a race that the ECB is determined to
win. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">NTC MFG Indices </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>49.16</td>
<td>50.60</td>
<td>50.74</td>
<td>50.17</td>
<td>51.27</td>
<td>52.25</td>
<td>37.2%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>52.56</td>
<td>53.57</td>
<td>53.62</td>
<td>53.25</td>
<td>53.93</td>
<td>54.18</td>
<td>60.3%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>49.24</td>
<td>51.48</td>
<td>51.12</td>
<td>50.61</td>
<td>51.91</td>
<td>52.07</td>
<td>31.7%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>46.91</td>
<td>48.05</td>
<td>48.24</td>
<td>47.73</td>
<td>49.01</td>
<td>50.57</td>
<td>24.2%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>40.61</td>
<td>43.79</td>
<td>45.19</td>
<td>43.20</td>
<td>45.42</td>
<td>48.21</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>48.39</td>
<td>49.76</td>
<td>49.83</td>
<td>49.33</td>
<td>51.31</td>
<td>52.71</td>
<td>32.6%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>53.81</td>
<td>53.77</td>
<td>54.38</td>
<td>53.99</td>
<td>53.08</td>
<td>53.50</td>
<td>63.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>44.71</td>
<td>45.21</td>
<td>44.69</td>
<td>44.87</td>
<td>46.13</td>
<td>49.39</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>51.07</td>
<td>51.46</td>
<td>51.45</td>
<td>51.33</td>
<td>52.02</td>
<td>53.99</td>
<td>49.5%</td>
</tr>
<tr class="odd">
<td colspan="8">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>45.79</td>
<td>49.46</td>
<td>50.34</td>
<td>48.53</td>
<td>49.65</td>
<td>52.02</td>
<td>2.8%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">percentile is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

The June EMU MFG PMI moved below 50 for the first time since June of 2005. This signals EMU-wide MFG contraction. The dip comes ahead of a meeting of the ECB when it is expected to hike rates. EMU member finance ministers have been [...]

Markit Indices Continue to Show MFG Declines in Euro Area

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702a.jpg" width="353">
The ADP National Employment Report, from the payroll processor, reported that private nonfarm payrolls fell 79,000 last month after a revised 25,000 increase during May. Declines in payrolls reported for earlier months this year were revised to show modest increases.
The U.S. Bureau of Labor Statistics will report on June nonfarm payrolls tomorrow. Last month, the 25,000 worker rise in ADP&#39;s measure of private nonfarm payrolls was accompanied by a 66,000 worker decline in the BLS measure of private sector payrolls.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
The ADP sub-index for large payrolls fell 51,000 (-1.2% y/y) after a 19,000 worker decline during May.
Medium sized payrolls also were quite weak and posted a 35,000 (+0.4% y/y) decline.
A 7,000 worker increase (1.1% y/y) in small sized payrolls during June was much reduced after the 50,000 May increase.
Employment in the goods producing industries fell a huge 76,000 (-2.4% y/y) and the rate of decline has intensified as this year has progressed. Services payrolls also fell but by a lesser 3,000 (1.2% y/y).
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.<div> </div>

<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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>-79,000</td>
<td>25,000</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>


</html>

The ADP National Employment Report, from the payroll processor, reported that private nonfarm payrolls fell 79,000 last month after a revised 25,000 increase during May. Declines in payrolls reported for earlier months this year were [...]

