Tom Moeller

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Personal income rose 0.2% during November (4.2% y/y)
following an unrevised 0.5% October increase. A 0.3% gain was expected in the
Action Economics Forecast Survey. Leading last month's rise was a 1.0% hop (5.3%
y/y) in proprietors' income which came after a 1.3% jump. Wages &amp; salaries
rose a lessened 0.2% (4.2% y/y), the weakest rise in six months. Income from
assets held steady (3.5% y/y) after a 0.3% rise, reflecting a 0.4% dividend
decline (+3.8% y/y) and a 0.3% gain (3.2% y/y) in interest income. Rental income
increased 0.5% (4.8% y/y), the same as during October. Transfer payments edged
0.1% higher (5.2% y/y) reflecting a 0.4% decline (+5.7% y/y) in social security
payments. Medicare receipts rose 0.9% (7.5% y/y) but Medicaid income inched just
0.1% higher (4.8% y/y). Veterans benefits rose 0.4% (10.9% y/y) while
unemployment insurance benefits eased 0.4% (-16.7% y/y).

Disposable personal income gained 0.2% (4.7% y/y) following a
0.5% increase. When adjusted for higher prices, disposable income also rose 0.2%
(2.8% y/y).

Personal consumption expenditures improved by a lessened 0.4%
last month (4.7% y/y) after a 0.8% increase. A 0.3% rise had been expected.
Adjusted for higher prices, personal outlays rose 0.3% (2.8% y/y). Real durable
goods outlays increased 0.9% (3.8% y/y) led by a 1.9% rise (8.9% y/y) in
recreational goods &amp; vehicles. Home furnishings &amp; appliance buying
increased 1.3% (4.1% y/y) but motor vehicle expenditures declined 0.4% (-2.2%
y/y). Real outlays on nondurable goods increased 0.6% (3.2% y/y) as fuel outlays
edged 0.1% higher (-0.8% y/y). Clothing spending jumped 1.6% (4.6% y/y) and
spending at restaurants rose 0.3% (2.7% y/y). Real services outlays gained a
lessened 0.2% (2.6% y/y). Spending on housing &amp; utilities rose a steady 0.6%
(2.4% y/y) while financial services &amp; insurance payments gained 0.4% (0.9%
y/y). Recreation services spending decreased 0.8% (+1.4% y/y) while spending at
restaurants fell 0.7% (+3.5% y/y). Health care outlays rose 0.3% (2.9% y/y).

The personal savings rate eased to 6.0%, the lowest level
since March 2013. It has been falling steadily since the February high of 7.4%.
The level of personal savings increased a paltry 1.7% y/y.

The personal consumption chain price index rose 0.1% (1.8%
y/y) after a 0.2% rise. The index excluding food &amp; energy also rose 0.1%
(1.9% y/y) for a second month.

The personal income and consumption figures are available in
Haver's USECON database with detail in the USNA database. The
Action Economics figures are in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Personal Income &amp; Outlays
 (%)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Personal Income</td>
 <td >0.2</td>
 <td >0.5</td>
 <td >0.2</td>
 <td >4.2</td>
 <td >4.4</td>
 <td >2.6</td>
 <td >4.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Wages &amp; Salaries</td>
 <td >0.2</td>
 <td >0.4</td>
 <td >0.3</td>
 <td >4.2</td>
 <td >4.6</td>
 <td >2.9</td>
 <td >5.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Disposable Personal Income</td>
 <td >0.2</td>
 <td >0.5</td>
 <td >0.2</td>
 <td >4.7</td>
 <td >4.4</td>
 <td >2.8</td>
 <td >4.4</td>
 </tr>
 <tr>
 <td class="firstcol" >Personal Consumption Expenditures</td>
 <td >0.4</td>
 <td >0.8</td>
 <td >0.1</td>
 <td >4.7</td>
 <td >4.3</td>
 <td >3.8</td>
 <td >4.0</td>
 </tr>
 <tr>
 <td class="firstcol" >Personal Saving Rate</td>
 <td >6.0</td>
 <td >6.1</td>
 <td >6.3</td>
 <td >6.2 
 (Nov.'17)</td>
 <td >6.7</td>
 <td >6.7</td>
 <td >7.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >PCE Chain Price Index</td>
 <td >0.1</td>
 <td >0.2</td>
 <td >0.1</td>
 <td >1.8</td>
 <td >1.8</td>
 <td >1.1</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Less Food &amp; Energy</td>
 <td >0.1</td>
 <td >0.1</td>
 <td >0.2</td>
 <td >1.9</td>
 <td >1.6</td>
 <td >1.7</td>
 <td >1.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Real Disposable Income</td>
 <td >0.2</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >2.8</td>
 <td >2.6</td>
 <td >1.7</td>
 <td >4.1</td>
 </tr>
 <tr>
 <td class="firstcol" >Real Personal Consumption Expenditures</td>
 <td >0.3</td>
 <td >0.6</td>
 <td >-0.0</td>
 <td >2.8</td>
 <td >2.5</td>
 <td >2.7</td>
 <td >3.7</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Personal income rose 0.2% during November (4.2% y/y) following an unrevised 0.5% October increase. A 0.3% gain was expected in the Action Economics Forecast Survey. Leading last month's rise was a 1.0% hop (5.3% y/y) in proprietors' [...]

U.S. Personal Income and Spending Gains Slow; Pricing Power Is Weak

Carol Stone, CBE

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Real gross domestic product increased 3.4% (AR, 3.0% y/y) during Q3'18, a downward revision of 0.1% from November’s second estimate. This followed a 4.2% rise during the second quarter. Participants in the Actions Economics Forecast Survey had expected no change from the 3.5% rate.

Third-quarter corporate profits data were also revised and now show 3.5% growth from Q2 (19.6% y/y) including adjustments for inventory valuation and depreciation, up from 3.3% reported last month. The rise followed 2.1% growth in the second quarter. Profits without inventory & depreciation allowances rose 0.9% (6.1% y/y), also up 0.2% from last month’s report, following a 3.3% Q2 increase.