ADP Report: June Private Sector Payrolls Down, Earlier Figures Revised Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702d.jpg" align="left" border="0" height="265" width="353">
Factory inventories increased 0.5% in May after little change
during the prior month. As a result of recent moderation, the
three-month growth rate eased further to 5.9% (AR), which was half the
growth rates of this past Winter.
The picture of more moderate rates of inventory accumulation
was widespread. Automobile inventories, in fact, fell at a 34.3% rate
during the last three months. Less the transportation sector
altogether, inventories rose 0.5% in May but three-month growth fell to
4.4% from a double-digit rate of accumulation earlier this year.
Inventory accumulation in the machinery sector also eased to a
5.2% growth rate, which was half the earlier rate. Accumulation in the
computer &amp; electronics areas also eased, but just slightly to
an 8.4% rate of growth. In the nondurables area inventories rose 0.6%
in May but three-month growth of 2.4% was down considerably versus the
double digit growth rate earlier this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702e.jpg" align="right" border="0" height="265" width="353">
Factory shipments nudged up 0.1% after to 2.7% March surge.
Shipments of petroleum surged again, in May by 4.0% (39.0% y/y). Less
petroleum shipments fell 0.6% (+0.4% y/y). Growth of 5-7% had been the
norm back from 2004-2006.
Total factory orders rose an expected 0.6% again reflecting
stronger petroleum orders (which equal shipments). Less petroleum,
shipments rose 0.1% and three-month growth was a moderate 2.6% (AR).
Durable orders overall were unchanged, which was little different than
reported in the advance report, after a 1.0% April decline.
Overall unfilled orders rose 0.9% in May and the three-month
growth rate remained firm at 12.3%. Higher backlogs of civilian
aircraft, which have been rising at a 25.3% rate, boosted the figure.
Excluding the transportation sector altogether unfilled orders still
rose 0.5% in May and at a 10.1% rate during the last three months.
Accelerated growth in backlogs of machinery still account for much of
that strength.
Why Are Goods So Cheap in Some Countries?
from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/2008/q2/alessandria-kaboski_why-are-goods-so-cheap.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory
Survey</a> (NAICS, %)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5</td>
<td>-0.0</td>
<td>6.1</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.5</td>
<td>-0.2</td>
<td>5.0</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>0.6</td>
<td>1.3</td>
<td>5.0</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.4</td>
<td>2.8</td>
<td>7.4</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.1</td>
<td>2.7</td>
<td>4.7</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.6</td>
<td>2.9</td>
<td>7.2</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>0.7</td>
<td>15.8</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>0.5</td>
<td>1.1</td>
<td>8.5</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
Challenger Layoffs Fell in June,
Trend Up Strongly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 2, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702f.jpg" align="left" border="0">
Job cut announcements fell 21.0% last month and reversed all
of their rise during May, according to the Challenger, Grey &amp;
Christmas survey. The three-month rise in layoffs surged, however, to
its highest level since early 2006.
A rise in the three-month average of job cut announcements in
the financial, automotive, transportation and telecommunication sectors
led the recent strength.
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans again
fell sharply (-63.7% y/y).
The Evolution of World Income Distribution
from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/br/2008/q2/sill_evolution-of-world-income-distribution.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>81,755</td>
<td>103,522</td>
<td>46.7%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
ADP Report: June Private Sector
Payrolls Down, Earlier Figures Revised Up 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 2, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702a.jpg" align="left" border="0" height="265" width="353">
The ADP National Employment Report, from the payroll
processor, reported that private nonfarm payrolls fell 79,000 last
month after a revised 25,000 increase during May. Declines in payrolls
reported for earlier months this year were revised to show modest
increases.
The U.S. Bureau of Labor Statistics will report on June nonfarm payrolls tomorrow. Last month, the
25,000 worker rise in ADP's measure of private nonfarm payrolls was
accompanied by a 66,000 worker decline in the BLS measure of private
sector payrolls.
According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.
The ADP sub-index for large payrolls fell 51,000 (-1.2% y/y)
after a 19,000 worker decline during May.
Medium sized payrolls also were quite weak and posted a 35,000
(+0.4% y/y) decline.
A 7,000 worker increase (1.1% y/y) in small sized payrolls
during June was much reduced after the 50,000 May increase.
Employment in the goods producing industries fell a huge
76,000 (-2.4% y/y) and the rate of decline has intensified as this year
has progressed. Services payrolls also fell but by a lesser 3,000 (1.2%
y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's 
USECON database;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months.

The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>-79,000</td>
<td>25,000</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Markit Indices Continue to Show
MFG Declines in Euro Area 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 2, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702b.jpg" align="left" border="0" height="265" width="353">
The June EMU MFG PMI moved below 50 for the first time since
June of 2005. This signals EMU-wide MFG contraction. The dip comes
ahead of a meeting of the ECB when it is expected to hike rates. EMU
member finance ministers have been warning the ECB of the potential for
a rate hike to turn growth negative in the e-Zone. Meanwhile, in the
interest rate and exchange rate sensitive MFG sector it already has
happened- at least by one measure. 
 