Domestic final sales increased 2.9% (3.2% y/y), which is revised down 0.2% from November’s estimate. Personal consumption expenditures were revised down to 3.5% growth (2.9% y/y) from 3.6%. Spending on durable goods was reduced to 3.7% (5.6% y/y) from 3.9%. Motor vehicle purchases fell at a 1.8% rate (1.5% y/y), revised from -1.5%. Recreational vehicle purchases growth was reduced from 9.1% to 8.9% (9.3% y/y) and spending growth on home furnishings of 6.3% (6.4% y/y) was revised from 6.8%.

Nondurable goods purchases grew at a 4.6% rate (3.2% y/y), revised from 5.3%. Clothing purchases strengthened 11.0% (5.2% y/y), still the quickest growth since Q4'05, and food & beverages expenditures rose 3.4% (3.6% y/y), revised from 3.8%. Gasoline & fuel oil buying dropped at a 3.4% pace (-1.0% y/y), revised from a 1.2% decrease reported last month.


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Spending on services increased at a 3.2% pace (2.5% y/y). It remained the quickest growth since late 2014. Outlays at restaurants & hotels gained 7.1% (4.2% y/y) which followed an 8.1% Q2 rise. Health care outlays increased 4.7% (2.7% y/y) and financial services insurance rose 1.4% (0.4% y/y), revised from 1.0%. Housing & utilities outlays rose 1.0% (0.5% y/y) while recreation spending fell 1.3% (+0.7% y/y), revised from -0.2%.

Government sector spending also was reduced to 2.6% (2.3 y/y) from 3.3% reported before. Federal government outlays growth was unrevised at 3.5% both q/q and y/y. National defense spending remained at 4.9% growth in the quarter and the 4.2% y/y increase was the strongest since Q1 2010. Outlays by state & local governments were also unrevised, showing a 2.0% growth rate in the quarter (1.5% y/y).

Growth in business fixed investment remained at a 2.5% pace (6.8% y/y). Structures investment, however, was revised to a decline of 3.4% (6.3%) from the -1.7% reported last month. Industrial equipment spending growth was trimmed to 9.5% (4.5% y/y) from 9.8% in last month’s report, while information processing equipment investment grew 7.2% (9.6% y/y). Transportation equipment expenditures declined 3.6% (+5.3% y/y), a slight improvement from last month’s -3.9%. Investment in intellectual products did better than seen before, growing at a 5.6% (7.6% y/y) pace, up from last month’s 4.3% estimate.

Residential investment was revised down to a 3.6% (+0.5% y/y) decline from -2.6%. It remained the third straight quarter of decline.

The chain type GDP prices index was revised upward marginally to a 1.8% increase (2.3% y/y), compared with the Action Economics survey’s 1.7% forecast, following the 3.0% increase in Q2. The PCE price index was increased to 1.6% (2.2% y/y) from 1.5% in last month’s report. Business fixed investment prices increased at a 1.6% pace (1.2% y/y), a bit stronger than the already firm 1.5% of last month’s estimates, making the last two quarters the strongest since 2014. The residential investment price index increased 3.6% (5.7% y/y), unchanged from last month’s tabulation and roughly half the growth during the prior two quarters.

The GDP figures can be found in Haver's USECON and USNA database.
USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts.
Both databases include tables of the newly published not seasonally adjusted data. The Action
Economics consensus estimates can be found in AS1REPNA.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2012 $ (%, AR</a>)</th>
 <th scope="col" >Q3'18 (Third Estimate)</th>
 <th scope="col" >Q3'18 (Second Estimate)</th>
 <th scope="col" >Q2'18</th>
 <th scope="col" >Q1'18</th>
 <th scope="col" >Q3'18 Y/Y</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 <tbody>
 <tr>
 <td class="firstcol" >Gross Domestic Product</td>
 <td >3.4</td>
 <td >3.5</td>
 <td >4.2</td>
 <td >2.2</td>
 <td >3.0</td>
 <td >2.2</td>
 <td >1.6</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Inventory Effect</td>
 <td >2.3</td>
 <td >2.3</td>
 <td >-1.2</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >0.0</td>
 <td >-0.5</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Final Sales</td>
 <td >1.0</td>
 <td >1.2</td>
 <td >5.4</td>
 <td >1.9</td>
 <td >2.9</td>
 <td >2.2</td>
 <td >2.1</td>
 <td >2.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
 <td >-2.0</td>
 <td >-1.9</td>
 <td >1.2</td>
 <td >0.0</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >-0.3</td>
 <td >-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Domestic Final Sales</td>
 <td >2.9</td>
 <td >3.1</td>
 <td >4.0</td>
 <td >1.9</td>
 <td >3.3</td>
 <td >2.5</td>
 <td >2.3</td>
 <td >3.3</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
 <td >3.5</td>
 <td >3.6</td>
 <td >3.8</td>
 <td >0.5</td>
 <td >3.0</td>
 <td >2.5</td>
 <td >2.7</td>
 <td >3.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Nonresidential Business Fixed
 Investment</td>
 <td >2.5</td>
 <td >2.5</td>
 <td >8.7</td>
 <td >11.5</td>
 <td >6.8</td>
 <td >5.3</td>
 <td >0.5</td>
 <td >1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td >-2.6</td>
 <td >-2.6</td>
 <td >-1.4</td>
 <td >-3.4</td>
 <td >0.8</td>
 <td >3.3</td>
 <td >6.5</td>
 <td >10.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td >2.6</td>
 <td >2.6</td>
 <td >2.5</td>
 <td >1.5</td>
 <td >2.3</td>
 <td >-0.1</td>
 <td >1.4</td>
 <td >1.9</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
 <td >1.8</td>
 <td >1.7</td>
 <td >3.0</td>
 <td >2.0</td>
 <td >2.3</td>
 <td >1.9</td>
 <td >1.1</td>
 <td >1.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditures</td>
 <td >1.6</td>
 <td >1.5</td>
 <td >2.0</td>
 <td >2.5</td>
 <td >2.2</td>
 <td >1.8</td>
 <td >1.1</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
 <td >1.6</td>
 <td >1.5</td>
 <td >2.0</td>
 <td >0.7</td>
 <td >1.2</td>
 <td >0.7</td>
 <td >-0.8</td>
 <td >0.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
 <td >3.6</td>
 <td >3.6</td>
 <td >7.3</td>
 <td >8.8</td>
 <td >5.7</td>
 <td >4.5</td>
 <td >3.6</td>
 <td >2.7</td>
 </tr>
 </tbody>
 
 
</html>

Real gross domestic product increased 3.4% (AR, 3.0% y/y) during Q3'18, a downward revision of 0.1% from November’s second estimate. This followed a 4.2% rise during the second quarter. Participants in the Actions Economics Forecast [...]