Of the three largest EMU economies, two are registering
contraction in MFG by the Market PMI measures: Italy and France. The
Euro-Area&#8217;s strongest and largest economy, Germany remains in positive
territory &#8211; but is easing. 
 

The Euro Area plus Italy and France show that the economy is
losing momentum at a rapid pace. Germany, on the other hand, has
rebounded from its weakest reading and is losing momentum at a slower
pace. 
 

Still, the negative reading for the Euro Area's overall MFG
PMI does not make it easier for the ECB to do what it seems already to
have decided to do - that is to hike rates. Since the ECB began
considering a rate hike more seriously, inflation has overrun the ECB
ceiling by an even larger amount. Headline inflation is now is at more
that twice the pace that the ceiling allows, leaving the ECB chasing
after its own credibility. This is a race that the ECB is determined to
win. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="8" scope="col">NTC MFG
Indices </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td>49.16</td>
<td>50.60</td>
<td>50.74</td>
<td>50.17</td>
<td>51.27</td>
<td>52.25</td>
<td>37.2%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>52.56</td>
<td>53.57</td>
<td>53.62</td>
<td>53.25</td>
<td>53.93</td>
<td>54.18</td>
<td>60.3%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>49.24</td>
<td>51.48</td>
<td>51.12</td>
<td>50.61</td>
<td>51.91</td>
<td>52.07</td>
<td>31.7%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>46.91</td>
<td>48.05</td>
<td>48.24</td>
<td>47.73</td>
<td>49.01</td>
<td>50.57</td>
<td>24.2%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>40.61</td>
<td>43.79</td>
<td>45.19</td>
<td>43.20</td>
<td>45.42</td>
<td>48.21</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td>48.39</td>
<td>49.76</td>
<td>49.83</td>
<td>49.33</td>
<td>51.31</td>
<td>52.71</td>
<td>32.6%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>53.81</td>
<td>53.77</td>
<td>54.38</td>
<td>53.99</td>
<td>53.08</td>
<td>53.50</td>
<td>63.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>44.71</td>
<td>45.21</td>
<td>44.69</td>
<td>44.87</td>
<td>46.13</td>
<td>49.39</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>51.07</td>
<td>51.46</td>
<td>51.45</td>
<td>51.33</td>
<td>52.02</td>
<td>53.99</td>
<td>49.5%</td>
</tr>
<tr class="odd">
<td colspan="8">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>45.79</td>
<td>49.46</td>
<td>50.34</td>
<td>48.53</td>
<td>49.65</td>
<td>52.02</td>
<td>2.8%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">percentile
is over range since March
2000</td>
</tr>
</tbody>
</table>
PPI Inflation Trends Continue
Strong in the Euro Area 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 2, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080702c.jpg" align="left" border="0" height="265" width="353">
The charts show that trends in the PPI are still working their
way higher. The table shows that energy and manufacturing sector
inflation trends as well as the total excluding construction embody
accelerating trends. Headline inflation is accelerating in Germany,
Italy, France and the UK. Core inflation is accelerating steadily in
those countries too, except for France and Germany. In Germany core
inflation accelerated over 6-mo compared to 12 months then leveled off
at 4%. In France Inflation accelerated to 4.2% over six months from
3.5% over 12-months then backed off to 4% over three-months. So
countries where the core is not accelerating are not showing much in
the way of hopeful trends either. 
 