U.S. GDP Growth Revised Down 0.1%; Profits Growth Modestly Higher

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Real gross domestic product increased 3.4% (AR, 3.0% y/y) during Q3'18, a downward revision of 0.1% from November's second estimate. This followed a 4.2% rise during the second quarter. Participants in the Actions Economics Forecast Survey had expected no change from the 3.5% rate.

Third-quarter corporate profits data were also revised and now show 3.5% growth from Q2 (19.6% y/y) including adjustments for inventory valuation and depreciation, up from 3.3% reported last month. The rise followed 2.1% growth in the second quarter. Profits without inventory & depreciation allowances rose 0.9% (6.1% y/y), also up 0.2% from last month's report, following a 3.3% Q2 increase.

Domestic final sales increased 2.9% (3.2% y/y), which is revised down 0.2% from November's estimate. Personal consumption expenditures were revised down to 3.5% growth (2.9% y/y) from 3.6%. Spending on durable goods was reduced to 3.7% (5.6% y/y) from 3.9%. Motor vehicle purchases fell at a 1.8% rate (1.5% y/y), revised from -1.5%. Recreational vehicle purchases growth was reduced from 9.1% to 8.9% (9.3% y/y) and spending growth on home furnishings of 6.3% (6.4% y/y) was revised from 6.8%.

Nondurable goods purchases grew at a 4.6% rate (3.2% y/y), revised from 5.3%. Clothing purchases strengthened 11.0% (5.2% y/y), still the quickest growth since Q4'05, and food & beverages expenditures rose 3.4% (3.6% y/y), revised from 3.8%. Gasoline & fuel oil buying dropped at a 3.4% pace (-1.0% y/y), revised from a 1.2% decrease reported last month.

Spending on services increased at a 3.2% pace (2.5% y/y). It remained the quickest growth since late 2014. Outlays at restaurants & hotels gained 7.1% (4.2% y/y) which followed an 8.1% Q2 rise. Health care outlays increased 4.7% (2.7% y/y) and financial services insurance rose 1.4% (0.4% y/y), revised from 1.0%. Housing & utilities outlays rose 1.0% (0.5% y/y) while recreation spending fell 1.3% (+0.7% y/y), revised from -0.2%.


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Government sector spending also was reduced to 2.6% (2.3 y/y) from 3.3% reported before. Federal government outlays growth was unrevised at 3.5% both q/q and y/y. National defense spending remained at 4.9% growth in the quarter and the 4.2% y/y increase was the strongest since Q1 2010. Outlays by state & local governments were also unrevised, showing a 2.0% growth rate in the quarter (1.5% y/y).

Growth in business fixed investment remained at a 2.5% pace (6.8% y/y). Structures investment, however, was revised to a decline of 3.4% (6.3%) from the -1.7% reported last month. Industrial equipment spending growth was trimmed to 9.5% (4.5% y/y) from 9.8% in last month's report, while information processing equipment investment grew 7.2% (9.6% y/y). Transportation equipment expenditures declined 3.6% (+5.3% y/y), a slight improvement from last month's -3.9%. Investment in intellectual products did better than seen before, growing at a 5.6% (7.6% y/y) pace, up from last month's 4.3% estimate.

Residential investment was revised down to a 3.6% (+0.5% y/y) decline from -2.6%. It remained the third straight quarter of decline.

The chain type GDP prices index was revised upward marginally to a 1.8% increase (2.3% y/y), compared with the Action Economics survey's 1.7% forecast, following the 3.0% increase in Q2. The PCE price index was increased to 1.6% (2.2% y/y) from 1.5% in last month's report. Business fixed investment prices increased at a 1.6% pace (1.2% y/y), a bit stronger than the already firm 1.5% of last month's estimates, making the last two quarters the strongest since 2014. The residential investment price index increased 3.6% (5.7% y/y), unchanged from last month's tabulation and roughly half the growth during the prior two quarters.

The GDP figures can be found in Haver's USECON and USNA database.
USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts.
Both databases include tables of the newly published not seasonally adjusted data. The Action
Economics consensus estimates can be found in AS1REPNA.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM" ;>Chained
 2012 $ (%, AR</a>)</th>
 <th scope="col" >Q3'18 (Third Estimate)</th>
 <th scope="col" >Q3'18 (Second Estimate)</th>
 <th scope="col" >Q2'18</th>
 <th scope="col" >Q1'18</th>
 <th scope="col" >Q3'18 Y/Y</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 <tbody>
 <tr>
 <td class="firstcol" >Gross Domestic Product</td>
 <td >3.4</td>
 <td >3.5</td>
 <td >4.2</td>
 <td >2.2</td>
 <td >3.0</td>
 <td >2.2</td>
 <td >1.6</td>
 <td >2.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Inventory Effect</td>
 <td >2.3</td>
 <td >2.3</td>
 <td >-1.2</td>
 <td >0.3</td>
 <td >0.1</td>
 <td >0.0</td>
 <td >-0.5</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Final Sales</td>
 <td >1.0</td>
 <td >1.2</td>
 <td >5.4</td>
 <td >1.9</td>
 <td >2.9</td>
 <td >2.2</td>
 <td >2.1</td>
 <td >2.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Foreign Trade Effect</td>
 <td >-2.0</td>
 <td >-1.9</td>
 <td >1.2</td>
 <td >0.0</td>
 <td >-0.4</td>
 <td >-0.3</td>
 <td >-0.3</td>
 <td >-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Domestic Final Sales</td>
 <td >2.9</td>
 <td >3.1</td>
 <td >4.0</td>
 <td >1.9</td>
 <td >3.3</td>
 <td >2.5</td>
 <td >2.3</td>
 <td >3.3</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Demand Components</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Personal Consumption Expenditure</td>
 <td >3.5</td>
 <td >3.6</td>
 <td >3.8</td>
 <td >0.5</td>
 <td >3.0</td>
 <td >2.5</td>
 <td >2.7</td>
 <td >3.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Nonresidential Business Fixed
 Investment</td>
 <td >2.5</td>
 <td >2.5</td>
 <td >8.7</td>
 <td >11.5</td>
 <td >6.8</td>
 <td >5.3</td>
 <td >0.5</td>
 <td >1.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Residential Investment</td>
 <td >-2.6</td>
 <td >-2.6</td>
 <td >-1.4</td>
 <td >-3.4</td>
 <td >0.8</td>
 <td >3.3</td>
 <td >6.5</td>
 <td >10.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Government Spending</td>
 <td >2.6</td>
 <td >2.6</td>
 <td >2.5</td>
 <td >1.5</td>
 <td >2.3</td>
 <td >-0.1</td>
 <td >1.4</td>
 <td >1.9</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="9" >Chain-Type Price Index</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; GDP</td>
 <td >1.8</td>
 <td >1.7</td>
 <td >3.0</td>
 <td >2.0</td>
 <td >2.3</td>
 <td >1.9</td>
 <td >1.1</td>
 <td >1.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Personal Consumption
 Expenditures</td>
 <td >1.6</td>
 <td >1.5</td>
 <td >2.0</td>
 <td >2.5</td>
 <td >2.2</td>
 <td >1.8</td>
 <td >1.1</td>
 <td >0.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Nonresidential
 Investment</td>
 <td >1.6</td>
 <td >1.5</td>
 <td >2.0</td>
 <td >0.7</td>
 <td >1.2</td>
 <td >0.7</td>
 <td >-0.8</td>
 <td >0.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Residential Investment</td>
 <td >3.6</td>
 <td >3.6</td>
 <td >7.3</td>
 <td >8.8</td>
 <td >5.7</td>
 <td >4.5</td>
 <td >3.6</td>
 <td >2.7</td>
 </tr>
 </tbody>
 
 
</html>

Real gross domestic product increased 3.4% (AR, 3.0% y/y) during Q3'18, a downward revision of 0.1% from November's second estimate. This followed a 4.2% rise during the second quarter. Participants in the Actions Economics Forecast [...]

Robert Brusca

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GfK provides a forward-looking peek at German consumer confidence. Its estimate for January sees confidence at the same level as in December at an index reading of 10.4. This reading is in the 91st percentile of all readings since January 2002. The German climate remains rarified.

However, the economic climate (where readings are only up-to-date through December) is considerably less robust, having fallen off for a series of months; now the economic climate standing is only in its 59.8 percentile, still North of its median but far closer to being 'average' than to being 'wonderful.'

Income expectations (that also lag by one month) rebounded in December but the series has a legacy of recent weakness. Still, income expectations have a very strong standing at their 88th percentile.

Finally, the propensity to buy (where the reading is up-to-date through December) has fallen off in December after popping higher in November. The propensity to buy has a standing in its 78.4 percentile, a relatively firm reading that I would judge as solid but short of being 'strong.'

These ratings wrap up the GfK story for January. Despite turbulence in the EMU stemming from conflict with Italy and Brexit negotiations with the U.K. and some domestic political rejiggering, Germany's assessment of its confidence is still quite strong although we need to watch the clearly deteriorating views of the economy itself. At some point, consumer confidence has to be underpinned by economic performance (except maybe in Italy but more on that below).

The table offers the most up-to-date views available on Italy, France and the U.K. the next largest economies in the EU (at least for a while longer). These readings are only up-to-date through November and lag the GfK message by a whopping two months.

Italy continues oddly to post queue standings for confidence that rival Germany's. This is odd because while German GDP has advanced strongly since the Great Recession, Italy still has real GDP below its cycle peak after a decade of 'growth.' Yet, Italian confidence is nearly 'on the moon' with a 90th percentile standing. France does not yet show readings for the period of the yellow vest protests, but already in November the French reading is below its median (which occurs at a queue standing of 50) with a queue or count percentile standing at its 41.4 percentile. Confidence in France notched lower in October and stayed there in November. The U.K. also slumped in October and stabilized in November. Like France, U.K. confidence is close to the 40th percentile mark (39.9%). Of course, the U.K. is battling for its Brexit deal. These data are not fresh enough to include any of the new disappointment about the way the EU has played hard-ball with the U.K. over Brexit or the rising prospects for a 'hard' Brexit. Still, U.K. confidence is lagging. French confidence is lagging. Italians may be raising a stink about their allowable fiscal deficit, but none of that seems to affect their perceptions of prospects for 'la Dolce Vita.'


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GfK provides a forward-looking peek at German consumer confidence. Its estimate for January sees confidence at the same level as in December at an index reading of 10.4. This reading is in the 91st percentile of all readings since [...]

GfK Consumer Climate Is Unchanged Month-to-Month

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New orders for durable goods rebounded last month. Overall
durable goods orders increased 0.8% (5.3% y/y) during November following a 4.3% October
decline. A 1.5% increase had been expected in the Action
Economics Forecast Survey. Orders for defense aircraft &amp; parts led the gain
with a nearly one-third increase, and they rose by three-quarters y/y. Orders
for civilian aircraft also were firm and posted a 6.7% rise. Orders for motor
vehicles parts eased 0.2% (+8.7% y/y) after a 0.5% rise. Excluding the
transportation sector entirely, durable goods bookings slipped 0.3% (+4.9% y/y)
after a 0.4% increase.

In the capital goods sector, the gain in civilian aircraft
lifted nondefense orders by 0.7%. Elsewhere, orders weakened. Nondefense capital
goods orders less aircraft fell 0.6% (+6.5% y/y), the third decline in the last four months.

Increased orders for metals accounted for the remainder of
last month's rise in orders overall. Primary metals orders rose 1.0% (9.1% y/y)
and fabricated metals increased 0.5% (5.1% y/y). Working the other way,
machinery bookings declined 1.7% (+7.2 y/y) after three consecutive 0.2% gains.
Orders for electrical equipment &amp; appliances fell 0.7% (+5.7% y/y) after a
1.1% rise. Computer &amp; electronic product orders held steady (6.4% y/y) after
a 2.9% jump. Within that grouping, communication product orders rose 0.8% (5.8% y/y).