None of these inflation rates is acceptable to the ECB. For
the PPI even core inflation rates are running DOUBLE the ceiling that
has been set for headline HICP inflation rate. No wonder the ECB is
widely believed to be readying a rate hike. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup><thead><tr>
<th colspan="7" scope="col"> Euro
Area and UK PPI Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro Area 13</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total excl Construction</td>
<td>1.2%</td>
<td>0.9%</td>
<td>11.7%</td>
<td>9.2%</td>
<td>7.1%</td>
<td>2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Excl Energy</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.5%</td>
<td>4.9%</td>
<td>3.8%</td>
<td>3.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Capital Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>1.8%</td>
<td>2.0%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Consumer Goods</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>4.5%</td>
<td>1.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.4%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>3.4%</td>
<td>4.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Energy</td>
<td>4.1%</td>
<td>2.1%</td>
<td>36.7%</td>
<td>23.7%</td>
<td>18.2%</td>
<td>-0.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">MFG</td>
<td>1.3%</td>
<td>0.6%</td>
<td>11.2%</td>
<td>8.0%</td>
<td>6.3%</td>
<td>2.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>1.0%</td>
<td>1.1%</td>
<td>11.6%</td>
<td>8.8%</td>
<td>6.0%</td>
<td>1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany Ex Energy</td>
<td>0.4%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>4.0%</td>
<td>2.9%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>1.3%</td>
<td>0.8%</td>
<td>11.0%</td>
<td>7.9%</td>
<td>6.7%</td>
<td>1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France Ex Energy</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>4.2%</td>
<td>3.5%</td>
<td>2.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>1.5%</td>
<td>0.4%</td>
<td>11.9%</td>
<td>9.2%</td>
<td>7.5%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy Ex Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>5.5%</td>
<td>5.3%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>1.7%</td>
<td>2.3%</td>
<td>21.1%</td>
<td>17.9%</td>
<td>16.5%</td>
<td>0.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK Ex Energy</td>
<td>1.2%</td>
<td>1.0%</td>
<td>11.8%</td>
<td>9.7%</td>
<td>6.3%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Euro Area 13
Harmonized PPI
excluding Construction</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13
countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

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- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

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The chart provides a good overview for German trade trend. The table breaks trade trends down by categories and provides growth rates on shorter horizons of 3 months, 6 months and 12 months. But the chart depicts the overarching trends well. It shows the German surplus being diminished on a gradual path and not altogether in a clear monotonic fashion. Export and import lines on the chart move mostly sideways (horizontal). The export line is below the import line since late last year. These two series plots on the right-hand scale and they depict growth rates (year-over-year). So sideways movements mean roughly steady growth. Exports have been growth steadily year-over-year at a weak pace that on occasion has been a decline in terms of their year-on-year value. Generally, the green line is in positive territory. The red import line has been stronger, indicating somewhat better, steadier import growth over the period.

While exports had a good September, export growth sequenced from 12-months to 6-months, to 3-months has been weakening. Imports also put in a strong September but are showing some erosion from 12-month to 6-months to 3-months in terms of annualized rates of growth. Still, import growth rates remain quite strong and consistent; the sense of erosion is clear but also moderate – it’s a moderate erosion in progress for imports.

Capital goods exports from Germany are improving- this observation is based on lagged data with a one-month lag built in. But consumer goods and vehicle exports are slowing and rather sharply- likely as a result of U.S. tariffs.

Import side trends, with the same lag, are not as clear cut. Capital goods imports are growing, and motor vehicle imports are improving and accelerating. Consumer goods imports have erratically slowed.

Real exports and imports on sequential lagged data show exports contracting on most horizons while imports generate consistent positive growth in real terms. There is a big difference in these two trends expressed in real terms.

On balance, German trade trends are shifting. The trade balance is gradually eroding. Change is in play.

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Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

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**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

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**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

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**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

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**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

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**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

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Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). These state data are not seasonally adjusted.

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

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- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

Economy in Brief: 2008

Jump to:

U.S. Payrolls Fell for Sixth Month, Jobless Rate Stable at 5.5%

U.S. Payrolls Fell for Sixth Month, Jobless Rate Stable at 5.5%

PPI Inflation Trends Continue Strong in the Euro Area

Challenger Layoffs Fell in June, Trend Up Strongly

U.S. Factory Inventories Rose With Shipments

Markit Indices Continue to Show MFG Declines in Euro Area

ADP Report: June Private Sector Payrolls Down, Earlier Figures Revised Up

U.S. Factory Inventories Rose With Shipments