Shipments of durable goods rose 0.7% during November (6.2%
y/y) following a 0.4% easing. Excluding the transportation sector, however,
shipments held steady (4.6% y/y) after a 3.3% rise. Unfilled orders for durable
goods eased 0.1% (+4.6% y/y) and excluding transportation, order backlogs rose
0.2% (4.9% y/y). Inventories of durable goods rose 0.3% (4.7% y/y) after a 0.2%
improvement. Excluding transportation, inventories increased 0.3% (5.4% y/y)
following a 0.1% uptick.

The durable goods figures are available in Haver's USECON
database. The Action Economics consensus forecast figure is in the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Durable Goods NAICS
 Classification</th>
 <th>Nov</th>
 <th>Oct</th>
 <th>Sep</th>
 <th>Nov Y/Y</th>
 <th>2017</th>
 <th>2016</th>
 <th>2015</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >New Orders (SA, % chg)</td>
 <td >0.8</td>
 <td >-4.3</td>
 <td >-0.0</td>
 <td >5.3</td>
 <td >5.4</td>
 <td >-1.7</td>
 <td >-5.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Transportation</td>
 <td >2.9</td>
 <td >-12.3</td>
 <td >0.9</td>
 <td >6.1</td>
 <td >3.4</td>
 <td >-0.7</td>
 <td >-6.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total Excluding Transportation</td>
 <td >-0.3</td>
 <td >0.4</td>
 <td >-0.5</td>
 <td >4.9</td>
 <td >6.5</td>
 <td >-2.3</td>
 <td >-4.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Nondefense Capital Goods</td>
 <td >0.7</td>
 <td >-4.7</td>
 <td >-3.2</td>
 <td >0.5</td>
 <td >9.1</td>
 <td >-5.8</td>
 <td >-11.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp; Excluding Aircraft</td>
 <td >-0.6</td>
 <td >0.5</td>
 <td >-0.6</td>
 <td >6.5</td>
 <td >6.7</td>
 <td >-4.5</td>
 <td >-5.5</td>
 </tr>
 <tr>
 <td class="firstcol" >Shipments</td>
 <td >0.7</td>
 <td >-0.4</td>
 <td >0.9</td>
 <td >6.2</td>
 <td >4.0</td>
 <td >-2.4</td>
 <td >-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Unfilled Orders</td>
 <td >-0.1</td>
 <td >-0.2</td>
 <td >0.7</td>
 <td >4.6</td>
 <td >2.0</td>
 <td >-1.2</td>
 <td >-2.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Inventories</td>
 <td >0.3</td>
 <td >0.2</td>
 <td >0.8</td>
 <td >4.7</td>
 <td >4.6</td>
 <td >-3.0</td>
 <td >0.9</td>
 </tr>
 </tbody>
 </table>
 
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New orders for durable goods rebounded last month. Overall durable goods orders increased 0.8% (5.3% y/y) during November following a 4.3% October decline. A 1.5% increase had been expected in the Action Economics Forecast Survey. [...]

U.S. Durable Goods Orders Improvement Paced by Aircraft

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Initial unemployment insurance applications increased to
214,000 (-12.4% y/y) during the week ended December 15 from an unrevised 206,000
during the prior week. Initial claims remained near the lowest level since 1969.
The Action Economics Forecast Survey expected 215,000 initial claims. The
four-week moving average of initial claims eased to 222,000. 
The latest claims figure covers the survey period for
December nonfarm payrolls, and there was a 4.9% decline from the November
period. During the last ten years, there has been a 73% correlation between the
level of initial claims and the m/m change in nonfarm payrolls.
Continuing claims for unemployment insurance rose to 1.688
million (-13.4% y/y) in the week ending December 8 from 1.661 million in the
prior week. The four-week moving average of continuing claims rose to 1.673
million.
The insured unemployment rate held steady at 1.2%, near the
record low. The insured unemployment figures date back to 1971.
Insured rates of unemployment vary widely by state. During
the week ending December 1, the lowest rates were in South Dakota (0.40%), North
Carolina (0.43%), Nebraska (0.44%), Indiana (0.49%) and Florida (0.44%). The
highest rates were in Illinois (1.53%), Connecticut (1.78%), California (1.92%),
New Jersey (2.06%) and Alaska (3.10%). Among the other largest states by
population, the rate was 0.96% in Ohio, 0.93% in Texas, 1.41% in New York, 0.57%
in Georgia and 0.52% in Virginia. These state data are not seasonally adjusted.
Data on weekly unemployment claims going back to 1967 are
contained in Haver's WEEKLY database, and they are summarized monthly in USECON.
Data for individual states are in REGIONW. The expectations figure is
from the Action Economics Forecast Survey, carried in the AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="734">Unemployment Insurance (SA, 000s)</th>
 <th width="161">12/15/18</th>
 <th width="162">12/08/18</th>
 <th width="162">12/01/18</th>
 <th width="162">Y/Y %</th>
 <th width="162">2017</th>
 <th width="162">2016</th>
 <th width="162">2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="734">Initial Claims</td>
 <td align="center" width="161">214</td>
 <td align="center" width="162">206</td>
 <td align="center" width="162">233</td>
 <td align="center" width="162">-12.4</td>
 <td align="center" width="162">245</td>
 <td align="center" width="162">263</td>
 <td align="center" width="162">278</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="734">Continuing Claims</td>
 <td align="center" width="161">--</td>
 <td align="center" width="162">1,688</td>
 <td align="center" width="162">1,661</td>
 <td align="center" width="162">-13.4</td>
 <td align="center" width="162">1,961</td>
 <td align="center" width="162">2,136</td>
 <td align="center" width="162">2,267</td>
 </tr>
 <tr>
 <td class="firstcol" width="734">Insured Unemployment Rate (%)</td>
 <td align="center" width="161">--</td>
 <td align="center" width="162">1.2</td>
 <td align="center" width="162">1.2</td>
 <td align="center" width="162">
 1.3 
 (Dec. 2017)
 </td>
 <td align="center" width="162">1.4</td>
 <td align="center" width="162">1.6</td>
 <td align="center" width="162">1.7</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
Philadelphia Fed Manufacturing Index Declines; Pricing Pressure Holds Steady 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp; December 20, 2018
The Philadelphia Federal Reserve reported that its General
Factory Sector Business Conditions Index declined to 9.4 during December from
12.9 in November. The Action Economics Forecast Survey median estimate was 15.7.
During all of 2018, the index level eased to 21.1 from 27.4 in 2017. These
figures are diffusion indexes where readings above zero indicate expansion. The
percentage of firms reporting an improvement in business activity fell to 26.4%,
down from the high of 48.2% in May of last year. The number reporting a
weakening environment also fell to 17.0%.
Haver Analytics constructs an ISM-Adjusted General Business
Conditions Index and it eased to 54.6 in December from 55.8 in November. This
measure hit a cycle high of 61.9 in March. During the last ten years, there has
been a 65% correlation between the quarterly ISM-adjusted Philadelphia Fed Index
and quarterly real GDP growth.
Working lower was the shipments index to the lowest point in
just over two years. and the inventories series reversed its November increase.
The new orders index actually reversed most of the deterioration in November.
Unfilled orders also rose while the rise in the delivery times index indicated
slightly slower product delivery speeds. 
The employment index held fairly steady near the level of
this past June. During the last ten years there has been a 79% correlation
between the employment index and the month-to-month change in factory sector
payrolls. Twenty-four percent of respondents reported increased hiring, down
from 30%, while a lessened six percent indicated a decrease. The average
workweek reading fell sharply to its lowest level since late-2016. The index of
future employment improved this month, but remained well below its May high.
The index of prices paid was little changed, but the prices
received index improved to the highest level in four months. Forty-two percent
of firms reported higher prices paid, down from 63.1% in August while a higher
four percent paid less, though this was increased from July's reading of 0%. The
future prices paid index was steady m/m and remained down from the April high.
The index measuring expectations of future business
conditions improved m/m, but remained well below its high early last year.
The survey panel consists of 150 manufacturing companies in
the third Federal Reserve District (which consists of southeastern PA, southern
NJ and Delaware). The diffusion indexes represent the percentage of respondents
indicating an increase minus the percentage indicating a decrease in activity.
The ISM-adjusted figure, calculated by Haver Analytics, is the average of five
diffusion indexes: new orders, shipments, employment, delivery times and
inventories with equal weights (20% each). Each ISM-adjusted index is the sum of
the percent responding &quot;higher&quot; and one-half of the percent responding
&quot;same.&quot;
The figures from the Philadelphia Federal Reserve dating back
to 1968 can be found in Haver's SURVEYS database. The expectation from
the Action Economics Forecast Survey is available in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1208">Philadelphia Fed - Manufacturing
 Business Outlook Survey (%, SA)</th>
 <th scope="col" width="94">Dec</th>
 <th scope="col" width="94">Nov</th>
 <th scope="col" width="94">Oct</th>
 <th scope="col" width="94">Dec'17</th>
 <th scope="col" width="94">2018</th>
 <th scope="col" width="94">2017</th>
 <th scope="col" width="94">2016</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1208">General Factory Sector Business
 Conditions</td>
 <td align="center" width="94">9.4</td>
 <td align="center" width="94">12.9</td>
 <td align="center" width="94">22.2</td>
 <td align="center" width="94">27.9</td>
 <td align="center" width="94">21.1</td>
 <td align="center" width="94">27.4</td>
 <td align="center" width="94">4.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">ISM-Adjusted Business Conditions</td>
 <td align="center" width="94">54.6</td>
 <td align="center" width="94">55.8</td>
 <td align="center" width="94">55.7</td>
 <td align="center" width="94">57.5</td>
 <td align="center" width="94">57.7</td>
 <td align="center" width="94">57.2</td>
 <td align="center" width="94">48.3</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">&nbsp;&nbsp;New Orders</td>
 <td align="center" width="94">14.5</td>
 <td align="center" width="94">9.1</td>
 <td align="center" width="94">19.3</td>
 <td align="center" width="94">28.2</td>
 <td align="center" width="94">21.1</td>
 <td align="center" width="94">25.4</td>
 <td align="center" width="94">4.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1208">&nbsp;&nbsp;Shipments</td>
 <td align="center" width="94">10.0</td>
 <td align="center" width="94">21.6</td>
 <td align="center" width="94">24.5</td>
 <td align="center" width="94">23.9</td>
 <td align="center" width="94">22.8</td>
 <td align="center" width="94">26.8</td>
 <td align="center" width="94">6.9</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">&nbsp;&nbsp;Unfilled Orders</td>
 <td align="center" width="94">9.7</td>
 <td align="center" width="94">-4.8</td>
 <td align="center" width="94">-2.3</td>
 <td align="center" width="94">12.8</td>
 <td align="center" width="94">7.1</td>
 <td align="center" width="94">11.9</td>
 <td align="center" width="94">-5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1208">&nbsp;&nbsp;Delivery Time</td>
 <td align="center" width="94">6.7</td>
 <td align="center" width="94">5.0</td>
 <td align="center" width="94">0.2</td>
 <td align="center" width="94">11.0</td>
 <td align="center" width="94">9.5</td>
 <td align="center" width="94">10.6</td>
 <td align="center" width="94">-4.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">&nbsp;&nbsp;Inventories</td>
 <td align="center" width="94">-0.2</td>
 <td align="center" width="94">9.5</td>
 <td align="center" width="94">-0.8</td>
 <td align="center" width="94">-1.1</td>
 <td align="center" width="94">7.3</td>
 <td align="center" width="94">2.8</td>
 <td align="center" width="94">-9.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1208">&nbsp;&nbsp;Number of Employees</td>
 <td align="center" width="94">18.3</td>
 <td align="center" width="94">16.3</td>
 <td align="center" width="94">19.5</td>
 <td align="center" width="94">19.7</td>
 <td align="center" width="94">21.5</td>
 <td align="center" width="94">16.2</td>
 <td align="center" width="94">-5.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">&nbsp; Average Workweek</td>
 <td align="center" width="94">0.5</td>
 <td align="center" width="94">6.3</td>
 <td align="center" width="94">20.8</td>
 <td align="center" width="94">12.6</td>
 <td align="center" width="94">15.8</td>
 <td align="center" width="94">14.9</td>
 <td align="center" width="94">-5.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">&nbsp; Prices Paid</td>
 <td align="center" width="94">38.0</td>
 <td align="center" width="94">39.3</td>
 <td align="center" width="94">38.2</td>
 <td align="center" width="94">27.8</td>
 <td align="center" width="94">46.2</td>
 <td align="center" width="94">30.4</td>
 <td align="center" width="94">13.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="1208">Expectations - General Business
 Conditions; Six Months Ahead</td>
 <td align="center" width="94">31.7</td>
 <td align="center" width="94">27.2</td>
 <td align="center" width="94">33.8</td>
 <td align="center" width="94">52.7</td>
 <td align="center" width="94">36.9</td>
 <td align="center" width="94">47.1</td>
 <td align="center" width="94">33.7</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Leading Economic Indicators Rise Slightly 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp; December 20, 2018
The Conference Board's Composite Index of Leading Economic
Indicators edged 0.1% higher (5.9% y/y) during October following a 0.6%
September gain, revised from 0.5%. It was the smallest rise since May. No change
in the index level had been expected in the Action Economics Forecast Survey.
The series is comprised of 10 components which tend to precede changes in the
overall economy.
Movement amongst the components of the index remained mixed
last month. Weakness was led by declines in the unemployment insurance claims
component as well as lower stock prices and fewer building permits. Offsetting
these negative influences were improved consumer expectations for
business/economic conditions, a steeper interest rate spread between 10-Year
Treasuries &amp; Fed funds, higher ISM New Orders index and more nondefense
capital goods orders. The average workweek and new orders for consumer goods had
no effect on the index.
Three-month growth in the leading index declined to 4.8%
(AR), the weakest growth since June.
The Index of Coincident Economic Indicators increased 0.2%
(2.2% y/y) in October following a 0.1% uptick. Each of the index components
contributed positively including changes in personal income less transfer
payments, industrial production, nonagricultural payroll employment and
manufacturing &amp; trade sales.
Three-month growth in the coincident index held steady at
2.3% (AR). It remained improved from 1.6% growth early in the year, but below
its 3.6% peak as of December.
The Index of Lagging Economic Indicators increased 0.4% (2.4%
y/y) after a 0.2% decline, revised from -0.1%. It was the largest rise since
May. The median duration of unemployment, the average prime rate charged by
banks, the CPI for services and the consumer installment credit/personal income
ratio contributed positively to the index change. The change in commercial &amp;
industrial loans outstanding and the change in unit labor costs contributed
negatively to the index change. The ratio of business inventories-to-sales had
no effect on the index change.
The three-month growth in the lagging index jumped to 1.9%,
the quickest growth since June.
The ratio of coincident-to-lagging indicators is often
considered to be another leading indicator of economic activity. As economic
slack diminishes relative to current performance, the ratio will rise. It eased
to 99.2 last month and reversed most of its September rise.
The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA database. Visit the Conference
Board's <a href="http://www.conference-board.org/">site</a> for coverage of
leading indicator series from around the world.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="831">Business Cycle Indicators (%)</th>
 <th scope="col" width="148">Nov</th>
 <th scope="col" width="148">Oct</th>
 <th scope="col" width="148">Sep</th>
 <th scope="col" width="148">Nov Y/Y</th>
 <th scope="col" width="148">2017</th>
 <th scope="col" width="148">2016</th>
 <th scope="col" width="148">2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="831">Leading</td>
 <td align="center" width="148"></td>
 <td align="center" width="148">0.1</td>
 <td align="center" width="148">0.6</td>
 <td align="center" width="148">5.9</td>
 <td align="center" width="148">4.1</td>
 <td align="center" width="148">1.2</td>
 <td align="center" width="148">4.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="831">Coincident</td>
 <td align="center" width="148"></td>
 <td align="center" width="148">0.2</td>
 <td align="center" width="148">0.1</td>
 <td align="center" width="148">2.2</td>
 <td align="center" width="148">1.8</td>
 <td align="center" width="148">1.3</td>
 <td align="center" width="148">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="831">Lagging</td>
 <td align="center" width="148"></td>
 <td align="center" width="148">0.4</td>
 <td align="center" width="148">-0.2</td>
 <td align="center" width="148">2.4</td>
 <td align="center" width="148">2.6</td>
 <td align="center" width="148">2.9</td>
 <td align="center" width="148">3.7</td>
 </tr>
 </tbody>
</table>


</body>

</html>

Initial unemployment insurance applications increased to 214,000 (-12.4% y/y) during the week ended December 15 from an unrevised 206,000 during the prior week. Initial claims remained near the lowest level since 1969. The Action [...]

U.S. Initial Claims for Unemployment Insurance Rise

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<a href="/comment/181220j.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181220j.png"></a>
 <a href="/comment/181220k.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181220k.png"></a>

The Conference Board's Composite Index of Leading Economic
Indicators improved 0.2% (5.2% y/y) during November following a 0.3% October
decline, revised from +0.1%. No change in the index level had been expected in
the Action Economics Forecast Survey. The series is comprised of 10 components
which tend to precede changes in the overall economy.

Movement amongst the components of the index remained mixed
last month. Positive influences on the index were a greater number of building
permits, a higher ISM new orders index, improved consumer expectations for
business/economic conditions, a steeper interest rate spread between 10-Year
Treasuries &amp; Fed funds, more nondefense capital goods orders as well as more
consumer goods &amp; material orders. Negative influences on the index was
provided by lower stock prices, a decline in average weekly hours-worked and
higher initial unemployment insurance claims.

Three-month growth in the leading index declined to 2.2%
(AR), the weakest growth in two years.

The Index of Coincident Economic Indicators increased 0.2%
(2.1% y/y) in November following a 0.1% uptick during October, revised from
0.2%. Each of the index components contributed positively including changes in
personal income less transfer payments, industrial production, nonagricultural
payroll employment and manufacturing &amp; trade sales.

Three-month growth in the coincident index eased to 1.9%
(AR). That was below the 3.6% peak as of December 2017 and below the 3.1% growth
rate in August.

The Index of Lagging Economic Indicators increased 0.4% last
month (2.8% y/y) following a 0.5% October rise, revised from 0.4%. The change in
commercial &amp; industrial loans outstanding, the average duration of
unemployment, the six-month change in unit labor costs and the consumer
installment credit/personal income ratio contributed positively to the index
change. Six-month growth in the services CPI contributed negatively. The average
prime rate and the ratio of business inventories-to-sales had no effect on the
index change.

The three-month growth in the lagging index strengthened
2.7%, the quickest growth since June and up from no change as of August.

The ratio of coincident-to-lagging indicators is often
considered to be another leading indicator of economic activity. As economic
slack diminishes relative to current performance, the ratio will rise. It eased
to 99.0 last month, the lowest level since June.

The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA database. Visit the Conference
Board's <a href="http://www.conference-board.org/">site</a> for coverage of
leading indicator series from around the world.

<a href="/comment/181220l.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181220l.png"></a>
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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Business Cycle Indicators (%)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Leading</td>
 <td >0.2</td>
 <td >-0.3</td>
 <td >0.6</td>
 <td >5.2</td>
 <td >4.1</td>
 <td >1.2</td>
 <td >4.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Coincident</td>
 <td >0.2</td>
 <td >0.1</td>
 <td >0.2</td>
 <td >2.1</td>
 <td >1.8</td>
 <td >1.3</td>
 <td >2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >Lagging</td>
 <td >0.4</td>
 <td >0.5</td>
 <td >-0.2</td>
 <td >2.8</td>
 <td >2.6</td>
 <td >2.9</td>
 <td >3.7</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Conference Board's Composite Index of Leading Economic Indicators improved 0.2% (5.2% y/y) during November following a 0.3% October decline, revised from +0.1%. No change in the index level had been expected in the Action [...]

U.S. Leading Economic Indicators Increase

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<a href="/comment/181220e.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181220e.png" align="left"></a>
U.K. retail sales in November were bolstered by solid 'Black Friday' sales as the holiday selling period kicked off. Despite the November jolt in sales that reverses two straight months of declines, U.K. retail sales are still trending lower as 12-month growth at 5% erodes to an annualized pace of 4.6% over six months and to 2.9% over three months. Over the same monthly sequences, real retail sales (sales volume) slow from a rise at a 3.7% pace over 12 months to 3.1% over six months and 2.3% over three months.

Also disturbing is the ongoing weakness in passenger car registrations. Registrations fell by 3.1% over 12 months after a 13.9% drop in the 12-month period before that. Over short horizons, registration weakness has persisted and even intensified with six-month registrations off at a 19.3% annual rate and three-month registrations off at a 65.7% annual rate.

The retail surveys and the actual retail sales data both show some irregularity in terms of their strength. Since you can't compare a year-on-year sales gain to a sales survey diffusion response directly, I have subjected all the series in the table to a queue ranking process that permits some direct comparisons. I rank retail sales based on year-on-year growth and I rank the CBI survey responses on their survey diffusion metrics. Nominal retail sales show an 82nd percentile queue standing, higher than the 71st percentile standing for retail volume also ranked as a 12-month growth rate. Year-over-year passenger car registrations percentage changes have a lower 30th percentile ranking – quite poor. The CBI sales for the time of year response has a low 38th percentile standing but the volume of retail orders year-on-year survey response has a 78 percentile standing, more in line with real and nominal retail sales. Separately consumer confidence (ranked as an index rather than on is annual growth rate) has a 34th percentile standing.

U.K. inflation on the HICP measure is at 2.3% year-on-year, 2.4% over six months and 1.7% over three months.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181220.png" width="660" height="350">


BREXIT! 
Of course, there is no talking about the U.K. and its prospects without a word about Brexit. So here it is Word: Brexit!

Brexit is coming. But no one is quite sure of what it will be. It's like the old joke about the 'Viper.' A secretary gets a call and man's voice says, “I am the viper!” She hangs up. Then it happens again. She calls the police. The next day, with an officer protecting her, there is a knock on the door. She opens it. And old man with a moustache, a bucket and a squeegee says “I am the viper, I've come to vipe your vindows! I tried to make an appointment but someone kept hanging up on me….”

So Brexit is coming. But what will it be? Theresa May says she has cut the best deal possible and it should be approved; it is the will of the people. But there is opposition to it. It is possible but not likely that the EU would be willing to make some further accommodation if Parliament rejects this deal, but not much.

Some think that when Brexit was voted on, people had a distorted view of what it would mean. Now after countless negotiations, Britain knows more or less what Brexit actually will mean. Some think that a hard Brexit is so bad that if there were a new referendum the vote might switch to 'remain.' Of course, no one really knows. And last time the polls on this were terribly wrong. So even a new referendum is a roll of the dice. But it would be a vote taken with a much clearer idea of what is being voted on. You know, if the secretary in the story above knew who/what the viper was, she never would have called the police in the first place. But hindsight is often 20/20. A new referendum would be like stepping into a time capsule and re-voting…but with more knowledge, but still not exactly that.

For its part, the Bank of England has cut its forecast based on the notion that Brexit is coming and on the growing probability that it will be a hard Brexit. The bank sees inflation coming down into line at the same time. If there is a new referendum with a changed result, the new BOE forecast will have to be redone as well.

The Brexit process has been difficult for everyone. If the U.K. were to re-referendum and were the result to switch to 'remain,' would all the lost City of London jobs come back? Would the U.K. retrieve the EU ministries that had migrated across the channel? Would all the departed bankers return? How much would things actually go back to 'the same' normal? Would the dispelled expats come back? Would Scotland still go ahead with its talk of another referendum on its membership in the U.K. or would continued EU membership placate them?

Some things never can go back the way they were. With the revote situation in mind, I still wonder what the U.K. would see. I wonder if relations with Spain have been irreparably harmed over its stance regarding Gibraltar. A new referendum even with a changed vote result still comes with its own bundle of uncertainty. Mr. Carney could breathe a sigh of relief and prepare for his own exit. PM May would probably face all sorts challenges to her government once the future had been made clear and the no-win stand-off vs. the EU had been set aside. Suddenly, being PM would be attractive again. But that too is a speculative future.
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U.K. retail sales in November were bolstered by solid 'Black Friday' sales as the holiday selling period kicked off. Despite the November jolt in sales that reverses two straight months of declines, U.K. retail sales are still [...]

U.K. Retail Sales Advance on Strong 'Black Friday' Sales, But Weakness Has Not Been Reversed

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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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.

260206.jpg

**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

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

Winnie Tapasanun

260205X15.jpg

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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

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